QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| ALLIANCE BANK JSC
(a company incorporated in accordance with the laws of Kazakhstan)
|- and -
|(1) BAGLAN ABDULLAYEVICH ZHUNUS
(formerly BAGLAN ABDULLAYEVICH ZHUNUSOV)
(2) MAKSAT ASKARULY ARIP
(3) DAVID STURT
M. Howard QC, A. Haydon and Miss A. Dilnott (instructed by Cleary Gottlieb Steen & Hamilton LLP) for the 2nd defendant
Hearing dates: 10th and 11th March 2015
Crown Copyright ©
Mr Justice Cooke:
i) gave the Claimant ("Alliance") permission to serve a Claim Form and Particulars of Claim out of the jurisdiction (by alternative means) on the Second Defendant ("Mr Arip"); and
ii) made a worldwide Freezing Order against Mr Arip in respect of assets up to the value of £206 million ("the Freezing Order").
i) An application by Alliance for a continuation of the Freezing Order made by Flaux J on 14 November 2014 until trial or further order.
ii) Applications by Mr Arip:a) To discharge the Freezing Order on the grounds that (i) Alliance does not have a good arguable case against him and (ii) there were material non-disclosures at the without notice hearing on 14 November 2014.b) To set aside service of the Claim Form on the grounds that there is no serious issue to be tried and that there were material non-disclosures at the without notice hearing on 14th November 2014.
"1. Between 2006 and 2007 the Claimant ("Alliance Bank") lent the equivalent of approximately US$222,000,000 to Simons Holding BV, Argentan S.A., Barnard Commercial S.A. ("the Original Borrowers") in Kazakhstan to permit them to invest in, among other things, various oil companies ("the Original Loans"). The Original Loans were secured by, amongst other security, pledges in the shares in two of the oil companies, namely KNG-Dobycha LLC and DinyelNeft LLC ("the Original Pledges").
2. In about October 2008 the Defendants persuade Alliance Bank that the Original Loans should be replaced by new loans [the Replacement Loans] to Bolzhal Limited LLP, Commerce Business Centre Limited LLP, Caspian Minerals LLP and Holding Invest LLP ("the replacement Borrowers") and that the amount lend should be increased to the equivalent of approximately US$295,000,000 representing among other things, that the Replacement Borrowers were more reliable counterparties. The Replacement Borrowers were owned or controlled by the Defendants and/or were affiliated with them.
3. Under the terms of the Replacement Loans the Replacement Borrowers were to provide pledges of the shares in and assets of KNG-Dobycha LLC and DinyelNeft LLC, which were by then indirectly owned by the Replacement Borrowers. Alliance Bank released the Original Borrowers from their obligations under the Original Pledges.
4. The Replacement Borrowers drew down all of the loan monies. However, they did not provide the security agreed. Instead, the Defendants persuade Alliance Bank to accept as security for the Replacement Loans pledges of shares in OmskGeoTEK LLP, SibGeoTEK LLP and SibirGeoTEK LLP ("the GeoTEK companies") representing that these shares were more valuable than the shares in KNG-Dobycha LLC and DinyelNeft LLC.
5. At the same time the Defendants procured that KNG-Dobycha LLC and DinyelNeft LLC should be transferred to subsidiaries of a company which became known as Exillon Energy plc ("Exillon"). The Defendants were shareholders in Exillon. … In December 2009 new shares in Exillon were the subject of an IPO on the London Stock Exchange which valued the company at about £186 million. That value reflected the value of its interest in KNG-Dobycha LLC DinyelNeft LLC. …
6. None of the money lent under the Replacement Loans has been repaid to Alliance Bank. The Replacement Borrowers are insolvent. The shares in the GeoTEK companies are worthless.
7. The Defendants conspired to deprive Alliance Bank of the valuable security which it held over the shares in KNG-Dobycha LLC and DinyelNeft LLC and to obtain the value of those companies for themselves."
The allegations in the Particulars of Claim and the relevant facts relied on by Alliance
i) Caspian agreed to provide security for its loan in the shape of KNG-D shares.
ii) CBC and Bolzhal, by article 3.5 of the loan agreements agreed not to alienate assets held by them without the consent of Alliance. Those assets included, as appears from the following paragraph of this judgment, the 50% shareholding in KNG-D and the 100% shareholdings in DinyelNeft.
iii) Security was to be provided within a period of 1 month by all the Borrowers.
"Within eight months from the date of signing of this agreement, the Borrower shall provide assets for the pledge in the form of shares of the companies and fixed assets, the value of which covers the obligations of the Borrower under this agreement in full unless a different value is determined by agreement between the parties." (In translation).
By this amendment, therefore, it appears that the obligations of Caspian to provide KNG-D shares as security and on CBC to provide DinyelNeft shares as security were superseded. This, in Alliance's submission, was the result of Mr Arip's collusion with employees of Alliance who were acting in fraud of their employer. It is to be inferred, it is said, that this took place at the behest of the Seisembayev brothers in conjunction with Mr Arip as loans on such terms could not be in the best interests of Alliance.
The allegations of wrong doing under the laws of Kazakhstan
"50 (1) In exercising their civil rights to control or influence the actions of the Replacement Borrowers with the purpose of freeing the shares in DinyelNeft and KNG-D and the fixed assets of those companies from the pledge to Alliance to which they were subject or should have been subject, the Defendants intentionally violated the rights and lawful interests of Alliance in breach of the norms set out in Article 8.3.
(2) In their dealings with Alliance, they did not act in good faith, reasonably and justly, and/or they did not comply with requirements imposed by law, and/or the moral principles of society, and/or business ethics in that:
(a) at all material times, they intended to procure their for their own benefit and at the expense of Alliance the interests in and fixed assets of DinyelNeft and KNG-D that were or should have been pledged to Alliance;
(b) they never intended that the money advanced under Replacement Loans should be used for the agreed purpose or any legitimate purpose, but instead intended that it be used to repay the Barnard Loan, the Argentan Loan and part of the Simons Holding Loan in order to provide a basis for the request that Alliance should release the shares in DinyelNeft and KNG-D from the pledges to which they were subject, so that the valuable assets of those companies could be used to support the IPO;
(c) by procuring that the Replacement Borrowers should apply to Alliance for the Replacement Loans, the Defendants represented, expressly or impliedly, that it was their intention and that of the Replacement Borrowers that the monies loaned should be repaid in accordance with the terms of the relevant loan agreements; that representation was untrue because neither the Defendants nor Replacement Borrowers intended that the Replacement Loans should be repaid in accordance with their terms or at all;
(d) by procuring that the Replacement Borrowers should offer the security described in paragraph 19 above in support of their borrowing, the Defendants represented, expressly or impliedly, that it was their intention that the Replacement Borrowers should provide that security; that representation was untrue, because the Defendants never intended that the proffered security should be provided;
(e) Mr Arip represented to Alliance, untruthfully, that DinyelNeft and KNG-D did not constitute good security for the Replacement Loans and that it should, instead, take the Replacement Security.
In the premises, the Defendants acted in breach of the norms set out in Article 8.4.
(3) For the same reasons, the Defendants intentionally caused harm to Alliance by procuring that the Replacement Borrowers should use their rights under the Replacement Loan agreements for a purpose other than that intended and in order to further their plot to remove the encumbrance over the shares in and/or assets of KNG-D and DinyelNeft. In the premises, the Defendants acted in breach of the norms set out in Article 8.5.
(4) The Defendants procured that the Replacement Borrowers should breach their contractual obligations to Alliance in that:
(a) they did not use the loan monies for their stated purpose (article 3.1.1);
(b) they failed to provide the security which they were required to provide within one month (articles 2.6 and 3.6), or at all;
(c) they disposed of their assets without the consent of Alliance (article 3.5);
(i) Bolzhal and Commerce Business Centre sold their indirect interests in DinyelNeft to Diamondbridge Limited and Lanach Limited without first obtaining the consent of Alliance; and
(ii) Caspian Minerals procured that Kausar Overseas should sell its 50% shareholding in KNG-D to Tredall knowing and intending that Tredall should (in accordance with the Memorandum of Understanding) sell on those shares to the IPO Vehicle or to one of its subsidiaries (in the event Vitalaction Limited), without obtaining the consent of Alliance, although Caspian Minerals obtained Alliance's consent to its proposed sale to Tredall (which was its parent), it did so without disclosing the planned second sale, thus vitiating Alliance's consent to the first one and having the result that article 3.5 of its Loan Agreement was breached.
The Defendants therefore caused the Replacement Borrowers to violate Article 272. That action of the Defendants was an action which breached the norms set out in articles 8.4 and/or 8.5.
(5) The Defendants procured that the Replacement Borrowers should apply for the Replacement Loans knowing and intending that those loans would be granted in breach of Alliance's credit policy because the applications would [be] treated as "shareholder related" and would therefore subjected to no serious credit investigation. Along with those who assisted them inside Alliance, the Defendants therefore cause Alliance to violate Article 34 of the Law on Banks. That action of the Defendants was an action which breached the legal norms set out in articles 8.4 and/or 8.5.
(6) The Defendants procured that the Replacement Loans should be made on an unsecured basis to borrowers who were neither reliable or of high credit quality. Instead the Replacement Borrowers were no-trading shell companies which were, apart from their shareholdings in KNG-D and DinyelNeft, of no substance; further or alternatively the amounts lent exceeded the average net asset value of each of the Replacement Borrowers in the period between the beginning of their accounting years and the date upon which the loans were made. Along with those who assisted them inside Alliance, the Defendants therefore caused Alliance to violate Article 35 of the Law on Banks. That action of the Defendants was an action which breached the norms reflected in articles 8.4 and/or 8.5."
The question of enforceability of the pledges over the GeoTEK shares
"The client hereby retains the Attorney to render legal assistance before October 9, 2009, and the Attorney shall (1) prepare the legal opinion (memorandum) containing the description of the procedure regulating the order of registration of a contract of pledge of a 60% share in the LLC charter capital, and legal expertise of pledge contracts the forms of which were provided by the Client regarding their validity and correspondence with the legislation of the Russian Federation, (2) register the contract of pledge of a 60% share in the charter capital of with LLC OmskGeotek, LLC SibirGeotek, LLC SibGeotek, (3) and negotiate with the notary (not more than 2 meetings) regarding the possibility of notarizing the pledge agreement provided by the Client (hereinafter the "Assignment")."
"Considering the fact that the requirement for notary certification of pledges [a pledge] did not exist previously, there is an issue of bringing [the] existing pledges in compliance with the form that would allow their registration in the Uniform State Register of Legal Entities. We believe that the best approach is to sign a new share pledge contract before the notary."
Serious issue to be tried/good arguable case
i) By the time of the meeting he had formed the view that the loans to Replacement Borrowers were "shareholder transactions" because of the absence of any security, because the transactions were not in the interests of Alliance and because Alliance had not taken any measures to demand repayment of the loans.
ii) At the meeting, Mr Arip began by volunteering that he was no longer partners with Margulan Seisembayev, that his group was now separate from him because they had disagreed over financial issues and that Alliance should not now think that he was affiliated with the Seisembayevs.
iii) In those circumstances Mr Arip told him that the problems with all the assets other than the GeoTEK companies were so serious that he was losing control of them, that he did not have any contact with DinyelNeft and KNG-D and it was unrealistic for Alliance to expect to take them as security. He claimed that DinyelNeft was in an early exploration stage (whereas, in fact, it was producing oil at the time, as was KNG-D which had in the first quarter of 2008 discovered further oil in a southern extension of the one of the fields where it had a licence). By contrast, the GeoTEK companies had no problems, were doing better commercially than KNG-D and DinyelNeft and could be taken as security. In his earlier affidavit, whilst there is inconsistency in what he relates as to Mr Arip's statements about the GeoTEK companies, his evidence was that Mr Arip had said that the assets of KNG-D and DinyelNeft were of no value as security for the borrowing of the Replacement Borrowers because both companies were exposed to corporate raiding and/or hostile takeovers by the local government and had difficulties with access to the transportation infrastructure. Thereafter Mr Arip had proposed that Alliance should accept a pledge of a 60% interest in each of the GeoTEK companies where the value of that interest was said to be sufficient to cover all of the outstanding borrowings of the Replacement Borrowers and Simons Holding.
"No Supplement Agreement to BLA No 122K-08 dated 24th October 2008 was executed, as required by minutes of Credit Committee … dated 8th May 2009 on the substitution of the pledged security. In particular, under the BLA, the obligations were secured by the pledge of the 100% interest in the charter capital of LLC DinyelNeft, whereas pursuant to the decision of the Credit Committee it was to be substituted for the pledge of the 60% interest in the charter capital of SibGeoTEK."
Reference was thereafter made to the valuation of the 60% share in SibGeoTEK and the fact that AppraisConsult was not on the list of certified independent appraisal companies approved by the Credit Committee and to the 5th January 2009 minutes of the Credit Committee which referred to the decision that "within eight months … the borrower shall apply its best efforts to ensure the pledge of assets in the form of participatory shares and companies and fixed assets for the value covering the Borrowers' obligations hereunder in full, unless a different value is determined by agreement between the parties". Because reference was made in this report to the absence of any execution of pledge documents, it is to be assumed that the minutes pre-dated 15th June 2009.
"No supplement agreement to BLA No. 140 K/08 dated 3 December 2008 has been prepared, as required by the Minutes of the Meeting of the Credit Committee of the Head Office No. 25 dated 8 May 2009 on the substitution of the pledged property. Namely, the BLA provides for security of the obligations in the form of the 100% participatory share in the charter capital of Dinyelneft LLC, while the Credit Committee resolved to substitute the pledge for a 60% share in the charter capital of SibGeoTEK LLC."
"On 2 July 2009 and 3 July 2009, 100% of shares in each of the above four companies were sold pursuant to sale and purchase agreements, with the title thereto passing to [the Replacement Borrowers] Sh.N. Dikhanbayeva (from M.A. Arip and B.A. Zhunus). The aggregate purchase price of such shares comprised KZT 416,800, which demonstrates that the transactions were made merely on the record and for technical reasons.
The audit conducted by the Internal Audit Service identified various violations in the course of the compilation of the loan portfolio in accordance with the Bank's by-laws and the laws and regulations of the Republic of Kazakhstan. In particular, as regards almost all of the loans, the members of the Credit Committee (A.K. Saparov, R.A. Abdylkasymova, B. Baglan, A. Jailaubekov, B.A. Tasibekov) took a unanimous decision to approve the loans without first obtaining the required reports from the relevant internal departments of the Bank (a legal opinion, a risks evaluation report, an opinion of the security department, an expert opinion) in violation of the Regulation of the Processing of Loan Requests of Legal Entities in the Head Office of OJSC Alliance Bank dated 7 February 2003.
The identified violations include, inter alia, a violation relating to the concentration of powers of the Credit Committee and to the conduct of the appraisal process. The appraisal process in respect of the pledge was only provided in April 2009, whereas the loans themselves were granted in 2008. Moreover, the appraisal of 60% of shares in the share capital of SibGeoTEK LLC was conducted by Apprais Consul LLP, a company that was not include din the list of certified independent appraisal companies approved by the Credit Committee of the Head Office of JSC Alliance Bank.
In relation to the internal review pledges of SibGeoTEK LLC, OmskGeoTEK LLC and SibirGeoTEK LLC, Mrs. Aydana Ersayevna Kabidolanova, currently employed as the Director of the Pledge Security Department, explained that on 17 April 2009 she had examined (Participation in Shares in Companies) Appraisal Reports Nos. 01/02/-01, 01/02-02 and 01/02-03 relating to the security interests offered as security for the said loans. Her Examination Reports noted that the appraisal company, that had conducted the appraisal, was not certified by the Bank. She also explained that the decision on the certification of independent appraisal companies fell within the competence of the Bank's competent body, namely, the Credit Committee of the Head Office. She also noted that pursuant to the Corporate Standard On Pledge Policy, when examining the Appraisal Reports, the credit departments of the Bank shall compile a set of documents required for the employees of the Pledge Security Department. In relation to the loans, the relevant copies of documents were provided by the Bank's employee, Mr. B. Kudaybergenov, who in turn, had received the relevant documents from the borrowers. The examination was conducted on the basis of such documents. Given that the principal business of the said companies is the exploration and production of minerals and they are licensed to use subsoil in the Omsk Region of the Russian Federation on 27 March 2009, she and Mr. Yu. Bogday, the borrowers' representative, visited the location of the assets under appraisal (the oilfields). In evaluating the assets offered as security, she has applied the DCF analysis that is applied for the valuation of subsoil use rights. The said analysis effectively uses future free cash flow projections and discounts them to arrive at the present value as at particular date, called the "valuation date". Given that there was no information on any transactions for the sale of similar assets, it was impossible to apply the market value method to the valuation. The cost method applied to determine the cost estimate is based on the determination of costs of restoring or replacing the valued asset subject to wear and tear. The cost method is not used for the valuation of shares taking into account the value of minerals.
Mr Bakyt Kudaybergenov noted that, at the time when he held the position of manager at the Corporate Finance Department reporting to the Department's Director, Mr. S.A. Samidinov, from October 2008 on he was the one in charge of the loans of the Holding Invest Group of Companies. According to him, before that JSC Alliance Bank had already financed Barnard Commercial S.A., Argentan S.A. and Simons Holding B.V., the owners of the Russian companies holding rights to the oilfields in Russia. The said Russian Companies were sold to the Holding Invest Group of Companies, and for this purpose they were granted the loans. The loans were applied to repay the debt of Barnard Commercial S.A., Argentan S.A. and partially, Simons Holding B.V. The company was given a 2-month grace period to provide the security. Following the expiration of the said period an additional 8-month grace period was granted by the Bank, taking into account the complicated process of registration of the pledge, given that the pledged assets were located in the Russian Federation. To conduct the appraisal of the offered security, the appraisers and the representative of the Pledge Security Department undertook a trip to Russia at the expense of the Holding Invest Group of Companies. The relevant pledge agreements were prepared following the appraisal, together with the Legal Department.
At present, Mr Bakyt Kudaybergenov is not employed by the Bank. The explanations given by Mr B. Kudaybergenov demonstrate that the appraisal was only conducted after the loan was advanced and that the pledge was not duly registered during the prescribed term.
According to para. 27 of the Rules of Classification of Assets, Contingent Obligations and Provisions (Reserves) Therefor approved by Resolution of the Management Board of the FSA No. 296 dated 25 December 2006, a loan granted subject to security in the form of commodities, real or personal property located (registered) outside the territory of the Republic of Kazakhstan, is deemed to be unsecured. Since the pledged participatory shares are owned by a resident of the Russian Federation, the loans are 100% unsecured.
Pursuant to the Internal Memorandum of the Internal Audit Service to the Economic Security Department dated 30 October 2009 prepared following the audits conducted by it and on the basis of explanations given by the employees of the Pledge Security Department, the loans issued after the date of the Rules and qualified by the Rules as "insecured (blank) loans" are deemed to be issued in violation of Article 35 of the Law of the Republic of Kazakhstan On Banks and Banking activities, namely of its requirements concerning the provision by the Bank to any single borrower of a blank loan or the assumption of an unsecured contingent liability in the aggregate amount exceeding the average annual value of assets of such borrower less the amount of borrowings received by the borrower from banks and organizations involved in the conduct of banking operations of certain types.
Following the review of the original copies of the pledge documents conducted to determine their fullness and compliance with the Bank's requirements, it was established that, as at the time of the audit, i.e. from July to September 2009, the pledge agreements in relation to the pledge shares in the Russian Companies were not executed. The negotiations are ongoing with the head and manager of the said Group of Companies, Mrs Sh.N. Dikhanbayeva, concerning the required registration of the relevant agreements in the prescribed form. At present, the pledge agreements are already signed but not yet registered with the competent authorities.
The Internal Audit Service observed 100% of substantially all of the loans were used otherwise than in accordance with their designated purposes. The loans were provided to the said companies for the financing of their working capitals, acquisition of shares in charter capitals and procurement of fixed assets. However, the loan proceeds were actually applied towards full repayment of Argentan's and Barnard's loans and partial repayment of the loan of Simon Holdings B.V. The aggregate amount of such repayments comprised US$ 290,560,000 (including interest).
Taking the above into account, one should conclude that the loans of the Holding Invest Group of Companies were issued in violation of the Bank's internal regulations (Corporate Standards), Resolution of the Management Board of the Financial Market Monitoring Agency No. 296 dated 25 December 2006 and the Law of the Republic of Kazakhstan On Banks and Banking Activities. There are grounds to believe, as a result of the review of the process of granting of the said loans and the utilization and application of the loan proceeds, that damages were caused to the Bank's interests as a result of certain unlawful actions, namely the issuance of an obviously non-recoverable loan and the unlawful creation of comfort and preferential conditions for the crediting of certain legal entities. In their turn, the Borrowers took the advantage of the Bank's employees' failure to perform their official duties and embezzled and misappropriated the Bank's funds. As a result the Bank has suffered damages in the amount of the issued loans (as at 2 February 2010, the outstanding balance of the principal debt comprised KZT 28,713,000,000 and US$ 52,639,136.46), i.e. of a large scale.
These circumstances testify to an offence provided for by Article 220 of the Criminal Code of the Republic of Kazakhstan (Unlawful Misappropriation of a Bank's Funds), namely "the application by a bank's employees of the bank's own and/or borrowed funds to issue an obviously non-recoverable loan or to make an obviously unfavourable transaction for the bank, or the issue of unjustified guarantees of the bank, or the creation of unjustified preferential conditions for the bank's clients or other persons, where such actions result in an individual, an organization or the state suffering damages on a large scale", as well as to the violation Article 177 Fraud i.e. "the theft of another's property or the acquisition of title to another's property as a result of fraud or breach of trust".
On the basis of the above,
I BELIEVE THAT:
1. The internal investigation relating to the determination of unlawful actions in respect of the Bank is completed.
2. The factual circumstances of the unlawful actions in respect of the Bank are confirmed.
3. Given that there is evidence of certain unlawful actions committed against the Bank's interests and resulting in damages on a large scaled caused to the Bank, it is recommended that the Bank's management file with the law enforcement authorities an application for the institution of criminal proceedings and prosecution of guilty persons."
"The Borrowers' taking advantage of the violated loans provision, misappropriated and dissipated the monies provided by the Bank, without fulfilling their obligations regarding the registration of the pledges – shares in the equity capitals of SibGeoTEK, OmskGEoTEK, and SibirGeoTEK LLC. As a result the Bank has suffered financial loss for the issued loans, i.e. as of 02.02.2010, unpaid principal balance …"
The bank requested the financial police to institute criminal proceedings against those responsible.
i) The advancing of monies under the loan agreements of October and December 2008 without taking any security at all from the Replacement Borrowers.
ii) The commitment on the part of two of the Replacement Borrowers to provide, within 30 days, security in the form of a pledge of the shares in KNG-D and DinyelNeft, whilst other security was promised by the other companies.
iii) The 8 months extension of time granted for furnishing security in January 2009.
iv) The change in the terms of the agreement by amendment of article 3.6.
v) The acceptance by Alliance of substitute security for the KNG-D and DinyelNeft shares in the form of a pledge over the GeoTEK companies' shares, the value of which had been assessed by Alliance as sufficient to cover the indebtedness of the Replacement Borrowers.
vi) The violations of internal bank procedures and of the law in entering into the loan facility agreements in October/December 2008 and amendments in early 2009.
vii) The use of the Replacement Loans to repay the original loans.
viii) The Replacement Borrowers' exploitation of Alliance's employees' violation of procedures when issuing the loans in taking the money and using it without providing enforceable security in the form of pledges of the 60% shareholdings in the GeoTEK companies. In describing the Replacement Borrowers as embezzling and misappropriating its funds, Alliance was stating its case as to fraud on the part of the Replacement Borrowers in obtaining the replacement loans and, knowing that Mr Arip was the owner of the Replacement Borrowers, was well aware that he was the person who was responsible for the Replacement Borrowers' activities in this regard.
"(1) The duty on the applicant in such circumstances goes beyond merely identifying points of defence which might be taken against him, important though that is.
(2) The applicant has to show the utmost good faith, identifying the crucial points for and against the application and not rely on general statements and the mere exhibiting of numerous documents.
(3) The applicant has to investigate the nature of the claim asserted and the facts relied on before applying, and has to identify any likely defences. He has to disclose all facts which reasonably could or would be taken into account by the Court. The duty is not restricted to matters of fact but extends to matters of law.
(4) The applicant also has a duty to investigate the facts and fairly to present the evidence.
(5) There is a high duty to draw the Court's attention to significant factual, legal and procedural aspects of the case.
(6) Full disclosure has to be linked with fair presentation. The judge has to have complete confidence in the thoroughness and the objectivity of those presenting the case for the applicant.
(7) It is the undoubted duty of counsel to draw to the judge's attention weaknesses in his case and to make sure the judge understands what might be said on the other side even if the judge says he has read the papers."
"Thus an analysis of the banking documents and the pre-investigation examination shows that adopting a procedural decision to institute criminal proceedings doesn't seem to be possible. In particular documents submitted by Alliance Bank JSC show existence of the contractual relationship between the Bank and the entities. At the time of the issuance of the credit facilities the entities provided collateral that was accepted by the Bank. At the time of issuance of the bank loans the value of the provided collateral exceeded the value of the loans received. As the repayment period in respect of the bank loans begins from the year of 2013, and given that the Bank had set the deadline for the completion of the repayment at 2018, any discussion of the financial damage is premature. It should also be mentioned that the management of Bolzhal LTD LLP, Holding Invest LLP, Caspian Minerals LLP and Commerce Business Centre LLP are taking steps towards the resolution of the issue of the repayment of the bank loans, however, the Bank is not taking any steps towards selling the collateral assets. That is, the behavior of the workers of the Bank's does not point to any facts of illegal use of the Bank's funds.
Given the fact that at the time of obtaining the loans, the management of Bolzhal LTD LLP, Holding Investment LLP, Caspian Minerals LLP and Commerce Business Centre LLP provided collateral that was examined by the Bank's staff, as well as the fact that there were valuation reports in respect of the collateral assets estimating their market value available at the time of the issuance of the bank loans showing the their value exceeded the value of the loans granted, the fact of presence of an element of fraud in their actions is also ruled out.
Given that the bank filed an application alleging a malicious failure to pay credit debt this issue has to be considered by a court in a civil procedure."