Oxus and asset grab

By bne IntelliNews July 26, 2011

Clare Nuttall in Almaty -

Oxus Gold, one of the longest-standing foreign investors in Uzbekistan, has accused the Uzbek government of trying to seize its assets and orchestrating a smear campaign to force it out of the market. A statement from the firm's legal counsel, Amsterdam & Peroff, alleges that Oxus has been subjected to "expropriatory, unlawful, unfair and discriminatory treatment," resulting in losses of at least $400m.

Oxus has effectively been unable to take part in managing the Amantayau Goldfields joint venture, in which it holds a 50% stake alongside Goskomgeology and Navoi Mining & Metallurgical Combinat, both of which are owned by the Uzbek state, since a punitive tax audit was launched earlier this year and employees of the venture have been forced under threat of arrest to sign secrecy agreements that bar them from contact with Oxus, the firm's lawyers claim. Then on June 28, Goskomgeology accused Oxus of failing to meeting technology and environmental standards, and putting lives at risk at the venture.

Rebuffed

Oxus has urged the Uzbek government to take part in good faith settlement discussions under the international treaty between Uzbekistan and the UK. In February, it also offered to sell its stake in Amantayau, but received no response from the government. "Instead, Goskomgeology and the NMMC have focused inexorably on involuntary liquidation for AGF," Oxus wrote in a formal letter to the government dated July 6.

The company is also seeking the release of its former chief technologist Said Ashurov, who is being tried in a closed military court on espionage charges. Ashurov, a Tajik national, is suffering from hepatitis and has been denied medical treatment. "Mr Ashurov faces the most serious charges," says Amsterdam & Peroff founding partner Robert Amsterdam. "

AIM-listed Oxus has been present in Uzbekistan since the late 1990s. It remains the only publicly listed gold mining company with operations in Uzbekistan. Amantayau is located in the Kyzlykum region, 40 kilometres from Muruntau, the world's largest open pit gold mine. According to Amsterdam, "Oxus has faced a series of expropriatory acts in the years it has been in Uzbekistan, but nothing as severe as this. The present situation is as bad as one can imagine."

Oxus is not the only international investor to come under pressure recently. "This is anything but isolated," Amsterdam tells bne. "There have been recent actions against German, Korean and Turkish companies. I think of Uzbekistan as the Ponzi scheme of foreign investment - the government courts countries, people are encouraged to invest, then later they have to pull out."

In addition to working in the framework of the international treaty between Uzbekistan and the UK, Oxus plans to take action at a political level. The company plans to lobby the governments of Germany and other countries that are trying to develop relations with Uzbekistan, both to try and recover the company's assets in Uzbekistan and to secure Ashurov's release.

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