TASR, Teraz.sk, 21.10.2014

EuroGas in Slovakia Allegedly Damaged by Foreign-Based Garage Firms

      Bratislava, October 21 (TASR) - Garage firms based in Liechtenstein and Cyprus were involved in the alleged attack against EuroGas Inc. that led to the withdrawal of its licence for talc mining in Gemerska Polona (Kosice region) in 2005.

       "An investigation is already pending in the matter and it might lead to international arrest warrants," EuroGas Board of Directors chair Wolfgang Rauball told TASR on Tuesday.
      In general, the incentive for entrepreneurs to found companies in countries such as Cyprus and Liechtenstein is tax optimalisation, more efficient protection of investments and assets but also making the ownership structure and financial transactions less clear. "The companies in question can be subsequently used to finance not only the founding of daughter companies or acquiring shares in other firms but, in extreme cases, also for corruption activities. Of course, in the latter case, deformation of entrepreneurship culture ensues, which leads, ultimately, to honest domestic firms seeing their interests hurt," attorney at law Jana Martinkova(lawyer) of legal firm Advocatus Martinkova told TASR.

      EuroGas leads an arbitration proceedings against Slovakia at the International Centre for Settlement of Investment Disputes. As the petitioner in the arbitration, EuroGas is demanding compensation of $3.2 billion (€2.3 billion) from the state of Slovakia for what it calls a marred investment in Gemerska Poloma (Kosice region) in 2004 concerning the loss of a talc quarry.
      EuroGas began indicating its plans to take legal action for the loss of the talc quarry against Slovakia in 2010. At first, it demanded compensation of €500 million in 2011. One year later a company called EuroGas Inc., registered in the U.S.A., also began claiming compensation. EuroGas asserted that its rights related to a trade agreement between the erstwhile Czechoslovakia and the U.S.A. from 1991 had been violated. The Slovak Finance Ministry last year denied that any such agreement had been broken.

      The talc deposit in Gemerska Poloma was discovered accidentally during a search for tin in 1985. The talc from the deposit has high levels of purity, with experts viewing it as one of the most important in the world. The largest producer of talc worldwide is China, but significant deposits are also located in the U.S.A., Brazil and India, while Finland is a significant producer in Europe. In view of the wide-ranging options for the industrial use of talc, mainly in the pharmaceutical, chemicals, cosmetics and paper industries, market demand for this raw material is rising steadily.