Baltic States – CIS, Banks, Crime, EU – CIS, Financial Services, Legislation

Kyrgyzstan crucially violated the fundamental principles of criminal law. The judgment therefore will not be recognised and will not be enforced in the Republic of Latvia, the European Union and other civilized countries.

As the Ministry of Foreign Affairs of the Republic of Latvia has previously stated,  "(..) we must express our concern about the gross violations of the Kyrgyz Republic's criminal procedural norms by certain members of the country's law enforcement agencies in this case. In this connection, the Republic of Latvia will reserve its right to undertake an adequate response.

“We firmly believe that the court made its judgment in revenge for the unfavourable international arbitration award that Kyrgyzstan received and whereby the Kyrgyz Government was ordered to pay a Latvian citizen Valeri Belokon US$16.5 million as compensation. The judgment made by Kyrgyz court does not relieve the Kyrgyz Government whatsoever from paying the compensation ordered by the Arbitration Tribunal in favour of Valeri Belokon. But the judgment enables the Kyrgyz Government to explain and interpret its loss suffered in the international arbitration in the context of the country’s internal policy.

We would like to remind the following fact. In 2010, after the coup (a forcible overthrow of the government) in Kyrgyzstan, the new political regime actually expropriated Manas Bank owned by Valeri Belokon. V.Belokon holds negotiations with the new Government and makes multiple attempts to recover his investments under the Agreement between the Government of the Republic of Latvia and the Government of the Kyrgyz Republic for the Promotion and Protection of Investments. The Ministry of Foreign Affairs of the Republic of Latvia supports V. Belokon’s stance and calls on the Kyrgyz Government to respect the obligations arising from international treaties”, BC was informed from the Belokon Holdings.

On 23 November 2010, V.Belokon warns Kyrgyzstan of his intention to initiate international arbitration proceedings. In response (after 2 months have expired), on 19 January 2011, Kyrgyz law enforcement authorities issue an indictment (formal accusation) against the former executives of Manas Bank of which they become aware from media publications.

Although already in April 2011, the Kyrgyz Financial Intelligence Service (FIS) made an official statement whereby it officially recognized that Manas Bank had not committed any violations and there were no grounds to impose sanctions on the bank, the Kyrgyz Government urged to take recourse to criminal measures in revenge for loss suffered in the international arbitration.

The Arbitration Tribunal confirmed that the Kyrgyz Government expropriated Manas Bank owned by V.Belokon illegally and without any legitimate grounds to do so. As for the evidence submitted by Kyrgyzstan in international arbitration, the Arbitration Tribunal described it as merely anecdotal evidence. In arbitration award it is said that the award in favour of Mr Belokon itself restores the reputation harm made to him.

The Kyrgyz Government still continues to violate the Agreement between the Government of the Republic of Latvia and the Government of the Kyrgyz Republic for the Promotion and Protection of Investments signed in 2008. Under the Agreement, all investment-related disputes should be resolved amicably and within maximally short timeframes, and court rulings are binding upon the parties, mandatory and enforceable.

According to the latest Corruption Perceptions Index (CPI) published by Transparency International, Kyrgyzstan’s index remains unchangeably high: the score is 28, and the rank ranges between 123 and 129, together with jurisdictions such as Gambia and Guatemala (the Index covers perceptions of public sector corruption in 168 countries). 

According to the 2015 U.S. State Department’s Report on Kyrgyzstan investment climate, “since most of these disputes are between foreign investors and the Kyrgyz Government, local courts serve as an executor of the authorities’ political agenda”. Amnesty International also repeatedly pointed out serious breaches committed in Kyrgyzstan while investigating crimes (criminal justice issues are too politicized).