Government of Uzbekistan Holds Foreign Investors Hostage in Resource Nationalism Attack against Oxus Gold PLC

LONDON, July 11, 2011 /PRNewswire/ --

An important foreign-investor dispute in Uzbekistan escalated in recent weeks, as the Government of Uzbekistan elected to pursue a mudslinging strategy instead of good faith negotiations required under international law.  The dispute involves a company owned by Oxus Gold plc (Oxus) - once Uzbekistan's largest foreign investor - and two entities controlled by the Government of Uzbekistan, all of whom joint venture in a precious metals extraction operation, Amantaytau Goldfields A.O. (AGF), in the Kyzylkum Region of Uzbekistan's Navoi Oblast.  Following expropriatory conduct by the Uzbek entities, Oxus formally asked the Government of Uzbekistan in March 2011 to participate in obligatory good faith settlement discussions under an applicable bilateral investment treaty.  While Uzbekistan gave lip service to meaningful discussions, its real effort went into launching a campaign of disinformation to try to force AGF into involuntary liquidation, which Oxus' lawyers assert smacks of resource nationalism.

"On June 28, 2011, state-owned Goskomgeology accused Oxus - its own joint-venture partner - of failing to meet technology and environmental standards, and of creating 'threats to human life,'" noted Robert R. Amsterdam, international counsel to Oxus.  "These false accusations were leveled against the first company ever in Uzbekistan to implement an environmental plan that complied with World Bank standards, which far exceed local Uzbek environmental regulations.  In most countries, these false allegations would be the source of jokes, but the Uzbek officials are shamelessly motivated by their desire to steal a profitable foreign investment."

Amsterdam also points out that the Uzbek authorities have conjured up punitive tax audits, initiated a pattern of bureaucratic harassment, and imprisoned Oxus's former chief technologist - Mr. Said Ashurov - on fabricated charges of espionage.  "This kind of conduct effectively holds Oxus hostage.  The international business community should take note of what happens to foreign investors who achieve success in Uzbekistan," said Amsterdam.

On July 6, 2011, Oxus' lawyers delivered a letter to the President of Uzbekistan and other officials, refuting the recent false allegations.  A copy of that letter is available on http://www.robertamsterdam.com/uzbekistan.

This media campaign by the Uzbek government is the latest development in a dispute that commenced formally on March 3, 2011, when Oxus gave formal notice under the investment arbitration treaty between the governments of Uzbekistan and the United Kingdom.  The principal basis for Oxus' claim is that Oxus and its subsidiaries have been subjected to expropriatory, unlawful, unfair and discriminatory treatment, resulting in catastrophic losses of no less than $400 million.

"The Uzbek government's conduct has been unlawful and morally reprehensible," Mr. Amsterdam stated.  "Uzbekistan's reluctance to resolve the AGF dispute in a lawful manner will not only lead to significant injury in terms of foreign investment, it also jeopardizes critical aid programs if Uzbekistan is found to have violated the arbitration treaty."