Almaty. August 20. Information Center - On Monday 16th August 2021, the Ministry of Justice of the Republic of Kazakhstan responded to a notice of dispute issued by King & Spalding LLP, the legal counsel of the Stati family. In its response, the Ministry exposed a series of false statements made by the Statis, presented evidence of their fraud and encouraged King & Spalding to initiate arbitral proceedings immediately, Business Wire reports.

The Ministry was responding to the notice issued by the Statis on 5 August through the press, which threatened the filing of a new arbitration under the Energy Charter Treaty due to the ongoing refusal by the Republic of Kazakhstan to settle on an award which was secured by the Statis through the use of fraud.

A new arbitration would provide the opportunity for a free and fair review of the Statis’ fraud by an independent arbitral tribunal capable of examining all of the new undisputed evidence that has come to light since the original arbitration ended and which the Statis systematically avoid. For this reason, the notice by the Statis cannot be considered an honest attempt to settle a dispute and is rather designed to mislead the public and their partners. Kazakhstan would welcome and strongly encourages the initiation of a new arbitration procedure.

Background

The Republic of Kazakhstan refuses to engage with individuals who have been clearly shown to engage in a systematic behaviour of fraudulent criminal schemes for over a decade. It is now evident that, starting with the arbitration against Kazakhstan under the Energy Charter Treaty filed in 2010, the Statis have engaged in a campaign of bad faith, fraudulent litigation against the Republic.

In a letter from KPMG Audit LLP to the Stati Parties dated 21 August, the international accounting firm undertook the extraordinary action of withdrawing all of its audit reports for the Statis’ financial statements because of unrebutted evidence of the Statis’ fraud. The unprecedented nature of this move has been also confirmed independently by a PWC report.

With the mounting evidence that is now available, the fraud and other illegal and unethical conduct committed by the Statis, with the support and guidance of their legal counsel, has been confirmed in reports issued by multiple world-leading independent experts, including Professor George Bermann, Professor Bernard Hanotiau, Professor Christoph Schreuer, Professor Kaj Hobér, Professor Catherine Rogers, Dr Patrik Schöldström, Mr Stefan Cassella, as well companies including PwC. Moreover, the English High Court of Justice concluded prima facie that the Stati Parties obtained the arbitral award against Kazakhstan by fraud whilst also being under criminal investigation in Luxembourg Finally, their former Chief Financial Officer, Artur Lungu, admitted key elements of the fraud under cross-examination in sworn testimony.

In addition to the unlawful conduct by the Statis as it pertains to this long-running dispute, their systematic criminality seems to extend to other cases as well, with companies belonging to the Statis having been sanctioned by the U.S. government for "contributing to the ongoing crisis in South Sudan because they are a source of substantial revenue that, through public corruption, is used to fund the purchase of weapons and other material that undermine the peace, security, and stability of South Sudan rather than support the welfare of the South Sudanese people."

The only solution to remedy the unlawful conduct by the Statis for the past decade and to end this long-running dispute from the perspective of the Republic of Kazakhstan is for the Statis to vacate the fraudulent Award, any court decisions recognizing the Award, and pay the Republic the amounts that have been ordered by various national courts and compensation in an amount equal to the damage caused by their illegal schemes.

The Republic of Kazakhstan is steadfast in its resolve and will not be influenced by the Statis’ propaganda and black PR campaign.

An online version of the press release including links to relevant documents can be found here: https://www.gov.kz/memleket/entities/adilet/press/news/details/242664?lang=en.