The Story of Marubeni-Kazatomprom Deal. Part 4

We are continuing the story of how, in 2006-2007, two foreign investors arrived in the Kazakh uranium extraction industry – Japan’s Marubeni Corporation and offshore Swinton Investment and Finance S.A. registered in the British Virgin Islands.  

They arrived together and, incidentally, Marubeni Corporation became a part of the team involuntarily. However, it had to obey the request of the then NAK Kazatomprom President Mukhtar Dzhakishev and his representatives, particularly, Malkhaz Tsotsoria who very adamantly insisted on employing the mentioned scheme.

This detail shows that Mr. Dzhakishev and his team were acting in the interests of the people in control of Swinton Investment and Finance S.A. And these people must have been part of President Nursultan Nazarbayev’s closest entourage.

In the future articles, we will explain why we are so certain of this (and present the related documents). At this point, let us continue our story.

You can find the previous publications on the subject below.

Now let us sum up the outcomes of the operation:

As of April 1, 2007, here is what the state of affairs looked like (quoting from our latest article).

a) NAK Kazatomprom achieved a series success since it was able to attract such a big, well-known and reputable investor as Marubeni Corporation. And it invested the received funds in the amount of US$540 mln in its own investment project that, if successful, would have allowed the company to launch another one – very important, profitable and crucial both politically and technologically, namely nuclear assembly project under a license from Westinghouse group. In other words, a Western customer-oriented production;

b) NAK Kazatomprom and Mukhtar Dzhakishev personally grew very seriously in the eyes of society not just in Kazakhstan but abroad;

c) someone who was in control of Swinton Investment and Finance S.A. and Glendale International Investment LTD became involved in the large-scale and potentially very profitable investment project with participation of NAK Kazatomprom and Marubeni Corporation – practically for free, without investing any human or other resources in its preparation, execution and implementation;

d) someone who was in control of Swinton Investment and Finance S.A. and Glendale International Investment LTD instantaneously became the owner of the assets worth US$540 mln. For, at the time, Glendale International Investment LTD owned the identical 50% share in Energy Asia (BVI) Limited as did Marubeni Corporation that paid US$540 mln for it.

To enlarge, click on the scheme, wait for it to appear in a separate window and enlarge to a desirable size.  

The documents that we have in our possession show that, in 2007-2009, both of NAK Kazatomprom’s affiliated companies co-owned by Marubeni Corporation and Swinton Investment and Finance S.A. were experiencing big problems related to the launch of the uriniferous ore extraction project. However, as long as Mukhtar Dzhakishev was the head of the national company, these delays did not cause much anxiety to the management of the Japanese company albeit they did have their concerns.

It all changed as soon as Dzhakishev was first released from his post and then arrested by the NSC officers.

Incidentally, Mukhtar Dzhakishev knew of his prospective arrest beforehand. Moreover, shortly before the arrest, he was abroad on business and, nonetheless, chose to return to Kazakhstan despite the numerous warnings. Back then, we were surprised by Dzhakishev’s decision but now, after all these years, a lot has become clear.

It looks like he was hoping that the people behind Swinton Investment and Finance S.A. would protect him. However, his hopes turned out to be futile and Mukhtar Dzhakishev together with his friends, the top-managers of the national company, were arrested and sent to prison.

We see no point in relating the further events of the story since anyone interested in the subject can easily find the relevant information on the Internet.

This information, among other things, includes the data on how Kazatomprom’s vice presidents Dmitry Parfenov, Askar Kasabekov and Malkhaz Tsotsoria were either arrested or simply isolated and, in the capacity of a witness, kept in a safehouse. And then they even appeared before the Kazakh TV-viewers telling them that they were OK and that they had not been pressured by anyone.

Here is what “The Respublika” wrote about it in an article of July 3, 2009.

“Recently, two TV-channels have shown a video-recording where the three vice presidents and the director of Kazatomprom’s affiliated company denied the information that they were being kept hostage.

It turns out (just don’t laugh, please!) they have learned about certain media releasing false information that the top-managers named in the Kazatomprom case as witnesses “were being kept in a safehouse with no amenities, experiencing all kinds of pressure and prohibited from seeing their relatives”. So, they themselves have asked the secret service officials to set up a meeting with journalists to clarify the matter once and for all.

The Khabara film crew has confirmed that Tsotsoria, Parfenov, Kasabekov and Pirmatov were sober-minded and healthy, that they saw no dungeons, plank beds or bars on the windows.

As for the “witnesses” themselves, their optimism seems excessive. For instance, Tsotsoria says that the living conditions are completely normal, not unlike those of a three-star hotel. Three meals a day, daily doctor’s visits, the attitude of the personnel (guards) is absolutely correct and friendly. Parfenov has dispelled the public’s worries that, on the video, they were forced to say what the investigation wanted to hear. He added that all the talks about them being beaten or drugged are but a pure speculation.

The position of the wives of some of the vice presidents strikes a discordant note in this message constructed via the efforts of the secret service and the progovernment online media. Some of the wives believe that, as long as their husbands are witnesses, they should live as witnesses usually do – at home. Or, if they do live in a safehouse, they should live there together with their wives. Or at least have an opportunity to meet with their nearest and dearest without a secret service official present.

However, this is exactly what the NSC cannot allow, just as it cannot let independent lawyers get involved in the matter”.

Now, Mukhtar Dzhakishev’s arrest and the appointment of Vladimir Shkolnik the President of NAK Kazatomprom resulted in Marubeni Corporation managers finding themselves completely dumbfounded. For, the workplace problems that they, on the whole, understood and took for granted overlapped with the other challenges that they found incomprehensible.

For instance, they had to communicate with the new NAK Kazatomprom representatives who, to their great surprise, knew nothing about the scheme employed for the sale of the Kyzylkum LLP and Baiken LLP shares. Also, they had absolutely no idea who was behind the Swinton Investment and Finance S.A. and Glendale International Investment LTD offshore companies.

And then, the Japanese investors back pedaled investing their own funds in the uranium extraction projects as well as crediting these projects via Japan’s bank. For, as a result of Japanese investors’ actions, the successful completion of the investment projects was called into question which means their own fate was called into question, too.

Since, in this particular case, we are not interested in the workplace problems (the more so because, not being specialists in this, we will find it hard to relate and explain the matter), we are not going to go into detail. And, in our next publication, from a number of the multi-page minutes of the meetings, we will only quote the passages we believe our reader will find interesting. 

To be continued


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