The public foundation “Elge Qaitaru” demands an investigation on A. Klebanov and S. Kahn case

Mr O.A. Bektenov, Prime Minister of the Republic of Kazakhstan, Chairman of the Asset Recovery Commission.

To the Prosecutor General of the Republic of Kazakhstan Mr B.N. Asylov.

To the Chairman of the Agency of the Republic of Kazakhstan on coun­ter­ac­tion to cor­rup­tion Mr Zhumagali A.J.

Mr D.M. Malakhov, Chairman of the Agency of the Republic of Kazakhstan on Financial Monitoring.

Mr N.M. Suindikov, Chairman of the Asset Recovery Committee of the General Prosecutor’s Office of the Republic of Kazakhstan.

The pub­lic foun­da­tion “Elge Qaitaru” is alarmed by the many acci­dents in the heat and elec­tric­i­ty sup­ply sec­tor and shares the con­cern of the cit­i­zens of the coun­try that acci­dents in this sec­tor have become a reg­u­lar occurrence.

Also of con­cern is the sub­stan­tial increase in reg­u­lat­ed tar­iffs for all types of goods and ser­vices envis­aged in the National Development Plan until 2029.

And the desire of the Government of the Republic to use KZT1.5 tril­lion of pen­sion sav­ings to mod­ernise infra­struc­ture with­out analysing the effec­tive use of cur­rent cash flows in the indus­try seems questionable.

For exam­ple, between 30 November 2020 and 4 November 2022, Pavlodarenergo JSC, a mem­ber of the CAEC group, bought 100% of the stake in CAEC Green Energy LLP in three stages for USD 232 mil­lion, indi­cat­ing a sig­nif­i­cant over­pay­ment for this asset.

The total installed capac­i­ty of TsATEC Green Energy LLP is 100 MW, thus, these assets were pur­chased at the cost of one MW of installed capac­i­ty of USD 2.32 mil­lion for the bal­ance sheet of CAEC JSC

As the analy­sis shows, the cost of con­struc­tion of new plants built in the CIS coun­tries does not exceed USD 1.2–1.5 mil­lion per 1MW of installed capacity.

In addi­tion, Pavlodarenergo JSC pur­chased in sev­er­al stages 47.34% of 100% stake in TsATEK Green Energy LLP from Circle Maritime Invest JSC owned by Sergey Kan and Alexander Klebanov’s son Yakov for $159,788,118.2. I.e. Messrs Kan and Klebanov bought from them­selves at a triple price and at the same time the price of 1MW has already cost 3.37 mil­lion US dollars.

To car­ry out this dubi­ous trans­ac­tion, Pavlodarenergo JSC and CAEC JSC group attract­ed cred­it funds, including:

- in 2021 SB Sberbank for the total amount of 14,491,493 thou­sand Tenge

- in 2022 Halyk Bank of Kazakhstan JSC for the total amount of KZT 47,775,497 thousand;

- On 10 January 2022, Pavlodarenergo JSC issued KZT75 bil­lion bonds matur­ing on 10 January 2030.

On 14 January 2022, TsATEK Green Energy LLP received a long-term loan from VTB Bank (Europe) SE in the amount of KZT 73,981,723 thou­sand. At the expense of the loan received “CATEC Green Energy” LLP pur­chased bonds of “Pavlodarenergo” JSC in the amount of 41,203,125 thou­sand tenge, at the expense of which the loans of VTB Bank (Europe) SE were par­tial­ly repaid.

These trans­ac­tions result­ed in a sharp increase in Pavlodarenergo JSC’s total finan­cial lia­bil­i­ties from KZT 43.9 bil­lion in 2019 to KZT 199 bil­lion in 2022 and an increase in finan­cial expens­es from KZT 3.6 bil­lion in 2019 to KZT 29.4 bil­lion in 2022.

These facts explain the rea­sons for the acci­dent at Ekibastuz CHPP, part of Pavlodarenergo JSC, in November 2022 due to lack of funds for cap­i­tal and cur­rent repairs and not at all due to low tariffs.

In addi­tion, we con­sid­er as a gross vio­la­tion of the leg­is­la­tion and prin­ci­ples of fair com­pe­ti­tion the estab­lish­ment by a sep­a­rate res­o­lu­tion of the Government of the Republic of Kazakhstan dat­ed 19 March 2015 No. 148 of a spe­cial tar­iff for LLP (CATEK Green Energy) for the sale of elec­tric­i­ty in the amount of 59.7 tenge per 1 KWh with annu­al index­a­tion. Other sim­i­lar sta­tions sell their prod­ucts in the range of 11.88 — 18.5 tenge per 1 KWh.

As a result of this unwar­rant­ed priv­i­lege, CATEC Green Energy LLP is high­ly prof­itable, as the Company’s 2021 Annual Report shows EBITDA mar­gins (a rough ana­logue to tra­di­tion­al Profitability) for 2020 and 2021 to be 84.91% and 89.72%, respectively.

(https://caepco.kz/assets/files/go/final-go-2021-caek-pdf.io.pdf )

Given the above, we request that you

- to con­duct an audit of the finan­cial and eco­nom­ic activ­i­ties of CAEC JSC;

— ver­i­fy whether there is a causal link between the acqui­si­tion of Pavlodarenergo JSC’s 100% inter­est in TsATEK Green Energy LLP, which led to the diver­sion of huge funds from the buy­er and a sharp increase in its debt load, and acci­dents at Ekibastuz CHPP, which is part of Pavlodarenergo JSC;

- con­sid­er­ing that one of the sell­ers of the stake in CATEC Green Energy LLP is a non-res­i­dent com­pa­ny AOM Metal B.V. (Netherlands), to check the pos­si­bil­i­ty of ille­gal with­draw­al of assets out­side the Republic of Kazakhstan;

- In con­nec­tion with the avail­able infor­ma­tion that Mr A. Klebanov has not been in the coun­try for a long time and that Mr S. Kahn and Mr A. Klebanov are involved in legal pro­ceed­ings in the USA. To con­sid­er the pos­si­bil­i­ty of return­ing Pavlodarenergo JSC and Sevkazenergo JSC to the own­er­ship of the Republic of Kazakhstan.;

- to check the cir­cum­stances of the adop­tion of the Resolution of the Government of the Republic of Kazakhstan dat­ed 19 March 2015 No. 148 for vio­la­tion of the require­ments of anti-cor­rup­tion leg­is­la­tion of the Republic of Kazakhstan and take mea­sures to can­cel this resolution;

- Considering the state­ment of Mr S. Kahn’s state­ment about send­ing 26 bil­lion tenge, half of which are pub­lic funds, to mod­ernise the facil­i­ties of their pri­vate com­pa­ny. We ask you to con­sid­er the expe­di­en­cy, rea­son­able­ness and legal­i­ty of such expen­di­ture of peo­ple’s mon­ey and take mea­sures to recov­er it from the state.

In case of estab­lish­ment of facts of vio­la­tion of the norms of the cur­rent leg­is­la­tion and dam­age to the legit­i­mate inter­ests of cit­i­zens, legal enti­ties and the state. To bring to respon­si­bil­i­ty those respon­si­ble and take mea­sures to com­pen­sate for the damage.

App:

1. Synopsis of the finan­cial posi­tion of the CATEC/CAEC Group
2. Resolution of the Government of the Republic of Kazakhstan dat­ed 19 March 2015 No. 148

Director of the Public Foundation “Elge Qaitaru” O. Yerzhanov