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Uzbekistan: Under questionable circumstances, Kazakh-Uzbek Urtok confectionery in Tashkent is seized and being demolished

04.06.2008 11:54 msk

Kazakhstan Today

Business Uzbekistan

A candy manufacturing factory in Tashkent is being demolished as part of an urban renewal project, in spite of previous assurances that the building would be left intact.

At a June 3 Alma Ata press conference, Yerlan Iemberdiyev, KEI Invest General Director said the Urtok factory was being demolished by authorities.

"Demolition of the confectionery in the capital of Uzbekistan began on May 21. It took demolition teams under a week to tear down half the factory while law enforcement agencies monitor the process," Iemberdiyev said.

KEI Invest management charged that demolition teams had not provided the company with any notifications, written orders or other permits. Additionally, police have refused to allow employees or owners of the company access to the building. Iemberdiyev said his company had contacted numerous government offices, including the prosecutor’s office, without receiving assistance.

Iemberdiyev told the press that his company originally contacted authorities after hearing rumors that the confectionery was earmarked for demolition. "We approached the Tashkent akimat [city administration] to be told, officially, that the confectionery was safe because the site it was on was not on the demolition area plans," he said.

Additionally, the Tashkent division of The Uzbek State Property Committee filed a lawsuit on April 4 requesting an annulment of the privatization of Urtok property that had previously belonged to the state. The lawsuit was rejected by the court, ruling that such lawsuits must be filed by the original Uzbek owner who had participated in privatization in 1994.

However, on May 21 the court sided with the government and voided the earlier privatization of the area surrounding the confectionery. The court agreed with the State Property Committee that the documents the Kazakh owner had compiled had failed to account for some assets (trees, asphalt, and equipment).

"We mailed letters to the Embassy of Kazakhstan in Uzbekistan, the Kazakh Foreign Ministry, and Presidential Administration begging for protection. We have reasons to believe that formal protests have been made already but they have elicited no response. Complaints to Uzbek courts were already made and we are determined to appeal to international courts now," Iemberdiyev said. "We represent a foreign investor and law-abiding buyer. The government is commandeering the confectionery, liquidating the enterprise, and demolishing the factory just because some obscure official failed to mention several trees and a piece of asphalt in the documents. That's an excuse that might be used to commandeer anything else, a nuance that disturbs all other investors already operating in Uzbekistan or pondering it."

"I appeal to President of Uzbekistan, Islam Karimov, to step in and put an end to this lawlessness or, hopefully, sort out this misunderstanding. It is known, after all, that Karimov is doing what he can to attract foreign investors and improve the investment climate in the country. He is supposed to be guarantor of investments' safety," Iemberdiyev said. "I also appeal to the Kazakh authorities and President Nursultan Nazarbayev for protection of the Kazakh investor."

According to Iemberdiyev, Kazakh investors, along with local partner BankTuranAlem, bought the confectionery for $6.5 million in 2005.

"We did everything. We received a permit and license from the National Bank for withdrawal of capital, settled debts, refurbished the confectionery, invested in it... We entertained the hope of expanding into the Uzbek market. The plans even stood for procurement of new equipment worth almost $18 million," Iemberdiyev said.

KEI Invest bought 85.2% of the Uzbek-Kazakh joint venture, Urtok, in 2005 with the intent of reviving the confectionery in Tashkent, which had earlier been closed.

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One of the oldest enterprises in all of Uzbekistan, Tashkent’s Urtok was built in 1926.

Kazakhstan Today, June 3, 2008. © Translated by Ferghana.Ru