Following the launch of a corruption probe in the UK involving a natural resources giant with strong links to Kazakhstan, the company, ENRC, has become the subject of a hostile takeover bid by powerful interests with connections to the Central Asian state.
The three oligarchs who founded the London-listed Eurasian Natural Resources Corporation – Alexander Machkevitch, Patokh Chodiev and Alijan Ibragimov (who are all believed to have powerful connections in Kazakhstan) – have teamed up with the Kazakh government to mount the takeover. Together the four parties hold a combined 55.33 percent of ENRC, with the three founders owning equal shares of 14.56 percent each and Astana owning 11.65 percent.
ENRC’s committee of independent directors has rejected the bid on the grounds that it “materially undervalues ENRC,” according to a May 17 statement.
The committee said that the City of London’s Panel on Takeovers and Mergers, which regulates takeover bids for London Stock Exchange-listed firms, had granted its request for an extension until June 3 for a decision on the bid, to allow the consortium time to make a better offer – something there is no guarantee it will do.
The takeover panel issued a statement on May 20 saying that another London-listed company linked to Kazakhstan, the Kazakhmys copper miner, is officially to be treated as part of the takeover bid, because Astana plans to use its stake in Kazakhmys to finance the ENRC buyout.
The United Kingdom’s Serious Fraud Office (SFO) has launched a criminal investigation into alleged corruption at a London-listed natural resources giant with strong links to Kazakhstan, British media report.
The SFO probe targets the Eurasian Natural Resources Corporation (ENRC), a company with interests in the energy and mining sectors mainly in Kazakhstan but also in China, Brazil and some African states. It is partially owned by three oligarchs believed to have powerful connections in Kazakhstan. The Kazakh government also holds a stake.
“The focus of the investigation will be fraud, bribery and corruption relating to the activities of the company or its subsidiaries in Kazakhstan and Africa,” The Guardian newspaper quoted the SFO – an arm of the British government – as saying in an April 25 statement.
ENRC, which is listed on the London Stock Exchange, said in a statement the same day that it “is assisting and cooperating fully with the SFO” and “is committed to a full and transparent investigation of its procedures and conduct.”
The news follows a troubled period for ENRC, whose chairman Mehmet Dalman resigned on April 23, less than two weeks after a law firm appointed by ENRC to pursue an internal inquiry into the corruption allegations – first made by a whistleblower – was abruptly replaced.
It has long been rumored that huge bribes change hands in Kazakhstan to secure public-service jobs and law-enforcement positions that come with small salaries but enormous potential to make a few bucks on the side.
Now comes some indication of just how large the bribes may be: A human resources official in South Kazakhstan Region’s bureaucracy is under arrest after demanding a $50,000 backhander in a cash-for-job deal, Kazinform reports.
The official offered her services to secure a lowly job as deputy head of the regional Entrepreneurship and Trade Directorate, begging the question of how much money might be changing hands for more senior (and potentially lucrative) positions.
Graft is officially acknowledged to be rife throughout Kazakhstan’s bureaucracy, including the judiciary and law-enforcement system.
Last month the financial police said that some tax officials were taking bribes ranging from 1,000 to 1 million tenge (approximately $6.60 to $6,600) to fix results on tax audits, Tengri News reported.
In one high-profile case, Major-General Almaz Asenov, former head of the military’s armaments department, was arrested earlier this year on suspicion of taking a $200,000 kickback from two representatives of Ukrainian company Ukrspetzeksport in return for turning a blind eye to faulty repair work on An-72 aircraft.
Gulnara Karimova, daughter of Uzbek President Islam Karimov, has finally broken her long silence about allegations that she is connected to two corruption cases being investigated in Europe, complaining to Swiss magazine Bilan that her “enemies” are taking advantage of the situation to undermine her reputation and griping that the “attacks” are distracting her from her charitable work.
In the interview published March 7, Karimova launched a fierce attack on Russian telecommunications company MTS (which left Uzbekistan last year amid a furious dispute with Tashkent) and its former director, Bekhzod Akhmedov, once believed to be Karimova’s right-hand man.
Akhmedov is a central figure in two European corruption investigations: a money-laundering probe in Switzerland and a Swedish investigation into allegations that Nordic telecoms giant TeliaSonera made dubious payments to enter Uzbekistan’s telecoms market in 2007 – a probe which forced the resignation of CEO Lars Nyberg last month.
According to company correspondence filed with a Swedish court, TeliaSonera officials negotiating with Akhmedov (who was head of their rival MTS at the time) to enter the market believed he was “the telecom representative of Gulnara Karimova.”
Karimova has no official role in Uzbekistan’s telecoms sector; officially, she is Uzbekistan’s ambassador to the United Nations, and she is also a fashion designer and a pop diva under the stage name Googoosha.
Uzbekistan's customs declaration: All kinds of pitfalls for the unwary traveler.
Uzbekistan’s new currency restrictions have generated some bafflement inside the country, as EurasiaNet.org has already reported – but confusion over the Byzantine regulations regulating the sale and movement of dollars and other currencies, including the Uzbek som, is nothing new.
That bewilderment helps fuel a booming business at Uzbekistan’s main land border with Kazakhstan, where intermediaries are on hand to help the perplexed traveler navigate the obligatory customs forms – for a small consideration, naturally.
The intermediaries, all from Uzbekistan, accost travellers on both sides of the Chernyayevka border post near Tashkent and are also present in the Uzbek customs section, where officials presumably turn a blind eye in exchange for a share in the profits.
The form fillers offer assistance in navigating the Byzantine bureaucracy for a fee of 100 tenge (about 65 cents) or 2,000 sums ($1 at the official rate or around 80 cents at the black market rate).
On a recent Saturday afternoon they were doing a roaring trade. But why would anyone pay someone to fill in a form he could just complete himself, I asked one matronly Uzbek woman who approached me offering her services.
“Different reasons,” she said. “Some don’t have a pen, others have forgotten their glasses, a few can’t write.” She and her giggling colleagues were performing a “public service,” she joked with a flash of gold teeth.
European authorities say they have uncovered a vast conspiracy to fix football matches in Europe, Asia and South America. How much do you want to bet that clubs from Central Asia, a region that features some of the most corrupt nations in the world, were involved?
Officials at Europol – a pan-European law enforcement agency based in The Hague – say they have identified 380 football matches that were rigged. A Europol statement said the conspiracy originated in Asia and involved at least 425 individuals – including match referees, club officials, players and members of organized criminal gangs . The statement doesn’t provide specific names, places or dates, but it does indicate that high-profile international matches were fixed. In all, the rigged games are believed to have generated 8 million euros in gambling profits, the Europol statement indicates.
“Among the 380 or more suspicious matches identified by this case are World Cup and European Championship qualification matches, two UEFA Champions League matches and several top-flight matches in European national leagues. In addition, another 300 suspicious matches were identified outside Europe, mainly in Africa, Asia, South and Central America,” the Europol statement said.
Other information contained in the Europol release suggested that there’s a good possibility that clubs in former Soviet states are involved. “The organized criminal group behind most of these activities has been betting primarily on the Asian market,” the statement said. “The ringleaders are of Asian origin, working closely together with European facilitators. During the investigation, links were also found to Russian-speaking and other criminal syndicates.”
The head of Swedish-Finnish telecoms giant TeliaSonera, Lars Nyberg, has resigned after an auditor found the company was negligent when purchasing mobile licenses in graft-saturated Uzbekistan.
The 2007 deal was thrust into the spotlight in September, when Swedish journalists accused TeliaSonera of paying some 2.2 billion Kroner ($337 million) to a small, offshore company linked to President Islam Karimov’s daughter, Gulnara Karimova.
Mannheimer Swartling, which carried out the review for TeliaSonera, found no evidence of bribery or money laundering, but said “the suspicions of crime expressed in the media and by the Swedish Prosecution Authority cannot be dismissed by this investigation.”
Biörn Riese, a lawyer for Mannheimer Swartling, “notes that the transactions have been surrounded by so many remarkable circumstances that at least someone should have reacted to the lack of clarity regarding the local partner,” the firm said in a February 1 statement.
“If one carries out business in a corrupt country, one should quite simply be more thorough than TeliaSonera has been,” Riese said.
Last month documents surfaced showing TeliaSonera knew it was dealing with Karimova, who has been described in US diplomatic cables released by WikiLeaks as a “robber baron,” for the way she uses her father’s leverage to take over profitable businesses in Uzbekistan.
As a probe into allegations of shady payments in Uzbekistan by a Swedish-Finnish telecoms firm continues, fresh accusations have surfaced linking the deal directly to Gulnara Karimova, daughter of President Islam Karimov, whose name has repeatedly emerged in connection with the controversy.
Swedish broadcaster SVT -- which this fall broadcast the exposé that sparked the opening of a corruption investigation in Sweden involving TeliaSonera’s acquisition of the rights to operate in Uzbekistan -- says it has interviewed two senior TeliaSonera executives who linked Gulnara Karimova to the agreement allowing the company to enter Uzbekistan’s lucrative cellphone market.
“To reach a deal with Gulnara was a prerequisite to the whole deal,” one executive (both requested anonymity) told SVT’s “Uppdrag granskning” program. The executives said TeliaSonera officials traveled to Uzbekistan in 2007 to negotiate with the president’s daughter, who has extensive economic interests in Uzbekistan. (One WikiLeaked US Embassy cable describes her as a “robber baron.”) Karimova, who casts herself a sultry pop diva and fashion designer, and is her country's permanent representative to the UN in Geneva, has not commented on any of the corruption allegations.
One of the sources linked Karimova to Bekhzod Akhmedov, formerly a major player on the Uzbekistan’s telecoms market and currently the prime suspect in a separate money-laundering probe under way in Switzerland.
Fugitive Kazakh oligarch Mukhtar Ablyazov has been dealt a serious blow in a massive fraud case brought against him in London’s High Court by Kazakhstan’s BTA Bank: Ablyazov has been debarred from fighting BTA’s accusations that he pilfered $6 billion, reports The Lawyer.
Barring a successful appeal, the November 6 ruling sounds the death knell for Ablyazov’s hopes of clearing his name. His reputation also took a hit from the judge’s condemnation of Ablyazov’s attitude to the court: “It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr. Ablyazov.”
Ablyazov left Kazakhstan for London in 2009 after Kazakh authorities forcibly nationalized BTA Bank, which he headed and owned through an undeclared stake.
BTA sued Ablyazov for embezzlement in London. The oligarch went on the run after the High Court in February handed him a 22-month prison sentence for contempt of court for concealing assets. His whereabouts are unknown.
If Ablyazov loses his planned appeal, BTA can move to seize his assets, which – according to the British press – include a $29-million nine-bedroom mansion on The Bishop’s Avenue, a London street so exclusive it is dubbed Billionaires’ Row.
UPDATE / 0245 Saturday, Bishkek time: A Kyrgyz government source says the reports of Maxim Bakiyev's arrest are true, and denies that Maxim was released. (An earlier version of this post was headlined "Kyrgyzstan: Bakiyev Jr Reportedly Caught and Released in London.")
Late Friday night the website of Kyrgyzstan’s president announced that Maxim Bakiyev, son of the former president, had been arrested in London that morning. Maxim, wanted at home for fraud and embezzling tens of millions of dollars in state funds, has apparently been living in the United Kingdom since his father, Kurmanbek, was chased out of Bishkek on April 7, 2010.
But Vechernii Bishkek, a popular local newspaper, has cast doubt on the claims. The paper says it spoke with someone who had contacted Maxim; the source reportedly said that the former first son had in fact been detained but was released quickly with an apology “for the misunderstanding.”
A member of the president’s press office did not immediately return requests for more information.
Maxim, the demonized scion of the Bakiyev clan, who turns 35 this month, was also detained on June 13, 2010, when he arrived in the UK on a private jet. Six days later he was reportedly granted temporary asylum. Little has been heard from him since.