WASHINGTON, Aug. 15, 2012 (ANTARA/PRNewswire-Asia) -- Today Lao Holdings N.V. and its wholly-owned subsidiary, Sanum Investments Limited, both filed suit against the Government of the Lao People's Democratic Republic to stop the illegal taking of a US$400 million investment by the Government of Lao. The claims will be handled by the World Bank's International Center for the Settlement of Investment Disputes using treaties signed by Lao in which it promised to protect foreign investment.
"We invested in good faith in the Lao PDR. We believed the former Prime Minister when he told us the Lao Government would uphold the rule of law. We established a profitable business that created thousands of jobs for the Lao people," said Jody Jordahl, President of Sanum. "As we became more successful, they moved in to take it from us. This is a simple case of a government breaking its promise to protect foreign investors against greed and exploitation."
These assets were established by means of the direct investment of over US$85 million made in the country by Sanum Investments. According to Mr. Jordahl, today that investment is worth at least US$400 million.
Sanum Investments was enticed to invest in the Lao PDR on the basis of the government's promises of a safe and stable economic and legal environment, where foreign investments were promised protection and security through steadfast adherence by local officials to the rule of law. The investment was made approximately five years ago. Now Sanum alleges that the government has turned on the company, using all the governmental tools at hand to expropriate Sanum's investments.
One example of the government's misconduct is the way both its judicial branch and its tax authorities have taken actions to allow a well-connected Lao family and their companies to seize control of Sanum's prize asset, the Thanaleng Slot Machine Club, which is located close to the Lao capital, Vientiane, near the foot of the Lao-Thai "Friendship Bridge No. 1." Lao Holdings is losing US$1.8 million every month that this taking is allowed to stand, according to Mr. Jordahl.
Lao PDR's alleged illegal acts are in violation of multiple treaties and include:
1. Retroactively imposing over US$23 million in taxes and penalties for years past upon Sanum's businesses, going back on written promises and agreements to the contrary;
2. Threatening to use these baseless tax claims as an excuse to seize and auction off the company's investments;
3. Forcing the enterprise to go to trial in a multi-million dollar lawsuit brought by a local business partner on 48 hours' notice, and then giving it only an hour to make its entire case;
4. Having a Lao court impose an unheard of US$5 million fine, and begin enforcing it, before the hearing was over and the result announced;
5. Arbitrarily revoking a number of licenses and concessions, for projects worth hundreds of millions of dollars, without valid cause and with no compensation paid.
"The Lao Government wants and needs foreign direct investment. They want to be a member of the World Trade Organization. They want to be a member in good standing of the international legal community. It will not happen until they can enforce the rule of law at home. The treatment we have received shows they simply cannot be trusted," Jordahl said.
About Sanum Investments
Sanum Investments Limited is a Macau, China, based investment and development company. Sanum is primarily focused on development projects in the Lao People's Democratic Republic, but is also currently involved in a number of condominium developments in Macau.
Sanum is a partner in and manager of several hotel and casino projects throughout Lao including Savan Vegas in Savannakhet. The company is also investigating many other opportunities in the region.
About Investment Treaty Arbitration
Investment treaty arbitration is an independent and impartial process provided for in over 3,000 treaties worldwide. The Lao PDR has concluded 14 such treaties, whose purpose is to encourage foreign investment by promising investors that the local government will provide "fair and equitable treatment" and "full protection and security" to foreign investors. In these treaties the Lao PDR has also promised not to revoke valuable concessions and licenses granted to foreigners without good reason and not without the prompt payment of fair market value compensation.
The International Centre for the Settlement of Investment Disputes, an independent arm of the World Bank, will administer the Lao Holdings case. The Sanum Investments case will be handled by an ad hoc tribunal as provided under the applicable treaty. Both tribunals will be composed of three arbitrators, who are authorized to issue binding damages awards against offending countries.
For more information on investment treaty arbitration, please visit: http://icsid.worldbank.org/ICSID/ICSID/ICSIDOverview.jsp
Additional Documentation:
http://bit.ly/RdXu7N
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