Kyrgyz-Owned Shares in Centerra Gold Frizzed by a Canadian Court
Thursday 18 October 2012
TORONTO (The Globe and Mail) – Canadian court froze a part of Centerra Gold Inc shares and its dividend payments, owned by Kyrgyzstan, The Globe and Mail reported.
- Pinara Hotel in Bishkek
Pinara Hotel is located close to city center. It has 15 floors, 140 rooms and 12 suites.
Kyrgyzstan works on two litigations on the purpose of Pinara Hotal. In one side, the founder of the hotel, the Asia Universal Bank (AUB) claimed for more than $60 million. In its side, The Turkish firm Sistem Muhendislik Insaat Sanayi ve Ticaret A.S. filed a case against Kyrgyzstan government on raider seizure of “Ak-Keme” (“Pinara”) hotel. The company demanded $12 million from Kyrgyzstan. AUB was nationalized in June and declared technically insolvent. Mikhail Nadel, the bank’s former chairman, is charged with a variety of financial crimes. He is currently in London and contemplating moving to Israel, according to media reports.
According to The Globe and Mail, in September 2012, an Ontario Superior Court judge upheld freeze orders on four million of Centerra’s shares and on millions in dividend payments owed to the company’s state-owned Kyrgyz shareholder.
The case is related to disputes between the government of Kyrgyzstan and a Turkish firm, Sistem Muhendislik Insaat Sanayi Ve Ticaret Anonim Sirketi, which built Pinara hotel in Bishkek and owned it for a period of time.
The Turkish firm claims Kyrgyzstan US $8.5 million plus costs and interest for the alleged takeover of the hotel on a 2009, as ruled in an international arbitration panel in Geneva. To recover the debt, Sistem wants to get shares detained by Kyrgyzstan in Centerra Gold. Centerra has contested the claim to hand over shares and dividend payments to Sistem, arguing that the assets were not directly owned by the Kyrgyz government.
Centerra has been denied court standing in the dispute. In September 2012, an Ontario Superior Court judge reaffirmed an earlier order of freezing 4 million of Kyrgyzaltyn’s 77 million shares in Centerra and forcing Centerra to put about $8-million in owed and future dividends in trust.
Lawyers acting for Kyrgyzstan in Toronto have appealed a preliminary ruling on jurisdiction to the Ontario Court of Appeal. The outcome, says John Judge, Centerra’s lawyer on the matter with Stikeman Elliott LLP, could have implications for other Canadian resource companies doing business around the world. “It’s a precedent and that’s why it’s very important that the courts here carefully look at issues of jurisdiction,” Mr. Judge said in an interview.