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. Last Updated: 07/27/2016

Family Fires Back in Polyus Probe

The Assaubayevs, locked in a dispute with Polyus Gold, said Russia's biggest producer of the metal was using allegations against the family to divert attention from a Kazakh government probe of the company.

Polyus — which acquired 50.1 percent of KazakhGold Group last year from the Assaubayevs — may lose the Kazakh unit's mining permits as a result of the investigation, the family said in a statement Friday.

KazakhGold management, including chairman Yevgeny Ivanov, who is also chief executive of Polyus, may face criminal proceedings in Kazakhstan, the statement said.

"Whether or not KazakhGold will lose its mining licenses in the country will totally depend on how active a position the Kazakh regulators will take in defending the interests of the Assaubayevs," Ivanov said Friday. "If the licenses are withdrawn, we will consider this unlawful and take action."

The dispute may thwart the plans of billionaires Mikhail Prokhorov and Suleiman Kerimov to transform Polyus into a London-listed company, a step toward a merger with a global mining company, according to VTB Capital.

KazakhGold, registered in Jersey and with a primary listing in London, said in June that it intended to acquire its parent Polyus in a so-called reverse takeover.

Kazakhstan's Industry Ministry said July 12 that it annulled its previous approval of Polyus' 2009 acquisition and ruled out the sale of additional shares by KazakhGold as part of the reverse takeover.

Polyus "does not expect the recent events in Kazakhstan to result in the reversal of the acquisition of KazakhGold made last August," Ivanov said. "Kazakhstan chose last year not to exercise its pre-emptive right to buy KazakhGold shares before Polyus, and this now should not be reversed."

Polyus and affiliates filed a lawsuit in London on June 25 against members of the Assaubayev family, who are the former directors of KazakhGold, Gold Lion Holdings and Hawkinson Capital, seeking damages of more than $450 million over allegations that they misappropriated funds and misrepresented output and profit figures from 2006 to 2008.

The Assaubayevs said July 1 that the lawsuit was "without any foundation" because Polyus had "extensive access" to KazakhGold books before the purchase. KazakhGold was regularly checked by the energy and mineral resources ministers, the financial regulation authorities and other Kazakh state bodies, and no discrepancies were found, the Assaubayevs said Friday.