Assaubayevs Say Polyus Diverting Attention From Probe

July 16. Bloomberg

Assaubayevs Say Polyus Diverting Attention From ProbeThe Assaubayev family, locked in a dispute with OAO Polyus Gold, said Russia’s biggest producer of the metal is using allegations against the family to divert attention from a Kazakh government probe of the company.

Polyus, which acquired 50.1 percent of KazakhGold Group Ltd. last year from the Assaubayevs, may lose the Kazakh unit’s mining permits as a result of the investigation, the family said today in a statement. KazakhGold management, including Chairman Evgeny Ivanov, who is also chief executive officer of Polyus, may face criminal proceedings in Kazakhstan, the family said.

Polyus spokesman Anton Arens declined to comment. Ivanov didn’t immediately respond to e-mailed questions.

The dispute over KazakhGold may scupper the plans of Russian billionaires Mikhail Prokhorov and Suleiman Kerimov to transform Moscow-based Polyus into a U.K.-listed company, a step towards a merger with a global mining company, according to VTB Capital. KazakhGold, registered in Jersey and with a primary listing in London, said in June it intends to acquire its parent Polyus in a so-called reverse takeover.

Kazakhstan’s Industry Ministry said July 12 it annulled its previous approval of Polyus’s 2009 acquisition and ruled out the sale of additional shares by KazakhGold as part of the reverse takeover.

London Lawsuit

Polyus and affiliates filed a lawsuit in London on June 25 against members of the Assaubayev family, who are the former directors of KazakhGold, Gold Lion Holdings Ltd. and Hawkinson Capital Inc., seeking damages of more than $450 million over allegations they misappropriated funds and misrepresented output and profit figures from 2006 to 2008.

The Assaubayevs said July 1 the lawsuit was “without any foundation” because Polyus had “extensive access” to KazakhGold books prior to the purchase. KazakhGold was regularly checked by the energy and mineral resources ministers, the financial regulation authorities and other Kazakh state bodies and no discrepancies were found, the Assaubayevs said today.