How did an oil-rich region in western Kazakhstan end up with a $100-million hole in its budget?
According to investigators from Astana, this giant hole in public funds in Atyrau Region was caused by massive fraud perpetrated by a man who was a member of Kazakhstan’s national parliament and who just happened to be the brother of the regional governor, acting in cahoots with corrupt officials and construction firm bosses. Speculation is rife in Kazakhstan about whether this corruption scandal is the product of political infighting, but the bare facts are as follows.
On October 1 charges were brought against Amanzhan Ryskali, brother of recently fired regional governor Bergey Ryskaliyev, on one count of fraud, but police are investigating a total of 13 corruption cases involving theft to the tune of 16 billion tenge (a little over $100 million).
Although the scandal had been brewing for weeks, investigators did not manage to charge Amanzhan Ryskali (who uses the Kazakh form of his surname, while his brother uses the Russian form) in person -- He has long since disappeared, along with his brother. (After initial reports that ex-Governor Ryskaliyev was under house arrest, police have confirmed that he is not wanted and has not been questioned over the case.)
As Swiss and Swedish investigators probe allegations of corruption and money-laundering involving Uzbekistan, one name is increasingly appearing linked to the cases: Gulnara Karimova, the eldest daughter of strongman President Islam Karimov.
Leaked documents (whose authenticity is not confirmed) relating to the Swiss money-laundering inquiry suggest that investigators have identified the suspect at the heart of the probe as an associate of Karimova’s and designated the case politically sensitive.
A French-language letter (carried by regional news site Centrasia.ru) purportedly sent by anti-laundering investigators to the Swiss Office of the Attorney General suggests the Uzbek government -- perhaps inadvertently -- sparked the money-laundering probe that is now coming uncomfortably close to Karimova.
The letter states that the probe was launched after investigators received notification from Geneva-based bank Lombard Odier (acting under its legal obligations) that one of its clients was on the Interpol wanted list for alleged fraud.
That client was Bekhzod Akhmedov, former director of the Uzbekistan subsidiary of Russian cellphone company MTS. Tashkent declared him wanted after he fled the country amid a row between the firm and the government that culminated with Tashkent seizing MTS’s assets this summer.
Uzbekistan is facing a second corruption investigation in Europe, as Swedish police open a graft probe into claims that Swedish-Finnish telecoms giant TeliaSonera paid hundreds of millions of dollars in bribes for the rights to operate in Uzbekistan. The case is allegedly linked to a money-laundering investigation in Switzerland.
TeliaSonera (whose largest shareholders are the Swedish and Finnish states) said that Swedish police are investigating allegations of “bribes and money laundering” involving Uzbekistan. The allegations surfaced in a September 19 documentary on Swedish broadcaster SVT.
“We can confirm that the Swedish police has collected information from TeliaSonera regarding Uzbekistan,” TeliaSonera – which owns the Ucell mobile phone company in Uzbekistan – said in a statement on September 26. It said that the company had already announced an external review “regarding the allegations of bribes and money laundering” and that now the Swedish Prosecuting Authorities’ anti-corruption unit had launched its own probe, “which we welcome.”
TeliaSonera has denied any wrongdoing but pledged to “cooperate fully” with the Swedish investigation, which follows SVT’s allegations that the firm paid hundreds of millions of dollars to “a small, one-woman company in a tax haven” for the rights to operate in Uzbekistan. The company, Takilant Limited, is run out of Gibraltar by Uzbekistan national Gayane Avakyan.
Once again a foreign telecoms firm in Uzbekistan is at the heart of an international scandal, and this time the trail leads back to a close associate of Gulnara Karimova's.
An investigation to be aired September 19 by Swedish public broadcaster Sveriges Television (SVT) charges that Swedish-Finnish mobile giant TeliaSonera has paid hundreds of millions of dollars to a shady offshore firm for the rights to operate in Uzbekistan. Karimova, the daughter of Uzbekistan’s dictator Islam Karimov, is close to the action, says SVT's Uppdrag Granskning (“Mission Scrutiny”) program.
TeliaSonera, which is 37 percent owned by the Swedish government, started operating in Uzbekistan in 2007. In order to work there, the company relied on a partner called Takilant Limited, which is based in Gibraltar and run by an Uzbekistan national named Gayane Avakyan.
Uppdrag Granskning reports that Avakyan has strong links to Karimova. Her name appears frequently in association with Gulnara’s pet fashion projects. And Radio Ozodlik has quoted sources calling Avakyan very close to Karimova, adding that she manages the first daughter’s finances.
Over the course of six years, SVT says, TeliaSonera has paid Takilant 2.2 billion Swedish krona ($336 million) in exchange for 3G licenses, mobile frequencies and phone numbers in Uzbekistan. But, the program notes, the money cannot be accounted for in public financial records.
Public perceptions of corrupt deals involving the Manas air base outside Kyrgyzstan’s capital helped bring down President Kurmanbek Bakiyev in 2010. This week, Prime Minister Omurbek Babanov became the latest Kyrgyz leader to be tarnished by accusations of mischief at Manas.
On August 13, a member of Babanov’s parliamentary coalition charged the embattled premier with accepting a bribe from a Turkish company building a new air-traffic control tower at Manas. Joomart Saparbayev, a deputy with the Ata-Meken Party, told a party meeting that Babanov had accepted a racehorse valued at up to $1.3 million in exchange for a multi-million-dollar Pentagon contract.
Saparbayev’s argument: "We thought about how these events could be linked, and we have found a corrupt scheme. This horse was given to Babanov as a gift so that the Turkish company could carry out the construction work," Saparbayev said, adding that the English-bred horse, five-year-old Islander One, arrived on an Istanbul-Bishkek flight.
There’s a whiff of something rotten in the air, and it’s trailing the Azerbaijani boxing team at the London Olympics.
Forget about the badminton scandal that featured Chinese, South Korean, and Indonesian players throwing matches. Perhaps the most egregious behavior so far at these Olympic Games has been the boxing officiating - and Azerbaijani boxers have just happened to be the beneficiaries of two of the most controversial decisions.
The latest result to prompt howls of disbelief was Azerbaijan heavyweight Teymur Mammadov’s decision August 5 over Siarhei Karneyu of Belarus. Boxing commentators who watched the fight said Mammadov should have been disqualified in the third round for a clear rule violation.
But it turned out that if the bout’s referee had one more eye, he’d be a Cyclops.
“This was as big a travesty as we've seen so far,” boxing commentator Scott Christ wrote on the Bad Left Hook blog, referring to the scoring in the Mammadov fight.
NBC boxing analyst Teddy Atlas offered perhaps the most memorable comment on the officiating, when, after the Mammadov bout, he said: “I’m going to start keeping a bucket here near ringside, because I want to throw up.”
The Mammadov decision followed on the heels of a bantamweight bout, in which Azerbaijani fighter Muhammed Abdulahmidov got pummeled, and yet was declared the winner. That decision, however, was overturned on appeal.
**UPDATE (July 26): The Ministry of Social Development has stopped all international adoption agencies from working in Kyrgyzstan, for now. According to a July 26 Vecherny Bishkek report, which includes a list of the agencies, four have been banned due to "grave violations." Six others have been suspended for two months.
Kids in Kyrgyzstan’s state childcare institutions are again at the center of the country’s lackluster war on corruption. Though a long-standing moratorium on international adoption in Kyrgyzstan was lifted last year, authorities seem bent on bringing it back after the high-profile arrest of a minister involved in the process.
The moratorium was originally instituted in February 2009 because of corruption in the adoption system and reasonable fears children were not being protected. (The campaign later drew sensationalist coverage in press reports, which played on fears of "Americans harvesting our children's organs”). Despite repeated promises to prospective parents to lift the ban, it dragged on because of chaos in government. For at least 65 American families who had already started the adoption process, the freeze left dozens of children in limbo for years. A fair number had congenital illnesses and needed treatment in the West. Some died waiting.
The arrest of the popular former mayor of Kyrgyzstan’s capital on corruption charges, despite his immunity as a sitting parliamentary deputy, looks like risky business for the weak government in Bishkek.
Nariman Tyuleyev, who served as Bishkek mayor under former President Kurmanbek Bakiyev, is charged with corruption, costing the state some $1.4 million when he purchased unneeded and overpriced Chinese-made city buses back in 2008, local news agencies report.
The case against him is not particularly surprising in a city known for flashy and unmitigated graft. And this is far from the first time Tyuleyev has been linked to sleaze: In a conversation where his name was mentioned in 2008, shortly after being appointed acting-mayor by Bakiyev, the US Embassy tosses this telling aside into a cable later made available by Wikileaks: “Note: Many connect Tuliyev with organized crime. End note.”
But Tyuleyev (often spelled Tuleyev and Tuleev) isn’t just another official from the hated Bakiyev regime. He’s currently a member of the opposition Ata-Jurt party in parliament. Thus, it would seem Tyuleyev has parliamentary immunity, though the prosecutor’s office says the crime is so grave that it can revoke his immunity. Tyuleyev was arrested this weekend and put in temporary detention for two months.
Since coming to power in April 2010, Kyrgyzstan’s government has said that the family of deposed President Kurmanbek Bakiyev and his associates used the country’s largest bank to launder and export vast amounts of cash. A new report by Global Witness, an anti-corruption watchdog, says lax Western banking regulations abetted such alleged criminal activities.
After Bakiyev and his notoriously venal family were overthrown in April 2010, the interim government promptly nationalized AsiaUniversalBank (AUB); the bank’s former managers claim the charges are politically motivated. The European Bank for Reconstruction and Development, in an audit, appears to support Bishkek’s money-laundering claims. The former president is living in Belarus; his son Maxim has sought asylum in the UK.
But the case points to a larger problem, says Global Witness in the report, “Grave Secrecy”: It is too easy to set up a fake company in many Western countries “to launder the proceeds of corruption, tax evasion and other crimes.” The UK, New Zealand, and states such as Delaware “are effectively permitting hidden company ownership” and doing little to enforce anti-money laundering laws. “This matters because ‘shell’ companies – entities that are little more than just a name on a piece of paper – are key to the outflow of corrupt money that keeps poor countries poor.”
“It is so easy to set up a secretive ‘shell’ company in the UK and elsewhere that criminals, terrorists and corrupt politicians can easily move money around the world with impunity,” said Tom Mayne, a Global Witness campaigner, in a statement. “Not only that but you can do this perfectly legally. This denies citizens of poor countries the chance to lift themselves out of poverty and leaves them dependent on aid.”
The city of Tashkent is making it easier for police to sort residents into “insiders” and “outsiders” by forcing everyone to get a new stamp in their internal passports. It’s unclear what’s behind the new measure, but in one of the most corrupt places on earth the extra red tape could provide police another opportunity to stick their hands in residents’ pockets, observers fear.
As of May 14, the inhabitants of Uzbekistan’s capital have been formally divided into two groups, and must line up for the proper stamps to show it. Residents who were born in Tashkent or already have a permanent Tashkent living permit will have one stamp; outsiders, those who have come to Tashkent from the provinces, will have a different stamp.
According to Uzmetronom, a news site believed by some to be connected to Uzbekistan’s security services, the stamps allow police to “quickly determine whether the holder of the document is a native resident of the capital city or region or if he/she came to the capital from a distant region [of Uzbekistan].” Uzmetronom does not say why police must be able to quickly separate residents from non-residents.
The Ministry of the Interior says it is training officials and lawyers on the new law’s specifics, but the regulations are lengthy. Requiring all residents to get a new stamp sounds like a paperwork-generating nightmare ripe for misreading.