ANALYSIS: Kazakhstan turns up heat on Moldovan oligarch oil assets

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ANALYSIS: Kazakhstan turns up heat on Moldovan oligarch oil assets

By SRI ⋅ June 18, 2009 ⋅

(bne) - Kazakh authorities have brought criminal charges and tax claims against oil companies owned by the oppositional Moldovan oligarch Anatol Stati, in what appears to be a case of authoritarian rulers in the former Soviet bloc learning to cover each other’s backs.

By Graham Stack (business new europe)

Moldovan President Vladimir Voronin’s animosity towards the small country’s richest man has long been known. But when the Moldovan press published last October an apparently leaked letter from Voronin to his Kazakh counterpart Nursultan Nazarbayev calling on the Kazakh authorities to crackdown on Stati’s activities in the country, he was ridiculed for having overreached himself. It seemed far-fetched that the Kazakh authorities would heed a request from tiny Moldova to discriminate against a foreign investor.

Stati owns two smallish Kazakh oil and gas companies, KazPolMunai and Tolkynneftegaz, and claims to have invested half a billion dollars in the companies since acquiring them in 1999. The special purpose vehicle Tristan Oil was set up in 2006 to issue bonds on the back of the KazPolMunai and Tolkynneftegaz licences. Stati and his holding company Ascom also run operations in Turkmenistan, Kurdistan and South Sudan. It’s a comparatively small setup, but for Moldova, Europe’s poorest country and Ascom’s historic base, it’s big business - and that inevitably means politics.

“[Stati] runs and finances propagandistic campaigns and in non-transparent ways funds political parties in opposition to the current government,” Voronin wrote in the alleged letter, which also accused Stati of engaging in sanctions-busting in Sudan.

Eight months on, no one is laughing any more at Voronin’s bizarre letter, as Stati’s Kazakh operations are facing existential threats from a united front of Kazakh regulatory authorities, including the Ministry of Energy and Mineral Resources, the Tax Committee, and economic crime investigatory units. “We have no doubt about the authenticity of the letter, although the allegations are ludicrous,” Artur Lungu, vice president and CFO of Tristan Oil, tells bne. “It is no secret that relations between Mr. Stati and President Voronin are bad.”

Stati has publicly denied he actively funds oppositional parties - although as a Moldovan citizen it would be entirely within his rights to do so. But the fact that Ascom deputy CEO Iurie Leanca decided to run for the opposition Liberal Democratic Party led by Vladimir Filat and another Ascom top manager, former deputy foreign minister Anatol Salaru, became deputy chairman of Moldova’s Liberal Party led by Mihai Ghimpu and Dorin Chirtoaca, might have convinced Moldova’s authorities otherwise.

Moreover, Stati’s 33-year-old son playboy son Gabriel, a football club and nightclub owner in the Moldovan capital Chisinau and star of celebrity gossip columns, publicly called on Moldova’s youth to vote against Voronin’s Communists in the April parliamentary elections. Gabriel Stati is married to the daughter of opposition Democratic Party Chairman Dumitru Diacov. When mass protests disputing the election results turned violent on April 7, the Moldovan authorities immediately blamed the Statis for instigating the violence, and had Gabriel Stati extradited from Ukraine to Moldova, where he is now in jail awaiting trial.

Kazakh intrigue

However, for Stati’s business interests, the worst blow had already been struck a good deal before the elections in faraway Kazakhstan. From late 2008 onwards, following Voronin’s letter to Nazarbayev, a number of Kazakh agencies began targeting Tristan Oil’s local subsidiaries in a style reminiscent of Russia’s notorious attack on the country’s then-largest oil company Yukos, which was owned by the renegade oligarch Mikhail Khodorkovsky.

First up was the Kazakh Ministry of Energy and Mineral Resources in December. Based on recent changes to legislation that entitled the government to break or change existing licence agreements, the energy ministry challenged Tristan Oil’s licences, alleging it hadn’t supplied all information to properly evaluate the fields in 2003.

The licence dispute with Tristan Oil was not unique, and a provisional agreement reached in March gave grounds for optimism. But hopes were dashed in May when other authorities turned up the heat. The Tax Committee and local economic crime investigators launched a double whammy of back tax claims totalling $31m coupled with trumped-up criminal charges, resulting in an assets freeze eerily reminiscent of the Yukos case in Russia. The criminal charges relate to company-operated pipelines that investigators suddenly decided should be reclassified as trunk pipelines that were operating without state permission. The mounting pressure culminated in the arrest of the CEO of Tristan’s largest subsidiary Kazpolmunai, Moldovan citizen Sergiu Cornegru.

The escalation in May made it crystal clear that Tristan Oil was the target of a systematic campaign, according Lungu. “But we can only speculate about who is behind this,” he says.

Besides the “Moldovan version”, linked to the Stati-Voronin feud, there is also the “Kazakh version”, according to Lungu. State-owned oil and gas national champion KazMunaiGas named Tristan Oil’s operating companies as potential acquisition targets at a Merrill Lynch-hosted investment conference in April and is currently evaluating Tristan’s operations, Lungu claims. “Both these versions have their merits,” says Lungu. A Moldovan synthesis of the two is that Voronin’s son Oleg is seeking an ownership stake in Stati’s Kazakh companies in conjunction with KazMunaiGas. “We are definitely not expecting diplomatic support in Kazakhstan from the Moldovan authorities,” Lungu says acidly.