May 27 (Bloomberg) -- The former head of Kazatomprom, Kazakhstan’s state-run nuclear energy company, was accused of embezzling state shares in uranium deposits, including one co- owned by Canada’s Uranium One Inc.

Uranium One fell the most in almost nine years on the Toronto Stock Exchange.

Mukhtar Dzhakishev, who was arrested earlier this week, abused his position as Kazatomprom chief and embezzled state shares in “large uranium deposits” by “transferring” them to offshore companies, Kazakhstan’s National Security Committee said today on its Web site.

On Dzhakishev’s orders, Kazatomprom in 2005 sold a 30 percent stake in TOO Kyzylkum, a joint venture with Uranium One’s UrAsia London Limited unit, for 15.6 million tenge (about $103,000), the committee said. “Proof of illegal transfers of mining rights for other deposits was also uncovered,” it said.

Dzhakishev’s mobile phone was not in service when called by Bloomberg News. Kazatomprom spokesman Sergei Nasyrov declined to comment on the report.

“We believe there ought to be no impact whatsoever,” Uranium One Chief Executive Officer Jean Nortier said of the possible fallout from the accusations against Dzhakishev.

“We paid full value for those assets and we bought them at arm’s length,” he said by mobile phone. “The Kazakhstan government gave us a letter saying they approve the transaction.”

Trading Halt

Uranium One fell C$1.30, or 40 percent, to C$1.99 at 4:36 p.m. in Toronto trading. The percentage decline was the biggest since July 28, 2000. Uranium One, which trades under the symbol UUU, has risen 11 percent this year.

“If allegations are true, we believe UUU’s ownership of its Kazakh assets could be questioned,” Bart Jaworski, an analyst at Raymond James Inc. in Vancouver, said today in a note to clients. “Such allegations could potentially spook the Japanese consortium which is currently working with UUU to close its C$270 million private placement” and uranium supply agreement.

A group of Japanese companies led by Tokyo Electric Power Co. and Toshiba Corp. agreed to acquire a 19.95 percent stake in Uranium One, according to a Feb. 10 statement.

In 2007, Dzhakishev and Kazatomprom denied media reports of alleged illegal uranium-mine sales to foreign companies, calling them “absurd,” according to a company statement released to the Kazakhstan Stock Exchange.

Under Dzhakishev, Kazatomprom planned to make Kazakhstan the world’s largest uranium producer in 2009, the company said last year. The Central Asian country has 15 percent of the world’s reserves of the metal, according to the World Nuclear Association. Dzhakishev sought to expand Kazatomprom’s reach to include power generation and power-plant construction.

Kenzhebulat Beknazarov, a spokesman for the National Security Committee, declined to comment or to provide information about Dzhakishev’s legal representation, citing the ongoing investigation. Saulebek Zhamkenov, a spokesman for the Prosecutor General’s Office, wasn’t available for comment.

To contact the reporters on this story: Nariman Gizitdinov in Almaty, through the Moscow newsroom at ngizitdinov@bloomberg.net; Carli Lourens in Johannesburg at clourens@bloomberg.net

Last Updated: May 27, 2009 16:40 EDT