Black PR and Disinformation in the Stati case
Misleading their partners and noteholders
Defrauding the international tribunal and courts around the world
Forcing Kazakhstan to settle the dispute before their case collapses in court
Black PR — the practice of using dishonest and manipulative public relations tactics to besmirch businesses or political rivals — is a method used by numerous fraudsters against businesses and businesspersons to damage their reputations and spread disinformation to the public.
Over the years, the Statis and their co-conspirators have systematically published false information in the media and through press releases. There are numerous examples of false statements made to the media and dishonest press releases issued by the Statis. Some of the key lies propagated by the Statis in the press are described and rebutted in detail below.
Examples of Stati lies in the media
The Statis claim that the arbitral tribunal had already considered the fraud claims and discarded them.
Fact:
The arbitral tribunal was not aware of the fraud allegations at the time when it considered the case. As the English High Court has later determined, Kazakhstan did not even begin to uncover the fraud until after the arbitral award was issued in December 2013. Kazakhstan’s present fraud allegations are not referenced anywhere in the award.
The English High Court, in its June 2017 decision, conclusively determined that Kazakhstan did not even have access to the evidence of the fraud during the arbitration, much less present it to the arbitral tribunal:
“I am satisfied that the State did not have access before the Award to the evidence of the alleged fraud on which it now seeks to rely, and that the evidence of the alleged fraud could not with reasonable diligence have been discovered before the Award had the State used reasonable diligence.”
A vivid example of the critical evidence of fraud — which the Svea Court of Appeal (Swedish court) that considered Kazakhstan’s initial application to set aside/invalidate the arbitral award did not have and, therefore, was not aware of — is the Statis’ correspondence with KPMG, that shows that KMPG were misled by the Statis and which informs the Statis of KPMG’s decision to withdraw the reliability from its audit reports issued for the financial statements of the Statis’ companies for three consecutive years. The Swedish court did not have knowledge of the facts stated in the Statis correspondence with KPMG in those proceedings because the Statis violated their duty to tell the truth to such an extent that, per the expert opinion of Patrik Schöldsröm (now a judge on the Svea Court of Appeal):
“The Svea Court did not have a correct and truthful basis for its 2016 Decision.”
It is also misleading to say that the Swedish courts rejected Kazakhstan’s fraud case on the merits. As confirmed by the decision of Justice Knowles of the High Court of Justice of 27 June 2017:
“It is not accurate to suggest that the Swedish Court rejected all the evidence before it. In fact, with limited exceptions, the Swedish Court did not in the event form a view on the evidence and material before it”
No court in any of the many jurisdictions in which the Statis and their co-conspirators have attempted to enforce the award (Sweden, England, US, Belgium, Netherlands, Luxembourg, Italy) has ever analysed all available evidence on the fraud.
The Statis claim that the decision of the arbitral tribunal is final, binding, and non-appealable in all jurisdictions, and Kazakhstan has bent over backwards to avoid paying the arbitral award.
Fact:
Kazakhstan has exercised its legal right to challenge the multiple legal proceedings initiated by the Statis to have courts recognize and enforce an arbitral award that was obtained by persons who, the evidence now confirms, engaged in a massive fraud – both before, during and after the arbitration. This fraud was confirmed as early as June 2017 in the Justice Knowles decision and has been re-confirmed more recently in Artur Lungu’s sworn testimony, in KPMG’s independent decision to withdraw all its audit reports for the Statis’ financial statements, and in the multiple opinions offered by the independent experts now supporting Kazakhstan’s case in the courts.
In London, the Statis lost because of the fraud. In Luxembourg, confirmation of the award has been reversed over the Statis’ objections. In Belgium, a full appeal is now ongoing. In the Netherlands and Italy, cassation proceedings are pending. Even in Sweden, the Statis suffered a critical defeat in June 2020, when the Svea Court of Appeal overturned their improper efforts to attach the funds of the National Bank of Kazakhstan and ordered the Statis’ to pay millions of US dollars in legal costs.
The Statis claim that, in 2017, the English High Court used a low threshold to state that there is evidence of fraud, and this does not mean that fraud has been proven.
Fact:
Justice Knowles’ judgment was not that the fraud case was strong enough to be put to the court. In fact, through extensive witness evidence, documents and legal submissions, the case had already been put to the court in 2016/17. Justice Knowles’ 21-page judgment found that Kazakhstan’s fraud case was proven unless rebutted by the Statis. Justice Knowles concluded that the arbitral award was obtained by fraud but that the Statis had the opportunity to rebut that conclusion at the trial scheduled for October 2018, from which they promptly ran away.
Under English law, the High Court’s prima facie finding of fraud means that it is proven in a court of law to such an extent as to create a rebuttable presumption that the matter asserted is true. Justice Knowles ruled that:
“There is a prima facie case of fraud which is sufficient to overcome the extreme caution of the court when invited to set aside an award on the grounds of public policy.”
“[Counsel for the Statis] submits that ‘[I]t is absurd to suggest that the alleged fraud was a fraud on the Tribunal … or would have made a difference to the Tribunal’. I do not find it possible to accept that submission. In my judgment, there is the necessary strength of a prima facie case that the alleged fraud would have made a difference to the tribunal. And that, in asking the tribunal to rely on the KMG Indicative Bid in circumstances (concealed from the tribunal, as from the bidder) of the alleged fraud, there was a fraud on the tribunal.”
“I hold that the decision of the Swedish Court and the decision of the US Court do not create an estoppel, that the State is entitled to rely on the evidence obtained since the Award, and that there is a sufficient prima facie case that the Award was obtained by fraud.”
“It will do nothing for the integrity of arbitration as a process or its supervision by the Courts, or the New York Convention, or for the enforcement of arbitration awards in various countries, if the fraud allegations in the present case are not examined at a trial and decided on their merits, including the question of the effect of the fraud where found. The interests of justice require that examination.”
The Statis were allowed to dismiss their own enforcement case and avoid the fraud trial only after agreeing to three harsh conditions:
a)
Reversal of the prior order they obtained ex parte stating that the award was enforceable in England;
b)
Undertaking never again to attempt to enforce the Award in England; and
c)
Undertaking to pay the Kazakhstan’s substantial legal fees and expenses.
The Statis claim that Kazakhstan’s Ministry of Justice celebrates procedural wins as solid victories.
Fact:
After years of systematic lies by the Statis and their co-conspirators, the truth is being considered by courts, and the pendulum is swinging in Kazakhstan’s favour. The decisions that the Ministry of Justice makes public through press releases are, in fact, solid victories for Kazakhstan and not just “narrow and technical” procedural wins. The Ministry of Justice is publishing critical evidence of the Statis’ fraud which was not available to courts previously.
The Ministry of Justice, being a public entity, has a duty to report on certain developments to the wider public, in particular in light of the disinformation and black PR campaign organized and run by the Statis and Chapman parties.
New York financier Dan Chapman and his Argentem Creek group of companies claim that the Statis did not engage in any fraud, and the Republic supposedly invented the fraud allegations to avoid paying the Statis.
Fact:
The Ministry of Justice of Kazakhstan obtained evidence that proves the New York financier Dan Chapman and his Argentem Creek group of companies are knowingly participating in the long-running fraud perpetrated by the Statis.
Email communication between Chapman and his associates show that Chapman investigated the Statis years ago and has long established for himself that the Statis had been engaging in fraud in connection with their former Kazakh businesses. These emails show that Chapman knows the story he has been telling the courts, the media and the public is false.
