A pyramid scheme in Uzbekistan that reeled many high-profile celebrities into its net is now costing officials their job.
Since investigations began in mid-June, the fraud allegedly engineered by well-known businessman Ahmad Tursunbayev has caused enough ripples to knock dry political programing off the airwaves in favor of at least three television programs devoted to the case to date.
Among the officials to have lost their job are Behzod Mirsoatov, prosecutor for the Chinasky district of Tashkent out of which Tursunbayev operated. On July 25, the district head of police also got the chop and is now being questioned as a witness in the case. There are also unconfirmed reports that the head of the district is next for the metaphorical firing squad.
The removal of relatively important local officials signals a rare concession to restive public sentiment in Uzbekistan, although the story is actually a little less straightforward than that.
Tursunbayev’s suspected scam consisted simply of promising 100 percent yearly returns on investments made either in cash, gold or other assets, mainly cars. The bulk of his clients — estimated at between 40,000 and 80,000 people — appear to have been naive Uzbeks unused to market speculation.
Uzbekistan’s transition to a market-based economy has been negligible over the past 25 years and untrained investors are ripe subjects for fraudulent get-rich quick scams.
Against all odds, however, despite the unfolding scandal, Tursunbayev continues to enjoy some support from the public. Victims of his scheme have drowned prosecutors with letters — not to demand his punishment, but instead to ask that he be released, so that he might return their money and jewelry.
Uzbekistan’s unfortunate pop stars have been landed in hot water once again. This time it is for what they are getting up to outside the motherland. Namely, giving concerts.
State run arts association Uzbeknavo has in recent times suspended a slew of pop artists for supposedly violating national mores. On July 20, it announced it had revoked performing licenses from another three artists.
Sitora Farmonova, Sarvara Azimova and Komila Fazylova earned the sanction for performing overseas in violation of the terms of their license, according to an Uzbeknavo statement cited by news website uz24.uz.
What is unclear is whether the pop artists are being banned from performing overseas outright or whether what is bothering the authorities is that the singers are plying their trade in a way that somehow embarrasses their home country.
And what is it that is so shaming for Uzbekistan?
Uzbeknavo license department chief Olizhon Abukhakharov claimed that punished singers had been unable to gather crowds of 200-250 people at their performances, which he said “greatly harms the reputation of Uzbek pop art.”
“As a result of repeated recurrence of such cases, it was decided to deprive them of their licenses,” Abukhakharov was cited as saying by uz24.uz.
And yet none of this likely applies to Sitora Farmonova, who recently won gold at the popular KVN comedy tournament in Russia’s Kaliningrad region as part of a team representing Bishkek, Kyrgyzstan.
A puppet polling organization in Uzbekistan has revealed that 98.9 percent of the population are positively disposed toward the introduction of bank cards.
The figure defies belief considering the intensely cash-based nature of the national economy.
Local media cited slavishly government-loyal polling company Izhtimoy Fikr as stating that cards are increasingly giving way to cash in retail transactions.
“Cards are very convenient, safe and reliable means of payment,” website Nuz.uz quotes 98.9 percent of people as thinking, according to the Izhtimoy Fikr research.
Banks cards were made available to local customers in Uzbekistan in 2004 as a means of reducing the public’s reliance on cash. The payment system was first introduced in the retail and catering sectors, since these are areas of the economy where the grey economy is strongest. Authorities made it mandatory for retail outlets to install payment terminals, which were imported in large quantities from abroad.
Outlets refusing to accept payment by card were subject to substantial fines, which could be as high as the equivalent of 200 times the minimum wage. Advertisements on television and radio stations publicized telephone numbers that members of the public could call to complain about retailers’ failure to accept card payments.
The drive has been largely successful in the capital, Tashkent. But paying by card is hardly convenient, as the Izhtimoy Fikr poll claims.
In a bad year for grain, farmers in Uzbekistan are feeling pressure from all sides as they struggle to meet government-imposed quotas.
The grain harvest reached 8.2 million tons in 2015, a slight increase on the year before, and a similar amount was expected this year. Blights brought on by patches of spring and summer showers may well have put a dent in crop returns this year, however.
To ensure that the plan is fulfilled, officials are applying particularly strong pressure on farmers. Under an agreement between farmers and the government, grain growers are permitted to retain a certain amount of the crop for their own uses. Instead, local official are pressuring farmers into giving up even their own stores.
“Farmers that don’t meet the grain quota need to find the missing tons any way that they can. As a rule, they buy it from farmers with extra supplies or they pay [the government] 750,000 sum ($125) per ton. And that is while the government purchases grain for 500,000 ($84) per ton,” Muhammadasodyk, a farmer from the Ferghana Valley, told EurasiaNet.org.
Things are especially bad in arid southern regions. In the Kashkadarya region, the local government enlists policemen to confiscate grain grown on low-yield, rain-fed lands, which provokes particularly intense dismay and rage.
“All I have is 2 hectares (20,000 square meters) of land and the police brought a combine harvester to take away my crop. And while they’re doing it, they threaten and intimidate us. This is the harvest I am supposed to use to feed my family and cattle. And now are waiting for winter,” Murad, a farmer in the Yakkabagsky district of the Kashkadarya region, told EurasiaNet.org.
Even without official interference, arable farming makes for a tough, hardscrabble life in many parts of Uzbekistan
Uzbekistan is all a-hubbub these days over the case of a prominent businessman facing charges of fraud for his creation of what amounts to a crude pyramid scheme.
State television station Channel One on July 1 aired a second program in quick succession about the arrest of Ahmad Tursunbayev, who went popularly by the name Ahmadbai Chinazsky.
Tursunbayev’s arrest, in the middle of June, came as a major surprise to many.
According to Uzbek TV, 38-year old Tursunbayev and a group of around 30 collaborators duped people into handing over their savings with promises they would provide a minimum 100 percent return within the year.
The scheme appears to have gulled no small number of gullible investors. According to Uzbek state television, around 40,000 people willingly parted with cars, money and gold, apparently against written assurances that their profits would be paid. Curiously though, no guarantee was given that any money would be returned in the event of Tursunbayev’s death, presumably as some crude form of protection. Rumors on the streets of Tashkent put the number of defrauded investors even higher than that offered by Uzbek television, at around 80,000.
The scheme does not in truth appear to have been especially sophisticated. Tursunbayev’s team compiled accounting information in children’s school copybooks. Television footage showed stacks of hundreds of copybooks and huge bags spilling over with Uzbek sum and US dollars. Police reportedly seized a whopping 13.1 billion sum (around $2.1 million at the unofficial rate) and $12 million in hard cash.
In an interview with Channel One, a woman called Halima said that she sold 20 large sheep and handed Tursunbayev around $2,600 dollars in the hope of doubling it within a year. Halima said she is now penniless.
The trail of the terrorist attack on Istanbul airport that killed 42 people looks now to be leading inexorably to the former Soviet Union, and Central Asia in particular.
The New York Times cited Turkish officials as saying on June 30 that the three suicide bombers that mounted the attack were citizens of Kyrgyzstan, Russia and Uzbekistan.
Turkey has already linked this to the Islamic State militant group, which is known to have large groups of Central Asian and Russian citizens among its ranks. Estimates on the exact number of Central Asians in the group vary, however, from the low hundreds into the thousands.
Turkey has said that 13 people, including three foreigners, have been detained in connection with the attack on Istanbul’s main airport on June 28. No group has yet claimed responsibility for the attack, which also claimed victims among Uzbek citizens, according to Turkish media.
Kyrgyzstan’s Foreign Ministry cast some confusion over proceedings by telling media that it could not confirm that one of its citizens had been linked the bombings.
“Employees from the Kyrgyz consulate met with representatives from the anti-terrorism department in Istanbul. They did not confirm the information. According to them, the identity of the suicide bombers is still being established,” the ministry said.
That statement appeared to have been superseded by events, however.
The heads of state of the SCO member states at their 2016 summit in Tashkent. (photo: president.uz)
The Shanghai Cooperation Organization's summit concluded with few concrete results and plenty of reminders that the group's members have different visions for where the would-be non-Western bloc should be heading.
At the SCO's 15th anniversary summit in Tashkent, there were plenty of vague declarations about the desirability of greater economic cooperation and stepping up the fight against terrorism, but no new initiatives as to how that might be achieved.
The concrete results of the summit were so meager that Russian President Vladimir Putin was reduced to touting the new SCO Youth Card, "which would offer students discounts on travel, accommodation, and visits to museums and other cultural and historical sites in the member countries."
The much-discussed accession of India and Pakistan as full members of the SCO progressed with the signing of a memorandum of obligation. "We hope that our partners will complete these steps as soon as possible, in time for our next meeting in Kazakhstan," Putin said in his speech. Putin also pushed for Iranian membership: "We think that now that the Iranian nuclear issue has been settled and the UN sanctions lifted, there are no obstacles in the way of a positive assessment of Tehran’s membership application."
Authorities in Uzbekistan have arrested the acting general director of part US-owned carmaker GM Uzbekistan on suspicion of embezzlement, RFE/RL’s Uzbek service has reported.
Ozodlik cited an unnamed source on June 23 as saying that Rustam Rajabov is suspected of appropriating large amounts of money through “an illegal scheme during the export of cars to Russia.”
The company’s previous general director, Tohirjon Jalilov, was detained in late April over what was rumored at the time to be suspicions of a scheme to resell Ravon models intended for export on the local market. Since the vehicles sell for higher prices in Uzbekistan than in Russia, where the GM Uzbekistan exports much of its goods, it is believed the management were pocketing the difference.
Rajabov was appointed acting general director on May 10.
A Tashkent-based reporter familiar with the details of the case told EurasiaNet.org that investigators say they traced 10,900 vehicles intended for export being stored in the city of Shymkent, just across the border in Kazakhstan. The thinking is that the cars were to be brought back into Uzbekistan.
“The preliminary assessment of damages in $285 million,” the reporter told EurasiaNet.org.
GM Uzbekistan’s Ravon Gentra model retails for $6,500 in Russia and Kazakhstan, but costs $12,500 to buy in Uzbekistan, where demand is high and waiting lists to buy cars long. Another popular model, the Ravon Cobalt, costs $6,000 abroad and $12,000 on the domestic market.
GM Uzbekistan, a company with a 25,000-strong staff and an annual turnover estimated at around $4 billion, consists of a joint venture between Uzbekistan's UzAvtosanoat (75 percent) and US giant General Motors (25 percent).
Uzbekistan President Islam Karimov greets his Chinese counterpart Xi Jinping upon the latter's arrival to Uzbekistan for the SCO summit. (photo: president.uz)
As the 15th summit of the Shanghai Cooperation Organization is set to start on Thursday in Tashkent, the group is poised to continue its growth, with two new members and five new partners. The group's purpose, however, remains unclear, with its diverse members apparently unable to agree on a consistent agenda.
The biggest headline after last year's summit was that India and Pakistan were invited to join the organization as full members, the first expansion since the group was founded. (The SCO currently consists of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.)
But on the eve of this year's summit, it's not clear what the timetable for their accession is. Their final accession should take place next year, Yuriy Ushakov, a senior adviser to Russian President Vladimir Putin, said. "The process of accepting India and Pakistan into the SCO will enter the final stage and we expect that at the next summit in Kazakhstan, India and Pakistan will be finally admitted into the SCO ranks," he said.
A senior Indian diplomat suggested that the timetable may be looser and hinted that it is dependent on the desires of current member states. “We need to work out what we need to do … As far as India’s pace of accession at the SCO being a function of Russia, China and the four countries of Central Asia, I would say we see ourselves as following fairly flexible multilateralism. So we are quite happy to engage in multiple processes. We have been working with other members of SCO on several other fields,” said the diplomat, Sujata Mehta, at a press conference Wednesday.
Uzbekistan is reportedly closing its borders to all citizens from neighboring Central Asian countries in the most drastic measure adopted to date to enhance security for the Shanghai Cooperation Organization summit this month.
The plan was reported in local media on June 15 and partly confirmed by authorities in Tashkent.
“From June 15 to June 25, Uzbekistan will be halting the passage of people, transportation and cargo entering the country from Kyrgyzstan, Tajikistan, Kazakhstan and Turkmenistan,” KyrTAG news agency reported.
KyrTAG reported that an exception is being made for residents of the Kyrgyz enclave of Barak, which lies fully within Uzbek territory.
Closing borders has long become a customary practice in Uzbekistan ahead of major public events, such as the Nowruz holidays.
There had been rumors earlier this week that authorities in Tashkent would close the city off to all public transport from outside the capital from June 16 onward. Law enforcement officials denied that claim, however. (A report about the claimed transport ban on Nuz.uz has since been pulled).