UPDATE ON LEGAL DEVELOPMENTS

RNS Number : 4149Q

KazakhGold Group Ltd

03 August 2010

 

Update on legal developments in Kazakhstan

On 29 June 2010, KazakhGold announced that it had commenced legal proceedings at the High Court in London against five members of the Assaubayev family who were former directors of KazakhGold Group Limited ("KazakhGold" or "the Company"). The Company has been notified that a freezing order has been placed by the Agency on Economic and Corruption Crimes ("AECC") in Kazakhstan on certain bank accounts held in Kazakhstan by its main operating subsidiary, JSC Kazakhaltyn MMC ("Kazakhaltyn"), in connection with an investigation by the AECC into allegations of fraud by three members of its current Board of Directors (Mr. Evgeny Ivanov, Mr. German Pikhoya and Mr. Alexey Teksler). KazakhGold understands that the AECC investigation was launched at the instigation of members of the Assaubayev family. The allegations relate to the partial offer for a controlling stake in KazakhGold by Jenington International Inc., a wholly-owned subsidiary of OJSC Polyus Gold, which completed in August 2009. Following the completion of the partial offer, after unanimous approval from the then Board members of KazakhGold and the approval of an overwhelming majority of shareholders, the Assaubayev family now claims that they have been fraudulently deprived of $187 m.

The Board of Directors of KazakhGold strongly refutes these allegations against the three current directors, which it believes are without factual or legal basis.  KazakhGold has received preliminary advice from its legal advisers in Kazakhstan that the AECC has acted inappropriately in making an order of this nature against Kazakhaltyn, which is not, and, as a matter of Kazakh law, could not, be a defendant in any criminal proceedings in relation to the allegations that have been made against the three current directors. Kazakhaltyn has instructed its legal advisers in Kazakhstan to take urgent steps to have this freezing order on the bank accounts of Kazakhaltyn revoked in order to minimise the disruption to its operations.

The Board of Directors of KazakhGold believes that the AECC action, which may prevent Kazakhaltyn from making wage payments to over 4,000 employees in Kazakhstan and causing undue hardship to them and their dependants, is highly regrettable. KazakhGold provided all the information requested about the partial offer for a controlling stake in KazakhGold to the Prime Minister of Kazakhstan on 14 July 2010 and continues to engage with the authorities to resolve the outstanding issues. Since that date, no further requests for information have been received.   

Enquiries:

KazakhGold Alexey V. Chernushkin, Director, Capital Markets and IR	[phone]
Polyus Gold Evguenia V. Buydina, IR manager	[phone]

 

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