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Cyprus exposed: links to the Khrapunov fund diversion network suspected

Author: admin | 02 May 2013

While the Ablyazov files have an evident string of Cypriot connections related to them, most of which have come to light years ago, traces of links with a similar (though less in financials) fund embezzlement scheme centred around the former mayor of Almaty Viktor Khrapunov, having taken refuge in Switzerland, to the Mediterranean island remain scant. What is clear, however, is that the latest disclosures through the project OffshoreLeaks once more demonstrates that claims by white-collar criminals on the run from former Soviet republics that they are no crooks at all but rather political opposition figureheads subject to repression in their countries of origin, are doubtful at best. As for the Khrapunovs, it may already be too late for the authorities in Switzerland, where the family is under investigation on suspicion of laundering stolen funds, to eventually return the money to Kazakhstan. Whereas the suspects have no restricted freedom to move around the globe imposed on them, the cash is hopping even more freely around and most of it is no longer located in the Helvetic confederation.

CHARLES VAN DER LEEUW, WRITER, NEWS ANALYST

Cyprus exposed: links to the Khrapunov fund diversion network suspectedBank accounts on Cyprus exposed both by the Mediterranean island’s new legislation making deposit holders accountable and taxable in relation to cash staked in the formerly protective country’s banks’ coffers include those held by the Khrapunov family, headed by the former mayor of Almaty and cabinet minister Viktor Khrapunov, reports by Kazakh local media suggest – without, however, giving more details. According to a report dated April 25 and published by Tengrinews (referring to a local newsreel known as Nomad) (http://tengrinews.kz/kazakhstan_news/smi-hrapunovyi-hranili-sberejeniya-v-bankah-kipra-233005/), Viktor Khrapunov and his spouse Leyla have deposits on Cyprus with “savings for a rainy day”. The article also suggests that revenue from the sale of the family’s main asset in Switzerland, known as Swiss Development Group to a Swiss tycoon are supposed to have ended up in Cypriot bank accounts.

Economic relations on the record between Kazakhstan and Cyprus are modest to some but the island’s role as a cash haven for Kazakh citizens is beleved to be significant. “Kazakhstan’s citizens’ deposits kept with Cypriot banks do not exceed $40-50 million, Tengrinews reported on March 21 (http://en.tengrinews.kz/finance/Kazakhstans-depositors-keeping-about-50-million-with-Cyprus-banks-17946/), quoting FINAM investment holding company experts. “Individuals account for most of the deposited amount. Anton Soroko, a FINAM analyst, notes that given the insignificant cooperation between Kazakhstan and Cyprus [Kazakhstan’s FDI to Cyprus for the 9 months of 2012 stood at $0.8 million, whereas in 2011 the figure made up $40.6 million] one may assume that the amount of Kazakhstan citizens’ money deposited with Cyprus banks is not substantial.”

However, the agency also quoted another official claiming that the amount of Kazakh money “parked” in Cyprus exceeds a billion greenbacks. “Olzhas Khudaibergenov, Director of the Kazakhstan Institute for Macroeconomic Studies, said, citing the country’s Vice Minister of Finance, that Kazakhstan’s individuals and entities keep around $1.1 billion with Cypriot banks,” the report reads further down. “According to him, the actual figure might be 2-3-fold bigger as part of the money was channeled to Cyprus via other countries.”

According to an Interfax report dated April 24 this year, the number of suspects-in-the-run sought by Kazakhstan in the CIS and further abroad stands at 2,465, the agency reported quoting First Deputy Prosecutor General Johann Merkel. “According to the Statistics Committee, a total of 2,465 persons are sought by Kazakhstan on various charges including 2,285 on the wanted lists of CIS agencies and 180 people on the Interpol list,” the official was quoted as telling the plenary session of the Kazakh Lower House of Parliament in Astana. “Merkel noted that with the assistance of Interpol, 50 of Kazakhstan’s fugitives have been tracked down,” – in the agency’s words. Among the cases pending, those of the Khrapunov family, fugitive banker/swindler Mukhtar Ablyazov of the BTA bank and his former colleague of Nurbank, equally former security chief, former diplomat and former presidential son-in-law Rakhat Aliyev stand out in terms of public profile. All three proclaim themselves “political dissidents” subject to “persecution” on behalf of the Kazakh state apparatus.

Realities prove to be quite different. Preliminary results of an ongoing judicial investigation into the wheelings and dealings of the Khrapunovs have revealed a number of business connections through strings of both domestic and offshore companies in the style of his son’s spouse’s father Mukhtar Ablyazov. Some of them had already been identified in media reports. But names and locations of mailbox and camouflage companies also point at Switzerland as Khrapunov’s main haven to stack his embezzled funds and collected “commissions” years before he ended up on the bank of Lake Geneva himself: a well prepared network to cache assets’ and funds’ ownership and keep them out of reach for Kazakh authorities trying to recuperate lost paper and cash. A recent global request for Khrapunov’s arrest and subsequent extradition to Kazakhstan was issued in late February this year. Switzerland is unlikely to honour such a bid, since “economic offences” are excluded from its list of reasons to extradite any foreign citizen, and on top of that Khrapunov’s application for Swiss citizenship dates from earlier times and therefore the extradition request cannot be taken into consideration in the decision whether or not to grant it to him.

Viktor Khrapunov’s soft landing as of 1997 as mayor of Almaty looks like an evacuation operation from national politics, with the option to combine the tragically famous combination of pubic responsibility with corporate irresponsibility after the notorious examples of the likes of Boris Berezovsky and Mikhail Khodorkovsky in the Russian Federation. By the time he made his second soft landing, this time in Switzerland, the mattress had become substantially thicker. Ireland-based, but German-controlled Depta Bank seems to have been playing a key role in he fraudulent transaction, back in 2003, of 15 million US dollar worth in bonds originally issued by the municipality of Almaty for the nominal sum of $7 billion, with the obvious channel to filter the difference minus a handsome commission for the German bank to Khrapunov’s Swiss-Dutch financial tandem Helvetica. But it might very well have played a similar role in cases where the honourable mayor and his equally honourable spouse and other associates could have played somewhat less honourable roles in a modern boardroom variant of Shakespeare’s display of old-time English royalty performance.

Victims of Khrapunov’s dealings at the time he occupied the City Hall of Almaty are likely to have a different opinion where his “political” claims are concerned. Investigations concerning Khrapunov’s network of proxies and the property deals involving it have been going on for less than a year so far. “On May 27, 2011 the financial police filed two criminal cases against Victor Khrapunov under Part 4, Article 308 of the Criminal Code,” a source in the financial police was quoted by Interfax-Kazakhstan in a report published on July 1. “Article 308 of the Criminal Code stipulates liability for abuse of power or official authority, while Part 4 specifies fraudulent actions committed to obtain personal gain and cause other persons or organizations to suffer damages,” the news report read.

On August 19, newsreels reported the start-up of a “criminal investigation” against Khrapunov – without giving any details. A sanatorium meant to grant elderly people, including those who have risked their lives in the ill-fated attempt by the Red Army to get Afghanistan under control, some comfort towards the end of their lives, two kindergardens meant to give the young some comfort and hope and a number of vacant locations, have been illegally appropriated by companies affiliated with Almaty’s former mayor Viktor Khrapunov, with the ultimate aim to resell them to developers planning  to build glossy plazas for the newly rich to indulge in. Four individual, though strongly interrelated, cases have been singled out as samples by prosecutors currently investigating into the complex string of affairs in order to sustain criminal charges put forward against the ex-mayor and some of his associates. The complete picture, though, is supposed to be a lot more complex and involves much larger sums of cash pocketed in the process – given the hundreds of million Swiss francs the Khrapunov family is indulging in up in Switzerland these days.

At the time when Kazakhstan’s leadership started to realise on how many assets they were sitting on while not knowing how to capitalise on them, foreign parties were already besieging those assets – say uranium, oil, gas, base and precious metals and ceramics – which could be “commercialised”, meaning undervalued and subsequently be seized at scrap prices. In this domain, there was little chance that white-collar cowboys of local origin could ay any hand on any property worth trying. Instead, people like Khrapunov must have started to look at what would and could be done with the spin-off in terms of cash collected from upstream commodity deals. This, of course, meant the luxury assets the gainers of the upstream business would like to indulge in – and lo and behold: there were all of a sudden the former Soviet property assets in vogue.

The test case seems to have come with the option for Khrapunov to lay his hands on some “immune” property secured by the public sector in this manner back in 2001. At stake were two plots of historic prestige even though they hardly might have looked like it. But the two dull-looking premises on the outskirts of the centre of Almaty harboured the most venerable old soldiers who heroically exposed themselves to the deadly gun- and tank-fire in the Second World War and after that in the Soviet Union’s hapless war in Afghanistan (featuring remarkable similarity with America’s present-day killing fields on the same location) in which despite the war’s misconception they hardly showed to be less foolhardy for it.

At the time the first trouble concerning Khrapunov’s German home bank in Kazakhstan arose, the Deutsche Welle on October 6 showed Germany’s Counsillor Angela Merkel pledging that her government would “pledge that those who have conducted business irresponsibly will be held to account. The government will ensure that that happens.” When it is supposed to do so, she failed to mention. This leaves German victims a long way from any possible comfort to the money thus plucked out of their pockets from the global racketeers’ gang known as corporate banking business. Where that leaves their victims in Kazakhstan is not very hard to guess. In all: crime pays – from the glamorous Brandenb?rger Tor to the back streets of Almaty.

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