Two Moldovan Oil and Gas investors have been indicted in Luxembourg

Two Moldovan oil and gas investors who won a $506 million arbitral award against Kazakhstan nearly a decade ago have been indicted in Luxembourg in connection with their attempts to enforce the allegedly fraudulent award, according to documents filed in Texas federal court, writes

Kazakhstan said Anatolie Stati and his son Gabriel Stati were criminally indicted on Sept. 27 and
Nov. 13, respectively, on charges of forgery, defrauding a court and money laundering. An
indictment in Luxembourg means an investigating judge considers there to be sufficient evidence
to establish guilt, according to a brief Kazakhstan filed on Nov. 22.

The country disclosed the indictments in legal proceedings where it’s seeking permission to
subpoena Artur Lungu, a former executive at several of the Statis’ companies who acted as their
chief financial officer, for information that the country said could prove crucial as the criminal
proceedings play out.

Kazakhstan is also seeking the information for use in proceedings in the Netherlands, where the
Statis are attempting to enforce the award, and in Belgium. The Statis won the award, which has
been upheld by Sweden’s highest court, in 2013 from a Swedish tribunal after Kazakhstan seized
their petroleum operations in the country in 2010.

Kazakhstan has argued for years that the Statis were not forthcoming with the Swedish tribunal,
claiming that the father and son inflated the value of their investment in a liquefied petroleum gas
plant to influence the damages calculation undertaken by the arbitral tribunal.


The Statis, meanwhile, have insisted that Kazakhstan is the one at fault, accusing it of
orchestrating “an unprecedented strategy of abusive litigation, intimidation and illicit asset hiding
in an attempt to avoid its international treaty obligations.”

Reached for comment Nov. 23, an attorney for Anatolie Stati downplayed the criminal
proceedings in Luxembourg, calling the indictments “Kazakhstan’s boldest and most creative
allegation yet.”

“It is a well-known and regularly criticized fact that it is extremely easy for an alleged victim to
initiate criminal proceedings in Luxembourg,” said Edward H. Davis Jr., a founding shareholder of
Sequor Law. “This tactic is used by some bad faith litigants to delay civil proceedings.”
He pointed to a proceeding filed in New York that was dismissed earlier this year as evidence of
Kazakhstan’s alleged pressure campaign. There, the country accused a hedge fund of conspiring
with the Statis to secure the award. The ruling dismissing the litigation is on appeal.
Anatolie Stati, meanwhile, has initiated a new $6.84 billion claim in Moldova against Kazakhstan,
where he alleges the expropriation of his assets was the result of blackmail and slander by the
ex-leaders of the two former Soviet states.

He had asked for and obtained permission from a New York court over the summer to subpoena
the Clearing House Payments Co. LLC — which owns and operates core payments system
infrastructure in the U.S. — for information regarding alleged bribes that he claims ultimately led
to the seizure of his Kazakh petroleum operations more than a decade ago.

Stati filed a brief before the New York court on Nov. 22 seeking permission to obtain additional
evidence from the Clearing House Payments Co. 11/24/22, 9:34 AM Energy Investors Indicted In Luxembourg Over $506M Award – Law360 2/2 Counsel for Kazakhstan declined to comment on Nov. 23.

These proceedings represent just part of the complicated web of litigation spanning several
continents that has resulted from the decade-old dispute between Kazakhstan and the Statis.
In the Netherlands, Kazakhstan told the Texas court on Nov. 22 that it is trying to prove that the
alleged fraud renders the award unenforceable.

In Belgium, meanwhile, an appeals court refused to enforce the award last year, citing the alleged
underlying fraud committed before, during and after the arbitration that led to the $506 million
award. Specifically, the court found that the Statis falsely recorded certain transactions among
their businesses before the arbitration, relied on fraudulent financial statements before the
tribunal, and defrauded the Swedish courts during the proceedings initiated by Kazakhstan in
2014 to set aside the award. An appeal of the Belgian court decision is pending.

Kazakhstan says Lungu has “direct, material knowledge of facts about the Statis’ fraud schemes,”
and it says his testimony will be crucial in the various foreign legal proceedings.
The country says that since it originally deposed Lungu in 2019, bank records from Latvia have
emerged showing that the Statis conducted “extensive” money laundering schemes. Lungu may
also be able to shed additional light on the Statis’ deception of their external auditors, KPMG, that
led the firm to “withdraw” all of its audit reports for the Statis’ financial statements.

Kazakhstan claims that after the Statis raised millions of dollars from investors to finance their oil
and gas operations in the country, they allegedly defrauded those investors by misappropriating
hundreds of millions of dollars.

They then initiated arbitration against Kazakhstan to recover those amounts, Kazakhstan says,
eventually winning the $506 million arbitral award.

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