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.
Days after being removed from his senior Cabinet post and his role as a key aide to Turkmenistan’s president, Palvan Taganov is reported to have been arrested.
Announcing the dismissal during the January 5 Cabinet meeting, President Gurbanguly Berdymukhamedov listed multiple shortcomings by Taganov, including failure to contain corruption.
CA-News website went further on January 7, reporting that Taganov has been detained on unspecified charges.
Corruption has becoming a recurring public theme in Turkmenistan as authorities seek to explain away the increasingly apparent economic malaise gripping the country.
Taganov’s brief was evidently vast and he had access to the highest echelons of power paralleled by few others in Turkmenistan.
He was simultaneously appointed deputy prime minister and administrator of the presidential apparatus and Cabinet in September 2013. The following January, his role was slightly amended to put him in charge of trade and the state commodity and raw materials exchange.
Taganov was again named chief of the presidential administration in August 2015, replacing Shamuhammed Durdyliyev, who was moved over to deal energy, construction and utilities sectors. Durdyliyev’s primary brief has been to get the capital, Ashgabat, ready for the 5th Asian Indoor and Martial Arts Games in 2017, which are being touted as a international showcase for the country.
Taganov's control extended over the foreign economic relations, the chamber of industry and trade, and the union of industrialists and entrepreneurs.
So Berdymukhamedov’s criticisms suggests maladministration across a wide array of offices.
The people of Uzbekistan are apparently satisfied corruption is on the wane, while the president of Turkmenistan is indignant it is still rampant.
The “good news” first.
Podrobno.uz website reported on February 1 that a survey in Uzbekistan carried out by polling company Izhtimoy Fikr (Public Opinion) has found that experiences of corruption declined markedly from 2013 to 2014.
Izhtimoy Fikr is notorious for its almost comically unrealistic surveys, so the vat of salt should probably be taken with only a pinch of seriousness and perhaps only to understand the extent to which the government intends to embark on a serious fight against corruption.
Perceptions of corruption in the health care sector dropped from 37.7 percent to 25.5 percent, in education it went from 37.8 percent to 24.2 percent, and in the justice system from 24.3 percent to 14.6 percent, according to the poll.
The question “Is there corruption in Uzbekistan” yielded a 34 percent positive response in the latest query, compared to 36 percent in 2012 and 53 percent in 2011.
As many 74.5 percent of respondents believe the fight against corruption is being waged effectively. Leaving the best for last, Podrobno.uz reveals that Izhtimoiy Fikr’s survey found that 80 percent claimed that they have never been exposed to extortion or bribery.
Strong anecdotal evidence suggests the real number may well literally be zero.
Transparency International’s recently issued Corruption Perceptions Index 2015 shows Uzbekistan in 153rd place out of 165 countries listed, coming in just behind Zimbabwe.
Anticorruption officials in Kyrgyzstan say they have exposed a $58 million money laundering operation — the largest ever seen in the country’s history.
The graft-fighting department at the State National Security Committee (GKNB) said on January 20 that the cash was laundered by a construction company called LLC Berkut Stroi, which they said was based in the southern city of Osh.
The GKNB say two employees of a commercial bank in Osh, Amanbank, registered the construction company in the name of Kanybek M. They then opened bank accounts in Amanbank and another bank, Rosinbank.
The next step was to sign bogus contracts for the purchase of construction materials from companies in China and Latvia, to which the 4.4 billion Kyrgyz som ($58 million) were transferred between January and October 2014. Meanwhile, tax records at Berkut Stroi reflected no economic activity.
The man identified as the founder of Berkt Stroi, whose name can only be given as Kanybek M., said he had no idea of what business was being done by the company he purportedly controlled.
“I was told [by a friend]: ‘Let’s start a company, we will take care of banking operations.’ I know nothing about banking operations,” he told the Kloop.kg news website.
Kanybek M. said anytime the alleged money-launderers need a document signed, they paid him an additional 500 soms ($7).
Another figure that Kloop.kg reported was linked to the case said that although he worked at the bank at the time of the alleged offense, he worked as the chief accountant and didn’t work directly with clients, so he couldn’t know who transferred the money.
Uzbekistan’s foreign minister has begun a round of annual consultations in Washington that happen to follow shortly after Tashkent launched an offensive to recover millions of dollars frozen in a U.S. corruption case involving the Uzbek president’s daughter.
Abdulaziz Komilov began the three-day talks on January 19 with a meeting with Nisha Desai Biswal, Assistant Secretary of State for South and Central Asian Affairs, the U.S. Embassy in Tashkent said in an e-mailed statement.
Topics for discussion include the usual suspects: security, political developments, human rights and trade. But one onlie Uzbek media outlet is speculating that Komilov may also be raising another thorny topic behind the scenes.
According to documents recently filed with a U.S. court, copies of which have been seen by EurasiaNet.org, Tashkent has begun pressing for the release of $300 million in assets frozen during a bribery investigation involving the president’s daughter, Gulnara Karimova. The last that was heard of Karimova, she was under house arrest in Tashkent.
The funds are allegedly illicit proceeds from “an international conspiracy to launder corrupt payments” made in Uzbekistan’s telecoms sector, according to a lawsuit filed by the U.S. Department of Justice last summer.
The $300 million – held in Bank of New York Mellon accounts in Belgium, Ireland, and Luxemburg – were frozen by a U.S. Federal Court order in July.
The lawsuit named two Karimova associates, Gayane Avakyan and Rustam Madumarov, as owners of shell companies “beneficially owned by GOVERNMENT OFFICIAL A.”
In one of the greatest falls from grace in the post-independence history of Kazakhstan, a court in the industrial city of Karaganda on December 11 sentenced former prime minister Serik Akhmetov to 10 years in jail for corruption.
The severity of the punishment has set tongues wagging about ulterior motives and show trials, especially since corruption is rife and cases of abuse of office have abounded in recent years, but rarely with such severe outcomes.
Akhmetov was arrested on charges of grave corruption on November 18, 2014, less than one month after being removed from his post as defense minister. Rumors immediately began circulating of infighting among Kazakhstan’s notoriously fractious elites.
According to prosecutors, Akhmetov, who was prime minister for 18 months until his resignation in April 2014, took bribes of $2.4 million and embezzled large amounts of a state resources.
Another 20 officials from the Karaganda city and region were also in the dock in the broad-ranging and lengthy trial, which reviewed material contained in 338 volumes of evidence.
Prosecutors had asked for a 12 year sentence. Although the sentence passed was milder, it also included provisions for the confiscation of Akhmetov’s property.
Akhmetov, who had until his arrest been a figure whose work experience suggested unusually close ties to President Nursultan Nazarbayev, appealed in vain for clemency before being convicted.
“I sincerely ask forgiveness of Nursultan Abishevich for failing to live up to his trust. I understand that I bear moral responsibility for the fact that, among other things, such an atmosphere has been created in Karaganda. And that the head of state has been forced to think and worry about these things,” Akhmetov said.
A top Norwegian business executive has been arrested in Oslo on corruption charges relating to a multimillion-dollar bribery case involving the ruling Karimov family of Uzbekistan.
The detention ramps up the pressure from international investigations into alleged bribery by multinationals of Gulnara Karimova, the disgraced daughter of Uzbekistan’s President Islam Karimov, to gain a foothold in the country’s lucrative telecoms market.
Jo Lunder, former chief executive of embattled Russian-owned telecoms company VimpelCom, was arrested as he flew into Oslo airport late November 4, a public prosecutor told Norwegian media the following day.
“He has been charged in connection to the VimpelCom case. It is a corruption charge,” Marianne Djupesland said in remarks quoted by Stockholm-based newspaper The Local, declining to reveal further details.
Lunder’s lawyer Cato Schiotz says the accused believes he is innocent, the newspaper reported.
The arrest comes three months after the U.S. Department of Justice won a ruling in a New York court to have $300 million dollars frozen as part of an investigation into what it described as an “international conspiracy to launder corrupt payments.”
The lawsuit alleges that illicit payments were made by two telecoms companies, Russia’s MTS and Amsterdam-based VimpelCom, which is majority owned by Russian billionaire Mikhail Fridman, to curry influence and secure favorable decisions to operate in Uzbekistan’s telecommunications sector.