Baltic States – CIS, Financial Services, Investments, Raiders

Photo:http://almaty-city.narod.ru/pamyatniky.htm

Why do the foreign investors choose Kazakhstan?

The Republic of Kazakhstan is the 9th biggest country in the world by its territory. Investors are free from payment of corporate income tax and land tax for 10 years, as well as from property tax for 8 years from the moments investments are done. The country has joined the World Trade Organization (WTO).

Kazakhstan is the leader in attracting foreign investors among countries having no exit to the sea. Only in 2015, the amount of direct foreign investments made 15 billion $. From 2010 to 2014, twenty-nine leading world companies from the list of FORBES GLOBAL 2000 invested their money into Kazakh enterprises. Various public programs supporting private business and protecting foreign investments are active and available in Kazakhstan, besides, the republic foreign policy is aimed at establishing of a positive image.

Still, not all Kazakh officials take care of the country image and follow the letter of the law. Despite strict measures taken against corruption, according to the research made by an international organization Transparency International, Kazakhstan has been included into the list of countries defined by a high level of corruption and low a level of transparency.

According the Corruption Perception Index (CPI) for 2015, Kazakhstan took the 123rd place.

There are a number of investors, which have suffered from raider attacks made by public structures. One of such victims is a large company from the New Zealand - Warehouse Logistic Investment Group Limited. A representative of Warehouse Jurgita Pauraite is telling that when the owners of the New Zealand company planned to transfer a part of their business to the territory of the former USSR, their analysts choice was made in favour of Kazakhstan. This republic seemed to be the most attractive, perspective and safe among other CIS countries.

Warehouse received an attractive offer that looked profitable. A piece of land suitable for a Warehouse was offered for sale at an affordable price in Almaty - the largest megapolis of Kazakhstan. The initial owner of the land was the public company „Almatymetrokurylys” (“Metrostroi”). The true is, the land was being sold by a private company, which was established by “Almatymertokurylys”. The lawyers checked all relevant facts and details very carefully; the legitimacy of the suggested deal made no doubts, therefore it was completed. The New Zealand company started to implement their idea – building of a large modern logistics center in Almaty. The building was constructed, commissioned and put into operation. The business was successful. And then unpredicted actions from public structures began. They decided to take the real estate property away from the Company Warehause.

Chronicle of raider seizure of property of the WAREHOUSE LOGISTIC INVESTMENT GROUP LIMITED made by the public structures of Kazakhstan

→ In 2003 in Almaty the Akimat (the City Counsil) leases a land plot to the public company JSC “Almatymetrokurylys” in the city center

→ public company „Almatymetrokurylys” establishes, together with some natural persons, a private structure „Portal-Service LTD” and transfers the right of lease of public lands to that structure

→ 2007-2008 – “Portal-Service”, upon decision of the Akimat, buys a land plot from the city at its cadastral value, divides it and sells the land in parts at its commercial value (Kazakhstan partner Warehoues is among buyers )

→Warehause, together with partner, invests into the purchased land and building construction several million dollars. The building is commissioned.

→ 2011 → after building construction, other structural unit of Akimat (City Finance Administration) submits a claim against Akimat regarding acknowledgment of land sale deal to “Portal-Service” to be invalid and demands to return the right of property to the real estate Per se, the Akimat at court appeals against its own judgment and quickly loses the case to itself, even without letting the final buyers (investors) know about it.

→ courts of all instances acknowledge the transaction to be invalid and the land plot is returned for administration by “Almatymetrokurylys”. Besides, the owner of the property i.e. Warehause is not notified by anyone about trials and is not a party in the case.

→ after effectiveness of the court judgment, the Akimat returns the money for buyout of the land plot (over 1 million dollars) to “Portal-Service”, which cashes it immediately and terminates its activity – there is none by their registered address, the accounts are empty.  

→ investors stay without property and without money

Before the verdict is in

Currently, the New Zealand company is attempting to return its investments and defends its rights in the court, attracting lawyers, international instances and experts. In the future, there is planned a session about this case of the Supreme Court of the Republic of Kazakhstan. It has been already managed to cancel one court judgment, which acknowledged the repaired building as non-existing. And the land under this building is still de jure owned by „Almatymetrokurylys”. The former director of „Almatymetrokurylys” Murat Ukshebaev, in whos presence of the deal was made, has been convicted for embezzlement and frauds, and the head of financial department of Akimat in Almaty, Aiman Abdykadyrova who was in charge of “transaction clearness” has been dismissed. It is already the second year the country is trying to sell „Almatymetrokurylys” itself, which uses the disputable land plot.

Despite the fact that some officials, who took part in machinations, have been punished, the property of the company Warehause is still not returned. And it is too early to speak about termination of lawsuits for the benefit of the New Zealand company.

This incident has been made very public in foreign and Kazakhstan mass media. The newspapers «Vremya», «Express-K», “Vecherniye Almaty”, weekly newspaper “Argumenty i fakty Kazakhstan”, internet portal zakon.kz, etc contained articles about the procedure.

Reference: Kazakhstan as a country, undertakes to defend investors

According to the Code of Entrepreneurship of the Republic of Kazakhstan, an investor is to be provided with a public support of its investing activity.  The article of this code says: “An investor is given a full and absolute protection of rights and interests, which is ensured by the Constitution of the Republic of Kazakhstan, by the Code of Entrepreneurship and other normative legal acts of the Republic of Kazakhstan, as well as by the international agreements, ratified by the Republic of Kazakhstan. An investor is entitled to claim for a compensation for damage caused to him as a result of legal acts made by public authorities that do not correspond to the laws of the Republic of Kazakhstan, as well as by some illegal actions (inaction) of public officers of these authorities, in compliance with the civil legislation of the Republic of Kazakhstan”.

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