How Prince Andrew and New Labour opened the floodgates for Kazakh cash to flow into Britain

Bloody protests against country’s rul­ing elite throw rela­tion­ship under fresh scrutiny

Nestled in the Berkshire coun­try­side not far from Windsor Castle, a sprawl­ing man­sion built by one of Kazakhstan’s wealth­i­est oli­garchs occu­pies an estate for­mer­ly owned by Prince Andrew.

Sunninghill Park, a wed­ding gift from the Queen to her sec­ond son, was bull­dozed by oil and gas busi­ness­man Timur Kulibayev after he pur­chased it from the Duke of York for £15m – a hefty £3m above the ask­ing price. 

While its replace­ment – fea­tur­ing six bed­rooms, a ten­nis court and steam, ice and sauna rooms – might sim­ply seem a dis­play of lav­ish wealth, crit­ics say it is emblem­at­ic of the trou­bling rela­tion­ship between the British estab­lish­ment and Kazakhstan rul­ing elite.

Sunninghill Park, now rebuilt, was pur­chased from Prince Andrew for £3m above its ask­ing price CREDIT: Shutterstock

The rela­tion­ship spans mem­bers of the Royal Family, top politi­cians, big busi­ness­es and lawyers, open­ing the UK to a flood of Kazakh money.

With Kazakhstan now gripped by unrest, and its gov­ern­ment open­ing fire on cit­i­zens amid a crack­down, these links are fac­ing renewed scrutiny.

For Prince Andrew, the embar­rass­ment comes at an unwel­come time amid ongo­ing con­tro­ver­sy linked to his friend­ship with pae­dophile Jeffrey Epstein.

He is a for­mer goose-hunt­ing part­ner of Nursultan Nazarbayev, the de-fac­to auto­crat­ic ruler of Kazakhstan for 30 years and in 2007 he sold the Sunninghill estate to Kulibayev, Nazarbayev’s son-in-law. 

Dariga and Nursultan Nazarbayev meet­ing mem­bers of the Royal Family in 2015 CREDIT: Chris Jackson/AFP via Getty Images

The deal raised eye­brows over why Kulibayev had paid over the odds for the prop­er­ty. The rela­tion­ship seems to have led to oth­er poten­tial ben­e­fits for Kulibayev, with the Duke’s office lat­er attempt­ing to facil­i­tate a meet­ing between him and rep­re­sen­ta­tives of Coutts, the Queen’s bank.  Experts are quick to point out, how­ev­er, that Prince Andrew is by no means the only high-pro­file British fig­ure to have cur­ried favour with Kazakhstan’s elite.

In the years after they left Government, Sir Tony Blair and sev­er­al New Labour allies also cul­ti­vat­ed links with the Nazarbayev regime.

Tony Blair meet­ing then-President Nazarbayev at Downing Street in 2006 CREDIT: Leon Neal/AFP/Getty Images

A for­mer mem­ber of the Soviet Union’s top deci­sion-mak­ing body, the “polit­buro”, Nazarbayev has ruled Kazakhstan since the fall of com­mu­nism in 1991, pre­sid­ing over the sup­pres­sion of free speech and what US diplo­mats described as a “cesspool” of corruption. 

Nazarbayev’s gov­ern­ment first hired Sir Tony as a con­sul­tant after the 2011 Zhanaozen mas­sacre, when Kakazh police killed at least 14 protesters.

The for­mer prime min­is­ter advised Nazarbayev that the deaths, “trag­ic though they were, should not obscure the enor­mous progress” Kazakhstan had made.

President Nazarbayev was a key region­al ally of Russia’s President Putin CREDIT: Mikhail Svetlov/Getty Images

He also appeared in an offi­cial pro­mo­tion­al video, heap­ing praise on the coun­try for its “extra­or­di­nary eco­nom­ic poten­tial” and “cul­tur­al diver­si­ty”. At the time, Human Rights Watch said it por­trayed a “sani­tised image” of the “repres­sive” country.

Sir Tony’s involve­ment with Kazakhstan is like­ly to have been fruit­ful. His com­mer­cial busi­ness, wound up in 2016, offered its ser­vices for at least £5m per year, leaked doc­u­ments showed.  It was lat­er report­ed to have made as much as $13m annu­al­ly from the arrangement.

A spokesman for Sir Tony said he chose to work with Kazakhstan because, “of all the ex-Soviet coun­tries in the region, they had prob­a­bly made most progress eco­nom­i­cal­ly… Kazakhstan has been an ally of the West… and is the only coun­try which has will­ing­ly yield­ed up its nuclear weapons.”

Riot police in Almaty this month, where protests have led to a bloody crack­down CREDIT: AP Photo/Vladimir Tretyakov

Other Labour cab­i­net min­is­ters also fos­tered links with the Kazakhs.

Former busi­ness sec­re­tary Lord Mandelson spoke at events organ­ised by Kazakhstan’s sov­er­eign wealth fund, and for­mer for­eign sec­re­tary Jack Straw pro­vid­ed advi­so­ry ser­vices to the Eurasian Council on Foreign Affairs for £12,500 a year, which at the time was fund­ed by the Kazakh for­eign ministry.

Portland Communications, found­ed by Blair’s for­mer Downing Street spokesman, Tim Allan, also did work for the country’s government. 

Meanwhile, Lord Maude, a for­mer cab­i­net office and trade min­is­ter under David Cameron, has pro­vid­ed advice to Nazarbayev’s regime through his con­sul­tan­cy firm. 

It has been matched by a flood of invest­ment in British prop­er­ty by Kazakh elites, while bankers and lawyers have cashed in from a string of London list­ings by the country’s businesses.

Kazakh min­ing giant Eurasian Natural Resources Corporation (ENRC) float­ed in London in 2007 with the help of advis­ers at Deutsche Bank, PwC and Herbert Smith.

The appoint­ments of chair­man Sir David Cooksey, a well-known ven­ture cap­i­tal­ist, as well as direc­tors Sir Ken Olisa and Sir Richard Sykes, the for­mer chair­man of GSK, fur­ther bur­nished its image of respectabil­i­ty.  ENRC went pri­vate again, how­ev­er, after the UK’s Serious Fraud Office launched an inves­ti­ga­tion into alleged cor­rup­tion at the com­pa­ny. ENRC denies any wrong­do­ing. Sir Ken and Sir Richard sep­a­rate­ly left after clash­ing with the firm’s oli­garch owners.

Sir David lat­er said he regret­ted serv­ing as chair­man “because I think I have a strong rep­u­ta­tion and I gave more cre­dence to the com­pa­ny than it deserved”.

Other major Kazakh busi­ness­es list­ed in London include cop­per min­er Kaz Minerals, state atom­ic busi­ness Kazatomprom and Halyk Savings Bank, which is con­trolled by Kulibayev and his wife Dinara, daugh­ter of Nazarbayev.

Meanwhile, a report pub­lished by Chatham House in December, enti­tled The UK’s Kleptocracy Problem, revealed at least 34 prop­er­ties have been snapped up by Kazakh elites for about £530m.

The Nazarbayev connection

It said Nazarbayev’s fam­i­ly owned around £330m worth, though the true amount is like­ly to be high­er due to the own­er­ship of some being obscured by off­shore com­pa­nies with com­pli­cat­ed structures. 

British law enforce­ment recent­ly lasered in on £80m worth of prop­er­ty owned by Dariga Nazarbayeva, anoth­er of Nazarbayev’s three daugh­ters and a top Kazakh politi­cian – and her son Nurali Aliyev.

The National Crime Agency froze the three homes: a high-secu­ri­ty man­sion in Hampstead’s “billionaire’s row”, anoth­er in Highgate and a lux­u­ry apart­ment in Chelsea, using an unex­plained wealth order (UWOs) – tools intro­duced in 2018 to help crack down on sus­pect cash.

It alleged the prop­er­ties had been paid for by Rakhat Aliyev, Dariga’s ex-hus­band and a for­mer mem­ber of the Kazakh gov­ern­ment, using illic­it funds. Aliyev died in an Austrian jail sev­en years ago after being charged with murder. 

The UWO’s were suc­cess­ful­ly chal­lenged in the High Court after Dariga brought in lawyers from top firm Mishcon de Reya.

They argued the prop­er­ties were not asso­ci­at­ed with Aliyev and she had an “inde­pen­dent life as an eco­nom­i­cal­ly-active woman”, with judge Ms Justice Lang brand­ing the NCA’s assump­tion that Aliyev was the source of the funds “unre­li­able”.

Lang accept­ed some of Nazarbayeva’s wealth came from sug­ar com­pa­ny JSC Kant, received in her divorce, but said this was a “legit­i­mate busi­ness”. Lawyers for Dariga and her son said the High Court held that the NCA’s “case had been ‘flawed by inad­e­quate inves­ti­ga­tion into some obvi­ous lines of enquiry’, and that it had ‘failed to car­ry out a fair-mind­ed eval­u­a­tion’ of the infor­ma­tion pro­vid­ed” by Mischon de Reya on behalf of their clients.

Researchers behind the Chatham House report raised doubts, how­ev­er, point­ing out that the offi­cial Kazakh prosecutor’s depart­ment – con­trolled by the Nazarbayev regime – was behind the assur­ances that no ille­gal­ly acquired assets were trans­ferred in the divorce deal.

Dariga also owns £140m worth of prop­er­ty in Baker Street, includ­ing 221B, the fic­tion­al address of detec­tive Sherlock Holmes.

Separately, Aliya Nazarbayeva, Nazarbayev’s third daugh­ter, recent­ly raised eye­brows when she trans­ferred $300m out of her coun­try and went on a spend­ing spree. She bought a $25m Challenger Bombardier pri­vate jet, $14m worth of oth­er prop­er­ties in Dubai – and a £9m house in Highgate.

Professor John Heathershaw, a Central Asia expert at Exeter University who co-authored the Chatham House report, says while the elite have ben­e­fit­ed great­ly from Kazakhstan’s rich pool of resources, many remain repressed and live in poverty.

He has argued for tougher scruti­ny of wealth flow­ing out of Kazakhstan and into the UK and says that, for a start, prop­er­ty own­er­ship needs to be far more transparent. 

While the British gov­ern­ment pledged to bring in a pub­lic reg­is­ter of for­eign own­ers of prop­er­ties five years ago, it has yet to do so. 

If you and I buy a prop­er­ty in Britain, the Land Registry has a record, we know who owns it,” Heathershaw explains.  “But if you’re wealthy enough, you do it through a shell com­pa­ny, and then you hide the real own­er­ship of that property.”

That means our loose sys­tem of self reg­u­la­tion func­tions real­ly bad­ly, because no light is being shone on it.”

Heathershaw also warns UK law enforce­ment is under­fund­ed and out­gunned by the army of lawyers and PR advis­ers Kazah elites can afford.

Tom Mayne, anoth­er expert at Exeter University, says part of the prob­lem is that cor­rupt coun­tries’ regimes often try to legit­imise illic­it gains through gov­ern­ment crony­ism and con­trol of the legal sys­tem. It means mon­ey that would oth­er­wise be thought as sus­pect can be spent in Britain with few ques­tions asked. 

We should have a list of klep­to­crat­ic coun­tries and we should say that any trans­ac­tions over a cer­tain amount have to be report­ed, so there is a record if it turns out to be prob­lem­at­ic lat­er,” he adds. 

The sug­ges­tions may find recep­tive ears in Westminster, where there are grow­ing calls for tougher scruti­ny of assets owned by Kazakh elites fol­low­ing the recent crackdown. 

The may­or’s office in Almaty was set ablaze as protests gripped the cen­tral Asian state last week CREDIT: Valery Sharifulin\\TASS via Getty Images

Tory MP Tom Tugendhat, chair­man of the Foreign Affairs Committee, last week told the Telegraph that “those who vio­late the human rights of their cit­i­zens should not be able to enjoy the priv­i­lege of hold­ing wealth in the UK”. 

According to Heathershaw, tak­ing stronger action would show Boris Johnson’s admin­is­tra­tion is seri­ous about cham­pi­oning the rule of law on the world stage.

I think it’s real­ly impor­tant to demon­strate that there are costs to accu­mu­lat­ing wealth in this way,” he says. 

The test for the British gov­ern­ment is whether it’s pre­pared to stick its neck out politically.”

Original source of arti­cle: https: https://webcache.googleusercontent.com/

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