Can an influential investor, when leaving Kazakhstan, strike back at the country in response?
This is pondered by the renowned financier Rasul Rysmambetov. Literally:
«The departure of ArcelorMittal must be properly documented. Without proper documentation, Mittal can appeal internationally that he was forcibly removed from the enterprise. To avoid this, I would suggest (since we are a new Kazakhstan, not the one from 27 years ago that signed an agreement with Mittal) publishing the original contract. Errors, like those with Anatoly Stati, should not be allowed. For example, if Mittal demands payment from us, he can freeze our National Fund through lawsuits in international courts.
To properly handle the exit of ArcelorMittal from Kazakhstan, it is necessary to understand how the initial deal was arranged and what conditions were outlined there. It is quite possible that the contract included a waiver of any claims from Kazakhstan. It may turn out that the enterprise has debt obligations that the state is unaware of. It’s possible that the equipment is more worn out than official reports suggest. Recent major accidents and worker fatalities might attest to this.
The ‘old Kazakhstan’ had a bad practice of shadow deals that we only learned about years later. It would be a good step to publish the first contract with ArcelorMittal from 27 years ago. We would learn about the investor’s commitments, how much they pledged to invest, and whether they received any tax breaks. It’s possible that ArcelorMittal was siphoning off part of the profits to Dubai at a reduced price. Essentially, they were exporting products to their trading house in Dubai at a lower price and selling them there at market prices, thus evading taxes in Kazakhstan.
How should an inconvenient investor be escorted out? Before transferring the enterprise to the state’s balance or another investor, a comprehensive inspection is required: technological, financial, tax, and others. It is also preferable to involve international players like the ‘Big 4’ to have substantial arguments if there is a need to litigate with Lakshmi Mittal.
It’s crucial to understand where this $3 billion sum comes from. Where did the $1.3 billion that the prime minister mentioned, required upfront, come from? I can assume that the $1.3 billion is a buyout amount. Two months ago, the president said that we need to find another investor, but in these two months, it was virtually impossible to conduct a full inspection of the enterprise. So it’s unclear where this $1.3 billion comes from.
Does this mean that Mittal invested a billion into the enterprise every year? And what about the $3 billion counted by the government? Is that the amount Mittal was supposed to invest and left to the government? There are more questions than answers. If the $1.3 billion that the prime minister mentioned is needed now and there is no potential investor yet, these funds may be taken from the National Fund.
The problem is that if the government improperly buys this asset from Mittal now and lawsuits start tomorrow, who will we hold accountable? Typically, our prime ministers and ministers do not bear responsibility for their mistakes made while they held their positions, and now they are working in other roles.
When selecting the next owner for the Karaganda enterprise, the investor’s accident rate and technological advancement should be the primary focus. Kazakhstan needs a company with the lowest accident rate and the most technologically advanced. The investor must responsibly invest and introduce new products, rather than continue using old equipment.»
