An Ablyazov-like scheme ?-la-moldavienne: Stati cries wolf over self-stolen cash

How socially engaged can an oligarch get? The question has already been answered in the laughable statements of the likes of Mikhael Khodorkovsky in Russia and Kazakhstan’s banker and master swindler Mukhtar Ablyazov. The latest sham comes from an unexpected corner of the former USSR in the person of the Moldovan maverick tycoon Anatol Stati. What looks like a trade union-style bravery in the interest of employees, can well be an attempt by the controversial super-rich business boss from Europe’s poorest country after Albania to get away with illegal gains siphoned from an oil and gas project in the southwest of Kazakhstan for about a decade. Under the guise of “losses” suffered by Stati’s company Ascom and its Kazakh subsidiaries, hundreds of millions of greenbacks must have slipped out of the country. Now, under the cover of a mysterious non-profit movement pretending to be engaged in labour defence, Stati, himself entrenched in Romania since in 2009 he fell at odds with his home country’s head of state, accuses the latter’s Kazakh counterpart along with one-time state oil enterprise top executive Timur Kulibayev and state official Sauat Mynbayev of having “netted in personal pay-offs” the money represented in the hole in Ascom’s Kazakh balance sheet through “orchestrated” sales bids in the takeover process of Stati’s assets in Kazakhstan by the country’s state oil and gas company Kazmunaygaz. Nothing  appears to be less likely. Wherein reality the cash has gone in a complex loan and paper cycle that reminds one all too well of Ablyazov’s schemes  remains uncertain – except for the fact that it does not appear to be within Kazakh jurisdiction.


An Ablyazov-like scheme ?-la-moldavienne: Stati cries wolf over self-stolen cash“The Centre for Social Assistance and Contribution, an organization representing former workers at the Tolkyn and Borankol oil fields in Western Kazakhstan, has filed a complaint with the District Court in Kazakhstan alleging corruption by the President of Kazakhstan and other high-ranking government officials,” a press release dated July 3 this year signed by the so far unkinown Moldovan organisation reads. “The organization, which has retained the New York workers’ rights firm O’Dwyer and Bernstien, claims that the current Kazakh Minister of Oil and Gas, Sauat Mynbayev, and the former head of the state-owned oil company, and son in law of the President, Timur Kulibayev, attempted to orchestrate a forced sale of over a billion dollars worth of oil and gas licenses that would have netted the officials hundreds of millions of dollars in personal payoffs. The owner of the licenses, Ascom S.A., protested the forced deal after receiving significantly higher bids during a private offering led by Renaissance Capital, a leading investment bank based in Moscow. The officials, the complaint then alleges, responded by terminating the licenses and unilaterally transferring the rights to the state-owned oil company, illegally terminating all of its Moldovan workers in the process.”

The pretended cause of the “workers” looks very much like a pretext with the company’s real aim to lay its hands on the “hundreds of millions of dollars” which it claims to have “lost” in the process. The story goes back to the late 1990s, with the entry into Kazakhstan of a Moldovan fortune baron named Anatol Stati. Like most former Soviet tycoons (with some notable exceptions such as Lukoil’s president and major shareholder Vagit Alekperov and steel-tycoon Vladimir Lisin), Anatol Stati has little affection with the technical side of his ventures and mainly dreams of financial gain and fortune. Born in 1952, Stati is a construction engineer by origin, until back in 1989 he joined the management team of Decebal, a state-affiliated company responsible for the wholesale purchases and distribution of consumer goods. In the wake of Moldova’s independence following the break-up of the USSR, he watched how in Russia former executives made their fortune on expertise and material gains accumulated in the waning days of the Soviet Union, he must have decided that what was possible downtown Moscow should be a piece of cake in Chisinau. Through his new holding Ascom, based locally but with offshore safe havens for assets and capital in Gibraltar and the Caribbean, Stati engaged in a wide variety of trade and services.

Tristan Oil had, and as far as known still has, only two shareholders: Ascom and Gibraltar-based Terra Raf – both of which are under Stati’s control. “Tristan Oil Ltd. is a company organized under the laws of British Virgin Islands,” company information reads. “The Company’s registered offices are located at Graigmuir Chambers, Road Town, Tortola, British Virgin Islands. The founder of Tristan Oil Ltd., Mr. Anatol Stati, started his activity in the oil and gas business back in 1995, in Turkmenistan, by signing two major contracts with the Ministry of Oil and Gas of Turkmenistan for two projects. The first contract was for the rehabilitation and restoration of old wells in two of the largest fields of Turkmenistan. The second contract was for the repair and upgrade of field equipment. The overall investment during the 5 years of activity in Turkmenistan was over $100 million.”

There is no word about income generated from the project. But for the likes of Stati, possible tens of millions in profit are hardly satisfactory and only generate a taste for more. Following the project, Ascom waged into Kazakhstan, where the big bucks were supposed to be waiting. In 1999, it won two tenders for exploration and eventual development of two blocks on the peninsula of Mangistau for an undisclosed price. Two subsidiaries were established under Kazakh law, KazPolMunai and Tolkynneftegaz, named after the respective fields. Exploration of both blocks and a later acquired third one, Tabyl, according to Stati’s claim proved reserves of 8.9 million barrels of oil equivalent, just over half in gas and the remainder in oil and gas condensate. In 2006, Tristan Oil was set up with the aim to issue $420 million in Eurobonds to cover the necessary investments for the three fields’ development.

“Prior to Ascom’s programme of exploration and investment, the Borankol and Tolkyn fields were considered by many to be unprospective,” Ascom’s own version of the story relates. “Following its programme of investment, by 2008 Ascom had approximately 100 operational wells in the two fields, with approximately 80 of those producing 56,000 barrels of oil equivalent per day on average. To support these operations, Ascom had also constructed significant oil field infrastructure – including investing US$245 million in a Liquid Petroleum Gas plant that when completed would have had a processing capacity of 7 million cubic metres of gas per day. In addition to steadily increasing production at those fields, Ascom made a significant find in its Tabyl Block in July 2008 and declared the geological discovery of oil and gas fields on the Munaibay and Bahyt structures of the Tabyl Block in March 2009. In September 2008, Ascom received seven non-binding offers to purchase its fields, including one from KazMunaiGas, in the first phase of a formally conducted trade sale process.”

On paper, things looked quite well indeed. “For the year ended December 31, 2008, our average realized price for oil and condensate exports was $83.26 per barrel compared to $64.96 per barrel for the year ended December 31, 2007,” Tristan’s annual report over 2008 was to read. But the report also featured a number of anomalies which must have been at the bottom of the row that was soon to follow – apart from its political and personal dimensions, that is. Sales revenue more than doubled between 2006 and 2006 to half a billion US dollar, with net profit rising to all but tenfold to just below $431 million. Kazakh authorities must have become suspicious on seeing that Tristan’s taxes, which in 2006 and 2007 amounted to the order of 65 and 40 per cent of pre-tax net income respectively, were no more than around 16 per cent in 2008.

This could be due to the fact that the company apparently had not included debt into its financial results, although overall debt services are included in the annual expenditures and came close to $34.8 million in 2008, up from less than $6.4 million over the previous year. Nor were capital expenditures and EBITDA integrated in the annual financial results. on Tristan’s balance sheet, stock value shot up more than six-fold between 2006 and 2008 from just under $104 million to almost $635.3 million: a huge market value for a company of Tristan’s size. In other words: making an enterprise look immensely profitable is good for capital market valuation – but not so good for tax bills. As a result, an extra tax bill was sent to Tristan’s subsidiaries Kazpolmunay and Tolkynneftegaz on “excess profit”, with $11.2 million and $20.8 million respectively to be paid up, on 15 May, with a deadline on May 22.

What followed looked weird at best – and strongly suggested, at least in the eyes of the authorities, that other things than just pumping up and selling oil and gas were at stake here. Most strikingly, it appeared that though owned by Moldova’s reputedly richest citizen, the Kazakh oil venture had no liquidity to speak of and, like many another high-flying hydrocarbon venture in the Caspian region, was working on other people’s money with a gaping, ever increasing hole in the budget. Moreover, it also appeared that assets had been heavily overstated and liabilities minimised in the accounts over the previous years. In a subsequent press release dated May 28, Tristan noted that “…failure to pay the tax as soon as possible could result in [the Kazakh tax authorities] auctioning assets of KPM and TNG and seizing [their] oil, gas and gas condensate production until such time as revenues from the sale of such assets and production are sufficient to pay the excess tax in full.” The company also noted that production and sales could go on unhindered under Kazakh legislation, and revenue should be restored as soon as tax claims had been settled. But things would prove to be less easy than the company’s press service suggested. A glance at the balance sheet would demonstrate that whereas Tristan’s assets in the form of property had doubled from 2006 to 2008 in excess of $600 million, cash and “cash equivalents” reserves had dwindled from $275.6 million to below $9.3 million.


After a vain attempt to leverage tax debts against future income on oil and gas sales, Tristan once more turned to the debt market – the only result being that by selling more bonds the company’s liabilities threatened to exceed any possible future net income. In a fresh press release on June 19, Tristan announced that the entire package of new notes had been bought by a company called Laren Holdings Ltd., based on the British Virgin Islands and described as “a special purpose entity that is owned by a charitable trust”. The notes had been purchased for “an aggregate purchase price of $30,000,000 million, $6,000,000 of which is expected be paid on July 2, 2009, and the corresponding amount of New Notes will be held in escrow pending such payment”. “The proceeds from the sale of the New Notes will be used to pay a portion of the excess profit tax due by Kazpolmunay LLP (“KPM”) and Tolkynneftegaz LLP (“TNG”) and to pay for certain expenses incurred in connection with the issuance of the New Notes,” the press release continued.

But that was not the bottom of the story. “On June 16, 2009, Laren entered into a $60 million Credit Facility (the “Credit Facility”), with a group of lenders, which was arranged by Renaissance Advisory Services Limited,” the press release read further. “[…] Laren drew down $48,000,000 from the Credit Facility, of which $24,000,000 was used to purchase the New Notes (other than the Escrowed New Notes) and the balance was loaned to Montvale Invest Ltd. (“Montvale”), KPM and TNG’s oil and condensate trader. It is expected that on or about July 2, 2009, Laren will draw down the remaining $12,000,000 under the Credit Facility, of which $6,000,000 will be used to pay the purchase price of the Escrowed New Notes and the balance will be loaned to Montvale. Montvale will use loan proceeds from Laren to pay certain accounts payable, through two intermediary entities. KPM and TNG will use the funds to pay the balance of the excess profit tax currently due and for other general corporate purposes.” In all: a financial construction that looks all too much like a tax carousel.

But the Kazakh treasury appears not to have been the only loser in the game. From the very beginning, payments in the offshore loan chain failed to be paid. Into 2012, Tristan fell into default over its notes and their holders have now seen their paper’s exposure jump to more than half a billion US dollar as a result of Laren’s move, as the Financial Times observed in a comment dated June 29 this year. Bond holders in a recent conference call also wanted to know how it could be that $111 million in new derivatives had to be raised to pay a $32 million tax bill. It could well mean, as the newspaper tends to suggest, that liabilities have been recently understated.

“A letter allegedly sent on October 6 last year by Mr Voronin to Nursultan Nazabeyev, the Kazakh president, which was leaked to Moldovan opposition newspapers in March, suggests Mr Voronin was targeting Anatol Stati,” the Financial Times reported on May 29, 2009. “In the letter, whose authenticity has not been denied by either government, Mr Voronin allegedly urges his Kazakh counterpart to pay ‘serious attention’ to Anatol Stati, whom he accuses of using income from Kazakh assets to carry out ‘blood-tainted business’ in Sudan, causing ‘severe damage’ to Moldova’s reputation,” the article read. “He runs and finances propagandistic campaigns and in non-transparent ways funds political parties oppositional to the current government,” Mr Voronin was quoted as writing in his letter. Earlier, in an article published on June 27 the same year, Business New Europe wrote that in his letter the Moldovan head of state claimed that Stati “runs and finances propagandistic campaigns and in non-transparent ways funds political parties in opposition to the current government.”