Kazakhstan: Dutch Court Lifts $22B Freeze on National Fund Assets

Astana secures important reprieve in its years-long legal battles against a pair of disgruntled Moldovan investors.

A court in the Netherlands has lifted a freeze of $22 billion worth of assets held by Kazakhstan’s national fund at the Bank of New York Mellon.

The ruling on January 23 marks a provisional victory for Astana in its years-long legal battle against a pair of disgruntled Moldovan investors — Anatolie Stati and his son, Gabriel. 

Kazakhstan’s Justice Ministry said in a statement that the District Court in Amsterdam ruled that assets in the country’s sovereign fund were immune to the kind of legal proceedings that led to the freeze. The ministry stated that Dutch courts had previously denied petitions from the Statis to pursue a freeze on the national fund’s assets and that the Moldovan businessman sought to hide this fact during subsequent legal appeals.

The original asset freeze was first flagged up by Reuters news agency in December, but had reportedly taken place in October.

The Statis have been embroiled in a campaign for many years to seek compensation for what they claim was Kazakhstan’s expropriation of their investments in two oil and gas fields. The businessmen say government harassment included groundless tax inspections and arrests of people working for their companies. The pair entered Kazakhstan in the late 1990s, when they bought up two companies — Ascom Group SA and Terra Raf Trans — that owned licenses to idle oil and gas fields in the west of the country called Borankol and Tolkyn. The Statis are seeking $4 billion in compensation for claimed lost earnings.

Kazakhstan denies all wrongdoing.

A tribunal at the Stockholm Chamber of Commerce in December 2013 ruled that Kazakhstan should pay the Statis damages of more than $500 million — that being the claimed value of the investments in question.

Why the asset freeze effected by Bank of New York Mellon was so much greater than the damages sought by the Statis remains unclear.

The immunity defense strategy pursued by Kazakhstan’s Samruk-Kazyna National Welfare Fund and Justice Ministry has not always proven entirely reliable. In early 2016, the US Court of Appeals for the Second Circuit ruled to dismiss a Samruk-Kazyna petition to find its asset immune from suit. That case involved claims that Kazakhstan had welched on its obligations to holders of debt securities issued by BTA Bank, a troubled lender that was absorbed by the government in 2009.

The Stati case differs from the BTA episode in significant ways, but the Moldovan businessmen may explore that legal precedent as a way to continue their campaign to pump Kazakhstan for what they argue is their due compensation.

Kazakhstan: Dutch Court Lifts $22B Freeze on National Fund Assets

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