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Kazakhstan Accuses Key Official Over Uranium Deals

Former Kazatomprom chief Mukhtar Dzhakishev (file photo)
ASTANA/ALMATY (Reuters) -- Kazakhstan has accused the former head of its state uranium firm of pocketing resources of the nuclear fuel worth billions of dollars, by transferring them to foreign companies he controlled.

The KNB security service arrested the Kazatomprom chief, Mukhtar Dzhakishev, last month along with other officials, accusing them of illegal uranium deals.

Dzhakishev, 45, has not publicly commented on the case. The KNB has said he is denying any wrongdoing.

On June 1 the KNB showed reporters a video recording of senior officials of Kazatomprom -- which is expected to become the world's biggest producer of the radioactive metal this year -- confessing to wrongdoing by themselves and Dzhakishev.

In a separate statement, the successor service to the Soviet-era KGB said Dzhakishev, who was dismissed from his position shortly before his arrest in May, had used offshore firms to effectively take over some of the most lucrative uranium fields.

"It has been proved that more than 60 percent of state uranium deposits worth tens of billions of dollars had been turned into Dzhakishev's property," it said.

Addressing reporters in the Kazakh financial capital, Almaty, relatives of those arrested accused the authorities of holding their family members in secret locations without access to independent lawyers.

"We don't know why they are being held and where. I don't know if he is well and alive," said Dzhakishev's wife Jamilya as her mother-in-law wept and shook with emotion.

"The KNB has no legal grounds in this case. Everything happening right now has been falsified.... Kazatomprom is a state company and all deals are done only with state approval."

The former Soviet republic is home to a fifth of the world's uranium reserves and produced 8,521 tons of uranium last year, up from 6,637 in 2007. Access to the fuel is increasingly sought after as more countries turn to nuclear power due to high oil prices and concerns over carbon emissions.

Political Balance

The case, unfolding during a deepening economic crisis in the oil-producing state, has highlighted divisions among the ruling class in a country where President Nursultan Nazarbaev, in power for 20 years, has no clear successor.

Dzhakishev had long been hailed by the Kazakh government and foreign investors as a manager who presided over Kazatomprom's rise as a major global player in past years.

Dzhakishev has also been described as one of Kazakhstan's most powerful industry players with close personal links to the immediate political circle around Nazarbaev.

His sudden downfall highlights the vulnerability of this political balance and emphasizes uncertainty over who might be gaining weight as a possible successor to the 68-year-old ruler.

The KNB had earlier singled out the sale of a 30 percent stake in the Kyzylkum venture, which runs the country's largest uranium mine, Khorasan, as an example of an illegal transaction.

Canada's Uranium One, whose stock fell by 30 percent after the announcement, owns 30 percent in the venture. It has said it is cooperating with Kazakh investigators.

It said in a statement last week the transactions through which it acquired its Kazakh assets were completed in accordance with Kazakh law and approved by the authorities.

The KNB said it carried out its investigation in line with legislation and denied it was a politically motivated case. "As for the relatives, 99 percent of what they are saying is not true," KNB spokesman Kenzhebulat Beknazarov said.

The relatives' lawyer, Daniyar Kanafin, said the authorities had yet to present any charges, adding that only state-appointed lawyers were allowed to represent the accused in the case.