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).
The value of Uzbekistan’s national currency spiked sharply over the weekend in a development that some have linked to the unfolding corruption scandal involving GM Uzbekistan.
Traders on the black market in the capital, Tashkent, were buying dollars for around 5,500 sum on May 15, up from around 6,400 sum in the days before. They were selling dollars for around 6,000 sum. Rates in the capital typically set the pattern for the rest of the country.
The sudden change in fortunes of the sum has come as something of a shock to small and medium-scale businesses.
Umid, a market trader who rents a small stall from which he sells ice-cream, drinks and fast food snacks, said that he pays $400 in rent every month.
“For me it’s good when the exchange rate is low, since I have to spend much less on buying dollars. The question I have is: How long is this going to last?” Umid told EurasiaNet.org.
Firuze sells clothes imported from Turkey at her stall at the Ippodrom wares market. With the dollar rate dropping, Firuze said she had decided to close up shop for a while.
“The drop in the exchange rate is profitable to those that earn their money in sum, but those who make their money in dollars don’t see any benefit,” she said.
The speculation in Tashkent markets is that the sudden change in the fortunes of the national currency is somehow related to an ongoing corruption scandal involving senior management at carmaker GM Uzbekistan — a joint venture between Uzbekistan’s UzAvtosanoat (75 percent) and US giant General Motors (25 percent).
Prior to the scandal, GM sold some of its cars in dollars, which drove up local demand for the US currency. Now, however, payment is made in sum, which has led naturally to a fall in the desirability of the dollar.
In an unprecedented move, Mihran Poghosian, a senior Armenian official named in the Panama Papers’ corruption exposé, resigned from office on April 18. His stated reason, though, was not the accusations against him, but, apparently, a more patriotic one – the dishonor of sharing press space alongside Azerbaijani President Ilham Aliyev.
In an explanation sent to Armenian media outlets, Poghosian described himself as “saddened that my name is being raised alongside the family of Azerbaijani President Ilham Aliev, who has actually privatized millions of dollars,” according to an English-language translation of his comments published by RFE/RL’s Armenian service. “I find it unacceptable that I might be the reason for any possible civilized parallel to be drawn between my country and dictatorial Azerbaijan.”
“Is this a sign that something is changing in this country?” asked Yerevan resident Naira Soghomonian, 31. “Or is this another way of distracting people from the truth? Anyway, who would have thought . . .?”
Civil activist Syuzan Simonian, founder of the Front of Armenian Women, suspects the resignation is intended to quiet potential frustration with the government.
Gold mines for Azerbaijan’s presidential offspring, an ex-Georgian leader’s offshore company, a key Armenian official’s questionable income, the grounds for a clamoring public outcry in the South Caucasus over the Panama Papers were all there. But, so far, it hasn’t come.
Details about the Azerbaijani presidential family’s alleged control over Azerbaijan’s goldmines and its supposed business alliance with Tax Minister Fazil Mammadov hit on April 4, a day before a ceasefire which more or less ended three days of fighting with Armenian and separatist Karabakhi forces.
A 2012 report by RFE/RL, an OCCRP partner, had found that Aliyev’s daughters had stake in the goldmines; a revelation that OCCRP believes cost RFE/RL investigative journalist Khadija Ismyailova her freedom.*
Six more arrests have been made in a high-profile corruption case involving prominent media figures that has sparked fresh claims that freedom of speech is under attack in Kazakhstan.
Aset Matayev, director of the KazTAG news agency, four government officials and ex-officials and a senior official from the state Kazakhtelecom company are suspected of involvement in a conspiracy designed to defraud the state of more than $1 million dollars, the National Bureau for Counteracting Corruption said in a statement on March 28.
Aset Matayev is the son of Seytkazy Matayev, a well-respected figure on Kazakhstan’s media scene whose arrest in February on charges of embezzlement and tax evasion sparked a domestic and international outcry.
Now, Aset Matayev has, like his father, been placed under house arrest after the investigation purportedly revealed that he had “taken a direct part in the embezzlement of budget funds,” the anti-corruption bureau said.
Four current and former officials from the government’s Communications, IT and Information Committee have also been arrested: director Talgat Kazangap and former director Bolat Kalyanbekov are on bail; and Bolat Beserbayev, another ex-director, and his former deputy Bek Arpabayev are under house arrest. Also under house arrest is Batyr Makhanbetazhiyev, who is strategic management director at Kazakhtelecom.
The Matayevs categorically deny the charges against them. Aset Matayev told EurasiaNet.org in February that he believes the case is politically motivated and designed to get hold of valuable real estate owned by his father.
A former prime minister of Kazakhstan who was jailed last year in a high-profile corruption case has had his jail sentence reduced on appeal.
The case attracted widespread attention in Kazakhstan, where corruption is rife but the arrest of political heavyweights on graft charges is rare. That has led some observers to speculate that the case is the result of infighting among the elite groups surrounding President Nursultan Nazarbayev.
The term of Serik Akhmetov, who was prime minister for 18 months until April 2014 and was subsequently defense minister for six months, was cut from 10 years to eight in a ruling handed down on March 14, the Total.kz news website reported.
Akhmetov was jailed in December after a trial in which he pleaded guilty to bribery and embezzlement during his tenure as governor of Karaganda Region, which is Kazakhstan’s industrial heartland, from 2009 to 2012.
Investigators accused the former prime minister of taking bribes worth some $2.4 million to ensure that a firm run by his brother Berik Akhmetov and his son Daniyar Akhmetov was awarded lucrative tenders in Karaganda.
Prior to his conviction, Akhmetov issued a groveling public apology to Nazarbayev, in which he begged the president’s forgiveness “for failing to live up to his trust.”
The president of Turkmenistan has in candid remarks admitted to the pervasive corruption hobbling the country’s energy sector, but his solutions appear so far limited mainly to the usual threats and targeted dismissals.
Gurbanguly Berdymukhamedov said during a Cabinet meeting broadcast on television on March 5 that state auditors and prosecutors have recently been running checks on energy enterprises and uncovered irregularities “causing the government serious losses.”
Corruption has become a recurring theme in Turkmenistan as authorities seek to explain away the economic malaise gripping the country.
Berdymukhamedov said that former deputy prime minister Baymyrat Hojamuhammedov, who was dismissed from his role overseeing the energy sector for health reasons in November 2015, was directly involved in the corruption.
“After the investigations, he returned $1.5 million that he received in bribes from various people,” Berdymukhamedov said.
Also on March 5, the president fired the head of the State Statistics Committee, Akmyrat Mamedov, who stands accused of fiddling the figures to enable graft.
Anybody who has ever in good conscience scrutinised the sparse statistical information made available online by Turkmenistan’s authorities will have questioned their reliability years ago. And yet those are the same figures that international financial organisation invariably rely upon when formulating their rosy economic forecasts, which should probably raise some questions about their practices.
Mamedov has been in his job since March 2010.
Dismissals among senior economic officials have been coming fast and furious of late.
In February, Berdymukhamedov removed one of his key aides, Palvan Taganov, from his post, again for suspected wrongdoings in the oil and gas sector.
Russian-owned telecommunications giant VimpelCom is to shell out $835 million in fines after admitting to securing its foothold on the market in Uzbekistan through bribery.
The U.S. Department of Justice said in a statement on February 18 that it is also seeking the forfeiture of $850 million of bribes payments allegedly made by VimpelCom another Russian-owned company, MTS, and now being held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland.
U.S. government officials have described these as historic turning points.
“These cases combine a landmark [Foreign Corrupt Practices Act] resolution for corporate bribery with one of the largest forfeiture actions we have ever brought to recover bribe proceeds from a corrupt government official,” said Assistant Attorney General Caldwell.
The lion’s share of the fines — $795 million — will be paid to the U.S. and Dutch corruption-busting bodies that have been investigating the activities in Uzbekistan of VimpelCom and other telecoms companies.
VimpelCom officially admitted earlier this week to engaging in corrupt practices in Uzbekistan.
VimpelCom admitted it had “through various executives and employees, paid bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry,” the Justice Department said.
That individual is widely held to be Gulnara Karimova, the eldest daughter of Uzbekistan’s President Islam Karimov.
Tashkent is also seeking the return of those frozen funds, arguing that it is a victim of bribery.
An international telecoms company has admitted engaging in corrupt practices in Uzbekistan, following bribery probes spanning several continents whose tentacles reach into the heart of the ruling Karimov family.
This marks the first official admission by an international telecommunications company of illegal practices in a case that centers on the affairs of the eldest daughter of Uzbekistan’s President Islam Karimov, Gulnara Karimova, who was last heard of under house arrest in Uzbekistan on corruption charges.
Russian-owned VimpelCom said it is prepared to “acknowledge certain violations of the U.S. Foreign Corrupt Practices Act and relevant Dutch laws” and pay fines to corruption-busting bodies in the United States and Holland.
The admission was made in a report on final quarter results for 2015, released on February 17 by VimpelCom, which is majority owned by Russian billionaire Mikhail Fridman. Norway’s state-owned Telenor owns a minority stake that it is trying to sell.
VimpelCom said that discussions with the U.S. Department of Justice and Securities and Exchange Commission and the Dutch Public Prosecution Service had resulted in “prospective settlements” that, subject to approval, will see it admit breaking U.S. and Dutch anti-corruption laws and paying “fines and disgorgements.”
The size of the anticipated payments was not disclosed, but VimpelCom said that it was within the $900m it set aside last November to cover potential liabilities from the corruption probes.
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.