EXCLUSIVE: Mukhtar Ablyazov Escape From Justice: When Crime Pays

Belgiumgate: VdM et ses engagements vis-à-vis Moukhtar Ablyazov – piège ou trahison de justice?

With its troubled banking sector and its exposure to various threats to national security, Kazakhstan is seeing US and other Cold War II drummers step up their efforts to create western “client regimes” in the shadow, ready to seize power by hook or by crook (mainly by crook) if the occasion is deemed right. Sitting on (at least) 7.5 billion greenbacks in stolen cash, laundered through property and securities deals around the world and hidden on offshore bank accounts in the Caribbean, The Netherlands, Luxemburg and elsewhere, the judicial case of Ablyazov may be closed for the moment but the man and those backing him represents a danger to Kazakhstan that remains all too real for it.

by Charles van der Leeuw, writer, news analyst

“The Specialised Criminal Interdistrict Court of Almaty has sentenced ex-chairman of the Kazakh BTA Bank Mukhtar Ablyazov to 20 years in prison in absentia for embezzlement and organising a criminal gang, the court told RAPSI on Wednesday” Russia’s judicial newsreel RAPSI reported the following day. “The court also ordered forfeiture of Ablyazov’s property. Ex-Director for Lending Issues Kairat Sadykov was sentenced to 15 years in prison and asset seizure. Former Chairman of the Board Saduakas Mamesh and ex-First Deputy Chairman of the Board Zhaksylyk Zharimbetov received a 5-year suspended sentence each. According to indictment, Ablyazov has organised a criminal group to embezzle BTA Bank’s funds. Prosecutors claimed that companies controlled by Ablyazov had purchased the bank’s shares on money from loans illegally received from the bank. Therefore, Ablyazov and his accomplices “increased the bank stock.” The increase in the bank’s capital gave the appearance of BTA Bank’s success and enticed investors and depositors, prosecutors believe. The total amount of damage caused exceeded $7.5 billion. Zharimbetov pleaded guilty to charges, while Sadykov and Mamesh pleaded guilty in part.” The verdicts are conform the demands put forward by the Prosecution earlier.

Impressive but yet incomplete

The story gas been repeatedly told by us and others. In early spring 2009, a $10 billion hole in the balance sheet was disclosed, leading to the bank’s bail-out by the Kazakh state and the latter becoming a 78 per cent majority shareholder in it. Ablyazov fled to Britain, where the bank pursued numerous court cases against him with the aim to recover part of the stolen money and assets, about 3.5 million Sterling of which was stashed through circuits of offshore mailbox firms registered on British territory. In early 2012, faced with a 22-months prison term for perjury, Ablyazov fled the UK in turn. Looking back, his case reveals many connections with other criminal circuits both in Kazakhstan and abroad – leaving both the story proper and its wider context impressive but yet incomplete. The case, however, was to remain extremely important – since not only did it shed light on other cases of abuses in Kazakhstan some of which appeared to be closely related to the Ablyazov files while others showed more remote connections, but it also put other cases of billions and in all trillions that had been “swallowed” in the process of the “global crunch” between 2007 and 2010 – only to be eaten away from taxpayers’ funds subsequqently without law enforcement authorities wherever in the world seeming to bother very much about where the money that “disappeared” from coffers in banks had gone in the first place.

Initially, Mukhtar Ablyazov became known in Kazakhstan and beyond as the success story of private post-Soviet banking. His Bank TuranAlem (BTA), of which he was president and CEO as well as the largest single shareholder, mushroomed to the position of the country’s number one and its credit facilities seemed bottomless. People in business during the booming years seemed all too happy to forget about Ablyazov’s controversial past, his term in prison for having cashed in on murky deals in his pevious job as head of Kazakhstan’s national electricity grid KEGOC, and his role in the formation of a pressure group for Kazakhstan’s oligarchs under the guise of a political party, later disgraced. They also seemed to prefer to ignore that the loans they were so generously offered by and large consisted of money borrowed by BTA from international banking syndicates, meaning that the assets the money seemed to come from were in fact liabilities.

But this was not all: Once released from jail through a presidential pardon in 2004, Ablyazov first took over the share of his former partner Yerzhan Tatishev who had died in a mysterious “hunting accident”, then disappeared from the scenery to spend most of his time acquiring collateral against bank credits in Russia, Ukraine, Kyrgyzstan, Georgia and Armenia, through BTA subsidiaries created for the purpose. Through new share issues outside Kazakhstan’s jurisdiction, control over such subsidiaries later fell to cover-up firms at the end of the line controlled by Ablyazov, either directly or by proxy. In parallel moves, loans were transferred from original lenders to offshore mailbox companies in one direction, while their collateral was funneled through similar but different offshore chains in a different direction. This global web of more than 600 companies, as it would appear, came together with the man who in the end pulled all the strings, meaning Mukhtar Ablyazov.

Rope-pulling and arm-twisting

When inspectors uncovered a hole in the order of 10 billion US dollar in BTA’s balance sheet over 2008 in March the following year, it all fell through. Ablyazov fled head-over-heels to London from where he claimed that it had all been a set-up with the aim to disown him and claim the bank for the state. BTA was bailed out for the (insufficient) sum of $5 billion with the hope to recover the remainder of the missing sum through asset recuperation at home and abroad. The bank’s new management on behalf of the state started proceedings for the recovery of a similar amount nominally held on UK territory, mainly by overseas mailbox firms, in British courts of law.

During these proceedings, Ablyazov and two of his former proxies committed perjury, for which they were given unconditional prison terms varying from 18 to 22 months. None of them were ever put behind bars. Whereas the two latter had kept aloof from UK jurisdiction before their trials took place, Ablyazov fled in the direction of France and from there to an unknown destination on the very eve of his verdict in late February 2012. After a vain attempt to arrest him in Italy, he was finally apprehended in France in 2014. After more than two years of judicial rope-pulling and arm-twisting, which included eavesdropping the magistrate in charge of the case and under-the-girdle attacks by the culprit’s lawyers (said to be “close” to President Hollande) a court verdict in appeal allowed his extradition either to Russia or to Ukraine both of which had made an application. But after months of speculation, the verdict was overturned by the French government which refused the extradition and had Ablyazov set free. Now, he has the opportunity to wipe out more traces of his fraud circuit and replace it by a new network of offshore mailbox firms, possibly in locations such as The Netherlands, Luxemburg, the Seychelles and the British Virgin Islands, through which he operated before.

Thus stood the state of affairs as spring this year in the story of the man who had already obtained the nickname swindler-of-the-century in spring, leaving the outlook open but pretty hopeless for the bank. In the process, though, many sidelines had appeared strongly suggesting that Ablyazov, even with the help of his sophisticated and complex network of fake-transactions, could never have done what he did on his own. These dimensions in turn give a spooky image of the proportions to which financial enterprises around the world had been becoming intertwined with criminal organisations proper, which made the Ablyazov case even much bigger than in had looked in the beginning, and on top of that casting an eerie light on the way banks had been pursuing business both before and during the economic bubble that in the end led to the so-called global cash crunch – turning at least part of the world’s banking sector into an integral element in global security.

Self-declared political martyrs

The phenomenon of white-collar crime in the former USSR received a boost with the rise of the much-denounced oligarchs – most of them having been mid-ranking state officials in the last decade of the Union’s existence, annoyed with widespread inflation and depreciation of the Russian rouble and decided to make up for it through petty trade. Cash thus piled up was first used to buy up banks on the cheap during the first round of state companies’ privatisation in the early 1990s. This made the young entrepreneurs awash with cash which was subsequently used to purchase, also on the cheap, industrial assets varying from radio and television stations to steel factories in the secod round of privatisation conducted by Boris Yeltsin’s “capitalist champion” Anatoly Chubais towards the end of the 1990s.

This led to the rise of the likes of oil tycoons Vagit Alekperov of Lukoil, Mikhail Khodorkovsky of Yukos and Vladimir Bogdanov of Surgutneft, metal tycoons Vladmir Lisin and Roman Abramovich, and dozens of bankers who diversified their assets to more limited extents and stuck to the financial sector. A number of these tycoons managed to avoid politics while others did little to hide their political aspirations – not for the sake of politics but rather with the aim to keep their business interests aloof from official action against the (many) irregularities and infringements that marked them.

Condoned under Boris Yeltsin, the tide was to turn with the coming of Vladimir Putin, who made it clear that there was no place for mega-entrepreneurs in the higher echelons of politics and vice versa. Those who complied were to remain in business, while others defying the state policy were taken action against – only to become self-declared political martyrs either in exile or behind bars, while making little impression for it on the general public, either at home or abroad where “protests” against “human rights’ abuses” in Russia and other former Soviet republics remained limited to political and semi-political eccentrics with the public remaining just as indifferent to it as it did in the perpetrators’ homelands.

Tribute to organised crime

In Kazakhstan, a trend by and large similar to that in Russia has been pursued – though in a less timely manner. Wittingly or not, though, by its relentless and uncompromising attempts to get its fugitive banker-swindler Mukhtar Ablyazov on trial – if not at home, at least elsewhere in the world, Kazakhstan has become a forerunner in the world on pointing at fraud and embezzlement and other forms of financial and commercial abuse as one of the most, if not the very most important factors leading to the current global financial crisis. To varying degrees of reluctance, western authorities are now looking into possibilities to act more firmly against such abuses and make the law more forbidding for the future. In most countries, it is much harder to get away with penny-wise shoplifting than with billion-wise banklifting, as legal tools to counter white collar crime remain startlingly insufficient and many a culprit has a pretty good chance to get away with most of what he has done.

If most decision-makers tend to agree that laws and regulations need to be improved, the gap between law and law enforcement is only due to widen if nothing is done to strengthen the authority of those tracing, tracing and prosecuting white collar criminals – if it were only to make corporate executives think twice before they board on the next scheme leading to financial implosion. But this is not where the story ends. Cloak-and-dagger criminals need their white-collar peers to ever-increasing extents throughout the world.

In Almaty, control by “authorities” over petty crime has been strengthening of late, with anything varying from pickpockets in pedestrian tunnels to street prostitutes in parks unable to work free-lance without paying tribute to organised crime. This, along with intensifying traffic on smuggling routes due to intensified control by mobsters over shopping malls and market places, boosts the amounts of cash in circulation within the shadow economy and their owners looking for a way to get it back into the official circuit.

There is little doubt that at the apogee of their positions, the likes of Mukhtar Ablyazov and Rakhat Aliyev have used services offered by “authorities” in exchange for favours in the form of financial facilities – in a strategy that shows remarkable resemblance to the way the Bolsheviks defeated the Mensheviks back in 1917 for all it matters. Which structures are supposed to replace the crooked bankers after their exposure just remains to be seen. That the financial industry will come once more under pressure from the black sector looks all too obvious – thereby increasing the risk of more “hunting accidents”.

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.

“A perennial hot topic”

All this is not how Ablyazov and cronies would like to present the situation in Kazakhstan to western audiences. He has help from mouthpieces of America’s neo-cons to trumpet his “case” in the cyberspace and beyond. One example is the US far-right publication under the misleading banner of “The Diplomat” which wrote shortly after the court ruling: “If Ablyazov envisions a triumphant return to Kazakhstan, Astana has added another layer of difficulty to the task. Sham or not, the conviction is the books in Kazakhstan. Kazakhstan’s next presidential elections are slated for 2020, at which point Nazarbayev will be 80 and, if he decides to run, aiming at a sixth term at the helm in Astana. Succession is a perennial hot topic among Central Asianists. Kazakhstan experts all likely have their guesses for who stands next in line, and there’s an array of regime elites and relatives with potential. Astana, it seems, has made efforts to prepare the system for a managed transition by primarily cutting out the kind of uncertainty that democracies usually entail.”

The periodical adds a quote from a Polish anti-ex-Soviet propaganda tool, named Global Voices, which reads as follows: “As a rule, genuine opposition candidates are eliminated long before the elections are due. The most typical approach in the past has been the fabrication of criminal cases and even the imprisonment of potential opposition candidates. When the law passes, authorities will no longer have to resort to such attempts.” The Diplomat’s article concludes: ”Ablyazov may envision himself in a leadership position and agitating for Nazarbayev’s downfall; but the political elites in Astana, Nazarbayev and his many supporters, will do everything to keep him at bay. It’s not clear what pull Ablyazov has among Kazakh voters. Surely the conviction will be reported widely and in politics even a sham can besmirch a name.” In other words: Billy the Kid or Al Capone for President…

Ablyazov and a number of his Russian and other ex-Soviet peers clearly pin their hopes on “revolutions” forged in USA and “exported” to the former USSR. After their “success” in Ukraine, they see countries like Azerbaijan, Kazakhstan, Uzbekistan and Kyrgyzstan collapse and fall into the hands of ruthless “client regimes” of the United States, supported by local and transnational organised crime, after the examples in Latin America. This makes the likes of Ablyazov represent a real danger of destabilisation and civil war in the former Soviet domain. Already dangerously exposed to the spread of “Islamic” terrorism, the latter has now to struggle for its security on two fronts.