Ablyazov: business and politics – the Kyrgyzstan track

Could it be that Mukhtar Ablyazov in close cooperation with his one-time Bishkek BTA henchman Daniyar Usenov, has taken cash out of his bank’s coffers in order to finance the toppling of Askar Akayev? The idea seems far-fetched. Yet, investigations opened by Kyrgyz authorities into BTA’s wheelings and dealings under Ablyazov’s (and Bakiyev’s) regime, suggest that there could be a connection, given the coicidence of certain names in certain positions. Worse: sequences of events bear traces of the signature of foreign services involved – American ones in particular. A bit of time-travelling already lifts the tip of a veil that could hide spectacular details yet to be disclosed.

by Charles van der Leeuw, KZW senior contributor

Ablyazov: business and politics - the Kyrgyzstan trackAs both sides sharpened their knives for the big confrontation in Bishkek, a separate development that took place the news about which was already pushed into the margin by the events that followed on the streets in the country’s provincial towns. It was all but forgotten in the process of the bloodshed and the power-shift that followed. But On April 8, Novosti’s Astana desk reported that the Kyrgyz fiscal police had opened an investigation against “Kazakh citizen” Mukhtar Ablyazov on charges of having illegally appropriated the sum of 200,000 US dollar under his own name from BTA-Kyrgyzstan under credit, “without the intention to pay [the money] back”. A tip of the iceberg, as is often the case, meant to lead to a much vaster scheme of embezzlement in which much larger sums have been at stake.

On 15 September 2009, a private-held fund based in Bishkek and called Investment Holding Co. lost (in appeal) a local court case which would have entitled it to sell a bond package with a deemed par value of 28.4 million Sterling. The bonds, with a nominal value that had been put at 200 million pound when they were first placed back in 2006, had been purchased in June 2009 by IHC’s broker Central Asian Holding. The present owner claims that the broker had been instructed to purchase “reliable” bonds, but bought junk instead, since BTA-Kyrgyzstan’s parent company in Kazakhstan had slipped into default in April that year.

Curiously enough, the nominal issuer of the bonds TuranAlem Finance BV, based in Rotterdam, The Netherlands, also fell into default shortly after the verdict. IHC was ordered by the court to return the bonds to BTA-Kazakhstan, which was supposed to bear “ultimate” responsibility for payments of interest and lump-sum of the bonds, which were due to mature as of December 21 2009. This meant that IHC’s money was likely to disappear into the $10.3 billion abyss of unpaid debt by BTA, but entitled to receive value in paper once the overall debt should be settled. Both BTA-Kyrgyzstan and Dutch TAF were declared liability-free in the pursuit of the money for the bonds.

IHC had clearly hoped to get its money back by selling BTA-Kyrgyzstan to a third party and pocket the revenue on it. Unless, of course, IHC comes down to little more than Ablyazov and associates. This is what fiscal police in Kyrgyzstan doubtlessly started suspecting when they opened the investigation against Ablyazov. By “losing” the money the bonds are worth today, IHC would thereby obtain 200 million pound in paper once BTA’s debt would be settled. But the entire scheme might well go a lot further back in time.

A turning point in the affair’s history was a remarkable meeting in early November 2006, related in a BTA press release dated November 8, in Bishkek. Present were Mukhtar Ablyazov, then at the peak of his post-political career as president of Bank TuranAlem, and one of his executives named Yerlan Tatishev. Present was also the head of state of Kyrgyzstan, Kurmanbek Bakiyev. The outcome of the meeting remained extremely vague. “In Kyrgyzstan NTA will participate in tenders and various contests, finance mortgage lending, leasint services, and take part in projects directed at development of the mining industry, agriculture, biotechnoloies, communications, banking and tourist infrastructure. […] Not all of the planned project will be realised. The Bank [i.e. BTA] does not invest; it performs as an organiser, helping its clients to reach their goals.” Clear as mud – which is why the name of the fourth participant in the meeting, Danyar Usenov, demands further explanation. 

Born in 1982, Daniyar Toktogulovich Usenov made his career as a graduate from the Bishkek Polytechnic in the laboratory of the Kara Balta uranium upgrading facility – the only one in the entire region of Central Asia. He also became mayor of the nearby town of the same name and governor of the district – not unusual in Soviet times. Following Kyrgyzstan’s independence, he went back to school to obtain a law degree in 1992. He then secured his business interests as CEO of one of the “industrial-financial” private enterprises that mushroomed throughout the former USSR at the time, Eridanus. In 1995, he left this post as he obtained a seat in Parliament which he held till 2000, as he reached the most memorable stage in his career and became chairman of the board of InEximBank. Shortly afterwards, he successfully inked the purchase of his bank by Temirbank, which was later taken over by Bank TuranAlem, then under the fresh reign of Mukhtar Ablyazov.

The years that followed up to the Tulip Revolution remain by and large a blank spot in the overall story. There is, however, reason to assume the possibility that money has been funneled into the “southern” gangs at the origin of the Tulip Revolution’s outbreak and spread. The bazar bosses had certainly never been poor, given the flourishing trade in about everything from cosmetics to concrete mills from China to Uzbekistan and from there further west, oil products, grain and other commodities in the opposite direction, and, of course, narcotics from nearby Afghanistan to everywhere else. But the way the revolt was to spread over the country points not only at a sophisticated level of organisation but also of a well-organised funding network, to which the likes of Usenov and Ablyazov look far from strange – as do US intelligence services.

As known, the trouble that led to the 2005 coup started in Dzhalalabad in the south of the country on March 18, as a few hundred first and a few thousand “protesters” later occupied a number of government buildings and the local radio and television station’s premises. Early in the morning on March 20, police forces which had been mobilised the previous day tried to retake the occupied buildings, arresting hundreds and injuring dozens. In the all-out street battle that followed the mob re-occupied the government house and forced police to free the captives. On March 21, crowds occupied the airport, the local radio and television station, the main police station and the government house as well. Two constables were caught and tied up to horses to be dragged through the centre of the town.

On March 22, similar scenes occurred in the town of Pulgon in Kyrgyzstan’s deep south. The following day saw the first unrest in Bishkek, triggered by a dozen busloads of activists brought in from the southern provinces the previous day. How they teamed up with local movements remains unknown but they must have found the ground prepared in one way or another. It was almost a repetition of Lenin’s coup back in late 1917 which had been well prepared with revkoms popping up from Minsk to Vladivostok. So who were these “protesters”? Looking back, they seem to have less in common with crowds crying out their discontent than with the private armies Lebanon’s warlords used to deploy during the civil war. This for all it matters could well explain the bloody outcome of the clashes in Bishkek at the height of the confrontation. It can safely be assumed that what was described as “riot police” were either not police at all or (more likely) mobster armies integrated into the original riot police following the Tulip Revolution.

Back to 2005. In Dzhalalabad, local radio and television stations were occupied and their exhortion to revolt outvoiced Akayev’s dramatic appeal on the national television on the evening of March 22 calling for dialogue within the constitution and for refraining from outlaw action. Less than two days later, the President had slipped across the border into Kazakhstan and from there into exile in Russia. According to independent eyewitness report, among others by Kommersant, the capture of state buildings that followed was led by a number of mobsters, come in from the south, which took for the presidential palace and the house of parliament first.

And it did not stop at that. After the palace, the brave revolutionaries roamed further into the centre of Bishkek, smashing shop windows and taking all they could lay their hands on from mobile telephones to washing machines and cars. Owners of the shops and the merchandise were to try and report the damage done to them by the mob to the authorities later on – all in vain. It would have shed too much light on the true story behind the Tulip Revolution, which could have a lot more to do with Cold War scenarios revisited than meets the eye. The problem at the time was that the perpetrators of the “southern trouble” that ended in the power takeover were still leading a high-profile life, while knowing too much. This, of course, could not and would not last. For it would soon appear that thugs, not the opposition, had been behind it all – most likely on the payroll of the CIA.

This left the foreign instigators with a number of accomplices who clearly knew too much – which explains much of what happened next. On October 25, hardly more than half a year after the Tulip Revolution, a battle between chief-racketeers controlling bazaars in Karasu in the country’s deep south and in Bishkek in the north bearing the respective names of Bayman Erkinbayev and Zhyrgalbek Surabaldiyev broke out, which according to reports in Kommersant (among other, mainly Russian media) led to the bottom of what had been going on on March 24 in the capital. Whereas the former had put cash and clout behind the move against the Akayev government, the latter had tried to prevent the latter’s ousting using the same methods and means.

The newspaper’s investigations led to a third thug named Ryspek Akmatbayev, also from the south but a rival to Surabaldiyev. Akmatbayev was suspected of controlling much of the shady trade route with China and from there to Uzbekistan, was also somehow in the game, as was a fourth called Abdalim Zhunusov who was in the process of wrestling control over the Karasu market place from his foe Bayman Erkinbayev. Following the change of regime, all of them, remarkably all except Ryspek Akmatbayev having taken a seat in Parliament, came to a bad end. All of them had been prosecuted on the basis of an impressive list of charges, which were dropped following the Tulip Revolution with the stroke of a pen.

Surabaldiyev was shot dead on the street next to Bishkek’s Russian Drama Theatre on June 10. The same thing happened to Zhunusov on September 5 and to Erkinbayev on September 22. Followed, only days later, the murder of another member of Parliament named Tynychbek Akmatbayev, Ryspek’s brother. By the time they had been buried, Daniyar Usenov found himself in the comfortable position of chairman of the all-powerful State Committee of Economic Development, Trade and Investment. This institution from now on controlled all cash flows in and out of Kyrgyzstan – including those coming from Kazakhstan in the form of direct investments by also in that of credit lines and bond placements by Kazakh banks, either directly or through offshore agents.

The BTA bond issue took place shortly after the abovementioned meeting in Bishkek and looked very much indeed like a direct result of it. Now that the clock has been turned (hopefully) back to normal, the blank spots in the alleged sequence of schemes could possibly be identified, more of the culprits’ accomplices and possibly part of the money traced back and returned. Much depends on the macro-political dimensions of the game. The formation of gangs of Kyrgyz contras in the south of the country will require further financing. The current regime in the USA under Obama is hardly likely to allow lavish cash flows to be attributed to Bakiyev’s gangs. Even more remote involvement would in the end do more damage to America’s position in the region including to its right to maintain its military base near Bishkek. Moreover, such efforts would be ostentively and directly aimed against the interests of Russia and Kazakhstan, and harvest little sympathy anywhere else in the former Soviet Union.