Financial Times: Kazakh leader’s son-in-law skimmed millions from Chinese loans

The funds were alleged­ly siphoned off gas pipeline projects.

It is no sur­prise when cor­rup­tion is revealed among senior gov­ern­ment offi­cials and their fam­i­ly mem­bers in Central Asia. How else can they get so con­spic­u­ous­ly rich? It is the nuts and bolts of the heists that shed light on how gov­ern­ments and patron­age work for their per­son­al interests. 

The Financial Times today pub­lished a bomb­shell inves­ti­ga­tion detail­ing how the son-in-law of Kazakhstan’s for­mer President Nursultan Nazarbayev, who remains the most pow­er­ful fig­ure in the coun­try, alleged­ly siphoned tens of mil­lions of dol­lars off of one high-pro­file pipeline project paid for with Chinese loans.

Billionaire Timur Kulibayev, who is mar­ried to Nursultan Nazarbayev’s daugh­ter Dinara, has served as a direc­tor at Russian ener­gy giant Gazprom since 2011 and still holds a num­ber of senior posi­tions with­in Kazakhstan’s ener­gy industry. 

At the time of the pipeline deal he man­aged Kazakhstan’s sov­er­eign wealth fund, which “over­saw the state com­pa­nies that award­ed con­tracts to build the pipelines across Kazakhstan,” writes Tom Burgis, author of both the FT arti­cle and the book “Kleptopia: How Dirty Money is Conquering the World,” which was pub­lished in September.

Staff and con­sul­tants work­ing for Kulibayev “designed a scheme for the Kazakh bil­lion­aire to receive at least tens of mil­lions of dol­lars from con­tracts relat­ed” to the project, Burgis writes. The con­sul­tants even billed for their efforts. 

Emails sent between 2008 and 2014 and leaked by a whistle­blow­er con­tain detailed descrip­tions of a set-up that it appears would allow Mr Kulibayev to receive a share of the prof­its from pipeline con­tracts grant­ed to ETK, a com­pa­ny owned by Russian busi­ness­man Alexander Karmanov.

Under the scheme, ETK would buy pipes from plants in Ukraine and Russia. But first it would sell those same plants the steel to make the pipes – at a huge mark-up from the price it had paid for the metal.

Contracts seen by the FT show that an ETK com­pa­ny in Singapore agreed to buy steel pro­duced by Jiangsu Shagang group of China at $935 a tonne and to sell steel to the Russian pipeline man­u­fac­tur­er TMK for $1,500 a tonne. TMK’s con­tract envis­ages a total out­lay of “approx­i­mate­ly $200m”, which equates to a gross prof­it of $75m for ETK. 

However, the doc­u­ments seen by the FT sug­gest that most of that mon­ey was not des­tined for Mr Karmanov’s com­pa­ny but for Mr Kulibayev.

He could have earned $53 mil­lion from this one trans­ac­tion alone. 

Lawyers for Kulibayev deny he had any con­nec­tion with the scheme. 

A post script to the inves­ti­ga­tion sug­gests the whistleblower’s leak was ver­i­fied by Nazarbayev’s grand­son, Aisultan, who died in London in August after years of bat­tling drug addiction.

This is not the only news of high-lev­el Kazakh cor­rup­tion to fea­ture in major Western news­pa­pers this week. Bulat Utemuratov, anoth­er pow­er­ful bil­lion­aire close to Nazarbayev, recent­ly had $5 bil­lion worth of assets frozen by a UK court

EurasiaNet

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