A top banker has been arrested in Uzbekistan on suspicion of making a fortune out of Uzbekistan’s black currency market and laundering the proceeds.
The arrest comes as the rate of the currency, the sum, soars against the dollar on the black market, creating even larger than usual profit margins for those in control of the illegal trade.
Asaka Bank chairman Kahramon Oripov is in detention on suspicion of “currency crimes and legalization of criminal revenues,” an unnamed spokesperson for the General Prosecutor’s Office told Russia’s RIA Novosti news agency on February 12.
The confirmation of Oripov’s arrest, which had been rumored, came days after he was dismissed by the government as chairman of the state-owned Asaka Bank, which handles payments for the automobile industry in Uzbekistan.
Oripov is suspected of exploiting the bank’s position as the financial institution responsible for taking payments for car purchases to carry out his scheme, the Tashkent-based Uzmetronom.com website reported earlier this month.
This was allegedly made possible by the unorthodox system through which payments are made to purchase cars in Uzbekistan, whereby only dollars, rather than sum, are accepted to buy some models of vehicles assembled in-country by the GM Uzbekistan, a US-Uzbekistani joint venture which accounts for the bulk of the country’s car sales.
The money to buy a car must be deposited in dollars at an account in Asaka Bank, which is supposed to transfer it in hard currency to Uzavtosanoat, the state company that holds Tashkent’s share in GM Uzbekistan.
Instead, Asaka Bank was sending Uzavtosanoat sum at the official exchange rate and was thus able to hold back half the dollars by creaming off the difference between the official and black market rates, Uzmetronom.com alleged. The website claimed, citing an unnamed source close to law enforcement circles, that the bank then used that difference to make money on the black market.
With the rate on the black market now more than double the official rate to the dollar (6,000 sum, versus 2,900 officially), that represents a vast profit. For a car costing $10,000, the difference would be 31 million sum, for example.
Uzmetronom interpreted Oripov’s arrest as a blow to top officials not only at Uzavtosanoat but also at the Finance Ministry, which is one of the founders of Asaka Bank — an interpretation that implicitly suggests that the arrest could be part of a wider power struggle rather than a crackdown on the black market itself.
Finance Minister Rustam Azimov is one of the country’s most powerful political players and is sometimes tipped as a possible successor to President Islam Karimov. He is regularly criticized in articles published by Uzmetronom, which is believed to be close to Uzbekistan’s security services.
Uzbekistan has a thriving black market in currency, fueled by restrictions on dollar purchases in banks and a general shortage of dollars in official circulation.
The black market keeps a vast pool of cash outside of the official financial sector, and makes huge profits for the vested interests that control it.
Observers say they could not operate without high level protection — and the fact that previous crackdowns on the black market have come to nothing suggest that the illegal trade has friends in high places.