An obscure offshore oil and gas company is reportedly under investigation for stealing oil in Uzbekistan. The news will come as no surprise to the few brave Western investors still operating in the business-unfriendly Central Asian state, where a major redivision of spoils appears underway as President Islam Karimov’s once-powerful daughter comes under unprecedented attack.
Authorities have launched an investigation into an alleged theft of government-owned oil by Tethys Petroleum, Russia's RIA Novosti news agency reported on December 4, quoting an anonymous source. The firm, which denies wrongdoing, announced the launch of new oil and gas prospecting projects in the country only six months ago.
RIA Novosti said the company had been accused of stealing oil worth between $30 million and $40 million. Bakhrom Salakhitdinov, identified as the head of Tethys's operations in Uzbekistan, has been arrested, the news agency added.
Tethys calls the allegations “entirely without foundation.”
“We are in contact with the relevant authorities in order to reach an understanding of the reasons for the allegations and a satisfactory resolution of the situation as soon as possible. We are exploring all appropriate means to protect the company’s interests and ensure the safety of our employees in Uzbekistan. Oil production continues as normal,” the company told EurasiaNet.org via email.
Uzbekistan is rated one of the world’s most corrupt countries in Transparency International’s latest Corruption Perception Index, at 168th place out of 177.
Tethys, which is registered in the Cayman Islands, also operates in Kazakhstan and Tajikistan, where it holds a production-sharing contract. Like Uzbekistan, Tajikistan is a place where it is extraordinarily difficult to do business without high-level connections.
Tethys’ troubles come as a sweeping redivision of economic spoils in Uzbekistan is underway amid the collapse of the business empire of Gulnara Karimova, the eldest daughter of the president. Long mooted as a potential successor to her aging father, after several multi-million-dollar money-laundering scandals appeared in Europe, at home her businesses are reportedly facing unprecedented attack. She’s blamed much of her trouble on the head of the secret police, Rustam Inoyatov.
Oddly, a London-based law firm that few have heard of and that loudly announced it was pulling out of Uzbekistan in July said it was opening up shop again in Tashkent following the arrest of Karimova’s cousin, who is widely believed to be tied up in the Karimov family feud.
Huntsman-Lewis said in a December 4 statement that it was returning to Uzbekistan "following the conviction of Akbarali Abdullayev and the breaking up of the organized crime ring linked to him."
Abdullayev, often described as Karimova’s "purse," was arrested in October on charges of embezzlement, tax evasion and bribery. Karimova has since spoken out in his defense.
Uzmetronom.com, a critical website believed to be tied to Uzbekistan’s intelligence services, has also suggested the Tethys investigation is linked to Karimova.
Western businesses frequently come under attack in Uzbekistan and sometimes end up seized, as happened to Russian cellphone giant MTS last year.
Take the case of Oxus Gold. After an executive at the UK-based company was sentenced to 12 years on espionage charges that looked decidedly convenient for the authorities, Oxus agreed to sell its 50-percent stake in the Amantaytau Goldfields mining operation to its Uzbek partners in 2011 at a significant markdown. A lawyer for the company, which is pursuing a $400 million arbitration suit, described events as “an ongoing campaign to fabricate a reason to steal the last foreign assets in the mining industry in Uzbekistan.”