EuroGas Wants to Use Rusko’s Arrest to Renew Arbitration with Slovakia

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Former economy minister Pavol Rusko (photo by TASR)

Bratislava, October 27 (TASR) – The arrest of and investigation into former economy minister (2002-05) Pavol Rusko could have an international dimension for Slovakia, as a company called EuroGas wants to make use of the situation in order to renew arbitration proceedings against Slovakia concerning the allegedly illegal withdrawal of a licence for talc mining in Gemerska Poloma (Kosice region), EuroGas managing board chairman Wolfgang Rauball told TASR on Friday.

“Rusko was there at the beginning of the whole case in 2004, when he, via intermediaries, offered the acquisition of deposits of talc, which at that time were in our possession, to a company called Mondo Minerals for a bribe worth €5 million for his political party ANO,” said Rauball, adding that he has a sworn statement of then Mondo Minerals’ board of directors chairman Wolfgang Keller. Keller rejected Rusko’s offer at that time and reported the case to his superiors. In September 2016 he testified under oath before a US government official.

“In his sworn statement he [Keller] stated that he later met Rusko as well. He told him that he considered his people’s actions to be gross corruption and terminated the meeting a few minutes later. His sworn statement is in the hands of the FBI,” said Rauball, adding that he’s instructed his lawyers to examine the possibility of resuming arbitration in the talc case.

[Rusko was arrested by the police on Monday (October 23) due to the suspicion that he ordered the murder of his former business associate Sylvia Volzova via the criminal underworld back in 1997. No murder actually took place, however. – ed. note]

Slovakia won the talc case when the International Centre for Settlement of Investment Disputes (ICSID) in its ruling in August accepted jurisdiction objections raised by Slovakia.

“It was shown during the arbitration that while the original US company called EuroGas (I) went bankrupt in 2004, a company of the same name, EuroGas (II), was founded in 2005, with the two companies having seemingly merged after the end of bankruptcy proceedings. However, the tribunal came to the unanimous conclusion that the plaintiff Eurogas’s (II) merger with EuroGas (I) was illegal, and so no rights that it might claim in this arbitration could have been passed on to the plaintiff EuroGas (II),” wrote the Finance Ministry.

Rauball wants to apply an article enabling the decision to be annulled. A 120-day period starts as of the day on which the request is submitted. “A commission will then make a definitive decision as to whether the tribunal’s verdict can be annulled or not,” said Rauball. If EuroGas eventually suffers a definitive loss, it plans to file a lawsuit at the US federal court against Austrian company Schmid Industrieholding (SIH) and its subsidiary Eurotalc, which holds the Slovak talc mining licence in Gemerska Poloma. “We have collected enough evidence of criminal behaviour by the SIH owners and their links to the state mining authorities in Slovakia that have been damaging EuroGas and its shareholders for many years,” stressed Rauball.

Robert Schmid, owner of SIH, repeatedly rejected Rauball’s accusations. “Mr. Rauball likes to attack everyone, including me, the Slovak Republic, the mining authorities. I find all this to be constructions fabricated by him, and I don’t want to comment on them,” Schmid told TASR in reaction.

EuroGas AG began threatening Slovakia with arbitration proceedings in 2010. As the petitioner in the arbitration, which was launched in 2014, EuroGas demanded compensation of $3.2 billion (€2.9 billion) from Slovakia for what it called a marred investment. No appeal against ICSID decisions is possible, although they can be overturned due to serious procedural flaws.

EuroGas began indicating its plans to take legal action against Slovakia over the loss of the talc quarry in 2010. At first, it demanded compensation of €500 million in 2011. One year later a company called EuroGas Inc., registered in the USA, also began claiming compensation. The total sum of required compensation thus climbed to €1.5 billion. EuroGas asserted that its rights related to a trade agreement between the erstwhile Czechoslovakia and the USA from 1991 had been violated. The Slovak Finance Ministry denied that any such agreement was broken.