Mukhtar Ablyazov files: culprit muted while syndrome’s dimensions keep expanding


Kazakhstan’s bruised and battled bank BTA has recently scored in getting in the order of 2 billion greenbacks in embezzled assets by its former major shareholder and chief director Mukhtar Ablyazov back. References to facts and figures by the bank remain vague and incomplete – but judging by the order of the amount it must concern the real estate owned by Ablyazov in and around London bought with the stolen money. Meanwhile, Cyprus (proper, that is – meaning without the self-styled maverick republic of Northern Cyprus) has run into trouble with its EU partners over a bailout for which it requested recently just because of having served the likes of Ablyazov as a fugitive fund haven. One of the proxies he used to use for the purpose, a certain Jason Hercules, has been acquitted by a Cyprus court as it appears, while his colleague Paul Kythreotis has languished in a local jail and is still on the wanted list in the UK. Back home in Kazakhstan, the list of self-proclaimed martyrs of politics comparable and probably related to the Ablyazov files is getting longer as well.

culprit“The Supreme Court of the United Kingdom has rejected former BTA Bank (“the Bank”) Chairman Mukhtar Ablyazov’s application for leave to appeal the Court of Appeal’s rejection of his application against Mr Justice Teare’s judgment which debarred him from defending BTA Bank's claims against him as a result of his serious contempts of court and failure to hand himself to the British authorities to serve his prison sentences,” a BTA press release dated February 26 (http://www.bta.kz/en/press/news/2013/02/26/661/)

read. “The Supreme Court refused leave to appeal on the basis that the application did not raise an arguable point of law of general public importance.  The Bank has already obtained judgments against Mr Ablyazov for approximately $2 billion in two of its claims against him; it is in the process of entering judgment for a further US$1.5 billion and will enter further judgments when it needs to.” The press release quoted Pavel Prosyankin, BTA Bank Managing Director overseeing the asset recovery process and Member of the Management Board of the Bank, as declaring: “Today’s decision marks the end of Mr Ablyazov’s legal manoeuvring and will expedite the enforcement of the significant judgments we have won. The Supreme Court’s decision reinforces the Bank’s ability to start to reverse the processes by which Mr Ablyazov fraudulently diverted assets from the Bank. We remain committed to the process to help restore the Bank’s financial standing which was devastated by Mr Ablyazov’s actions.”

The final verdict in final appeal concerns Ablyazov’s failure to comply with the so-called unless-order which as in a judgment proclaimed on February 29, as a result of “an application by the claimant, the Bank, for a mandatory injunction requiring the defendant, Mr Ablyazov, to surrender himself to the tipstaff and to file a full and proper disclosure affidavit of assets and also for an order that, unless he does so, his defence to the several actions brought against him in this court shall be struck out and the Bank will be entitled to enter judgment against him,” in the verdict’s words. The first case on the agenda is dubbed the Chrysopa case, and leads to The Netherlands. The second, known as the Drey file, puts ownership and responsibility for loan and collateral diversion schemes in the Russian Federation at stake. The third one, known as the Tekhinvest case, takes us back downtown Moscow, and involves, among other projects, the Moscow City Tower — wherese case number four, about less is known concerning tangible assets (if there ever were any) is known as the Granton case, also after its most important offshore link in the chain. A fifth case concerns a Swiss connection, thought to be related to one or more oil-related diversion rings. This leaves three more cases which were added to the list later on, which altogether brings the sum sought to be recovered to well over 3 billion Sterling — or close to half of the hole left behind on BTA’s balance sheet by Ablyazov when he escaped through the back door.

Lump sums involved in the cases vary. In the Chrysopa case, the money to be claimed, excluding interests and other extra charges, amounts to the order of 120 million US dollar, according to reports submitted to the public domain by BTA. The cases of Drey and Tekhinvest described recently amount to $298 and $300 million respectively. Both are dwarved, however, by the amount at stake in the case connected to one of Ablyazov’s offshore shell companies called Granton Trade and named after it, which is coming close to $1.43 billion.

For Ablyazov, it may be over – to his detriment, that is. But BTA still has quite a way to go if it wants to cash in on its legal battles’ victories. “As Mr Ablyazov failed to comply with the Unless Orders, on 23 November 2012 the Bank was granted default judgment against him in the DCM and Drey Proceedings for over $2 billion,” the BTA press release quoted earlier read further down. “The Bank is now seeking to enforce those judgments.  In February 2013, the Bank completed the trial of the Chrysopa, Granton and Drey proceedings in the High Court against the remaining defendants. It awaits judgments.  The Bank has issued eleven claims in England against Mr Ablyazov (and others) worth approximately US$6 billion.” This is about half of the entire amount Ablyazov is believed to have diverted in both loan sums and collateral. The other half remains outside England’s jurisdiction.

Elsewhere, the Ablyazov files continue to spread havoc which in the case of one of his offshore bases, namely Cyprus, spells far-stretching consequences as the eurozone, to which Cyprus (Cyprus proper, that is, without the maverick and self-styled so-called Republic of Northern Cyprus created by the Turks) has threatened to block a badly needed bail-out if no measures are taken against the half-island’s function as an offshore haven for the likes of Ablyazov – taking the latter as the most notorious example. “Cyprus's newly elected government is bargaining for a €17 billion bailout from its euro-zone peers,” The Wall Street Journal reported on March 5 this year. “But the little island won't get a cent until it wrestles with a long-standing issue: money laundering. Cyprus's reputation as a transit point for shady cash, and its unusual connections to Russia, are making many of its would-be rescuers nervous.”

“An industry of thousands of lawyers, accountants and so-called corporate-service agents in Cyprus beaver away forming companies, whipping up corporate skeletons and dressing them with directors, paperwork and bank accounts,” the article reads further down. “Their handiwork is evident in a civil fraud action brought by BTA Bank, one of Kazakhstan's biggest lenders, against its former chairman, Mukhtar Ablyazov. BTA claims Mr. Ablyazov and another former executive looted billions of dollars from the bank before it was nationalized in 2009 and they were fired. BTA says Mr. Ablyazov squirreled the money away inside a paper empire of companies. A London judge's order freezing Mr. Ablyazov's assets lists hundreds of companies alleged by the bank to be shells—entities from Cyprus to the British Virgin Islands and the Seychelles. […] Cyprus was the engine room of Mr. Ablyazov's alleged operation. In court documents, BTA bank claims Mr. Ablyazov used a London company to direct agents in Cyprus who administered companies there—while apparently asking few questions. One agent was Paul Kythreotis, a 45-year-old Briton with offices in Limassol. Mr. Kythreotis's assignments included handling the corporate affairs of scores of companies the bank alleges are linked to Mr. Ablyazov. […] Among entities in Mr. Kythreotis's stable were five British Virgin Islands companies that BTA alleged Mr. Ablyazov ultimately owned. (A London judge has ruled he did own at least one.) BTA says $300 million worth of bonds owned by the bank ended up in the coffers of those companies. Mr. Kythreotis was sentenced to 21 months in prison in the U.K. for refusing to turn over documents. He has remained in Cyprus, where last year he was sentenced to two months in jail for refusing a court order to search his house and Limassol office.”

Kythreotis is related to a scam in corporate securities worth in the order of $300 million, known as the so-called AAA case, originating in UK proceedings against Ablyazov’s Roman Solodchenko, BTA’s former chairman of the board and one of Alyazov’s longstanding associates and men of confidence, along with Paul Kythreotis and another Cyprus-based intermediary by the name of Jason Hercules. The latter was acquitted from the case in the course of 2012, but the case against Kythreotis keeps hanging in the air. The charges include the usual string of offshore companies believed to be affiliated to Ablyazov and company, in this case bearing the names of Celina Investment Holdings Limited, Shoreline Investment Holding Limited, Nafazko Investments Limited, Olofu Investments Limited, Mymana Holdings Investments Limited Mabco Inc, Calernen Finance Inc, Astrogold Corp and Grundberg Inc. The case has been dubbed AAA after the ratings of the bonds used as fake liabilities in the asset diversion scheme that must have taken place between mid-2008 and early 2009. The case is not yet on the table in English courtrooms among BTA’s claims for retribution – but since it was included in Ablyazov’s shortlist for contempt of court, it is expected to be on the agenda soon.

It looks pretty much as though Ablyazov, wherever he could be, might soon get charming company in the form of old acquaintances from the northwestern Kazakh town of Atyrau, where back in March 2009 he is reputed to have obtained false passports for himself, his family and his close associates with the help of which he could cross the Russian border where a private jet was waiting to take the company to London. But there is more to Ablyazov’s friends in Kazakhstan’s far west than just that. Thanks to the revenue, the town has seen the start of a face-lift and a booming construction business into the new millennium. But along with it, an even more booming business has developed in the form of budget and account manipulation, fictional expenditures to hide embezzlement of funds and overvaluing of development and refurbishing projects, in the process of which hundreds of millions in US dollar have been funneled out of public funding and from there out of Kazakhstan.

The scandal erupted in late summer 2012, and led, in the course of October, to the arrests of a number of former public officials and owners/managers of construction companies based in Atyrau. According to the provincial newspaper and newsreel Ak Zhaik (“White Ural” – www.azh.kz) a number of officials are awaiting trial behind bars, including former deputy governor Bulat Daukenov, former Atyrau mayor Askar Kerimov, as well as a number of lower-ranking officials – some of which have been conditionally released and promised grace in return for cooperation with the authorities in the form of proof and testimonies. The two most important culprits, however, are on the run and said to have recently been signaled downtown London in some uppity bar, according to local media in the northwest of Kazakhstan. They are the former governor of the Atyrau province Bergei Saulebayevich Ryskaliyev, and his brother (who has assumed a de-russified surname) Amanzhan Ryskali, a one-time opposition deputy in Kazakhstan’s Lower House of Parliament and formerly prominent entrepreneur in the construction business in what is often dubbed Kazakhstan’s “oil capital”.

Among the entrepreneurs involved in the series of scams are Aibat Suleimenov, owner and general director of a company called Snaboilstroy LLP, involved in construction, maintenance and refurbishment services in the public infrastructure. Charges against Suleimenov were filed, according to Ak Zhaik, on August 21 last year, but a warrant for his arrest was only issued on November 16 – thereby offering him plenty of opportunity to escape which he apparently did. The same appears to be true for Nurlan Dzhoulmagambetov, director of Atyrausrandstroy, and a number of accounting department heads of various construction firms by the names of Gulmira Azbergenova, Murat Dzheldybayev, Galina Vakker and Erbolat Izbasar, who allegedly forged the accounts and documents to cover up the gaps in the expenditures and hide the kickbacks paid from project budgets to key figures in the public sector. Such multi-million kickbacks were usually in the order of 30 per cent of the overvaluation amount in contracts. Such overvaluation could easily run into tens of millions in US dollar, and in some projects, such as a trunk gas pipeline across the province and a water distribution system for Atyrau and surrounding townships, into hundreds of millions.

The chain of enterprises maintained by the Ryskaliyev brothers and their associates looks impressive and mainly consists of three “groups” as authorities dub them. The first “group” consists of a string of mutually affiliated companies known under the names Aktalin Group LLP, Atyraustroyprojekt, Tsentrstroy Ltd., Asia-Market-S, ATG Kurlys, BKA Groups, AtyrauStroyKom, Expolinks, Aksaray, Atyraugrandstroy, Aminastroymarket, Ekolayer and SP Utebainev. All firms are nominally owned by Bergey Ryskaliyev’s son-in-law Rustem Albakasov. Activities vary from construction design, construction contracting and subcontracting, material supply, surveying, consulting and business administration services to eve vaguer task descriptions. The second group includes firms belonging to a businessman, judging by the name of Korean origin, called Vadim Pak, and known as US-00 LLP, Atyrauinzhdorstroy, Munaykurylyservice Ltd., Atyrauinzhstroy and Atyraupolymerstroy. The third group belongs to Aibat Suleimenov, and apart from Snaboilstroy includes Atyraukapstroy, Eksan-Atyrau, Akas Alpha Grad and two SPs called Suleymenov and Mukhiyev.

So far, 13 cases are on the table. Among them is a 6.3 billion tenge (1 USD = approx. 150 tenge; 1 euro = approx. 200 tenge) overvaluation and subsequent overpayment in the construction of a gas pipeline from Atyray-town to the district of Kyzylkug, and another 2.5 billion tenge scam in the construction of a water supply network in the same district. The case has led to the arrest of the head of the Atyrau department of the state architecture and construction control service, Turlanbek Dzhiyenbayev, suspected ot having looked the other way in return for a share in the kickback. A third case in which 177.5 million tenge was embezzled concerns the overbilled construction of a number of schools and hospitals downtown Atyrau, while another 7 billion has “disappeared” in the process of the privatisation by the public sector of two public companies, Atyrau Akparat and Obltransgaz – which has led to the arrests of, among others, the head of the provincial financial department Baurzhan Dzhantemirov. Further cases include a 111.8 million tenge fraud related to the construction of a household waste burial site on the outskirts of Atyrau-town, and another case amounting to 45 million tenge in the construction of an electricity network in the area of Indersky.

As for Amanzhan Ryskali, on September 15 last year he threw the towel in the ring by offering the Ak Zhol party to end his mandate in Parliament – which was accepted.  He is particularly accused of illegally appropriating 9 apartments in a newly built residence block downtown Atyrau constructed by the AB Group, with which he and his brother are connected, with a par value of 200 million tenge. But as noted, both brothers are believed to have fled together with their families across the nearby, and ill-controlled, border with the Russian Federation on yonder side of which a charter plane was waiting to transport them further abroad. There is also no trace of Vadim Pak, who is also believed to have fled the country. In all, welcome to the club, with some nice company added to the “global society of Kazakh crooks” either sunbathing in one of the Arab Emirates or crisscrossing Europe these days – and possibly new websites popping up with the Ryzkaliyev brothers complaining about the cruel persecution by which they claim to be victimised back home in Kazakhstan. Here, it looks all too familiar and the comparison between the Ryzkaliyevs and their intimate Ablyazov look a lot more than just coincidental: just scream key words such as “opposition”, “oppression”, “persecution” through the cyberspace and get off the hook in the eyes of the outside world…

(amounts in US dollar)

case known as: claim*) frozen**)
Chrysopa file 120m 120m
Drey file 401m 295m
Tekhinvest file 300m
Granton file 2461m 2461m
Reuel/RIRoil file 65m
AAA file 295m 295m
Paveletskaya file 269m 269m
DCM file 1200m
TOTAL 5111m 3436m

*) Some claims include interest losses, others consist of lump-sums
**) Some of the frozen assets overlap.


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