The February 19, 2007 issue of “Profit” reports that OAO “Arna” is actively seeking to have the papers underlying Mark Seidenfeld’s extradition from Russia to Kazakhstan amended to increase the amount he is accused of stealing to 500,000,000 Tenge. See http://www.profit.kz/news/001689/
The report in Profit in February 2007 indicated that the Russian side has so far not amended the extradition papers to enlarge the amount Mark Seidenfeld is accused of stealing to 500,000,000 million Tenge which is approximately $4.2 million. The original criminal complaint from OAO “Arna” and request for his extradition accused Mark Seidenfeld of stealing 5,457,500 Tenge (approximately $40,000) which was, in fact, applied to equipment purchases.
The report in “Profit” indicated that the Almatinsky City Prosecutor’s Office and the Kazakh Financial Police were so far not agreeing to repeated requests from OAO “Arna” to increase the amount Mark Seidenfeld is accused of stealing. The report indicated that the Kazakhstan Prosecutor’s Office may be stepping in to coordinate the filing of a request in Moscow to increase the amount Mark is accused of stealing on behalf of OAO “Arna”.
From this report, it follows that OAO “Arna” is alleging that when Mark Seidenfeld left OAO “Arna” in March 2004, over three years ago, there was approximately $4.2 million missing from OAO “Arna”, not the $40,000 discussed to date.
If the accusation is being made that $4.2 million was missing from OAO “Arna” at the time that Murat Zhunussov acquired control of OAO “Arna” from the European Bank for Reconstruction and Development, then Murat Zhunussov would likely have a cause of action to sue the EBRD. The contract for the sale of the EBRD’s former 49.9% stake in the outstanding shares of stock of OAO “Arna” to Mr. Zhunussov likely included standard representations and warranties about the accuracy of the balance sheet and income statement of OAO “Arna” at the time the EBRD sold its shares to Mr. Zhunussov. The contract would give Murat Zhunussov the right to sue the EBRD or to commence an arbitration proceeding against the EBRD in London to recover the missing $4.2 million. Alternatively, Murat Zhunussov could seek to adjust the purchase price for the sale of 49.9% of the stock in OAO “Arna” sold by the EBRD to Murat Zhunussov in view of the financial fraud that OAO “Arna” claims to have uncovered.
The idea that Mark Seidenfeld is guilty of misappropriating, not approximately $40,000 as was originally charged, but now 500,000,000 Tenge seems preposterous. Given the lengths the Board of Directors of AOA “Arna” went to in December 2003 to hire an international audit company to investigate an allegation about a purported missing $40,000, it is not credible that $4.2 million was missing at that same time and this was not known to the audit company or to the Board of Directors of OAO “Arna”.
Mr. Zhunussov, having been, prior to March 2004, a significant minority shareholder in OAO “Arna”, would have had access to OAO “Arna’s” books and records. As reported elsewhere on this blog site, not only did Mr. Zhunussov have access to the company’s official records, he also had a second set of records about cash disbursements.
One is left to wonder about the current financial health of OAO “Arna” now in 2007. Why is the management of OAO “Arna”, under the direction of its controlling shareholder and Chairman of the Board, Murat Zhunussov, currently seeking to accuse Mark Seidenfeld of stealing not $40,000 of Tenge, which has been disproven, but now, reportedly, of responsibility for $4.2 million of missing Tenge?
The amount of losses at OAO “Arna” that management is seeking to scapegoat on to Mark Seidenfeld seems to be growing without limit! If such an amount has gone missing, what really happened to it?
What does it say about the strength of OAO “Arna’s” allegations that the allegations may be sufficient to convince the Kazakhstan Prosecutor’s office to seek to amend the official charges against Mark Seidenfeld. But, the allegations are not sufficiently strong that Murat Zhunussov has, to date, felt sufficiently confident to sue the EBRD to make a recovery with regard to the $4.2 million purportedly missing from OAO “Arna” when Mr. Zhunussov acquired control of the company from the EBRD? On the other hand, though it is for the EBRD to investigate, were Murat Zhunussov to obtain a criminal conviction of Mark Seidenfeld, then he may have a cause of action against the former controlling shareholder of OAO “Arna”, the EBRD.
If the money is not really missing from OAO “Arna”, what purpose is served for Mr. Zhunussov by seeking only to amend his allegations and make new false allegations against Mark Seidenfeld, and not simultaneously to make a complaint against the EBRD for compensation to which Mr. Zhunussov would be entitled if he was swindled, as he alleges, when he bought control of OAO “Arna”?
Hopefully, the Almatinsky City Prosecutor’s Office and the Kazakh Financial Police will in any case continue to resist pressure from OAO “Arna” to re-write the basis for Mark Seidenfeld’s arrest and extradition. The Minsk Convention which governed Mark Seidenfeld’s extradition specifies that charges must be clearly stated in a valid extradition request. Mark Seidenfeld has disproven the original false charges made against him. Presumably, he can also disprove additional false charges that may be under development. But, it would be a separate violation of the Minsk Convention for Mark Seidenfeld even to be tried on charges that were not included in the original false allegations made against him.
