July 15--The Israel Money Laundering and Terror Financing Prohibition Authority is gathering information about a deal in which the Azrieli Group Ltd. (TASE: AZRG) sold paint manufacturer Tambour to Singapore group Kusto for NIS 500 million in cash. Tambour had been up for sale for a long time. The deal was signed last May without the purchasers conducting due diligence.
The Money Laundering Authority is apparently seeking to investigate suspicions that the deal was used for money laundering, given the personal and business connections between the Tatishev family, which controls the Kusto group, and Kazakh oligarch Mukhtar Ablyazov, who has been convicted in the UK for fraudulently obtaining NIS 300 million in bonds from BTA Bank, and who faces nine other criminal charges in the UK.
Ablyazov, 50, the former Kazakhstan Minister of Energy and currently a political opponent of the regime in that country, fled the country in 2009, eventually settling in France. Early this year, however, France decided to extradite him to Russia on charges of embezzling NIS 6 billion in the affair of BTA Bank, which was subsequently nationalized.
In response, Kusto group media consultant Tal Rabina said, "Mukhtar Ablyazov was a member of the board of directors on a bank in Kazakhstan that was nationalized, together with a representative of the Tatishev family. At the same time, note that in contrast with the ongoing investigation against Ablyazov reported in several media, the entire investigation against other directors in that bank, including Mr. Tatishev, ended in less than 24 hours, with the legal authorities there making it clear to those under investigation that they had found nothing wrong with their activity, and the issuing of a written character reference. In order to remove all doubt, in contrast to Ablyazov, the Tatishev family members and the Kusto group are to this day accepted as respectable businessmen in Kazakhstan."
In response to a question from "Globes", the Kusto group contacted the Kazakh authorities for an inquiry on the matter, and was surprised to hear that while the government there had nothing against the Tatishev family, an Israeli named Dan Meiri, who said he was a former senior Mossad official, had recently contacted parties in the administration and businessmen in the country and offered a great deal of money to anyone who could supply him with negative information about the Tatishev family or the Kusto group. The Kusto group has no information about Dan Meiri, if such a person exists, his motives, or who he works for.
Rabina added, "Both the Azrieli group and the various banks in Israel examined the Kusto group carefully both before and after completing the deal for the acquisition of Tambour. Following the clear findings of these inquiries, which found that all the sources of the group's money were known and respectable, not only did they approve the deal, but they even proposed to finance it, even though the Kusto group intended from the start to finance the acquisition from its own resources.
"Incidentally, any state authority, such as the Money Laundering Authority, is obviously obligated to carefully check any information it obtains. As we have seen in recent affairs, however, the very transferring of any kind of information to the Authority, and even an examination of that information, if any was performed, does not indicate that this 'information' has any real reliability whatsoever. The group has received no official query in this matter whatsoever, but if one is received, we will be glad to cooperate with any authorized party."
The Israel Money Laundering Authority said in response, "The Authority is an information agency under the Law for the Prevention of Money Laundering and Terror Financing. Under the Law, the Authority is prevented from disclosing information it has received or its activity in accordance with its authority." The Azrieli group declined to respond to the report.
Kusto group outbid Apax by NIS 100 million
At the end of May, the Azrieli group announced that it had signed an agreement to sell paint manufacturer Tambour to the Singapore-based Kusto group. It turns out that Kusto snatched Tambour from under the nose of the Apax Israel Fund. The investment fund, managed by Zahavit Cohen, negotiated with the Azrieli group for several months, with the negotiations reaching an advanced stage. According to information obtained by "Globes", the deal was due to be closed at about NIS 400 million.
Kusto offered NIS 100 million more in cash, and the deal was completed in short order, since Kusto was willing to acquire Tambour's activity as is, without due diligence. When the initial deal was signed, Azrieli reported that it had received a NIS 70 million advance on account for the transaction, and the full amount was paid a week later. Following the completion of the deal, Azrieli is expected to report a NIS 50 million after-tax capital gain.
Kusto is a private industrial holding company with diverse business in construction and the construction materials industry, mining, information systems, and agriculture. The group also holds a number of productive oil wells in Kazakhstan. The company has thousands of employees throughout the world, and its annual sales turnover is estimated at $1.4 billion.
The company, which was founded over a decade ago, is owned by four businessmen with roots in Kazakhstan who have known each other since childhood, Kusto business development manager Daniel Kunin told "Globes" in an interview at the time of the deal. Yerkin Tatishev is the largest shareholder in the group, and the information now being collected by the Money Laundering Authority apparently concerns him, in view of his many years of acquaintance with Ablyazov, and the BTA Bank affair, exposed in 2009. The bank lent billions of dollars for real estate projects in Russia and Ukraine, and to oil companies that conducted off-shore drilling. This money was transferred to companies located in tax shelters, such as the Seychelles Islands and the Virgin Islands. Investigators hired by the bank checked at the time whether Ablyazov, the former chairman of the bank, had transferred billions of dollars from the bank loans to companies under his control. A representative of the Tatishev family was on the bank's board of directors at the time, and therefore had both business and personal relations with Ablyazov.
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