The Bank of New York Mellon froze $22 billion in assets that the Kazakhstan National Fund holds due to a lawsuit that was launched by Anatolie Stati a Moldovan businessman and his businesses against the government of Kazakhstan, said a source familiar with this case.
The National Bank in turn filed its own lawsuit against BNY Mellon. A court in Britain is expected to deliver its judgement on the case Thursday.
The National Fund receives revenue from oil exports and could be used for an emergency tool for state funding. The funds that are frozen amount to about 40% of the total in the account.
The central bank of Kazakhstan and its justice ministry were not available to make a comment, nor was the Bank of New York Mellon.
The legal problems between Stati, son Gabriel, two companies that are family controlled and the Kazakhstan government has been dragging on for several years in different courts.
The businessmen, who invested in the oil and gas industry in Kazakhstan, have said they were subjected to a great deal of harassment from the government, with the purpose of forcing a sale of their investments at low prices.
They have stated that the value of the investments they hold was negatively affected by being harassed, because the government was hoping to take control of the fields they owned and was attempting to bring down the price.
The allegations made by the businessmen have been denied by Kazakhstan.
In October, the government of Kazakhstan filed a racketeering lawsuit in a Washington, D.C. district court against both Anatolie and his son Gabriel along with two of their businesses which collectively have been dubbed Stati Partners.
The lawsuit came following arbitration award by international arbitrators of $500 million that was won by the Stati Partners following a case in an international arbitration court.
Dollar bonds in Kazakhstan extended their losses Thursday after falling sharply on Wednesday after the news of the assets being frozen. The bonds fell as much as one quarter of one cent after sharper drops late Wednesday.
The Kazakh tenge was able to firm against the U.S. dollar, though the country’s central bank said it did not intervene to support the tenge.