Ablyazov’s Kazakh Nuke Deal: Scandal Pops Up In The USA In Distorted Form

As known and report­ed on repeat­ed­ly in these columns, among Mukhtar Ablyazov’s fund embez­zling deals was the sale of a num­ber of ura­ni­um mines in the south of Kazakhstan to one of his off­shore firms for a cou­ple of hun­dreds in dol­lar. The new, a Canadian tycoon who also hap­pens to be a close pal of Bill Clinton, was to pay hun­dreds of mil­lions in green­backs for the assets – which he lat­er man­aged to re-sell to a sub­sidiary of Russia’s state nuclear cor­po­ra­tion. The affair has popped up once more in an attempt by right-wing pro­pa­gan­dists to throw mud at the Clinton cou­ple pend­ing elec­tion cam­paigns in which Hillary Clinton appears as a front-run­ner. The true affair in its real pro­por­tions, how­ev­er, comes out in a blurred and mis­lead­ing manner.

Ablyazov’s Kazakh nuke deal: scan­dal pops up in the USA in dis­tort­ed formA recent arti­cle in The New York Times  relates “…how the Russian atom­ic ener­gy agency, Rosatom, had tak­en over a Canadian com­pa­ny with ura­ni­um-min­ing stakes stretch­ing from Central Asia to the American West. The deal made Rosatom one of the world’s largest ura­ni­um pro­duc­ers and brought Mr. Putin clos­er to his goal of con­trol­ling much of the glob­al ura­ni­um sup­ply chain. But the untold sto­ry behind that sto­ry is one that involves not just the Russian pres­i­dent, but also a for­mer American pres­i­dent and a woman who would like to be the next one. At the heart of the tale are sev­er­al men, lead­ers of the Canadian min­ing indus­try, who have been major donors to the char­i­ta­ble endeav­ors of for­mer President Bill Clinton and his fam­i­ly. Members of that group built, financed and even­tu­al­ly sold off to the Russians a com­pa­ny that would become known as Uranium One.

Bill Clinton met with Vladimir V. Putin in Moscow in 2010. Credit Mikhail Metzel/Associated Press

Beyond mines in Kazakhstan that are among the most lucra­tive in the world, the sale gave the Russians con­trol of one-fifth of all ura­ni­um pro­duc­tion capac­i­ty in the United States. Since ura­ni­um is con­sid­ered a strate­gic asset, with impli­ca­tions for nation­al secu­ri­ty, the deal had to be approved by a com­mit­tee com­posed of rep­re­sen­ta­tives from a num­ber of United States gov­ern­ment agen­cies. Among the agen­cies that even­tu­al­ly signed off was the State Department, then head­ed by Mr. Clinton’s wife, Hillary Rodham Clinton. As the Russians grad­u­al­ly assumed con­trol of Uranium One in three sep­a­rate trans­ac­tions from 2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton Foundation. Uranium One’s chair­man used his fam­i­ly foun­da­tion to make four dona­tions total­ing $2.35 million.”

The arti­cle seems to be based on dodgy sources, the main one of which is a yet unpub­lished book by a far-right war fanat­ic called Peter Schweizer, “a for­mer fel­low at the right-lean­ing Hoover Institution and author of the forth­com­ing book Clinton Cash,” in the newspaper’s words. The book-in-the-mak­ing seems lit­tle more than an effort to throw mud at Democrat can­di­dates for the upcom­ing pres­i­den­tial elec­tions – Hillary Clinton in par­tic­u­lar. “The path to a Russian acqui­si­tion of American ura­ni­um deposits began in 2005 in Kazakhstan, where the Canadian min­ing financier Frank Giustra orches­trat­ed his first big ura­ni­um deal, with Mr. Clinton at his side,” the arti­cle reads fur­ther down. “The two men had flown aboard Mr. Giustra’s pri­vate jet to Almaty, Kazakhstan, where they dined with the author­i­tar­i­an pres­i­dent, Nursultan A. Nazarbayev. Mr. Clinton hand­ed the Kazakh pres­i­dent a pro­pa­gan­da coup when he expressed sup­port for Mr. Nazarbayev’s bid to head an inter­na­tion­al elec­tions mon­i­tor­ing group, under­cut­ting American for­eign pol­i­cy and crit­i­cism of Kazakhstan’s poor human rights record by, among oth­ers, his wife, then a sen­a­tor. Within days of the vis­it, Mr. Giustra’s fledg­ling com­pa­ny, UrAsia Energy Ltd., signed a pre­lim­i­nary deal giv­ing it stakes in three ura­ni­um mines con­trolled by the state-run ura­ni­um agency Kazatomprom. As if to under­score the point, five months lat­er Mr. Giustra held a fund-rais­er for the Clinton Giustra Sustainable Growth Initiative, a project aimed at fos­ter­ing pro­gres­sive envi­ron­men­tal and labor prac­tices in the nat­ur­al resources indus­try, to which he had pledged $100 mil­lion. The star-stud­ded gala, at a con­fer­ence cen­ter in Toronto, fea­tured per­for­mances by Elton John and Shakira and celebri­ties like Tom Cruise, John Travolta and Robin Williams encour­ag­ing con­tri­bu­tions from the many so-called F.O.F.s — Friends of Frank — in atten­dance, among them Mr. Telfer. In all, the evening gen­er­at­ed $16 mil­lion in pledges, accord­ing to an arti­cle in The Globe and Mail.”

Yet fur­ther down, UrAsia’s expan­sion is being described in, as must be admit­ted, a rather fac­tu­al man­ner: “But what had been a string of suc­cess­es was about to hit a speed bump. If the Kazakh deal was a major vic­to­ry, UrAsia did not wait long before resum­ing the hunt. In 2007, it merged with Uranium One, a South African com­pa­ny with assets in Africa and Australia, in what was described as a $3.5 bil­lion trans­ac­tion. The new com­pa­ny, which kept the Uranium One name, was con­trolled by UrAsia investors includ­ing Ian Telfer, a Canadian who became chair­man. Through a spokes­woman, Mr. Giustra, whose per­son­al stake in the deal was esti­mat­ed at about $45 mil­lion, said he sold his stake in 2007. Soon, Uranium One began to snap up com­pa­nies with assets in the United States. In April 2007, it announced the pur­chase of a ura­ni­um mill in Utah and more than 38,000 acres of ura­ni­um explo­ration prop­er­ties in four Western states, fol­lowed quick­ly by the acqui­si­tion of the Energy Metals Corporation and its ura­ni­um hold­ings in Wyoming, Texas and Utah.”

What fol­lows brings us clos­er to home: “By June 2009, a lit­tle over a year after the star-stud­ded evening in Toronto, Uranium One’s stock was in free-fall, down 40 per­cent. Mr. Dzhakishev, the head of Kazatomprom, had just been arrest­ed on charges that he ille­gal­ly sold ura­ni­um deposits to for­eign com­pa­nies, includ­ing at least some of those won by Mr. Giustra’s UrAsia and now owned by Uranium One. Publicly, the com­pa­ny tried to reas­sure share­hold­ers. Its chief exec­u­tive, Jean Nortier, issued a con­fi­dent state­ment call­ing the sit­u­a­tion a com­plete mis­un­der­stand­ing. He also con­tra­dict­ed Mr. Giustra’s con­tention that the ura­ni­um deal had not required gov­ern­ment bless­ing. When you do a trans­ac­tion in Kazakhstan, you need the government’s approval, he said, adding that UrAsia had indeed received that approval. But pri­vate­ly, Uranium One offi­cials were wor­ried they could lose their joint min­ing ven­tures. American diplo­mat­ic cables made pub­lic by WikiLeaks also reflect con­cerns that Mr. Dzhakishev’s arrest was part of a Russian pow­er play for con­trol of Kazakh ura­ni­um assets. […] Three days lat­er, a whol­ly owned sub­sidiary of Rosatom [ARMZ – ChvdL] com­plet­ed a deal for 17 per­cent of Uranium One. And with­in a year, the Russian gov­ern­ment sub­stan­tial­ly upped the ante, with a gen­er­ous offer to share­hold­ers that would give it a 51 per­cent con­trol­ling stake. But first, Uranium One had to get the American gov­ern­ment to sign off on the deal.”

What fol­lows is a lengthy hair-cleav­ing exer­cise over for­mal­i­ties con­cern­ing US gov­ern­ment per­mis­sion for the deal – but it leaves the basic ques­tion whether Clinton and Giustra had some­thing in com­mon in the process oth­er than their love of jazz (Clinton plays sax­o­phone and Guistra trum­pet). Moreover, the NYT in one its report’s upper para­graphs already had to admit that “…whether the dona­tions played any role in the approval of the ura­ni­um deal is unknown. But the episode under­scores the spe­cial eth­i­cal chal­lenges pre­sent­ed by the Clinton Foundation, head­ed by a for­mer pres­i­dent who relied heav­i­ly on for­eign cash to accu­mu­late $250 mil­lion in assets even as his wife helped steer American for­eign pol­i­cy as sec­re­tary of state, pre­sid­ing over deci­sions with the poten­tial to ben­e­fit the foundation’s donors.” In all: thin air. But the most impor­tant blun­der is that the paper com­plete­ly over­looked the real scheme behind the ura­ni­um deal – which brings in a more than famil­iar name, name­ly that of Mukhtar Ablyazov, the Kazakh banker who divert­ed an esti­mat­ed lump sum in the order between 6 and 12 bil­lion in US dol­lar from his bank to off­shore accounts the “ulti­mate ben­e­fi­cial own­er” of which point­ed at him­self. Ablyazov is now in a French jail wait­ing for his extra­di­tion to the Russian Federation, where most of the assets he bought with the mon­ey he stole are locat­ed. Another even more noto­ri­ous name involved in the case is that of Rakhat Aliyev, jailed in late sum­mer last year in Austria pend­ing his tri­al for kid­nap­ping and mul­ti­ple mur­der, who com­mit­ted sui­cide in prison on the event of the open­ing of the trial.

The names of the five urami­um upstream assets thus put into the shad­ow are known: Akdala, Southern Inkay, Central Mynkuduk, Kyzylkum and Khorasan. All of them were locat­ed in the deep south of Kazakhstan near the bor­der with Uzbekistan, and togeth­er they were thought to account for 60 per cent of Kazatomprom’s total asset val­ue. The real eye-open­er in the case came much lat­er, when in April 2009, short­ly after Ablyazov’s schemes had fall­en through and the cul­prit had escaped the coun­try, a mem­ber of Parliament used her immu­ni­ty to take a clos­er look at the books of KazAtomProm. In this way, Tatyana Kvyatkovskaya found out that Betpak Dala, an off­shore hold­ing alleged­ly per­son­al­ly con­trolled by the tan­dem Dzhakishev/Ablyazov, had been sold major stakes in the fields of Akdala, South Inkai and Khorassan for the hilar­i­ous total sum of 64,000 Kazakh tenge – or 426 US dol­lar at the time. She passed the infor­ma­tion on to the author­i­ties – but not with­out pre­sent­ing them at a press con­fer­ence in the process. The cur­tain fell for Dzhakishev in the last week of May the fol­low­ing year, when he was sacked as head of Kazatomprom and arrest­ed before he got a chance to flee from the country.

Kazatomprom work­er checks the radi­a­tion lev­el of ura­ni­um oxide at the East Mynkuduk PV-19 ura­ni­um mine in south­ern Kazakhstan in 2006

But only over the sum­mer, details about his clan­des­tine net­work of off­shore firms start­ed to come out in the open. Among the trans­ac­tions under inves­ti­ga­tion fig­ures the Central Mynkuduk deposit, esti­mat­ed worth in the order of 75 mil­lion US dol­lar in his­toric val­ue, which was trans­ferred to an off­shore shell com­pa­ny called Ken Dala Kz, run by Dzhakishev even though still lat­er it was to appear that the finan­cials were in the firm grip of Mukhtar Ablyazov. The same hap­pened with the near­by Kyzylkum deposit, which was even­tu­al­ly sold to a west­ern-held com­pa­ny called UrAsia for the equiv­a­lent of hard­ly more than a hun­dred thou­sand US dol­lar. UrAsia in turn was bought out by Canada-based glob­al ura­ni­um min­er Uranium One for $75 mil­lion. It was lat­er to be gen­er­al­ly assumed that UrAsia in real­i­ty paid a lot more for the assets, with the dif­fer­ence hav­ing been chan­neled out of the coun­try by Dzhakishev with the help of BTA’s Mukhtar Ablyazov and the latter’s asso­ciates. Following the trans­ac­tions, Uranium One was to own 30 per cent in the deposit which it bought through UrAsia for the men­tioned 75 mil­lion dol­lar. A Japanese con­sor­tium in the end owned 40 per cent with the remain­ing shares in the hands of Kazatomprom.

Clinton had no role what­so­ev­er in this rela­tion­ship, which had been ini­ti­at­ed by London busi­ness­man Sergey Kurzin,” an arti­cle in Forbes dat­ed December 1 2009 refut­ing the link sug­gest­ed by the New York Times almost two years ear­li­er reads. “Clinton arrived in Kazakhstan late in the after­noon Sept. 6, 2005, […] four days after Giustra. By then Giustra was well on the road to final­is­ing a mem­o­ran­dum of under­stand­ing to acquire a 30% inter­est in the Kharassan project for $75 mil­lion; the state owned the oth­er 70%. Giustra’s rep­re­sen­ta­tives were also nego­ti­at­ing a price for the Akdala and South Inkai projects with rep­re­sen­ta­tives of Mukhtar Ablyazov, a wealthy oli­garch with bank­ing and real estate inter­ests, who years ear­li­er had been Kazakhstan’s min­is­ter of ener­gy, indus­try and trade. […] Giustra’s major deal for 70% of the Akdala and South Inkai ura­ni­um projects was not com­plet­ed until Nov. 7, two months after Clinton had left Kazakhstan. In fact, Ablyazov, the own­er, demand­ed a $100 mil­lion addi­tion­al pay­ment to the $350 mil­lion Giustra was will­ing to pay and had raised for the ven­ture. ‘Doing the deal with Ablyazov was the most stress­ful in my life,’ says Giustra. ‘I had to bluff him that I would give the investors back their mon­ey. Then he caved. Clinton had no role at all.’ ”

The [New York] Times says Kazatomprom, the state-owned ura­ni­um com­pa­ny, con­trolled the prop­er­ties in which Giustra invest­ed,” Forbes not­ed in its con­clu­sions. “Not exact­ly true. In the major pur­chase (Akdala and South Inkai) that cost Giustra $350 mil­lion, 70% was owned by Mukhtar Ablyazov, a Kazakh banker; only 30% belonged to the state. Even as to the Kharassan prop­er­ty, which was 70% owned by Kazatomprom, the state com­pa­ny did not sign the agree­ment by which Giustra’s com­pa­ny, UrAsia Energy Ltd., acquired a 30% inter­est for $75 mil­lion. The sell­er in the Kharassan deal was Jeffcott Group Ltd., a pri­vate com­pa­ny incor­po­rat­ed in the British Virgin Islands.”

The next ques­tion raised here is: who was behind Jeffcott? “Uranium One owns a 30-per-cent stake in the Kyzylkum joint ven­ture, which was pur­chased for $75-mil­lion (U.S.) in 2005 from a pri­vate­ly held com­pa­ny, Jeffcott Group Ltd.,” a report by Canada’s lead­ing dai­ly The Globe and Mail pub­lished on May 29, 2009, would read. “But the Vancouver firm says the share­hold­ers behind Jeffcott were nev­er specif­i­cal­ly iden­ti­fied, nor does it know how Jeffcott ini­tial­ly obtained rights to the project.” The news­pa­per con­tact­ed Frank Giustra who react­ed in the form of a writ­ten com­ment in a man­ner that raised more ques­tions than it would answer. ‘The per­son who act­ed for Jeffcott was Eugene Charyshkin,” The Globe and Mail report’s quote from his e‑mail was to read. “That’s as much as I know.”

Ablyazov’s down­fall and Dzhakishev’s arrest gave the Kazakh author­i­ties a chance to cor­rect the sit­u­a­tion, with­out, how­ev­er, being able to recov­er the mon­ey lost on the “dis­count” trans­ac­tion. They did, how­ev­er, man­age to get asset val­ue for the ura­ni­um mines from Rosatom’s sub­sidiary ARMZ. “Uranium One has signed a defin­i­tive agree­ment to acquire a 50% inter­est in the Karatau Uranium Mine in Kazakhstan from ARMZ,” a press release dat­ed June 15 2010 was to read. “The pur­chase price will be paid by way of the issuance of 117 mil­lion com­mon shares of Uranium One and a cash pay­ment of $90 mil­lion (or equiv­a­lent promis­so­ry note). The agree­ment also pro­vides for a con­tin­gent pay­ment to ARMZ of up to $60 mil­lion, payable in three equal tranch­es over the peri­od between 2010 and 2012 sub­ject to cer­tain post-clos­ing tax relat­ed adjust­ments. The trans­ac­tion is val­ued at approx­i­mate­ly $451 mil­lion, based on the clos­ing share price of Uranium One on June 12, 2009. […] Upon clos­ing of the Karatau acqui­si­tion, ARMZ will hold an indi­rect 16.6% inter­est in Uranium One. ARMZ has agreed to a stand­still covenant under which it may not, with­out Uranium One’s pri­or con­sent, for a peri­od of at least five years from clos­ing acquire more than 19.95% of Uranium One’s out­stand­ing com­mon shares.” On November 16 the same year, the Kazakh gov­ern­ment report­ed­ly approved the deal, which was even­tu­al­ly clinched on December 15.

The asso­ci­a­tion between Dzhakishev and Ablyazov would bring a third play­er in Kazakhstan’s Shakespearian busi­ness dra­ma to mind. Prosecutors at the time they were elab­o­rat­ing on the Dzhakishev case were report­ed­ly look­ing into the sum of $670,000 which at one point dis­ap­peared from BTA’s accounts only to pop up at the local account of Kazatomprom’s Vienna office. That office used to head­ed by the spouse of Vadim Koshlyak, a close asso­ciate of Rakhat Aliyev, then Kazakhstan’s ambas­sador to Austria before he was to be dis­closed not only as a straight­for­ward gang­ster but also as hav­ing pre­pared an armed coup in Kazakhstan. According to Kazakh news media, the moth­er of Elnara Shorazova, whom Aliyev mar­ried after his imposed divorce from President Nursultan Nazarbayev’s eldest daugh­ter Dariga, was lat­er appoint­ed as the head of this office. If there would have been a scheme there as inves­ti­ga­tors used to believe there had been, the dimen­sion could only become the more sin­is­ter for it both for Ablyazov and Dzhakishev, and would turn them from sus­pects of white-col­lar crime into sus­pect­ed accom­plices of mur­der and polit­i­cal ter­ror on a glob­al scale.

Mukhtar Dzhakishev was once con­sid­ered one of the rich­est and most pow­er­ful men in Kazakhstan

As for Dzhakishev, he was to keep deny­ing any wrong­do­ing what­so­ev­er from the very moment of his arrest. His state­ments from prison fil­tered through to the pub­lic domain would look dif­fuse, though. On one hand, he denied any involve­ment in kick­backs; on the oth­er, he tend­ed to sug­gest that even if he would appear to have been respon­si­ble in any way to have passed on Central Mynkuduk to UrAsia, he had done so with the aim to grant west­ern­ers a stake in the deposit at the expense of Russian com­pa­nies. The lat­ter, Dzhakishev and his lawyers tend­ed to argue, would do any­thing in their pow­er to pre­vent Kazakhstan from devel­op­ing its own nuclear pro­cess­ing indus­try and keep it under con­trol as a mere sup­pli­er of uranium.

In a strange-look­ing coin­ci­dence, the first cash has been returned to the embat­tled Kazakh bank BTA after the sale of an estate out­side London which had been used by for­mer BTA chief and major­i­ty share­hold­er Mukhtar Ablyazov to laun­der ill-obtained funds. It appears that in the case of the English real estate bought in this man­ner those funds had been gen­er­at­ed by the clan­des­tine trans­fer of a num­ber of ura­ni­um mines in the south of Kazakhstan to an off­shore firm belong­ing to Ablyazov, as estab­lished more than once by English courts of law. With hun­dreds of mil­lions of “prof­it” pock­et­ed by Ablyazov, the mines were lat­er sold to a Canadian tycoon who also hap­pens to be a close pal of Bill Clinton, and who was to pay hun­dreds of mil­lions in green­backs for the assets – which he lat­er man­aged to re-sell to a sub­sidiary of Russia’s state nuclear cor­po­ra­tion. The affair has popped up once more in an attempt by right-wing pro­pa­gan­dists to throw mud at the Clinton cou­ple pend­ing elec­tion cam­paigns in which Hillary Clinton appears as a front-runner.

Ablyazov’s Kazakh nuke deal: scan­dal pops up in the USA in dis­tort­ed form/II“A sprawl­ing coun­try estate boast­ing a six-bed­room man­sion, four cot­tages, two log cab­ins and a polo pitch that was once seized from a fugi­tive Kazakh bil­lion­aire has been sold for £25million. Mukhtar Ablyazov, who is alleged to have siphoned off £3.2billion of bank assets in one of the biggest frauds of its type, was con­vict­ed of con­tempt of court in 2012 by a High Court judge,” the Daily Mail [http://www.dailymail.co.uk/news/article-3060956/Sprawling-Surrey-estate-four-cottages-two-log-cabins-polo-pitch-seized-fugitive-Kazakh-billionaire-help-pay-creditors-sells-25million.html] wrote on April 28 after the first trans­ac­tion in the age-long Ablyazov files that has actu­al­ly brought in some of the loss­es suf­fered by BTA bank – almost a decade after they were inflict­ed. . “The busi­ness­man was found to have lied about own­ing Oaklands Park, a 100-acre estate in Surrey with a 12,000 square foot main home and four fur­ther cot­tages. However, a judge said the pros­e­cu­tion had proved Oaklands Park and anoth­er man­sion in Hampstead, London, were his and the prop­er­ties were seized so they could be sold to pay cred­i­tors. Despite an arrest war­rant being issued and air­ports told to keep an eye out, Ablyazov man­aged to evade author­i­ties and flee the UK. His Surrey estate, for­mer­ly owned by American tech tycoon Michael Dell, has a pala­tial main home boast­ing six main bed­room suites, five recep­tion rooms and an indoor swim­ming pool. There are also four fur­ther cot­tages, two log cab­ins and a pair of American barns com­pris­ing of 33 sta­bles. In addi­tion, the estate has a full size polo pitch and for­mal gar­dens. It was put on the mar­ket with Savills in September 2013 for £25million and sold this month. Savills, act­ing on behalf of the receivers KPMG, declined to com­ment on the sale. It is yet to be logged with Land Registry and it is unknown whether the prop­er­ty was bought by a com­pa­ny or an indi­vid­ual. […] Ablyazov, 51, moved to the UK in 2009 after the BTA bank he had run col­lapsed with £11billion debts. A num­ber of west­ern banks lent to BTA, includ­ing Barclays, HSBC and Royal Bank of Scotland. He was giv­en asy­lum and police pro­tec­tion after an assas­si­na­tion plot was uncov­ered. But he was lat­er con­vict­ed of con­tempt of court after try­ing to hide more than £34million of assets from cred­i­tors. He had bought Oaklands Park through a Seychelles com­pa­ny in 2006 for £18.15million, vis­it­ing the prop­er­ty at week­ends. Ablyazov fled the UK after he was sen­tenced to 22 months in prison. He is cur­rent­ly thought to be in France await­ing extra­di­tion to either Russia or Ukraine.”

The ori­gin of the mon­ey with which Mukhtar Ablyazov pur­chased his English real estate takes a spe­cial place with­in his over­all embez­zle­ment schemes. It came from a scam involv­ing ura­ni­um fields in the south of Kazakhstan – as described in the pre­vi­ous episode and also as con­firmed in the tri­als against Mukhtar Ablyazov and a num­ber of his asso­ciates down­town London, end­ing on February 16 in a ver­dict con­demn­ing Ablyazov to 22 months in prison for “con­tempt of court” – a British equiv­a­lent for per­jury. Earlier, Ablyazov’s for­mer asso­ciate and broth­er-in-law Syrym Shalabayev was found guilty of the same offence and sen­tenced to 18 months impris­on­ment in con­se­quence. “He has not served his sen­tence and is cur­rent­ly abroad,” Ablyazov’s verdict’s court report reads. “Since it is Mr. Ablyazov’s case that Syrym Shalabayev is the own­er of Carlton House, Oaklands Park, the flat in Elizabeth Court and FM Company.

The report relates Shalabayev’s career as fol­lows. “He was born in 1969 in Kazakhstan and grad­u­at­ed from the Kazakh State University in Almaty in 1997 with a law degree. In addi­tion to trad­ing in com­modi­ties (exploit­ing price dif­fer­en­tials between dif­fer­ent regions in Kazakhstan) he import­ed cars into Kazakhstan from Russia and owned ‘a num­ber of shop­ping cen­tres’. He was also involved in the recov­ery of min­er­als (main­ly man­ganese ore) and the sup­ply of petro­le­um prod­ucts. He owned ‘a few fuelling sta­tions and petro­le­um prod­uct stor­age facil­i­ties.’ […] When Mr. Ablyazov was impris­oned in 2002 Syrym Shalabayev took Mr. Ablyazov’s wife and chil­dren to London.”

What hap­pened the fol­low­ing year gives some insight, and also pro­vides proof, though rather cir­cum­stan­tial, that Ablyazov and his asso­ciates have been far more direct­ly involved in Mukhtar Zhakishev’s deal­ings than so far assumed. “In that year [2003], on 14 August, [Shalabayev] found­ed a com­pa­ny which secured a con­tract to form a joint ven­ture with the Government of Kazakhstan which was anx­ious to invest in the ura­ni­um indus­try. His com­pa­ny was to invest “at least US$2m.” The price of ura­ni­um increased. But there was “polit­i­cal risk” because “con­trol over nat­ur­al resources which become more expen­sive and prof­itable for investors is grabbed by President Nazarbayev’s fam­i­ly.” Mr. Ablyazov advised him to sell and offered to find an investor in return for 30% and if the price was more than US$50m. the excess would be split 50/50. […] ‘Changing the own­er­ship struc­ture’ […] involved trans­fer­ring his inter­est in the joint ven­ture to an off-shore com­pa­ny owned by anoth­er off-shore com­pa­ny Widley Worldwide of which Mr. Syrym Shalabayev was the UBO [ulti­mate ben­e­fi­cia­ry own­er]. On 7 November 2005 he sold his ura­ni­um busi­ness to Urasia Energy Limited for US$350m. This was his “biggest trans­ac­tion”. Mr. Ablyazov was enti­tled to US$160m. of the sale proceeds.”

His” trans­ac­tion? Shalabayev UBO of Widley? Reading doc­u­ments filed by BTA at the London court, it becomes all too clear that the deal has been Ablyazov’s from begin­ning to end, leav­ing Shalabayev’s role lim­it­ed to lit­tle more than that of a sig­na­ture for hire through­out the entire process. In order to prove its per­jury case that two of Ablyazov’s real estate assets in Britain, Oakland Park and Carlton House, may well have been bought with some of the ura­ni­um deal’s pro­ceeds but not, as both Shalabayev and Ablyazov told the court ear­li­er, by the lat­ter but by the for­mer, two core doc­u­ments were accept­ed by the court. “The first was a let­ter writ­ten by Mr. Ablyazov to the President of Kazakhstan dat­ed 14 January 2004,” the verdict’s text explains. “There was no dis­pute that Mr. Abylazov had writ­ten it. Mr. Ablyazov was described as the “Head of the Board of Directors of Astana Kazakhstan Investment Group.” In the let­ter he request­ed the President to sup­port a plan for pri­vate invest­ment in the pro­duc­tion of ura­ni­um. Astana was to pro­vide 70% of a joint ven­ture. Thus, far from only being brought in to sell the invest­ment in 2005, Mr. Ablyazov was head of the board of direc­tors of the invest­ing company.”

The sec­ond doc­u­ment intro­duces yet anoth­er key fig­ure among Ablyazov’s men of con­fi­dence he used in his schemes, Alexander Udovenko – in the verdict’s words “… one of Mr. Ablyazov’s most trust­ed asso­ciates until some­time in late 2009 (when, it seems, he dis­ap­peared). He was a Russian lawyer who had prac­tised with an American firm in Moscow and had then worked for an American bank in Moscow. From 2001–2003 he stud­ied in London obtain­ing a diplo­ma in law and an MBA. […] He was the nom­i­nee UBO of at least some of Mr. Ablyazov’s com­pa­nies and as such made use of cor­po­rate ser­vice providers in off-shore juris­dic­tions, in par­tic­u­lar in Cyprus and the British Virgin Islands. He was assist­ed by Syrym Shalabayev, Mr. Ablyazov’s broth­er-in-law who, in the Autumn of 2008, replaced Mr. Udovenko as the nom­i­nee “ben­e­fi­cial own­er” of at least some of Mr. Ablyazov’s com­pa­nies.” It last­ed till over the sum­mer of 2009, when Udovenko “dis­ap­peared” and Shalabayev, con­sid­ered his “suc­ces­sor” trans­ferred the off­shore oper­a­tions from the UK to Cyprus.

Syrym Shalabayev – Ablyazov’s treasurer

The con­nec­tion with the ura­ni­um mine sale is referred to in the sec­ond doc­u­ment, an email writ­ten by Mr. Udovenko to the group of lawyers Denton Wilde Sapte, dat­ed 16 August 2005, and reveals the name of both the nom­i­nal and the real pur­chas­er of the Kazakh ura­ni­um field. “Denton Wilde Sapte had been instruct­ed to act in con­nec­tion with the sale of the ura­ni­um busi­ness and had asked Mr. Udovenko for infor­ma­tion as to who their client was, the court’s report reads. “Mr. Udovenko replied that the hold­er of the ura­ni­um deposits was a joint ven­ture owned as to 70% by ‘our pri­vate Kazakhi com­pa­ny TOO Investment Company Astana.’ That com­pa­ny was owned by a Cypriot com­pa­ny which was in turn owned by a BVI com­pa­ny Widley Worldwide Inc. Mr. Udovenko said that the ‘ben­e­fi­cia­ry of the struc­ture is Mukhtar Ablyazov – cur­rent­ly Chairman of the largest pri­vate bank in Kazakhstan – Bank TuranAlem’.” The judge con­cludes that “… Syrym Shalabayev’s evi­dence that it was the pro­ceeds of sale of the ura­ni­um busi­ness which enabled him, at least in part, to pur­chase Carlton House and Oaklands was untrue.”

What fol­lows in Forbes’ report strong­ly sug­gests that Ablyazov has used Mukhtar Zhakishev as a cam­ou­flage first and as a scape­goat lat­er – and got away with it him­self. “The [New York] Times says Kazatomprom, the state-owned ura­ni­um com­pa­ny, con­trolled the prop­er­ties in which Giustra invest­ed,” Forbes notes in its con­clu­sions. “Not exact­ly true. In the major pur­chase (Akdala and South Inkai) that cost Giustra $350 mil­lion, 70% was owned by Mukhtar Ablyazov, a Kazakh banker; only 30% belonged to the state. Even as to the Kharassan prop­er­ty, which was 70% owned by Kazatomprom, the state com­pa­ny did not sign the agree­ment by which Giustra’s com­pa­ny, UrAsia Energy Ltd., acquired a 30% inter­est for $75 mil­lion. The sell­er in the Kharassan deal was Jeffcott Group Ltd., a pri­vate com­pa­ny incor­po­rat­ed in the British Virgin Islands.”

A report by Canada’s lead­ing dai­ly The Globe and Mail pub­lished on May 29, 2009, con­firms the role of Jeffcott but adds that “the share­hold­ers behind Jeffcott were nev­er specif­i­cal­ly iden­ti­fied, nor does it know how Jeffcott ini­tial­ly obtained rights to the project. […] In addi­tion to the Kyzylkum asset, UrAsia paid $350-mil­lion in 2005 for 70-per-cent stakes in the South Inkai and Akdala ura­ni­um mines. The sell­er of those assets has been iden­ti­fied as Mukhtar Ablyazov.” Today, the Royal Court’s verdict’s file strong­ly sug­gests that Ablyazov agreed to pro­vide Kazatomprom with a cred­it from BTA tak­ing the ura­ni­um deposits as col­lat­er­al and sub­se­quent­ly did what he was doing with numer­ous oth­er col­lat­er­als: putting them on the books of an off­shore hold­ing which in real­i­ty he con­trolled him­self. By lever­ag­ing the off­shore hold­ing, he “cre­at­ed” anoth­er claimant stand­ing in the way between BTA and the col­lat­er­al – there­by block­ing the bank’s access to the asset. That so-called claimant must have been none less than Widley Worldwide Inc., British Virgin Islands, iden­ti­fied by the court. It can be assumed that Zhakishev obtained his bonus sim­ply for look­ing the oth­er way dur­ing the trans­ac­tion, even though it yet leaves to be guessed what Rustem Tursunbayev’s role is sup­posed to have been.

As for Frank Giustra, he would lat­er claim that he act­ed in good faith at the time he con­clud­ed his pur­chase from Jeffcott. But that was well before he sold UrAsia for $3.1 bil­lion, or $7.05 for a share which two years ear­li­er had been worth no more than 10 US dol­lar cents a piece, to a more renowned Canadian min­er called Uranium One in February 2007 with­out ever hav­ing put a spade into the ground – there­by inflict­ing a loss of 2 bil­lion 625 mil­lion dol­lar to Kazatomprom. This only adds to the hand­some $425 mil­lion Ablyazov is sup­posed to have cashed in on the three ura­ni­um fields. The entire scam could put Giustra in the posi­tion of poten­tial accom­plice in Ablyazov’s diver­sion net­work – some­thing that def­i­nite­ly has to be includ­ed in present-day BTA’s quest for its lost cash and assets recovery.



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