The US government wants to recover hundreds of millions of dollars in allegedly illicit funds that American prosecutors contend enriched a “close relative” of Uzbekistan’s strongman president, Islam Karimov.
A forfeiture complaint filed in US federal court in New York seeks the recovery of $300 million in assets “involved in an international conspiracy to launder corrupt payments” made in Uzbekistan’s telecoms sector, according to a copy of the complaint sent to EurasiaNet.org by the Department of Justice, which filed the case on June 29.
It alleges that illicit payments were made by two telecoms companies, Russia’s MTS and Amsterdam-based VimpelCom, to curry influence and secure favorable decisions from Uzbekistan’s government to operate in the lucrative telecommunications sector.
The alleged beneficiary is not named, but is identified as “GOVERNMENT OFFICIAL A,” and is further characterized as “a close relative of the President of Uzbekistan.” The unnamed beneficiary “held several positions in the Uzbek government” during the period in question (2004-2011), according to the complaint.
Gulnara Karimova, the president’s eldest daughter who is under house arrest in Uzbekistan on corruption charges, has previously been named as a suspect in a money-laundering probe in Switzerland involving payments in Uzbekistan’s telecoms sector. During the period in question, she held government positions, including as deputy foreign minister and ambassador to Spain and the United Nations in Geneva.
The lawsuit names two Karimova associates, and two shell companies they allegedly operated to funnel illicit funds: Gayane Avakyan, owner of Takilant, and Rustam Madumarov, owner of Expoline.
With the World Bank and Asian Development Bank soon to decide on Tajikistan’s request for $40 million more in budget support, they may wish to consider how past donations have benefited people close to the autocratic president while doing little to solve the long-term problems they were aiming to fix.
The two banks have spent over $140 million since 2009 topping up Tajikistan’s budget. But where does the money go? In 2012 alone the government spent $145 million recapitalizing a private bank that had handed out dozens of astronomically risky loans, many of them benefitting companies owned by relatives of the then-deputy prime minister, Muradali Alimardon (a man who had been promoted after admitting he’d lied to the IMF about the country’s reserves).
As I wrote for The Economist last week, the loans then disappeared but the directed lending continued. The bank is now deep in the red and Tajikistan’s whole banking sector looks on the edge of collapse.
Donors concede they struggle to piece together what is really going on. Their documents repeatedly describe Tajik bank statements as if they are purposely misleading. Internal memos say the banking sector’s structural problems stem from government resistance to reform, the lack of an independent central bank, ineffective internal controls, and ongoing fraud.
As Tajikistan’s banking crisis has snowballed over the last two or three years, donors have repeatedly seen their calls for reform ignored. So will they reward President Emomali Rahmon and his cronies for their persistent unwillingness to change the system?
A corruption scandal has engulfed a high-profile international exhibition that Astana is organizing, just as Kazakhstan enters the final stages of its bid to stage another prominent global event – the Winter Olympics.
Talgat Yermegiyayev, the chief organizer of Kazakhstan’s EXPO-2017 exhibition (which is due to be held in Astana in two years) has been placed under house arrest on suspicion of embezzlement, reports the Today.kz website.
The court ruling was issued on June 12, the day after President Nursultan Nazarbayev had fired Yermegiyayev from his position as chief executive of the Astana EXPO-2017 company, which is organizing the international exhibition. Nazarbayev’s administration has billed the event a major PR coup for Kazakhstan.
Another top EXPO official, Kazhymurat Usenov, who was in charge of the department overseeing construction of facilities for the exhibition, has also been placed under house arrest. He is suspected of embezzling 214 million tenge ($1.2 million) from the $385 million the state has allocated for the $3 billion event.
The corruption scandal has erupted as Kazakhstan enters the final stages in the race to stage the 2022 Winter Olympics, in which commercial capital Almaty is competing with Beijing to host the prestigious sporting event. A vote is due at the end of July.
The march against corruption advances undaunted in Tajikistan. Or does it?
A senior official has been felled in the trumpeted campaign to battle the country's scourge of all-encompassing graft, Russian news agency Interfax reported on June 15. Khasan Radzhabov was serving as adviser to the president on personnel affairs at the time of his arrest by the anticorruption agency.
Interfax cites a law enforcement source as saying that Radzhabov is suspected of embezzlement and bribe taking on a massive scale. No other details are yet available.
What personnel recommendations might Radzhabov have given the president?
He may learn to regret them if they included the March appointment of President Emomali Rahmon's 27-year-old son, Rustam Emomali, as head of the Agency for State Financial Control and Combating Corruption.
That nod invited immediate suggestions of high-level nepotism, although Emomali appears to have sought to dispel those thoughts by embarking on his job with gusto.
Izzattullo Azizov, an official with the state religious affairs committee, was arrested days after Emomali took up his post on suspicion of soliciting $2,000 bribes from devout Muslim hoping to go on the hajj. That detention was eagerly advertised on the evening news.
Interfax says several other senior functionaries have been arrested since.
There can be little disagreement that Tajikistan has a major corruption problem. The country ranks 152 out of 175 in Transparency International’s most recent Corruption Perceptions Index.
An investigative report provides details on alleged dirty dealings in Azerbaijan involving Stockholm-based telecom giant TeliaSonera and a company purportedly controlled by President Ilham Aliyev’s family.
The report, published May 27, was the result of a months-long investigation conducted by the Organized Crime and Corruption Reporting Project, Swedish public television SVT and the Swedish news agency TT. It alleges that TeliaSonera, a former majority shareholder in Azerbaijan’s largest telecommunications company, Azercell, facilitated the takeover of a large Azercell stake by an entity believed to be associated with President Aliyev’s family via offshore companies. The transaction cost Azerbaijani taxpayers an estimated $600 million, according to the report.
The cost to TeliaSonera investors, who are now demanding the details, is reckoned at roughly $709 million.
The report was based on work initially undertaken by now-jailed Azerbaijani investigative reporter Khadija Ismayilova. In December 2014, Ismayilova, whose work has appeared on EurasiaNet.org, was arrested on criminal charges several months after releasing a story that examined the connection between Azercell and Aliyev’s two daughters, Leyla and Arzu. Ismayilova remains in official custody pending trial.
A tenth-grader in Tajikistan’s capital has been detained after successfully soliciting a $50,000 bribe by impersonating the son of President Emomali Rahmon, Asia-Plus reports.
Last August, according to the state anti-corruption agency, Khushdil Kurbonov and a relative took $50,000 from a man in exchange for promising him 0.3 hectares of land just outside the capital.
Kurbonov then called a local official in charge of the land and said he was Somoni Emomali (sometimes Somon), the president’s younger son, and instructed him to hand over the deed. The official did not believe Kurbonov.
Kurbonov attends the Dushanbe International School, according to Asia-Plus. In 2012 Tajik media reported that Somoni was attending the Dushanbe International School; he would now also be in the 10th grade.
The organization investigating the case, officially known as the Agency for State Financial Control and Combating Corruption, is headed by another of the president’s nine children, Rustam Emomali. Rustam became head of the agency in March. His appointment (by his father) increased long-standing concerns that official corruption investigations will steer far and wide of the long-ruling first family.
That someone thought he could pull this off by posing as the president’s son speaks volumes about how business works – and the first family is viewed – in Tajikistan, a country that ranks 152 out of 175 on Transparency International’s most recent Corruption Perceptions Index.
Rahmon, seen here placing the first brick for his new city, likes to build.
Faced with a bulging population, Tajikistan’s government plans to build an entire new city in a stretch of northern desert. State television showed President Emomali Rahmon breaking ground this week, inspecting plans, receiving applause and placing the first brick.
Tajikistan’s population has more than doubled since 1979. With an annual growth rate of 2.3 percent, Tajikistan has the fastest growing population in Central Asia (the global average is around 1.2 percent), according to UN data.
The new city project – located 10 kilometers from Tajikistan’s second-largest city, Khujand – will house 250,000 people, the president’s website reports. Rahmon suggested the new city be named Saihun, after a nearby river. He ordered the building of over 50 new schools and 40 sports facilities. Over 7,000 hectares of orchard will rise from the desert, he promised.
The strongman likes to build. Last week, Rahmon laid the first stone for the region’s largest theatre. In 2011, he unveiled the world’s tallest flagpole (which was recently surpassed by another vainglorious dictatorship, Saudi Arabia). Tajikistan already boasts the world’s biggest teahouse, the region’s largest library (with few books) and has, for years, been building its largest mosque.
The hated younger son of Kyrgyzstan’s former president is living the highlife in the United Kingdom, inhabiting a house bought by an opaque shell company – probably with money stolen from the Kyrgyz people – while he waits for asylum. So alleges transparency watchdog Global Witness in a March 25 report.
Maxim Bakiyev never returned to Kyrgyzstan after his father, Kurmanbek Bakiyev, was ousted in a bloody April 2010 uprising that left around 100 people dead. He has since been found guilty at home of stealing millions in government funds and attempted murder, charges he says are politically motivated.
Meanwhile, he has applied for asylum in the UK and is eligible for permanent residency in three months, according to Global Witness.
How Maxim came to live in a $5.2-million mansion, bought by a secret Belize-registered company just after his father’s regime imploded, is the focus on the Global Witness report.
The report provides strong evidence suggesting that the scion of the Bakiyev clan, if not fully identifiable as the owner of the house in a posh London suburb, at least inhabits it.
Kyrgyzstan’s obscurity has allowed Maxim to fly under the radar of the British press for the most part. Even the British football club he was rumored to have a stake in was fairly unfashionable.
Gulnara Karimova, the daughter of Uzbekistan’s strongman leader Islam Karimov, has been making international headlines for years amid charges of massive bribery and corruption. But fresh evidence unearthed by an anti-corruption watchdog suggests her avarice reached mind-boggling scales as she vacuumed up cash from telecoms companies wanting a slice of Uzbekistan’s lucrative cellphone pie.
Karimova received over $1 billion in payments and shares from Scandinavian and Russian telecoms companies such as TeliaSonera, Telenor, MTS, and Alfa Telecom, the Organized Crime and Corruption Reporting Project (OCCRP) alleged in a report published March 21.
“Her audacious schemes may have cost the people of Uzbekistan money that could have paid for pensions or healthcare but instead went into banks, an offshore hedge fund and luxurious real estate around the world, including a castle in France and a penthouse in Hong Kong,” the OCCRP stated.
The watchdog was skeptical of the defense put forward by telecoms firms that they did not knowingly commit any wrongdoing: “While the international companies involved claim to have been innocent or unwilling dupes of her maneuvers, the blatant means by which Karimova allegedly operated made it virtually impossible for those involved not to realize they were giving in to extortion and bribery.”
Documents have come to light proving that the beneficiary of a $748,000 renovation funded by the U.S. military was not the state or people of Kyrgyzstan, as initially claimed by Kyrgyz and U.S. officials, but a private citizen who acquired the property under dubious circumstances.
The former state hospital, in the Bishkek suburb of Shopokov, was intended to be a “development center for battered women” and “a shelter for up to 55 women and their children,” according to U.S. military press materials distributed during a ribbon-cutting ceremony in 2010. The American airbase at Manas funded the renovations. The base commander and U.S. ambassador attended the event.
For a time, the impressively refurbished two-story building stood empty. Today it accommodates a private kindergarten that earns its owners roughly $47,000 per year, based on calculations using figures provided by the school’s employees.
The $748,000 grant was unusually large for Manas, accounting for one-third of the base’s humanitarian aid spending that year. Most of Manas’s development grants that year were for less than $20,000.
American officials appeared to believe at the time that the funds were being used to refurbish a state-owned building. In 2011, when the building stood empty, a Manas spokesperson told EurasiaNet.org that after refurbishment the building was supposed to remain Kyrgyz government property and said Manas was not responsible for monitoring program activity.
The implementing partner was Zamira Akbagysheva, the head of Kyrgyzstan’s Congress of Women.
Today, a sign on the gate outside the building declares “Authorized People Only.” With its sparkling paint-job, new windows, and bright-red roofing tiles, the building stands out in the neighborhood of dilapidated gray houses.