Clare Nuttall in Almaty -
BTA Bank is locked in a legal dispute over its Almaty headquarters as it tries to wrest control of the building from current owner Samal Properties. The outcome could have big consequences not only for the two companies, but also for the other occupants such as the British and US diplomatic missions, and even perhaps for the Kazakh property market as a whole.
A court decision on October 1 awarded the $70m building to BTA, but Samal has launched an appeal to have the decision overturned. Samal's managing director, Robert Williams, claims the decision by the Medeo District Court in favour of BTA was flawed, and is determined to fight for the building - an Almaty landmark that hosts not only BTA, but also the British embassy office and US consulate general, as well as the offices of several international firms including IT companies Cisco and Epson, and law firm Baker & McKenzie.
AlemBank, which merged with Turanbank in 1997 to form BTA, started building the Samal Towers business centre in the mid-1990s, but work was later halted when the bank found itself unable to pay Turkish construction company Fintrako, which was carrying out the project.
Fintrako and its parent company Uchgen Group later struck a deal, signed in 1998, under which the unfinished building was sold to KazCo, a Kazakhstan-based company set up by BTA employees. Under the agreement, KazCo was then to transfer the unfinished building to the charter capital of a newly formed company, Samal Properties. Fintrako, represented by Alara International, was given a stake in Samal Properties. The building was later completed with the help of a loan from the European Bank for Reconstruction and Development.
However, in September, BTA brought a civil claim against Samal Properties, saying the bank's former chairman, Yerzhan Tatishev, who was killed in a hunting accident in 2004, was not authorised to sign the agreement. On October 1, the court ruagreed, annulling the sale agreement and all subsequent agreements including the leases for the building's current tenants.
Williams says that his firm was not allowed to present evidence backing up its case during the hearing, and claims that many of the documents presented by BTA were photocopies not originals. He also says the date of the hearing was brought forward, giving Samal Properties just days to prepare. "This is highway robbery," Williams tells bne. "We have been operating peacefully and transparently in Kazakhstan for more than 10 years. Now our company is facing ruin if we lose the building."
A spokesperson for BTA said the bank was unable to comment on ongoing legal disputes.
Under Kazakh law, Samal Properties has two chances to appeal the original decision within the local court system. If these appeals fail, the court's decision will be enforced, although Samal Properties will still be able to contest it through the Supreme Court.
With BTA's lease on its offices in Samal Towers due to expire on November 30, Williams says he expects the appeal process take place quickly. "All we are asking for is a fair trial and a transparent hearing," he says. "But unless there is a miracle, we will lose these two appeals."
While Samal Properties stands to lose its main asset, the result of the appeal will also have significant consequences for BTA. At present the bank does not own its head office, an unusual situation, and should Samal Properties win the case, it is unlikely to want to keep BTA as a tenant. The Kazakh government, which is the majority shareholder in BTA through state holding company Samruk Kazyna, is in negotiations with Russia's Sberbank over a potential sale. Losing the building would damage the prospects of a deal with Sberbank or another buyer.
The issue is further complicated by Kazakh law stipulating that banks must use the buildings they own for banking activities, and cannot lease space to third parties. However, several international companies and the British and US diplomatic missions already have leases for office space at Samal Towers. The future of the current occupants of the building is unclear should it be taken over by BTA.
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