May 27, 2008

Excerpts from a recording of a meeting at Bayrock’s offices
in the Trump Tower (New York).


Tevfik Arif (Founder/principal owner)
Julius Schwarz (Exec VP, and often the general counsel)
Jody Kriss (Director of Finance)

Kriss: What do we have in Kazakhstan?

Arif: We have an oilfield. We have a [sic] coal properties.

[Note: The Kazakhstan-born Arif speaks with a heavy
foreign accent, and what sounds like limited working
proficiency in English]

Kriss: It’s a good deal?

Arif: I don't know how it works, but it's not just our company
drilling. We have five different also companies drilling also.

Kriss: We’re a partner in five different oilfields? One oilfield,
but there’s five different—

Schwarz: There are other people drilling in the same vicinity.

Arif: In the same property — not same property, but its

Kriss: So is it working? We have oil?

Arif: Maybe.

Kriss: …What happened with the coal deal? We have coal also?

Arif: Coal we have also.

Schwarz: We have no coal. We don’t have—

Kriss: We have coal, or no coal?

Arif: We have two coals. We [unclear word] two coals [unclear
word] full control. I told Felix, ‘Felix, I don’t want to go this deal
before we do all paperwork.’ He said, ‘No, no, we can’t do it, and I
know, Tevfik, for many years you don’t do it — somebody doing
money and your papers are ready, it’s finished.’

Schwarz: Yeah, we spent about $400-500,000 on a coal field
that we don’t own.

Kriss: Why?

Arif: [pause] It's a deal now who spends with us saying we can
buy you out.

Kriss: Does it occur to anyone that this is not smart, spending
half a million on a coal deal you don't own?

Schwarz: It occurs to me.

Kriss: So why do we do this?

Arif: It’s a 50% deal.

Kriss: You own 50% of a partnership, but the partnership
doesn’t own the coalfield.

Schwarz: No, you own nothing. You don’t own the coal.

Arif: Who?

Schwarz: You don’t own the coal.

Arif: What? What you say?

Schwarz: We don’t own the coalfield!

Arif: Who’s told you? Our partner —

Schwarz: Myself. I told myself! I know the documents.

Arif: Okay, who’s own?

Schwarz: That’s another good question because Khrapunov
said that they own it, all of a sudden they had a partner, and
they had to buy the partner out.

Arif: Yes.

Schwarz: And I heard all these stories, but I never got the
documents to show anything, so I have no idea.

Arif: That's what I’m [unclear word]. Now Khrapunov back to
his son, back to us, say, ‘Don’t worry, we can buy you out. You
want we pay you loan money’ — and I know why, because it’s a
very good deal. I know he wants to pay us and buy out. I don't
want it. I want to finish documents. I want to finish

[Note: “Khrapunov” here evidently refers to “Viktor,” and
“his son” here is evidently his eldest son, “Ilyas.” Both are
fugitives in Switzerland.]