KazMunayGas Trading ordered to pay over USD 70 mln to ANAF in biodiesel import case

KazMunayGas Trading lost a court case against Austrian oil company OMV and will have to pay over USD 70 million to Romanian tax administration agency ANAF, following a referral from the European anti-fraud office OLAF, for controversial biodiesel imports from Canada that originated from the US, reports Mediafax newswire.

According to a document seen by Mediafax, OMV has won a favorable ruling at a London-based court against KazMunayGas Trading Switzerland, the trading division of Rompetrol Group and of state-owned company KazMunayGas, for recovering losses generated by the OLAF investigation and the decision to pay the antidumping tax.

ANAF has noted in its report for 2012 that it had concluded follow-up controls for the circulation of biodiesel, imported from Canada, which was carried out between March 2009 – October 2011, reporting debt to the public budget worth RON 220.5 million.

OMV and Bioromoil won favorable rulings against KMG

OMV Petrom got only 2,000 tones of biodiesel, out of the 85,000 tones that were imported by KazMunayGas. Petrom has calculated a loss of USD 1 million, out of which USD 595,335 was the anti-dumping tax for imports from the US and the compensation tax and USD 434,475, which were interest and penalties imposed by ANAF. The courts in London ruled out that the Kazakhstan-based oil company should pay less than USD 900,000.

Mediafax cited sources which said that this was the second case lost by KMG Trading, after Bioromoil, another buyer, won a favorable ruling at the Court of Arbitration in London for the recovery of around EUR 25 million, before OMV.

ANAF’s decision was challenged by Rompetrom, OMV Petrom and Bioromoil, claiming they bought the biodiesel in good faith.

Rompetrol Rafinare has challenged the decision at Romania’s High Court the taxes and sanctions imposed by the National Customs Authority regarding the biodiesel imports. Rompetrol was one of the three companies that imported biodiesel from KazMunayGas Trading in Romania.

“KMG Trading has won in the first court appearance at the end of July the legal action opened in London against the Canadian supplier of biodiesel and its affiliates, as being responsible of the payment of all taxes related to the deliveries of biodiesel to KazMunayGas Trading, which then has exported them to Romania, an EU member,” said KMG International in a statement.

KMG Trading said all the documentation showed that the biodiesel came from Canada, although one judge working at the case between OMV Supply and Trading and

KazMunayGas Trading pointed out that the KMG Trading should have done a more rigorous check up of the Canadian company, which did not have a history in selling this product.

In addition, the court has shown that the ships contracted by Rompetrol to transport the biodiesel made several trips between Lake Erie (Pennsylvania – US) and Quebec (Canada) before loading the biodiesel that was supposed to be imported in Romania. Even KMG acknowledged that the court may conclude the biodiesel came from the US.

The court also noted that the contract did not include any provisions on what would happen if the biodiesel did not come from Canada or if the contracts of origin were not conformable, although in the draft initially proposed by the Vector Trading (KMG), and rewritten by OMV, there is such clause.

KMG Trading has to pay USD 70 million

Mediafax pointed out that the loss was smaller for OMV Petrom compared to its turnover. However, the other buyer of biogas, Bioromoil went into administration in 2012, after ANAF said the company had additional debts of EUR 25 million. The company had developed a plant for the production of biodiesel in eastern Romania.

The amounts that have to be paid by KMG Trading in this case exceed USD 70 million.

KMG International said that the court looked only at the finding of OLAF’s investigation but ignored the arguments of KMG International, which acted as an intermediary. The company added that the imported quantities did not raise any suspicions to Romanian authorities.

Mediafax quoted sources as saying that both Rompetrol and Petrom paid a combined EUR 26 million to the state budget, although they challenged ANAF’s decision. KMG Trading has also sued Canadian Bioversel to recover the loss.

KMG International wants to buy stake in Rompetrol Rafinare by year-end

KMG International said it was aiming to buy the remaining stake of 26.69 percent in Rompetrol Rafinare from the Romanian statem and would make a single offer of USD 200 million.

Azamat Zhangulov, senior vice-president of the oil company, told BR in an interview this summer the company was aiming to conclude the share buy-back by the end of this year, adding that KMG International was prepared to initially invest USD 350 million in Romanian energy projects, as part of a USD 1 billion investment program agreed with the government in the transaction strategy.

Romania has not yet announced any public tender to sell its stake in Rompetrol Rafinare.

Ovidiu Posirca

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