Following the admission by embattled Nordic telecoms giant TeliaSonera this week that its operations in Kazakhstan and four other countries had breached the company’s own ethical requirements and may have broken the law, the firm is bracing itself for a new round of scrutiny.
TeliaSonera's dealings with the rich and powerful in Uzbekistan, where its payments of millions of dollars to an intermediary of Gulnara Karimova’s, the president’s daughter, have already put the company in the crosshairs of investigators in Sweden, The Netherlands and the United States. TeliaSonera is also linked to a money-laundering probe in Switzerland in which Karimova is a suspect.
Now questions are being asked about TeliaSonera’s dealings in neighboring Kazakhstan, where it owns the Kcell brand (with 14.1 million subscribers in a country with a population of 17 million). Kazakhstan’s media has previously noted some striking similarities between TeliaSonera’s modus operandi in the two countries—namely its dealings with business people well connected to the powers-that-be and with links to rival companies.
Nordic telecoms giant TeliaSonera is at the heart of several international corruption probes involving its activities in Uzbekistan. Now it says it may have broken the law in neighboring Kazakhstan and other countries, as well.
An external review of TeliaSonera's dealings in five countries has found that “several transactions, and actions during [2007-2013] have been conducted in a manner inconsistent with sound business practice and TeliaSonera’s ethical requirements,” board chair Marie Ehrling told an Annual General Meeting on April 2.
“It cannot even be ruled out that certain conduct has been in violation of the law,” she said.
The review, commissioned last April and conducted by international law firm Norton Rose Fulbright, covered Nepal, Kazakhstan, Azerbaijan, Tajikistan, and Georgia but focused mainly on the first three countries.
Ehrling did not specify which transactions may have been unethical or illegal, but said the review mainly concerned the “establishing of operations and acquisitions of companies and licenses.”
Areas of concern included “substantial payments to advisors and intermediaries for, among other things, lobbying activities; lack of control of business partners; and inadequate handling of warning signs.”
“One area singled out is the inadequate governance of the Eurasian operations,” Ehrling said.
A reshuffle in Kazakhstan has brought a veteran insider back to lead the government amid fears of trouble on the domestic and international fronts.
President Nursultan Nazarbayev reappointed former Prime Minister Karim Masimov late on April 2. In a swift sequence of events, Prime Minister Serik Akhmetov resigned, Nazarbayev nominated Masimov, and Kazakhstan’s rubber-stamp parliament unanimously approved the move.
The affable and charismatic Masimov previously served as head of government for nearly six years, making him Kazakhstan's longest-serving prime minister since independence. Nazarbayev replaced Masimov in fall 2012 with the colorless technocrat Akhmetov.
The reshuffle comes as no surprise: Nazarbayev had hinted on several occasions that he was not happy with Akhmetov and in February, after a currency devaluation that caused an economic shock to many in the country, he threatened to sack the entire government.
Presenting Masimov as his candidate to parliament, Nazarbayev thanked the outgoing Akhmetov but also damned him with faint praise, noting that his government had not “permitted any particular failure” and had “worked in the measure of its experience and possibilities.”
Officials have raided the editorial office of one of Kazakhstan’s last independent newspapers, as it emerged that a court has ruled in secret to close it down.
Bailiffs “burst into the office” of the Assandi-Times in Almaty on April 2 and announced that they planned to seal the premises, the newspaper reported on its Facebook page. The bailiffs cited a court order that the newspaper’s staff said they knew nothing about.
A court had ruled to shut the newspaper down on April 1, the Adil Soz (Free Speech) media freedom NGO said in an April 2 statement, although “none of the newspaper’s staff had been informed about the trial or about the legal claim.”
The court ruled after deeming the Assandi-Times to be part of a banned group of media outlets under the “Respublika” brand. Prosecutors closed the investigative Respublika newspaper and associated outlets in 2012 after alleging that their coverage of fatal riots in the western town of Zhanaozen the previous year was “extremist” and contained calls to overthrow the state.
The Crimea crisis is putting pressure on Kazakhstan’s long-standing, multi-vectored foreign policy, which has sought to balance the competing interests of Russia, China and the United States in Central Asia. In forcefully backing Russia’s annexation of Crimea, many in Kazakhstan worry that President Nursultan Nazarbayev could be setting himself up for separatist woes of his own.
Hot on the news that Gulnara Karimova, daughter of Uzbekistan’s strongman president Islam Karimov, is a formal suspect in a Swiss money-laundering investigation, embattled Nordic telecommunications giant TeliaSonera has become the target of a related corruption probe in the United States.
“TeliaSonera has been informed that the U.S. Department of Justice (DOJ) has an ongoing investigation regarding TeliaSonera’s transactions in Uzbekistan,” the company said in a March 17 statement. “The DOJ has sent a request for documents to TeliaSonera. In addition, TeliaSonera has received a request from the U.S. Securities and Exchange Commission (SEC) to submit documents and information related to Uzbekistan.”
The company made the announcement five days after revealing that two of its daughter companies, TeliaSonera UTA Holding B.V. and TeliaSonera Uzbek Telecom Holding B.V (the holders of TeliaSonera’s operations in Uzbekistan, where it operates the Ucell brand), are under investigation in The Netherlands in a bribery and money-laundering case.
“Dutch authorities have requested collateral for any financial claims which may be decided against TeliaSonera UTA Holding BV,” TeliaSonera said on March 17, adding that the request for collateral stands at 10-20 million euros.
Kazakhstan’s President Nursultan Nazarbayev has strongly endorsed Vladimir Putin’s strategy in Ukraine’s Crimea peninsula, despite the uncomfortable precedent Russia’s military adventure has set for other post-Soviet republics with large ethnic Russian populations. Like Kazakhstan.
Nazarbayev told the isolated Russian president during a telephone conversation on March 10 that “Kazakhstan, as a strategic partner, treats Russia’s position, protecting the rights of national minorities in Ukraine, and also the interests of its security, with understanding,” his office said in a statement released after the call.
Kazakhstan is one of Russia’s closest allies, but the endorsement still raised eyebrows given that Nazarbayev’s remarks could be taken as carte blanche for Russia to intervene on behalf of Russian speakers across the former Soviet Union—including in Kazakhstan, where the ethnic Russian minority constitutes 22 percent of the population.
Crimea is set to hold a Russian-backed snap referendum on March 16 that will determine whether it stays part of Ukraine.
While backing Russian intervention abroad to protect minority rights, Nazarbayev also called for a “peaceful settlement of the crisis in Ukraine on the basis of the preservation of sovereignty in line with the norms of international law,” and hoped all sides would show “restraint” and resolve the crisis through negotiations.
A lone protester in Kazakhstan used International Woman’s Day on March 8 to draw attention to the fate of a group of children who were detained along with their mothers in Astana last week.
Schoolteacher Yelena Akhmetova staged her one-woman protest in downtown Almaty with a banner reading: “Our children are not criminals.”
She was remonstrating against heavy-handed police actions at a housing protest in Astana on March 6, when police rounded up a group of children while detaining their mothers for protesting over housing rights. Video from Radio Azattyk showed shocking scenes of screaming children being herded into police buses as their mothers were detained under strict laws regulating the right to public assembly in Kazakhstan. All were later released without charge.
Akhmetova said she was protesting “against all those who use force against our children.”
“We are not criminals, and this [country] is not a prison,” she added, defending her right to protest. An Almaty city hall official who was present warned her that she was breaking the law on public assembly, but Akhmetova suggested that the police watching her would do better to tackle issues such as bribe-taking in schools than infringing the rights of citizens to freedom of expression.
Another woman who had planned to protest, Dilnar Insenova, was arrested beforehand and immediately tried under public assembly legislation (which requires protesters to obtain official permission from the authorities by applying 10 days in advance of their action). Insenova, a campaigner on housing issues, was fined approximately $500 for her calls to protest.
After offering a coldly efficient example in Ukraine of the use of hard power, Russia’s paramount leader Vladimir Putin is turning his attention to shoring up Moscow’s soft power capabilities, namely keeping his vision for Eurasian unification on track. There are signs, however, that his Eurasian aspirations will be more difficult to fulfill than his Crimean land-grab.
The Russia-Ukraine crisis is having a profoundly unsettling effect on authoritarian-minded governments in Central Asia. On the one hand, they are keen to keep the forces unleashed by the Euromaidan movement at bay; on the other, they appear unnerved by the Kremlin’s power play.