About the Caspian Cabals investigation

Caspian Cabals expos­es how Western com­pa­nies des­per­ate for new oil reserves catered to Russian pow­er, enrich­ing Putin cronies and Kazakh elites and ignor­ing cor­rup­tion risks to keep the oil moving.

The Caspian Cabals inves­ti­ga­tion reveals how Western oil com­pa­nies — includ­ing Chevron Corp., ExxonMobil Corp., Shell PLC, and Italy’s Eni S.p.A. — ignored bribery risks and mas­sive cost over­runs to secure their stake in a crit­i­cal Kazakhstan-Russia pipeline, then deliv­ered sub­stan­tial con­trol of it to the Kremlin.

Western gov­ern­ments had oth­er things in mind at the Caspian pipeline’s incep­tion 30 years ago. Besides the poten­tial for inde­pen­dence from Middle Eastern oil, they envi­sioned the pipeline as an instru­ment for post-Soviet pros­per­i­ty and democ­ra­cy. Western invest­ment could pro­vide an eco­nom­ic boost to impov­er­ished regions and seed demo­c­ra­t­ic val­ues among author­i­tar­i­ans in Central Asia.

Instead, the inves­ti­ga­tion shows, the 939-mile pipeline, which runs from Kazakhstan’s vast crude reserves through Russia to the Black Sea, has pro­duced envi­ron­men­tal dev­as­ta­tion and alle­ga­tions of finan­cial cor­rup­tion. And it has bol­stered anti-demo­c­ra­t­ic pow­ers in Russia and Kazakhstan, which have met oppo­si­tion to the pipeline with intim­i­da­tion and worse. Today, the pipeline is vul­ner­a­ble to the will of the Kremlin. The first full shut­down, attrib­uted to storm dam­age, occurred a month after Russia’s February 2022 inva­sion of Ukraine and two weeks after the U.S. moved to invoke sanc­tions in response.

Behind the scenes, the International Consortium of Investigative Journalists found, Russian offi­cials were shap­ing a pub­lic mes­sage to exag­ger­ate the length of the shut­down in order to “scare” the West and under­score the Kremlin’s pow­er over oil mar­kets despite the sanc­tions. Since the inva­sion, there have been at least 20 pipeline dis­rup­tions or sus­pen­sions of oil ship­ments. When ship­ments are halt­ed, oil prices rise and Europeans face poten­tial fuel shortages.

The inves­ti­ga­tion was led by ICIJ, the Washington, D.C.-based non­prof­it news­room and glob­al net­work of reporters, with 26 media part­ners includ­ing NRC, Der Spiegel, Radio Free Europe/Radio Liberty, the Russian inves­tiga­tive group Proekt, Italy’s L’Espresso, and Germany’s Paper Trail Media. Over two years, reporters inter­viewed hun­dreds of sources, includ­ing com­pa­ny insid­ers and for­mer exec­u­tives. They combed through tens of thou­sands of doc­u­ments: leaked inter­nal cor­po­rate records and con­fi­den­tial emails, con­tracts, audits, land records, and court and reg­u­la­to­ry filings.

Five whistle­blow­ers alleged in inter­views with ICIJ that Western oil com­pa­nies’ deal­ings in Russia or Kazakhstan includ­ed pay­ments in vio­la­tion of the U.S. Foreign Corrupt Practices Act.

In a state­ment to ICIJ, Chevron said the com­pa­ny is “com­mit­ted to eth­i­cal busi­ness prac­tices, oper­at­ing respon­si­bly, con­duct­ing its busi­ness with integri­ty and in accor­dance with the laws and reg­u­la­tions of each of the juris­dic­tions in which it oper­ates.” Exxon did not respond to requests for comment.

A Shell spokesman said the com­pa­ny does not tol­er­ate bribery in any form. An Eni spokesper­son said, “We are com­mit­ted to uphold­ing the high­est stan­dards of trans­paren­cy, eth­i­cal con­duct and envi­ron­men­tal respon­si­bil­i­ty.” The com­pa­ny referred ques­tions about the pipeline to its own­er, the Caspian Pipeline Consortium (CPC), which did not respond to mul­ti­ple requests for comment.

The report­ing shows how a quest for prof­its brought the Western com­pa­nies that co-own the pipeline — and oper­ate the three oil fields that sup­ply it — to sign off on lucra­tive con­tracts worth hun­dreds of mil­lions of dol­lars to busi­ness­es con­trolled by Russian elites and to a firm par­tial­ly owned by Timur Kulibayev, the bil­lion­aire son-in-law of Kazakhstan’s for­mer pres­i­dent, Nursultan Nazarbayev.

Even as the West has tight­ened the eco­nom­ic screws on Russia for its war against Ukraine, the pipeline con­tin­ues to send hun­dreds of mil­lions of tax dol­lars a year to Russian author­i­ties. Pipeline advo­cates have spent mil­lions more on lob­by­ists in the U.S. and have put pres­sure on the EU Commission to ensure that the pipeline remains exempt from sanc­tions, and to water down trans­paren­cy rules that would force oil com­pa­nies to dis­close their pay­ments to the governments.

As Vladimir Putin’s polit­i­cal pow­er grew, the inves­ti­ga­tion found, Russia seized on oppor­tu­ni­ties to flex its mus­cle through Transneft, the state-owned pipeline com­pa­ny. Transneft began employ­ing “bul­ly tac­tics” in a $1.5 bil­lion pipeline expan­sion project. It held up con­tracts and sought to steer deals to its affil­i­ate com­pa­nies — a direct con­flict of inter­est. In one instance, it locked Western oil rep­re­sen­ta­tives out of a build­ing, pre­vent­ing them from review­ing bids for a con­tract. The project cost sky­rock­et­ed to $5.4 bil­lion. Eventually, Transneft blocked the elec­tion of CPC board mem­bers. As a con­cil­ia­to­ry move, the Western oil part­ners hand­ed sig­nif­i­cant man­age­ment of the pipeline to Russia.

A polit­i­cal­ly influ­en­tial Russian com­pa­ny, Velesstroy, became one of the pipeline’s key sup­pli­ers under Transneft man­age­ment. Velesstroy is co-owned by two Croatian busi­ness­men, both under sanc­tions by the U.K. for their ties to the Russian ener­gy sec­tor.  One, Krešimir Filipović, is known in Russian and oth­er media as “Putin’s wal­let” in the Balkans. Bank doc­u­ments, inspec­tion reports and court fil­ings show how the com­pa­ny avoid­ed tax­es and piled up safe­ty vio­la­tions. At least 18 Velesstroy work­ers have died on the job since 2015, includ­ing one at a pipeline site. Nevertheless, Western oil part­ners signed off on con­tracts with the com­pa­ny amid alle­ga­tions that the deals were vast­ly overpriced.

• Recommended read­ing

FAQ

Frequently asked questions about the Caspian Cabals investigation

Nov 22, 2024

CASPIAN CABALS

Putin’s pipeline: How the Kremlin outmaneuvered Western oil companies to wrest control of vast flows of Kazakhstan’s crude

Nov 22, 2024

INTERACTIVE

Uncovering Timur Kulibayev’s European property empire

Nov 22, 2024

In Kazakhstan, a fat con­tract went to a com­pa­ny tied to the then-president’s son-in-law, Kulibayev. The $276.5 mil­lion con­tract for two pump­ing sta­tions was award­ed to KazStroyService. During the six-year project, pub­lic records show, Kulibayev’s Singapore-based pri­vate equi­ty firm list­ed KazStroyService among its hold­ings. The project cost bal­looned to $486 mil­lion, with lit­tle expla­na­tion for the increase — and the com­pa­ny com­plet­ed the work four years behind sched­ule. Kulibayev’s lawyers told ICIJ he was not involved in man­age­ment of the com­pa­ny or in the con­tract nego­ti­a­tions or discussions.

In both Russia and Kazakhstan, the oil part­ners kept pay­ing as con­trac­tors drove up costs by mil­lions of dol­lars through con­tract changes. Our report­ing found at least 10 cas­es of sub­con­trac­tors alleged­ly pock­et­ing advance pay­ments, then dis­ap­pear­ing with­out doing the work.

And in pover­ty-strick­en towns near the Kazakh oil fields, ICIJ inter­viewed vil­lagers who bat­tle chron­ic ill­ness­es and who rem­i­nisced about a coun­try­side they no longer rec­og­nize — a place where they could breathe clean air, drink untaint­ed water and grow gar­dens free of con­t­a­m­i­na­tion. To many, the oil and gas fields that feed the pipeline sym­bol­ize bro­ken promis­es. Their hopes of get­ting a share of the country’s oil largesse have evap­o­rat­ed. They have lost the home­land they knew.

https://youtube.com/watch?v=Oa3DMefXug4%3FinitialWidth%3D670%26childId%3Dicij-iframe‑1%26parentTitle%3DAbout%2520the%2520Caspian%2520Cabals%2520investigation%2520-%2520ICIJ%26parentUrl%3Dhttps%253A%252F%252Fwww.icij.org%252Finvestigations%252Fcaspian-cabals%252Fabout-caspian-cabals-investigation%252F

The ICIJ team

Director: Gerard Ryle

Managing edi­tor: Fergus Shiel

Deputy man­ag­ing edi­tor: Annys Shin

Senior Editors: Marcia Myers, Whitney Joiner, David Rowell, Dean Starkman

Head of data and research: Delphine Reuter

Reporters: Sydney Freedberg, Nicole Sadek, Agustin Armendariz, Thomas Rowley, Tanya Kozyreva, Matei Rosca,  Marcos Garcia Rey, Peter Stone, Roy W. Howard Fellow Eve Sampson, Naubet Bisenov, Jesús Escudero, Denise Ajiri, Jelena Cosic, Karrie Kehoe.

Associate edi­tors and fact check­ers: Richard H.P. Sia, Kathleen Cahill

Copy edi­tor: Angie Wu

Editor: Tom Stites

Head of dig­i­tal and prod­uct: Hamish Boland-Rudder

Digital edi­tor: Joanna Robin

Digital pro­duc­er: Carmen Molina Acosta

Web devel­op­er: Antonio Cucho

Social media pro­duc­er: Daniela Vivas Labrador

Chief tech­nol­o­gy offi­cer: Pierre Romera Zhang

Technology team: Caroline Desprat, Soline Ledésert, Miguel Fiandor Gutiérrez, Bruno Thomas, Maxime Vanza Lutonda, Whitney Awanayah, Javier Ladrón de Guevara, Jorge González, Carolina Verónica López Cotán, Clément Doumouro, Marie Gillier.

Design and illus­tra­tion: Ben King

Training man­ag­er: Jelena Cosic

The investigation team

• Gerard Ryle (ICIJ) Australia
• Hamish Boland-Rudder (ICIJ) Australia
• Stefan Melichar (Profil) Austria
• Lars Bové (De Tijd) Belgium
• Delphine Reuter (ICIJ) Belgium
• Kristof Clerix (Knack) Belgium
• Mašenjka Bačić (Oštro) Croatia
• (OCCRP-CIReN, the Cyprus Investigative Reporting Network) Cyprus
• Carl Schreck (Radio Free Europe (RFE/RL)) Czechia
• Mukhtar Senggirbay (Radio Free Europe (RFE/RL)) Czechia
• Reid Standish (Radio Free Europe (RFE/RL)) Czechia
• Dean Starkman (ICIJ) France
• Marcel Rosenbach (Der Spiegel) Germany
• Bastian Obermayer (Der Spiegel/Standard/Paper Trail Media) Germany
• Carina Huppertz (Der Spiegel/Standard/Paper Trail Media) Germany
• Elisa Simantke (Der Spiegel/Standard/Paper Trail Media) Germany
• Frederik Obermaier (Der Spiegel/Standard/Paper Trail Media) Germany
• Hannes Munzinger (Der Spiegel/Standard/Paper Trail Media) Germany
• Harry Karanikas (Freelance) Greece
• Nikolas Leontopoulos (Reporters United) Greece
• Sotiris Sideris (Reporters United) Greece
• Thodoris Chondrogiannos (Reporters United) Greece
• Ritu Sarin (Indian Express) India
• Sukalp Sharma (Indian Express) India
• Karrie Kehoe (ICIJ) Ireland
• Uri Blau (Shomrim) Israel
• Gloria Riva (L’Espresso) Italy
• Leo Sisti (L’Espresso) Italy
• Paolo Biondani (L’Espresso) Italy
• Naubet Bisenov (ICIJ) Kazakhstan
• Ainur Saparova (Radio Free Europe (RFE/RL)) Kazakhstan
• Kobylan Aldibekov (Radio Free Europe (RFE/RL)) Kazakhstan
• Manas Qaiyrtaiuly (Radio Free Europe (RFE/RL)) Kazakhstan
• Mariya Melnikova (Radio Free Europe (RFE/RL)) Kazakhstan
• Vyacheslav Abramov (Vlast.kz/OCCRP) Kazakhstan
• Dmitriy Mazorenko (Vlast.kz  ) Kazakhstan
• Luc Caregari (Reporter.lu) Luxembourg
• Lukas Kotkamp (Follow The Money) Netherlands
• Carola Houtekamer (NRC) Netherlands
• Karlijn Kuijpers (NRC) Netherlands
• (IStories) Russian Federation
• Mikhail Rubin (Proekt) Russian Federation
• Roman Badanin (Proekt) Russian Federation
• Jelena Cosic (ICIJ) Serbia
• Anuška Delić (Ostro) Slovenia
• Daniele Grasso (El País) Spain
• Jesús Escudero (ICIJ) Spain
• Marcos Garcia Rey (ICIJ) Spain
• Miguel Fiandor Gutiérrez (ICIJ) Spain
• Joaquín Castellón (La Sexta) Spain
• Sylvain Besson (Tamedia) Switzerland
• Pelin Unker (DW Turkey) Turkey
• Will Dahlgreen (BBC) UK
• James Oliver (BBC) UK
• Matei Rosca (ICIJ) UK
• Thomas Rowley (ICIJ) UK
• Agustin Armendariz (ICIJ) USA
• Angie Wu (ICIJ) USA
• Annys Shin (ICIJ) USA
• Carmen Molina Acosta (ICIJ) USA
• Daniela Vivas Labrador (ICIJ) USA
• David Rowell (ICIJ) USA
• Denise Ajiri (ICIJ) USA
• Emilia Diaz-Struck (ICIJ) USA
• Eve Sampson (ICIJ) USA
• Fergus Shiel (ICIJ) USA
• Joanna Robin (ICIJ) USA
• Kathleen Cahill (ICIJ) USA
• Marcia Myers (ICIJ) USA
• Nicole Sadek (ICIJ) USA
• Peter Stone (ICIJ) USA
• Richard H.P. Sia (ICIJ) USA
• Sydney Freedberg (ICIJ) USA
• Tanya Kozyreva (ICIJ) USA
• Tom Stites (ICIJ) USA
• Whitney Joiner (ICIJ) USA
• Dan Friedman (Mother Jones) USA

Original Source: ICIJ

By Marcia Myers

Image: Ben King / ICIJ

November 22, 2024