The Netherlands’ Own Kazakhgate In The Air – And For The First Time On Air

The Netherlands’ Own Kazakhgate In The Air – And For The First Time On Air

In a two-part broadcast under the header ‘The Dubious Friends of Donald Trump: The Russians’ the Dutch broadcaster VARA went on air with a primer on Kazakhstan’s long-fingered gentry, virtually ignored by all Dutch media for more than a decade. The two-part documentary touches upon a number of Trump related figureheads of sinister backgrounds. But their activities point less at the Russian Federation than at Kazakhstan; in fact, numerous key players are Kazakh outlaws and not Russians.

by Charles van der Leeuw, writer, news analyst

“Although still in its early days, Donald Trump’s presidency is coming under fire,” the programme’s introduction reads.. The Russians are alleged to be in possession of sensitive information about Trump. And that exposes Trump to blackmail. Fake news, tweets Trump: “I have nothing to do with Russia – no deals, no loans, no nothing!” Trump swears he has no ties with the Russians. But is that actually the case?” That question is answered by no – yes he has, which is illustrated by “another explosive dossier concerning Trump’s involvement with the Russians: Trump’s business and personal ties to oligarchs from the former Soviet Union,” in the introduction’s words. “Powerful billionaires suspected of money laundering and fraud, and of having contacts in Moscow and with the mafia. What do these relationships say about Trump and why does he deny them? How compromising are these dubious business relationships for the 45th president of the United States? And are there connections with the Netherlands?”

Such questions are a lot easier to ask than to answer. The “billionaires” mentioned feature Viktor Khrapunov, ex-mayor of Almaty who embezzled hundreds of millions (euro, that is) in a massive real estate scam in the former Kazakh capital, the country’s sole metropolis thus far. The revenue was funneled out of Kazakhstan through a network of mailbox firms located in Switzerland (where Khrapunov and family are currently in hiding), Luxemburg, Cyprus and last but not least The Netherlands. A pivotal role was played by two Dutch enterprises: Bayrock and KazBay – both run by another Kazakh by the name of Tevfik Arif.

“Investigations conducted by ZEMBLA show that Bayrock has formed a business construction in the Netherlands, which may have been used to siphon off one and a half million dollars,” the VARA dossier reads further down. “In this enterprise, Bayrock collaborated with Viktor Khrapunov, a fugitive ex-mayor and governor from Kazakhstan. The Kazakhstan government accuses Khrapunov of systematically looting hundreds of millions of public assets. The network of companies works as follows: The hub of the enterprise is the Dutch letter box company KazBay B.V. In the act of incorporation it states that KazBay is owned by two companies: the Dutch firm Bayrock B.V. and the Swiss company Helvetic Capital S.A. This email explains that Trump’s business partner Bayrock Group L.L.C. is behind Bayrock BV, and that the actual owner of Helvetic Capital S.A. is none other than the wife of Viktor Khrapunov. This mail clearly refers to the use of a Dutch go-between company. Its contents also reveal that the Dutch construction was formed by the law firm of Rudy Giuliani who, at the time, was a partner in Bracewell & Giuliani LLP, and is also a Trump confidante. In this agreement  Bayrock and Khrapunov agree to deposit 1.48 million dollars in KazBay. On 25 September, Bayrock transfers its share of 740,000 dollars, evidence of which is recorded in the bank statements. Bayrock informs an investor that the 1.48 million was invested in mining operations in Kazakhstan. […] The Dutch intermediaries were directors of KazBay for eighteen months. During this time, various articles were published, exploring the murky past of Bayrock and Khrapunov.

Six months ago, the Financial Times wrote this article about Khrapunov and his business partner Bayrock, accusing KazBay of operating as a money laundering channel.”

The tandem Arif-Khrapunov leads to another, even more sinister character, a Russian-born American by the name of Felix Sater. “Donald Trump appeared entirely unconcerned by the criminal background of his then business partner Felix Sater. In an email to an investor, Sater observes that Trump’s main consideration was to turn the situation to his own financial advantage. In the email, Sater refers to a meeting that took place on 23 January 2008,” the VARA dossier reads. “According to internal documents belonging to Bayrock, the gathering was an important meeting which required the presence of all Trump SoHo business partners. Prior to the meeting, Sater appears to have been in contact with Trump. In an e-mail Sater tells his colleagues: ‘Donald is happy with me’. At the time of the meeting, Trump is fully aware of Sater’s past. A month earlier, on 17 December 2007, the New York Times published an article on Sater and his criminal deeds. On 19 December 2007, Donald Trump declares his intention to look into the matter.”

Had he done so, Trump would certainly have undergone some surprises. “The Russia-born Felix Sater—a twice-convicted one-time Mafia associate—is demanding hush money from a former boss, Kazakhstan-born Tevfik Arif, whose Bayrock Group worked in a close partnership for nearly a decade with the Trump organisation, an article published shortly after the broadcast written by Richard Behar, contributing editor of investigations for Forbes Magazine but weirdly enough posted not by Forbes but by a newsreel named Alternet, maintained by an organization called DC Report. “Sater warned Arif, in writing, that news headlines will read: The Kazakh Gangster and President Trump, unless Arif forks over $3.5 million to reimburse Sater for legal expenses he claims he’s owed, the Journal reported. Specifically, Sater is threatening to reveal negative information about Arif’s past relationship with President Trump and the Republic of Kazakhstan — as well as Arif’s alleged connections to ‘organised crime figures’ and his business activities in Kazakhstan, which involve dealings in the post-Soviet metals industry there. Spokespeople for Bayrock and Arif have called the allegations unsubstantiated falsehoods.”

That is not the opinion of Frederick Oberlander, a New York-based attorney specialised in tax law. “He took legal action as far as the United States Supreme Court calling for the public disclosure of the sealed legal dossier of Felix Sater,” ZEMBLA relates. “His attempts have proved largely successful. Previously, a variety of lower courts had ruled that Oberlander was enjoined from in any way revealing secret documents on Sater that he had obtained from a Bayrock employee, and instructed not to refer to the case at all. Oberlander has been conducting legal proceedings against Bayrock for years. He instigated what’s known as a ‘qui tam’ case against the company in 2015. ‘qui tam’ is a specifically American law suit filed by a private individual, acting as prosecutor (a private Attorney General) to recover misappropriate government funds (in this case taxes).

In the case against Bayrock, the public prosecutor of the State of New York has given Oberlander the go-ahead to represent a group of clients who are suing Bayrock ‘on behalf of themselves and the State of New York’. According to Oberlander, Tevfik Arif, Felix Sater and Julius Schwartz are guilty of perpetrating various types of fraud, and have attempted to conceal their fraudulent activities.

The name Julius Schwartz (nothing to do with the legendary comic publisher of the same name) requires some explanation which unfortunately cannot be found in the ZEMBLA files. In an exhaustive report posted in late May 2016 by The Daily Telegraph under the header “Donald Trump signed off deal designed to deprive US of tens of millions of dollars in tax“ describes Schwartz as “Bayrock’s executive vice president and general counsel”. His name, however, does not seem to appear in the Dutch Connections, for which the Dutch broadcaster has been particularly looking.

“The American real estate development company Bayrock, through which Donald Trump constructed hotels and apartment complexes, used Dutch letter box companies in a network suspected of being involved in money laundering. A ZEMBLA investigation suggests that Bayrock siphoned off $1.5 million dollars by setting up a corporate structure in the Netherlands in 2007. In New York, Bayrock also stands accused of large-scale tax fraud. This incriminating information could place Donald Trump in an extremely difficult position, claims attorney F. Oberlander, who is prosecuting Bayrock on behalf of the State of New York: “The maximum jail term would be 30 years. So you’re in really serious trouble.”

In 2005, Donald Trump became 18% owner of an hotel-condominium known as Trump SoHo. Bayrock, the other owner, is accused of perpetrating fraud on a grand scale through, among other things, Trump SoHo. According to US law, this means that Trump is jointly liable for Bayrock’s criminal activities. Oberlander concludes: “Anybody running a business through a pattern of crime is guilty of racketeering. Anybody knowing what they’re doing and are helping is guilty of racketeering conspiracy. They go to jail.”

“All Bayrock wants is to make clear to ZEMBLA that the Dutch corporate construction was established on the advice of an external legal counsel. ZEMBLA discovers that the firm in question is Bracewell & Giuliani. Rudy Giuliani, the former mayor of New York, and part owner of the law firm at the time, is also a Trump confidante. ZEMBLA has access to correspondence between the law firm and the Dutch director of a trust company in Amsterdam, which leaves no doubt as to the ultimate beneficiary owners of the Dutch business construction: the director of Bayrock and the Khrapunov family from Kazakhstan.”

“Viktor Khrapunov is a fugitive ex-mayor and governor from Kazakhstan. The Kazakhstan government accuses Khrapunov of embezzling hundreds of millions of state assets. In 2007, Bayrock and the Khrapunov family founded the Dutch joint venture KazBay B.V. ZEMBLA has copies of the act of incorporation, bank statements and internal communications showing how the suspected money laundering scheme was set up. It was designed to get millions of dollars out of New York into Europe. Through KazBay. KazBay was just a conduit, asserts attorney Oberlander. The Dutch director of KazBay B.V. tells ZEMBLA that he has no knowledge of his clients’ dubious backgrounds. In 2007, the year that the Dutch letter box companies were established, Viktor Khrapunov’s alleged criminal dealings become public knowledge. Around the same time, it also becomes clear that Felix Sater, one of the Bayrock owners, has concealed his criminal past and mafia connections. For years, the Dutch Central Bank has been concerned that Dutch trust companies are failing to comply with legislation. Over half of the companies investigated by the Dutch Central Bank are in breach of the regulations, such as subjecting their clients to rigorous screening. Investigations performed by the supervisory body reveal that hundreds of politicians from Russia and Kazakhstan make use of Dutch trust companies. Frank Elderson, director of the Dutch Central Bank: “There are no legal stipulations forcing you to do business with a former political hot-shot from Russia or any other high risk nation.”

One of the striking aspects in the Dutch documentary is that while Khrapunov is amply highlighted the name Mukhtar Ablyazov does not appear at all – and recent revelations convincingly show that who says Khrapunov, says Ablyazov. As we reported many times before, The Netherlands have been a key hub in Ablyazov’s fraudulent schemes from a very early stage.

Charles van der Leeuw. FUGITIVE LONG-FINGERED GENTRY FROM THE PLAINSNEW eBOOK on sale exclusively by KazWorld
Charles van der Leeuw
The story of Mukhtar Ablyazov, one-time major shareholder and chief executive of Kazakhstan’s BTA bank, tells how well over 10 billion US dollar is supposed to have been reaped through his network of close to 800 fake companies.

From the beginning, meaning long before Ablyazov took control of the Bank Turan Alem (BTA) following the dubious death of former majority-owner Yerzhan Tatishev, Turan Alem Securities BV, a Dutch-based subsidiary, was used on a multi-billion scale to transfer loans allocated by BTA to an offshore haven where they were out of reach for both the bank and the Kazakh authorities. “Dutch” firms have appeared in the Ablyazov files time and again. Another remarkable feature of the documentary is that there are no comments from Dutch prosecutors and the only one to speak up for the law is the Central Bank executive quoted above. As long as the law refrains from openly taking action, The Netherlands remains a laundering paradise to be compared with its counterparts in Switzerland and the Caribbean. As for mass media, the praiseworthy primer by the VARA should be a wakeup call.