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If there’s one thing rocket companies are coy about, it’s how much their launches cost. But the tab for a record-setting satellite launch in 2018 is tantalizingly close to coming in view, thanks to the fallout over a central Asian oil investment and the wealthy Moldovan now using US courts to pry open the secrets behind the launch.
The dispute begins in Kazakhstan, drifts to Sweden, and eventually arrives on America’s shores, but our story starts in Moldova.
Anatolie Stati leads Ascom Group, an oil and gas firm operating throughout central Asia. In leaked cables from 2009, a US diplomat described Stati’s family as one of the wealthiest in Moldova, with connections to—and rivalries with—the region’s rough-and-tumble political elite. The Moldovan elections that year were contentious to say the least: Gabriel Stati, Anatolie’s son, was arrested in Ukraine at the request of the Moldovan government for allegedly plotting a coup; the charges were eventually dropped.
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An arguably bigger problem for the Statis was a letter the Moldovan president, Vladimir Voronin, had written to Kazakhstan’s president Nursultan Nazarbayev in 2008, saying he should pay attention to what he described as Stati’s “blood-tainted business” and political meddling. (“Enmity between the Stati and Voronin families has never been a secret,” the leaked US diplomatic cable observed.)
Ascom owned several oil companies in Kazahkstan, investing $1 billion in oilfields there. Now, the Kazakh government was starting an investigation into those firms for possible tax fraud, which Stati’s lawyers say was “to intimidate and harass petitioners into selling their investments to the state-owned company KazMunaiGas at a substantial discount.” Ascom’s oil leases were eventually terminated and seized.
Nazarbayev’s regime had long been accused by NGOs and Western governments of corruption and flouting election laws. He resigned as president last year but is widely believed to retain significant influence in Kazakhstan. US lawyers for the Republic of Kazakhstan did not respond to Quartz’s requests for comment, but in court filings they maintain that the tax investigation was lawful and the oil concessions were only given to the state company to hold in temporary trust.
What happens to an international dispute when the rule of law on the ground is shaky? In this case, take it to Sweden. Under the Energy Charter Treaty, foreign energy investors can seek private arbitration there, and Stati did so in 2010, demanding $2.6 billon in damages. After three years, arbitrators ruled (pdf) that Kazakhstan owed Ascom some $500 million.
But winning a monetary award from a government is not the same as obtaining it, as many a global creditor has found. Kazakhstan refused to pay, leading Stati’s attorneys on a global race to make claims on the country’s assets abroad. They won recognition of the judgment in six countries, and have identified billions of dollars in Kazakh property from which they hope to seize the award.
Their efforts haven’t always been successful—in one notable case this spring, argued over Zoom and billed as one of the first virtual trials held by a London high court, Kazakhstan was able to establish that the funds held by the country’s central bank were not equivalent to those held by the government, and could not be seized.
US courts recognized the validity of the arbitrator’s ruling over Kazakhstan’s objections, but Kazakhstan’s lawyers maintained that the government has no commercial activity in the United States.
Which brings us to space.
A smoking rocket
In December 2018, SpaceX launched 64 small satellites from Vandenberg Air Force Base in California. It was the most spacecraft ever deployed from an American rocket. The ride-share mission was brokered by Spaceflight, a company that connects small satellite operators with the launch vehicles they need to put their assets in orbit.
Among the satellites launched that day, two were operated by a company called Ghalam, a joint venture between Airbus and the Republic of Kazakhstan.
Previous Kazakh satellites were launched domestically, from the Russian-operated spaceport in Baikonur that also is the departure site for cosmonauts and astronauts heading to the International Space Station. But state media reported that the government chose SpaceX for the 2018 launch at an all-in cost of $1.3 million because its Falcon 9 was cheaper and more reliable than Russian launchers.
“With all these blanket statements made to US courts that there is no commercial activity in the US, when you come across evidence that there is such activity, it calls those statements into question and underscores the need to investigate them,” says James Berger, a partner at the law firm King & Spalding who represents Stati in this matter. “What we’d like to determine is how the transaction is structured. What we’ve seen from the Kazakhstan state is a lot of its commercial activities are essentially run through other entities.”
To examine the transaction, Stati’s attorneys subpoenaed both SpaceX and Spaceflight, seeking to interview executives and view documents about the commercial relationship between Ghalam and the US firms. Both companies fought back; they also declined to speak to Quartz about the litigation.
While Elon Musk’s SpaceX is the rare space transportation firm to share a benchmark price—$62 million for its workhorse Falcon 9—it is no exception to the industry norm of keeping actual launch costs close to the chest. A 2019 contract with the US Air Force came in at $99 million a launch, while satellite executives often reference SpaceX discounts of as much as 20% for using previously flown boosters. The situation becomes even more opaque during ride-share missions with multiple middlemen.
During the 2018 launch in question, Spaceflight declined to provide a full manifest of the spacecraft onboard the rocket. Beyond trade secrets, both SpaceX and Spaceflight may simply want to signal to their customers, which include other sovereign nations with baggage of their own, that they will work to protect customer privacy.
Faced with a subpoena from Stati, SpaceX attempted to exclude records of sales discussions with the government of Kazakhstan, but Stati’s lawyers declined to accept the proposal. A federal court hearing in California to settle the issue was scheduled for April but postponed due to the coronavirus. Stati’s lawyers intend to keep pressing the matter.
Spaceflight, meanwhile, worked with Kazakhstan’s lawyers to fight the subpoena in a DC federal court, arguing the company has had no commercial relationships, contracts, assets, or debts from the Republic of Kazakhstan since 2016. Stati’s attorneys suggested this conflicts with what Kazakh government officials have said publicly—that they own the satellites launched—while arguing that Ghalam, Kazakhstan’s joint venture with Airbus, would likely qualify as an agent of the Republic. In June, a Virginia judge agreed, and ordered Spaceflight to provide documents and make an executive available for a deposition.
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That result suggests that SpaceX also may have to share its knowledge about Ghalam’s satellites with Stati’s attorneys. Though the specifics are likely to be held in confidence or redacted by the court, there’s a good chance the public may learn more about how the most competitive commercial rocket in the world is bought and sold.
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Focalor will sell you new content for the low low price of half of your Steeletech shares. It’s a Steele!
I’m back from backlog hell, and here with a new patch featuring some new scenes and items I wrote myself!
0.8.102 Changelog:
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- Three new win scenes for the gabilani chemist: tail docking (with 3 sub-variants), over-endowed “hyper” fun (with a possible extra ending), and some good ol’ fashioned face riding for the lady-types. (More on the way, including some sex scenes for PC’s with normal sized male endowments. Don’t worry!)
- A new NPC shopkeeper is available on Dhaal to sell you some fun outfits. Currently she only has six items available, but I have plans for some more on the way, including some fashionable party wear in case you need to attend a shindig with Dhaal’s upper crust…
- New busts: Huskar Erra (+Big Boobs), Rivet, Lewd Frostwyrm, Sydian cuntboy, and of course, the one and only Focalor.
There’s some bigger submitted works coming from community coders to look forward to as well. I’ll also be re-opening event submissions in a limited way this coming week too. Progress ahoy!