Eurasian Bank Ex-CEO Yertayev Arrested on Embezzlement Charge

Aug. 26. Bloomberg

By Nariman Gizitdinov

Eurasian Bank Ex-CEO Yertayev Arrested on Embezzlement ChargeKazakh authorities arrested former Eurasian Bank Chief Executive Officer Zhomart Yertayev on suspicion of embezzlement in connection with $1.1 billion in losses at Alliance Bank, which he led from 2002 to 2007.

The arrest was approved Aug. 25 by the district court in Almaty, said Murat Zhumanbai, a spokesman for Kazakhstan’s financial police, in a telephone interview today. Yertayev was detained last weekend, the news service Kaztag reported yesterday, citing an unidentified person.

Yertayev was removed as CEO of Eurasian Bank last month under an order from the Agency for Financial Supervision, which cited his role in the losses at London-traded Alliance Bank. Yertayev filed accounts that inaccurately reflected Alliance Bank transactions with foreign customers, the agency said.

Yertayev, speaking to reporters July 8, denied any wrongdoing, saying he hadn’t signed the documents mentioned by the regulator and the deals were completed after he left Alliance Bank. He couldn’t immediately be reached for comment today. Yertayev’s mobile phone referred callers to his secretary at Eurasian Bank, where he remains a consultant. Mikhail Yegorin, a spokesman for the bank, declined to comment.

Eurasian Bank is owned by Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, founders of Kazakhstan-based ferrochrome, iron ore and aluminum producer Eurasian Natural Resources Corp. Yertayev was hired to create a “powerful, universal lender,” Machkevitch said in September.

Alliance Bank said in May that it had given $561 million of U.S. Treasury bonds to Metropol (Cyprus) Ltd., a member of the Russia’s Metropol Group, and $542 million to an unidentified Russian lender to repay funds borrowed by offshore companies from 2005 to 2008. The bank said April 13 that it had stopped paying creditors after discovering liabilities that weren’t reflected on its balance sheet.

Seimar Alliance Financial Corp., which owns 81.7 percent of Alliance Bank, offered in February to sell a 76 percent stake to Samruk-Kazyna, the state’s economic bailout fund, for 100 tenge (66 cents).