Ablyazov’s Kazakh nuke deal: scandal pops up in the USA in distorted form/II

In a strange-looking coincidence, the first cash has been returned to the embattled Kazakh bank BTA after the sale of an estate outside London which had been used by former BTA chief and majority shareholder Mukhtar Ablyazov to launder ill-obtained funds. It appears that in the case of the English real estate bought in this manner those funds had been generated by the clandestine transfer of a number of uranium mines in the south of Kazakhstan to an offshore firm belonging to Ablyazov, as established more than once by English courts of law. With hundreds of millions of “profit” pocketed by Ablyazov, the mines were later sold to a Canadian tycoon who also happens to be a close pal of Bill Clinton, and who was to pay hundreds of millions in greenbacks for the assets – which he later managed to re-sell to a subsidiary of Russia’s state nuclear corporation. The affair has popped up once more in an attempt by right-wing propagandists to throw mud at the Clinton couple pending election campaigns in which Hillary Clinton appears as a front-runner.

BY CHARLES VAN DER LEEUW, WRITER, NEWS ANALYST

Ablyazov’s Kazakh nuke deal: scandal pops up in the USA in distorted form/II“A sprawling country estate boasting a six-bedroom mansion, four cottages, two log cabins and a polo pitch that was once seized from a fugitive Kazakh billionaire has been sold for £25million. Mukhtar Ablyazov, who is alleged to have siphoned off £3.2billion of bank assets in one of the biggest frauds of its type, was convicted of contempt of court in 2012 by a High Court judge,” the Daily Mail [http://www.dailymail.co.uk/news/article-3060956/Sprawling-Surrey-estate-four-cottages-two-log-cabins-polo-pitch-seized-fugitive-Kazakh-billionaire-help-pay-creditors-sells-25million.html] wrote on April 28 after the first transaction in the age-long Ablyazov files that has actually brought in some of the losses suffered by BTA bank – almost a decade after they were inflicted. . “The businessman was found to have lied about owning Oaklands Park, a 100-acre estate in Surrey with a 12,000 square foot main home and four further cottages. However, a judge said the prosecution had proved Oaklands Park and another mansion in Hampstead, London, were his and the properties were seized so they could be sold to pay creditors. Despite an arrest warrant being issued and airports told to keep an eye out, Ablyazov managed to evade authorities and flee the UK. His Surrey estate, formerly owned by American tech tycoon Michael Dell, has a palatial main home boasting six main bedroom suites, five reception rooms and an indoor swimming pool. There are also four further cottages, two log cabins and a pair of American barns comprising of 33 stables. In addition, the estate has a full size polo pitch and formal gardens. It was put on the market with Savills in September 2013 for £25million and sold this month. Savills, acting on behalf of the receivers KPMG, declined to comment on the sale. It is yet to be logged with Land Registry and it is unknown whether the property was bought by a company or an individual. […] Ablyazov, 51, moved to the UK in 2009 after the BTA bank he had run collapsed with £11billion debts. A number of western banks lent to BTA, including Barclays, HSBC and Royal Bank of Scotland. He was given asylum and police protection after an assassination plot was uncovered. But he was later convicted of contempt of court after trying to hide more than £34million of assets from creditors. He had bought Oaklands Park through a Seychelles company in 2006 for £18.15million, visiting the property at weekends. Ablyazov fled the UK after he was sentenced to 22 months in prison. He is currently thought to be in France awaiting extradition to either Russia or Ukraine.”

The origin of the money with which Mukhtar Ablyazov purchased his English real estate takes a special place within his overall embezzlement schemes. It came from a scam involving uranium fields in the south of Kazakhstan – as described in the previous episode and also as confirmed in the trials against Mukhtar Ablyazov and a number of his associates downtown London, ending on February 16 in a verdict condemning Ablyazov to 22 months in prison for “contempt of court” – a British equivalent for perjury. Earlier, Ablyazov’s former associate and brother-in-law Syrym Shalabayev was found guilty of the same offence and sentenced to 18 months imprisonment in consequence. “He has not served his sentence and is currently abroad,” Ablyazov’s verdict’s court report reads. “Since it is Mr. Ablyazov’s case that Syrym Shalabayev is the owner of Carlton House, Oaklands Park, the flat in Elizabeth Court and FM Company.

The report relates Shalabayev’s career as follows. “He was born in 1969 in Kazakhstan and graduated from the Kazakh State University in Almaty in 1997 with a law degree. In addition to trading in commodities (exploiting price differentials between different regions in Kazakhstan) he imported cars into Kazakhstan from Russia and owned ‘a number of shopping centres’. He was also involved in the recovery of minerals (mainly manganese ore) and the supply of petroleum products. He owned ‘a few fuelling stations and petroleum product storage facilities.’ […] When Mr. Ablyazov was imprisoned in 2002 Syrym Shalabayev took Mr. Ablyazov’s wife and children to London.”

What happened the following year gives some insight, and also provides proof, though rather circumstantial, that Ablyazov and his associates have been far more directly involved in Mukhtar Zhakishev’s dealings than so far assumed. “In that year [2003], on 14 August, [Shalabayev] founded a company which secured a contract to form a joint venture with the Government of Kazakhstan which was anxious to invest in the uranium industry. His company was to invest “at least US$2m.” The price of uranium increased. But there was “political risk” because “control over natural resources which become more expensive and profitable for investors is grabbed by President Nazarbayev’s family.” Mr. Ablyazov advised him to sell and offered to find an investor in return for 30% and if the price was more than US$50m. the excess would be split 50/50. […]  ‘Changing the ownership structure’ […] involved transferring his interest in the joint venture to an off-shore company owned by another off-shore company Widley Worldwide of which Mr. Syrym Shalabayev was the UBO [ultimate beneficiary owner]. On 7 November 2005 he sold his uranium business to Urasia Energy Limited for US$350m. This was his “biggest transaction”. Mr. Ablyazov was entitled to US$160m. of the sale proceeds.”

“His” transaction? Shalabayev UBO of Widley? Reading documents filed by BTA at the London court, it becomes all too clear that the deal has been Ablyazov’s from beginning to end, leaving Shalabayev’s role limited to little more than that of a signature for hire throughout the entire process. In order to prove its perjury case that two of Ablyazov’s real estate assets in Britain, Oakland Park and Carlton House, may well have been bought with some of the uranium deal’s proceeds but not, as both Shalabayev and Ablyazov told the court earlier, by the latter but by the former, two core documents were accepted by the court. “The first was a letter written by Mr. Ablyazov to the President of Kazakhstan dated 14 January 2004,” the verdict’s text explains. “There was no dispute that Mr. Abylazov had written it. Mr. Ablyazov was described as the “Head of the Board of Directors of Astana Kazakhstan Investment Group.” In the letter he requested the President to support a plan for private investment in the production of uranium. Astana was to provide 70% of a joint venture. Thus, far from only being brought in to sell the investment in 2005, Mr. Ablyazov was head of the board of directors of the investing company.”

The second document introduces yet another key figure among Ablyazov’s men of confidence he used in his schemes, Alexander Udovenko – in the verdict’s words “… one of Mr. Ablyazov’s most trusted associates until sometime in late 2009 (when, it seems, he disappeared). He was a Russian lawyer who had practised with an American firm in Moscow and had then worked for an American bank in Moscow. From 2001-2003 he studied in London obtaining a diploma in law and an MBA. […] He was the nominee UBO of at least some of Mr. Ablyazov’s companies and as such made use of corporate service providers in off-shore jurisdictions, in particular in Cyprus and the British Virgin Islands. He was assisted by Syrym Shalabayev, Mr. Ablyazov’s brother-in-law who, in the Autumn of 2008, replaced Mr. Udovenko as the nominee “beneficial owner” of at least some of Mr. Ablyazov’s companies.” It lasted till over the summer of 2009, when Udovenko “disappeared” and Shalabayev, considered his “successor” transferred the offshore operations from the UK to Cyprus.

The connection with the uranium mine sale is referred to in the second document, an email written by Mr. Udovenko to the group of lawyers Denton Wilde Sapte, dated 16 August 2005, and reveals the name of both the nominal and the real purchaser of the Kazakh uranium field. “Denton Wilde Sapte had been instructed to act in connection with the sale of the uranium business and had asked Mr. Udovenko for information as to who their client was, the court’s report reads. “Mr. Udovenko replied that the holder of the uranium deposits was a joint venture owned as to 70% by ‘our private Kazakhi company TOO Investment Company Astana.’ That company was owned by a Cypriot company which was in turn owned by a BVI company Widley Worldwide Inc. Mr. Udovenko said that the ‘beneficiary of the structure is Mukhtar Ablyazov – currently Chairman of the largest private bank in Kazakhstan – Bank TuranAlem’.” The judge concludes that “… Syrym Shalabayev’s evidence that it was the proceeds of sale of the uranium business which enabled him, at least in part, to purchase Carlton House and Oaklands was untrue.”

What follows in Forbes’ report strongly suggests that Ablyazov has used Mukhtar Zhakishev as a camouflage first and as a scapegoat later – and got away with it himself. “The [New York] Times says Kazatomprom, the state-owned uranium company, controlled the properties in which Giustra invested,” Forbes notes in its conclusions. “Not exactly true. In the major purchase (Akdala and South Inkai) that cost Giustra $350 million, 70% was owned by Mukhtar Ablyazov, a Kazakh banker; only 30% belonged to the state. Even as to the Kharassan property, which was 70% owned by Kazatomprom, the state company did not sign the agreement by which Giustra’s company, UrAsia Energy Ltd., acquired a 30% interest for $75 million. The seller in the Kharassan deal was Jeffcott Group Ltd., a private company incorporated in the British Virgin Islands.”

A report by Canada’s leading daily The Globe and Mail published on May 29, 2009, confirms the role of Jeffcott but adds that “the shareholders behind Jeffcott were never specifically identified, nor does it know how Jeffcott initially obtained rights to the project. […] In addition to the Kyzylkum asset, UrAsia paid $350-million in 2005 for 70-per-cent stakes in the South Inkai and Akdala uranium mines. The seller of those assets has been identified as Mukhtar Ablyazov.” Today, the Royal Court’s verdict’s file strongly suggests that Ablyazov agreed to provide Kazatomprom with a credit from BTA taking the uranium deposits as collateral and subsequently did what he was doing with numerous other collaterals: putting them on the books of an offshore holding which in reality he controlled himself. By leveraging the offshore holding, he “created” another claimant standing in the way between BTA and the collateral – thereby blocking the bank’s access to the asset. That so-called claimant must have been none less than Widley Worldwide Inc., British Virgin Islands, identified by the court. It can be assumed that Zhakishev obtained his bonus simply for looking the other way during the transaction, even though it yet leaves to be guessed what Rustem Tursunbayev’s role is supposed to have been.

As for Frank Giustra, he would later claim that he acted in good faith at the time he concluded his purchase from Jeffcott. But that was well before he sold UrAsia for $3.1 billion, or $7.05 for a share which two years earlier had been worth no more than 10 US dollar cents a piece, to a more renowned Canadian miner called Uranium One in February 2007 without ever having put a spade into the ground – thereby inflicting a loss of 2 billion 625 million dollar to Kazatomprom. This only adds to the handsome $425 million Ablyazov is supposed to have cashed in on the three uranium fields. The entire scam could put Giustra in the position of potential accomplice in Ablyazov’s diversion network – something that definitely has to be included in present-day BTA’s quest for its lost cash and assets recovery.

First part: Ablyazov’s Kazakh nuke deal: scandal pops up in the USA in distorted form

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