Financial Times December 29,

Tractebel, the Belgian power utility, is considering a number of options for its operations in Kazakhstan as part of a review of its international business.

The company said yesterday it was not necessarily planning to pull out of the region, although that was an option, as were partnerships or new contracts with other operators in the area.

The company confirmed it was embroiled in an international criminal investigation because of alleged payments of Euros 50m (Pounds 31.2m) to Kazak businessmen in 1997 in connection with a gas pipeline concession. The company said it had been made aware in July or August by its banks in Switzerland that there were legal problems with its partners in Kazakhstan.

Tractebel had also taken its own legal action in November over alleged kickbacks that may have been made to employees by the Kazakh businessmen.

It filed a suit against Nicolas Atherinos, its former vice-president for Asia, who was sacked in August 1998. The suit also includes ny other, unspecified, people who may have received kickbacks.

Jean-Pierre Hansen, Tractebel's chief executive, said yesterday Kazakhstan was a "very difficult" country in which to operate. After his appointment in March, he moved to shake up the company's control systems. It has now put in place new systems to try to ensure that the problems in Kazakhstan would not be repeated.

As well as making a country risk provision of BFr8bn (Pounds 125m), which would cover the Kazakh businesses, Mr Hansen has appointed a crisis manager for the region, reporting to him and the company's chief financial officer. Until then, only one or two people in the region were aware of all the different business processes and monitoring systems for Kazakh companies.

Mr Hansen also decided to rationalise the large list of consultants covering the Kazakh businesses, although he stressed this was unconnected to the kickbacks lawsuit. "It was a general decision to rationalise who is doing what in and for Kazakhstan in the hope of trying to limit the losses in the field and improve the operations," he said.

Tractebel has two main operations in Kazakhstan. It runs the Almaty Power Consolidated company, which supplies electricity and heating to the city of Almaty, and has a concession to operate the country's two gas pipelines.

Mr Hansen said there was no deadline for completing the review of the company's overseas operations.

Financial Times December 29