The government of Kazakhstan has escalated a two-year-old civil dispute with PetroKazakhstan Inc., laying criminal charges against two of the company's executives, over allegations the firm overcharged for some of its products.
The Kazakhstani-based executives were accused of violating the country's anti-monopoly legislation. Since 2003, PetroKaz has publicly battled Kazakhstan's Agency for Regulating Natural Monopolies over the prices the company charges for products such as diesel fuel.
Calgary-based PetroKaz -- whose operations are all in Kazakhstan -- said criminal charges were laid after a preliminary investigation by the country's "Agency for the struggle with Economic and Corruption Crimes (Financial Police)."
The anti-monopoly agency has previously sought roughly $90-million (U.S.) from the company to settle the situation. Ihor Wasylkiw, PetroKaz spokesman, said that according to transcripts of a government press conference yesterday, a Kazakhstani official called PetroKaz a "solid and reliable company" but laid the charges to put pressure on the company to pay up.
The executives weren't arrested or jailed, Mr. Wasylkiw said, adding the official told Kazakhstani journalists that there were no plans to do so.
The company called the criminal charges an "unnecessary escalation in what is essentially a civil dispute." Mr. Wasylkiw said it was unclear how long it would take to resolve the issue.
"It could take a significant amount of time," he said, depending on how the legal process goes.
Such disputes with the government are common for PetroKaz and usually send its stock tumbling temporarily to double-digit percentage declines, though yesterday the company's shares closed only 3.8-per-cent or $1.92 (Canadian) lower at $47.82 on the Toronto Stock Exchange. Over all, the stock has steadily risen through the past 2½ years.
PetroKaz is accused of selling refined petroleum products above "price ceilings" established by the anti-monopoly agency in August, 2002. PetroKaz has always said that those ceilings violate agreements PetroKaz has with the government for its Shymkent oil refinery.
Thomas Dvorak, president of two PetroKaz subsidiaries, and Clayton Clift, chief financial officer of those companies, were the executives slapped with criminal charges.
In other company news, chief executive officer Bernard Isautier has sold more than $50-million of PetroKaz stock, regulatory filings indicate, bringing his total divested since early 2004 to more than $200-million.
Mr. Isautier on March 31 sold 1.08 million shares for $51.7-million, following the sale of 700,000 shares in earlier March for $35.3-million.
Since early 2004, Mr. Isautier has exercised options to buy 2.64 million shares and has sold 4.73 million.
In the company's proxy circular last week, it was reported that he made about $93-million on the exercised options of 2.64 million in 2004. However, he sold a total of about $120-million in stock in 2004.
Mr. Isautier still holds 2.3 million shares -- 3 per cent of those outstanding -- and 200,000 options, of which 133,333 are "in the money."
He remains among PetroKaz's top six shareholders, Mr. Wasylkiw said.