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UPDATE 1-Kazakhstan broadens probe after uranium arrest
June 2, 2009 / 2:11 PM / 8 years ago

UPDATE 1-Kazakhstan broadens probe after uranium arrest

* Kazakhstan to review asset sales by state firms

* Move follows arrest of key uranium figure

By Olzhas Auyezov and Maria Golovnina

ALMATY, June 2 (Reuters) - Kazakhstan said on Tuesday it will review all asset sales in strategic sectors after accusing a key metals industry official of stealing some of the country’s most lucrative uranium deposits.

The uranium probe in Kazakhstan, a former Soviet republic lying on a fifth of the world’s uranium reserves, comes at a time of higher demand for the radioactive metal due to the world’s renewed interest in nuclear energy.

It also highlights deep-seated divisions among the ruling class in an oil-rich country where President Nursultan Nazarbayev, in power for 20 years, has no clear successor.

Samruk-Kazyna, the state welfare fund controlling big state companies including Kazatomprom, said in a statement it will review all asset sales in sectors ranging from oil and gas to banks and telecoms.

The review will include cases where joint ventures were created or assets were transferred to establish new companies.

Foreign investors often operate their businesses via joint ventures with state companies in Kazakhstan, which has attracted more than $50 billion in foreign investment since independence.

Samruk said it will also audit the procurement process at state oil and gas company KazMunaiGas as well as the state railways company, both of which are under its control.

The Samruk announcement follows the arrest of Mukhtar Dzhakishev, former head of state uranium company Kazatomprom who was accused this week by the KNB security service of illegally gaining control over 60 percent of Kazakh uranium riches.

The KNB has quoted Dzhakishev as denying the charge. It said he had transferred ownership in uranium mines worth tens of billions of dollars to a number of offshore firms owned by him.

The case is a worry to foreign investors who have courted Kazakhstan and invested actively in its fields in recent years as uranium demand continued to grow in line with rising requirements for nuclear power to replace fossil fuels.

Japanese companies doing business in Kazakhstan said they were closely watching the case. Shares in Canada’s Uranium One, another uranium investor in Kazakhstan, have fallen sharply since news of Dzhakishev’s arrest. It said it was cooperating with the investigation.

The probe also has caused a stir in Kazakhstan, a tightly controlled nation where public debate is usually muted and where state media keeps a firm grip on controversial news items.

The opposition has publicly joined forces with top business leaders to express support for Dzhakishev and used open letters to appeal for justice.

In a statement on Tuesday, the opposition Azat party said the case will hurt “trust in the predictability and stability of Kazakh policy in the nuclear sector.” A headline in the state Kazakhstan Pravda daily said: “Uranium king loses his crown”.

Writing by Maria Golovnina; Editing by Keiron Henderson

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