Kazakhstan Kagazy PLC
Kazakhstan Kagazy PLC: London’s Court of Appeal News

Kazakhstan Kagazy PLC  / Miscellaneous

02.04.2014 13:26

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London, 2 April 2014

London's Court of Appeal rejects appeal against £72m worldwide freezing
order, which allegedly involves the 'perfect fraud'

The Court of Appeal has this morning unanimously delivered its judgment in
a case involving the alleged theft of over US$150 million by Maksat Arip
and Baglan Zhunus, the previous directors and shareholders of London-listed
Kazakhstan Kagazy Plc (KK). The Court rejected Mr Arip's appeal against the
worldwide £72m freezing injunction initially granted by the Commercial
Court in August 2013.

The injunction will remain in place until the trial and judgment of KK's
US$150 million fraud claim against Mr Arip. His former co-director and
shareholder, Mr Zhunus, has previously given the Court an undertaking in
lieu of the injunction against him.  The defendants deny any wrongdoing.

The Court of Appeal refused permission for Mr Arip to appeal this ruling to
the Supreme Court.

The injunction was first obtained in August 2013, after KK discovered that
sums had been channelled into corporate vehicles connected to the
defendants. In November 2013, His Honour Judge Mackie QC in the Commercial
Court dismissed Mr Arip's application to discharge the Freezing Injunction,
a decision which Mr Arip then appealed to the Court of Appeal.

The Appeal judges commented that Mr Arip 'accepts before us that there is a
good arguable case that he defrauded Kazakhstan Kagazy in the manner
alleged by them', with his only disclosed defence being based on
Kazakhstan's rules of its three-year limitation period.

Lord Justice Elias observed that 'it is inherently unattractive for the
Appellant to submit that the fraud should have been manifestly obvious and
yet at the same time to assert that he has a complete defence to the
allegation.'

Lord Justice Jackson expressed unease at the prospect that the defendants,
if they are ultimately successful in defeating the claim on the basis of a
limitation argument, 'might then have achieved the 'perfect' fraud. The
money which has been stolen (over US$100 million) will become
irrecoverable'.

He also observed that the principal losers by the Appellant's alleged fraud
are the creditors of, and investors in, KK and it would be appropriate for
them to take a close interest in this case. The principal creditors of KK
are two Kazakhstan State-owned banks: Alliance Bank and Development Bank of
Kazakhstan. KK's shareholders include the European Bank for Reconstruction
and Development, which has its headquarters in the City of London.

A spokesperson from Kazakhstan Kagazy said:
'We are pleased that the Court of Appeal judges were unanimous in
maintaining the freezing order against Mr Arip in the face of his
challenge.

'The Kazakhstan Kagazy board believes that this legal action is vital in
defending the reputation of Kazakh businesses and the efforts of their
hard-working employees.

'We will continue to pursue this claim with vigour to prove the Group's
allegations and will take all available steps to recoup the millions which
the board believes have been stolen from the Kazakhstan Kagazy Group.'

Sarosh Zaiwalla, Senior Partner at Zaiwalla & Co, Kazakhstan Kagazy's
solicitors said:
'The English courts have, at every stage, consistently rejected Mr Arip's
attempts to overturn the freezing order. Once again, the Commercial Court
and the Court of Appeal have proved themselves as beacons of justice. That
is why people from all over the world treat the Commercial Court as a truly
International Court to resolve their disputes.

'We are now focused on moving forward to the fraud trial.' 

--- ENDS ---

For further information, contact:

Neil Cameron, +44 (0)207 861 2497 or ncameron@bell-pottinger.com 

Stuart Leach, +44 (0) 207 861 2848 or sleach@bell-pottinger.com

Note to Editors:

The Kazakhstan Kagazy Group is one of the leading industrial holdings in
Kazakhstan. Kazakhstan Kagazy PLC is listed on the London Stock Exchange.

Through its Kagazy Recycling subsidiary, the Kazakhstan Kagazy Group is the
largest paper packaging and recycling group in Kazakhstan and Central Asia.
The Group also owns industrial real estate through another of its
subsidiaries, PEAK.




Contact:
For further information, contact:

Neil Cameron, +44 (0)207 861 2497 or ncameron@bell-pottinger.com 

Stuart Leach, +44 (0) 207 861 2848 or sleach@bell-pottinger.com



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Language:           English
Company:            Kazakhstan Kagazy PLC
                    33-37 Athol Street
                    IM1 1LB Douglas
                    Isle of Man
Phone:              +7-727-244-87-87
Fax:                +7-727-244-87-82
E-mail:             ir@kagazy.kz
Internet:           www.kazakhstankagazy.com
ISIN:               US48667M2035
Listed:             London
Category Code:      MSC
TIDM:               KAG
Sequence Number:    1967
Time of Receipt:    Apr 02, 2014 13:26:07
 
End of Announcement                       EquityStory.RS, LLC News-Service
 
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