In light of Karim Massimov receiving the new rank of General Lieutenant, we publish information on his involvement as a hidden investor in a variety of lucrative Kazakh telecoms companies, using his friend Aigul Nuriyeva as the proxy shareholder. Through this business Nuriyeva amassed a fortune of hundreds of millions of dollars, though this research highlights evidence to suggest that she was not the true shareholder, and that the ultimate beneficial owner was Massimov and other members of the Kazakh political elite.
This feature forms the basis of continuing research on the topic by a group of independent researchers and academics including researchers who worked on previous investigation regarding Swiss repatriation of laundered money from Kazakhstan whose final report will be published in due course.
Telia has been active in Kazakhstan since the late 1990s. In order to retain its privileged position in the Kazakh market Telia has engaged in corrupt activities with senior political figures, namely Timur Kulibayev and later Karim Massimov.
The first seemingly corrupt deals were conducted in the mid-2000s taking two different forms. Within Kazakhstan Telia acquired dormant companies such as AR-Telecom and KT-Telecom for $25 million. Additionally Telia acquired telecommunication assets owned by Kulibayev’s Visor Group in Nepal and Cambodia for $484 million. The real value of those assets was significantly lower. One such example was Applifone, a Cambodian telecommunications company, on which Telia wrote off $100 million shortly of its acquisition.
In 2012 Telia bought a 49% in GSM Kazakhstan from Kazakh Telecom for $1.5 billion. The price was vastly inflated. Massimov and Kulibayev were recipients through Deran and Bodam, respectively, of a large portion of Telia’s fee.
In 2013 and in Telia’s last large corrupt payment in Kazakhstan it acquired WiMax licences for $175 million from entities ultimately owned Aigul Nuryieva and Alexander Klebanov, two of Massimov’s proxies. The companies involved were Lavita Holdings BV and Mymari Holding BV. The $175 million fee was largest settlement that Veysal Aral, CEO of KCell and allegedly the principal facilitator of Telia’s corrupt payments to Massimov, could pass through Telia’s board in Stockholm. Veysal Aral was dismissed amid allegations of corruption in 2014.
In addition to the big ticket items above Telia and KCell channelled regular bribes to Massimov through engineering contracts via three Kazakh companies: Micro Engineering LLP; GSM Tech Management LLP and Micro Wireless LLP. These payments were concealed as service contracts for antennas in KCell’s network which were invoice at $2000 per visit; approximately 10 times the market rate. To cover this scheme in February
2015 KCell petitioned the General Prosecutor’s Office in Kazakhstan to initiate a criminal probe into its own executives.
Some of the illicit monies paid by Telia to Massimov were used to acquire a 50% stake in the Altynalmas gold mine from Canada-listed Turquoise Hill Resources. In particular Massimov put up $51 million through Lavita Holding in the deal. In 2014 the mine was sold to Polymetal in the region of $1 billion.
TELIASONERA AND KARIM MASSIMOV
TeliaSonera’s (“Telia”) engagement in Kazakhstan dates back to the late 1990s when the company, together with Turkcell, acquired a 51% position in GSM Kazakhstan, a mobile network operator, in which Kazakhtelecom owned the remaining 49%. In 2012, however, Kazakhtelecom extracted itself from GSM Kazakhstan’s share capital by selling its stake to Telia, for $1.5 billion.
In 2007, 2008 and 2013 Telia, separately from Turkcell, acquired WiMAX businesses from Kazakhstan-registered companies. In 2007 and 2008 Telia paid circa $25 million for WiMAX licences acquired from AR-Telecom LLP and KT-Telecom LLP. In 2013 Telia acquired WiMAX licences from Midas Telecom LLP (“Midas”) for $170 million.
The same year the company bought a 20% stake in KazTransCom (“KTC”) for a consideration approximately $22.5 million. The corporate disclosures pertaining to the two transactions indicate that the ultimate beneficiaries of the proceedings from the WiMAX business were Aigul Nuriyeva (“Nuriyeva”) and Aleksandr Klebanov (“Klebanov”), individuals considered by sources to be fronts for Prime Minister Karim Massimov (“Massimov”); and Raushan Sagdiyeva (“Sagdiyeva”), a person understood to have links to both Massimov and Timur Kulibayev (“Kulibayev”). Sagdiyeva was the formal recipient of the $22.5 million payment. These transactions are described in greater detail below.
ORIGINS OF THE RELATIONSHIP
A former official in the Kazakh Agency of Information and Communications indicated that the existence of a relationship between Telia and the Kazakh political establishment became apparent in approximately the mid-2000s. In that period Kulibayev was engaged with Telia in South Asia whilst Massimov acquired a proportion of Kazakhtelecom, then Telia’s partner in GSM Kazakhstan (later renamed KCell).
Telia and the Visor Group
Documentary evidence of a relationship between Telia and Kulibayev’s Visor Group can be traced back to 2008. Between 2008 and 2012, Telia, via several subsidiaries, had channelled significant amounts of cash to Visor, which took the form of acquisitions of the latter’s telecoms assets in Nepal and Cambodia and loans.
Visor Group entered the South Asian telecoms market in the mid-2000s. In 2005 Visor Group entered into an agreement with a consortium of investors led by Upendra Mahato (“Upendra”), a Nepalese businessman, to establish Spice Nepal, a local mobile provider.
Upendra became acquainted with members of the Kazakh political establishment in the early 2000s. He has had commercial interests in the post-Soviet space since the 1990s, when he stroke a partnership with Aleksandr Milyavsky (“Milyavsky”), a Russian businessman turned politician. Milyavsky and Upendra reportedly privatised the Rubin factory in Moscow, on the basis of which they developed the famous Gorbushkin Dvor commercial centre. In addition to Russia, Upendra had reportedly owned businesses in Belarus.
Upendra initially met Visor representatives through mutual acquaintances. At that meeting Upendra is said to have offered Visor a partnership in Nepal, where he was in the processing of registering Spice Nepal. Visor reportedly provided investment in exchange for a 60% stake in the company. In subsequent years it increased its stake in Spice Nepal and had also entered the Cambodian market, where it acquired mobile provider Applifone (see below).
Telia’s Acquisition of Visor’s Assets
In 2008 Telia acquired part of Visor’s South Asian telecoms assets. According to TeliaSonera’s annual report, in 2008 its subsidiary UTA Holding BV (“UTA Holding”) acquired 51% of the shares in TeliaSonera Asia Holding BV (“Asia Holding BV”), through which Visor owned 80% of Spice Cell and 100% of Applifone. This gave Telia control of approximately 40% of Spice Cell and a controlling stake in Applifone. The Dutch corporate registry stated that the total consideration paid by UTA Holding to Visor Group was approximately $484 million. Visor Group retained a 49% shareholding in Asia Holding BV. In addition to the acquisition, UTA Holding’s annual report stated that in 2008 the company had provided a loan of $26.5 million to an undisclosed company, which was identified in an independent investigation published online as an unnamed Visor Group entity.
According to Dutch corporate records, on 8th December 2010 UTA Holding increased its ownership in Asia Holding BV from 51% to 75.45%, by paying Visor another $160 million. The same year Spice Nepal was rebranded into NCell. In December 2015 Telia and Visor sold their 75.45% and 24.55% stakes respectively in NCell for $1.03 billion.
TeliaSonera: 2013 annual report, p.27.
Exit from Cambodia
In December 2010 Telia and Upendra agreed to merge their Cambodian businesses, respectively Applifone and Latezl. Telia received a 25% stake in the new venture. In December 2012 Telia divested the investment by selling to Axiata Group. The price paid for 100% of Latezl was in the region of $155 million. Telia had written off approximately $100 million in goodwill on Applifone.
During the course of 2011 and 2012 Telia acquired Nepal Satellite, described in industry reports as a small telecom company with a market share of less than one percent. In 2011 Telia and Visor, via Asia Holding BV, paid $30 million for a stake in Nepal Satellite. In Asia Holding BV’s annual accounts it is stated that the $30 million was paid for a 51% stake in Airbell Services Ltd (“Airbell”), the Cypriot company owning Nepal Satellite. According to historical records held by the Cypriot registry, the selling party was BVI-registered vehicle Zhodar Investments Ltd (“Zhodar Investments”).
Asia Holding BV’s annual report stated that in 2012 the company “sold and transferred” its investment in Airbell. Cypriot records state that the transfer was done to TeliaSonera Norway Nepal Holding AS, another Telia subsidiary. According to Telia’s annual report, on 26th April 2012 Telia bought the remaining 49% in Airbell, which brought Telia’s stake in Nepal Satellite from 50% to 75%. Telia booked a good will of SEK 1.2 billion ($157 million). In September 2013, Telia divested Airbell by selling its stake back to an entity named Zhodar Investments at a declared loss of SEK 389 million ($60 million).2 Telia explained its decision to sell the business by quoting “regulatory uncertainty”. The beneficial ownership of Zhodar Investments was not established and research did not find any other links that would directly lead to Kulibayev or Massimov.
Archives of the Cypriot corporate registry indicated that local company Anu Oil Ltd (“Anu Oil”) was in 2008 the sole shareholder of Airbell. Sources said that Anu Oil was Samata Prasad (“Prasad”), an Indian businessman. Prasad is a longstanding partner of Upendra and Milyavsky.
Dutch corporate records do not disclose the current ownership structure of Asia Holding BV, the holding company for Telia and Visor’s assets in Asia. From 1st September 2008 until 1st October 2008 the company’s sole shareholder was Netherlands-registered entity SEA Telecom Investments BV (“SEA Telecom”), a vehicle incorporated on 30th July 2008 whose sole shareholder is Panorpa Holding BV (“Panorpa Holding”). Panorpa Holding is wholly owned by Visor Growth Fund BV.
Between 30th July 2008 and 8th July 2011 SEA Telecom was owned by Alkatento Trading Ltd (“Alkatento”), a company registered in Cyprus on 5th June 2008 and dissolved on 21st October 2015. Alkatento’s shareholder at liquidation was BVI-registered ASIA Telecom Grouping Ltd and its director was Kazakh national Shyngys Utepov. The company’s past shareholders included Meridian CIS Ltd. The latter company appears to be affiliated with Meridian Capital Ltd, the investment fund widely acknowledged to have been previously controlled by Kulibayev and Kazakh businessman Nurzhan Sukhanberdin.
The relationship between Telia and the Kazakh government has been initially channelled through Kulibayev. In approximately 2011–2012, however, Massimov took charge. A source in the Presidential Administration of Kazakhstan said that this was due to Kulibayev’s fallout with Nazarbayev over the issue of Kulibayev’s lover in London. The source considered that Kulibayev simply did not have the time and administrative reach to continue his engagement with Telia at that level.
According to two former Telia executives, throughout the years Kulibayev, and later Massimov, ensured — via bureaucratic mechanisms — that no major competitors arose for Telia. KCell, Telia’s local subsidiary, had enjoyed a market share of circa 50% for a long time and the revenues were constantly on the rise. In 2013 KCell declared total revenue of $1.02 billion. In return for this support as agreed with Kulibayev, Telia have been paying kickbacks.
The majority of kickbacks took the form of regular payments – masked as marketing and servicing contracts to companies close to the Kazakh political establishment as well as KCell management. The bigger kickbacks, which were directed personally to Massimov and Kulibayev, were done via acquiring overinflated assets. The principal Telia senior executive coordinating the relationship between Kulibayev, Massimov and the Board of Directors in Stockholm was Veysal Aral (“Aral”), KCell’s CEO and a former Ericsson executive, who sources understood to enjoy a cordial relationship with Kulibayev. A Telia source said that, the way the relationship functioned was that Aral first reached an agreement with the Kazakh politicians and then would convince Telia’s Board in Stockholm to approve the different deals. Telia’s Board of Directors was aware of the way things were done by Aral in Kazakhstan and did not oppose to this as long as KCell’s revenues would continue to increase.
From 1992 until 2007 Aral worked at Ericsson in Turkey, where he rose through the ranks to the role of Vice President. In 2007 he was named CEO of GSM Kazakhstan, later renamed KCell. He retained his position at KCell until 2013, when the Board in Stockholm promoted him to the role of Head of Business Area Eurasia. In 2014 he was dismissed from this position.
Initial Contact with Massimov
According to the former official in the Kazakh Agency of Information and Communications, since 2008 Massimov held a number of meetings with Telia’s then CEO Lars Nyberg (“Nyberg”) and Tero Kivisaari, Head of TeliaSonera Eurasia. Preliminary intelligence suggests that the initial contact between Massimov and Telia has been facilitated by Kulibayev, who is also understood to be a beneficiary of Kazakhtelecom and who was already engaged in different deals with Telia in South Asia.
The first documented instance in which Massimov had acted on behalf of Telia was in 2009, when he coordinated the necessary legal arrangements for GSM Kazakhstan to receive a 3G licence. Primarily, a source in the Kazakh government advised that Massimov requested the relevant state agencies to make available the 3G frequency band which the company necessitated. In the second phase of this process, Massimov, in his capacity as the Prime Minister, order the existing legislation on telecoms licences to be amended. Specifically, he has reduced the annual payments required by holders of 3G licences from KZT 2.8 billion (approximately $8.2 million) to KZT 500 million ($1.4 million).
In November 2010 these amendments were signed into law by President Nursultan Nazarbayev (“Nazarbayev”) and in November 2011 GSM Kazakhstan received the 3G licence. A source in the Presidential Administration stated that without Massimov’s support Telia could have not obtained the desired amendments in such a timely manner.
TRANSACTIONS WITH DORMANT ENTITIES
AR-Telecom and KT-Telecom
The first questionable transactions of considerable proportion in which Telia has been involved in Kazakhstan date back to 2007 and 2008, when the company acquired two dormant companies for a total consideration of circa $27 million.
According to the 2008 annual report of Fintur Holdings BV (“Fintur”), of which Telia is a majority shareholder, on 20th June 2007 KCell acquired 100% of AR-Telecom LLP (“AR-Telecom”), an entity incorporated on 24th October 2003. AR-Telecom is described in Telia’s disclosures as an entity “which was dormant since establishment”. The purpose of the acquisition, according to the same source, was “to get a WiMAX licence held by AR-Telecom that provides a right to organise wireless radio-access networks over 3.5 MHz spectrum.” According to official Kazakh corporate documentation, AR-Telecom was bought from GSM Telecom, where both Telia and Kazakhtelecom were at the time shareholders.
Fintur’s annual report further says that the “acquisition of AR-Telecom was accounted for as an acquisition of group of assets (licences) rather than a business. […]Total consideration paid for the licences amounted to USD 5,587”. However, according to KCell’s 2012 prospectus, the amount paid for AR-Telecom was KZT 677.8 million, or $5.5 million.
In 2008 Telia paid KZT 2.6 billion, or approximately $21.5 million, for KT-Telecom LLP (“KT-Telecom”), registered on 19th September 2006 in Kazakhstan. KT Telecom was also described as a dormant company and the purpose of the transaction was also obtaining WiMAX licences held by the Kazakh entity. Research into the ownership of KT Telecom is ongoing.
Acquisition of GSM Kazakhstan LLP
In 2012 state-controlled Kazakhtelecom sold its 49% stake in GSM Kazakhstan to Telia for approximately $1.5 billion and was rebranded KCell. A source in the inner circle of Kulibayev said that it was the Kulibayev who has initially been responsible for the terms of the deal. However, due to Kulibayev falling out with Nazarbayev in 2011, he was replaced by Massimov who finalised the negotiations.
Initially Sonera Holdings BV Telia’s Dutch subsidiary, acquired Kazakhtelecom’s 49% position in GSM Kazakhstan. In December 2012 Telia listed 25% of KCell on the Kazakh Stock Exchange (“KASE”).
A former Telia executive said that this was the first significant kickback paid by Telia to Kulibayev and Massimov. The source understood that Kulibayev and Massimov benefited from the overinflated price through Bodam and Deran, vehicles through which each was then the beneficiary of Kazakhtelecom. Similar payments were conducted through the acquisition of 20% in KazTransCom and the $175 million payment for WiMAX licences.
WiMAX 2012 Transaction
In December 2012 Telia announced it would acquire KazNet Media LLP (“KazNet Media”), a Kazakhstan-registered telecoms company for a consideration of $170 million. The seller was Midas Telecom, the company’s sole shareholder, which was wholly-owned by Mymari Holding BV, a Netherlands-incorporated company profiled below. According to Telia’s disclosures, the $170 million figure consisted of a $106 million cash payment and a further $64 million in shareholder contribution. The deal was reportedly concluded on 11th January 2013.3 Kazakh corporate records confirmed that KazNet Media’s current shareholder are Telia’s subsidiaries Sonera Holding BV and TeliaSonera Assignments BV.
Aral and Kulibayev/Massimov understood that the pre-existing corrupt arrangement could not continue when the scandal pertaining to Telia’s corrupt practices in Uzbekistan emerged in the public domain. The decision taken by the trio was to mask one last significant kickback under WiMAX transactions, which was described by the source as a standard method to formalise a bribe. The price which Telia paid, $175 million, was the amount which Aral managed to convince the Board in Stockholm to sign off on.
The most evident indication to support a corrupt relationship in Kazakhstan was that months after the acquisitions of the WiMAX licences in Kazakhstan, Telia’s new management had written off most of its value. In Telia’s 2013 annual report Telia said it had written off the value of companies acquired by SEK 500 million (approximately $58 million). This decision was “based on the view that it will take longer than expected to achieve full use of the acquired frequencies due to the current lack of a 4G license.” Telia’s CEO Nyberg resigned on 1st February 2013.
KazNet Media was founded on 31st March 2009 in Almaty under Business Identification Number (BIN) 090340020625. Together with the acquisition of KazNet Media Telia stated it had received ownership over Aksoran LLP (‘‘Aksoran’’) and Instaphone LLP (‘‘Instaphone’’), two Kazakh companies each of which was said by Telia to have owned certain radio frequency permits capable of being deployed for the operation of Telia’s future WiMAX activities in Kazakhstan.
Instaphone was incorporated on 11th April 1997 in Almaty under BIN 970440001647. Kazakh corporate records indicated the company’s sole shareholder to be KazNet Media.
Aksoran was registered on 7th December 2001 under BIN 011240000487 and its sole shareholder is Alem Communications Holding LLP (“Alem”). The latter was incorporated on 23rd December 2008 in Almaty under BIN 081240013967. According to Kazakh corporate data, its shareholders are Midas Telecom and Mymari Holding BV (“Mymari Holding”).
Mymari Holding is a Netherlands-incorporated company registered on 14th June 2007 in Amsterdam under company number 818136364 and is the sole shareholder of Midas Telecom. Mymari Holding is wholly-owned by Rimbor Holding & Finance BV (“Rimbor”), a company incorporated on 14th June 2007 in Amsterdam. Rimbor’s sole shareholder is Lavita Holding, the entity that featured in the KTC transaction flow.
As detailed above, the latter is currently ultimately owned by Nuriyeva and Klebanov on a parity basis.
A source in the Kazakhstan Financial Police stated that the WiMAX deal was signed and completed outside Kazakhstan and there was no evidence to suggest that the proceedings have reached bank accounts in Kazakhstan. The banks used for this transaction have, according to the same source, been DHB Bank and Triodos Bank in the Netherlands.
In December 2012 Telia announced that it had finalised the negotiations to acquire an approximately 20% stake in KTC, the Kazakh telecoms services provider. The mechanics of the transaction, which was said to have been completed on 11th January 2013, are outlined below and are also illustrated in a chart accompanying this report.
At the time of the transaction, KTC had the following ownership structure:
Shareholder Stake (%)
TOO Rodnik Ink 79.9
TOO Telekom Asia 9.9
Others (not disclosed) 10.2
Telia acquired a 50% in Alatau LLP (“Alatau”), a Kazakhstan-registered company. Alatau owned a 50% interest in TOO Rodnik Ink, another Kazakh entity, which in turn was a 79.9% shareholder in KTC. Kazakh corporate records indicate that at the time of the transaction, Alatau’s sole shareholder was Sagdiyeva, whom sources identified as a person close to both Kulibayev and Massimov. Sagdiyeva started her career at Halyk Bank and in the early 2000s, when Kulibayev acquired local investment company Merkury 1999, Sagdiyeva became its CEO. The information pertaining to the fee paid by TeliaSonera to Sagdiyeva was indicated in Telia’s annual accounts to have been $22.5 million. The press, however, reported it to be in the region of $35 million.
At the same time Sagdiyeva sold the remaining 50% shares in Alatau to Lovou BV, a company registered on 25th April 2005 in the Netherlands under company number 814471249. Lovou’s sole shareholder is Panorpa Holding BV, which is owned by Visor Growth Fund BV. The latter entity is understood to be part of the Visor Group of companies controlled by Kulibayev. Visor financed its acquisition of the stake in Alatau through a SEK 182.5 million (approximately $22.5 million) loan provided by Telia. The loan has never been re-paid.
Remaining Shares in TOO Rodnik
At the time of Telia’s acquisition of KTC, the remaining 50% shares in TOO Rodnik were owned by Almaty Engineering Company LLP (“AEC”), the sole shareholder of which was identified by Kazakh corporate records as Abdukalyk Nalibayev (“Nalibayev”). Nalibayev previously served as Massimov’s deputy at both Halyk Bank and also in the government. In October 2012 Nalibayev sold his shares in AEC to Lavita Holding BV (“Lavita Holding”), an entity registered in the Netherlands, for a fee of $51 million.
Lavita Holding was incorporated on 5th May 1997 in Amsterdam under company number 806125792. Dutch corporate records indicate that from 10th December 2008 until 22nd December 2011 Lavita’s sole shareholder has been Nuriyeva. On 22nd December 2011 Nuriyeva transferred ownership of its shares to UNA SCA (“UNA”), an entity registered on 21st December 2011 in Luxembourg under company number B166810. As of 2015 the company is in voluntary liquidation.
Luxembourg corporate records identified UNA’s original shareholders as UNA Management S.a.r.l. (“UNA Management), a company incorporated on 3rd February 2012 in Luxembourg under company number B166810, and Panev SA (“Panev”), a vehicle established on 12th August 1992 in Luxembourg under number B41036. On 23rd August 2013 Kauz Services S.a.r.l. (“Kauz Luxembourg”) became UNA’s third shareholder following an increase in share capital.
Kauz Luxembourg was established on 16th December 2011 under company number B166778. According to available corporate records, until 5th February 2015 when Kauz Luxembourg was liquidated, the company’s sole shareholder has been Nuriyeva.
UNA Management has been wholly-owned by Panev since its incorporation until 2012, when Panev transferred 50% of its stake in UNA Management to Nuriyeva, and the remainder 50% to Pieter Hamelink (“Hamelink”), a fiduciary known for his services to members of the Kazakh elite.
Further, on 19th November 2014 Hamelink transferred his stake in UNA Management to Keisecker, which appears to be the current shareholder.
According to information held by the Luxembourg corporate registry, Keisecker was incorporated on 22nd December 2011 under company number B166777. At incorporation its sole shareholder was Alexander Klebanov (“Klebanov”), a Kazakh national born on 27th April 1963. No information was found to suggest that the company’s ownership structure has changed since incorporation. Klebanov is a prominent Kazakh businessman best known as a major shareholder of the Central-Asian Power Energy Company. According to a source in the Presidential Administration, Klebanov is known to hold other interests on behalf of Massimov. The source indicated that he manages Massimov’s media portfolio, which is understood to include news website Vesti.kz and radio station Tengri FM.
Turquoise Hill Resources
A source close to Nalibayev said that the latter sold the 50% stake in Rodnik upon instructions he had received from Massimov, who needed to legalise $51 million which he then provided to Kulibayev as part of the $235 million acquisition from Turquoise Hill Resources of a 50% stake in Altynalmas Gold Ltd (“Altynalmas”). The latter owns the Kyzyl gold project in North-eastern Kazakhstan.
According to information held by the Kazakh Stock Exchange (“KASE”), after the transaction, the ownership structure of Altynalmas was as follows:
Shareholder Stake (%)
Sumeru Gold BV 50.0
Sumeru LLP 50.0
Sumeru Gold BV was established on 1st February 2013 in Amsterdam under company number 852454922. According to the Dutch corporate registry, Sumeru Gold BV is wholly-owned by Steppe Unity Cooperative UA. Sumeru LLP is a Kazakhstan-registered company incorporated on 28th December 2014. It is wholly owned by Aquila Properties Investments BV. According to reports in the mainstream business press, Kulibayev is the beneficial owner of Sumeru and Aquila.
This is supported by the fact that both Aquila and Sumeru Gold BV has listed as one of their administrators Olga Aristova (“Aristova”), a Kazakh national born on 8th August 1973. Aristova was previously named in the Russian press as Kulibayev’s trusted manager.
In 2011 Rodnik was a shareholder in TOO Terra Management, a company founded in Almaty on 6th June 2007. In 2012, one year prior to the acquisition by Telia, the ownership of Terra Management was transferred to Dekcon Services BV (“Dekcon”), a vehicle registered in the Netherlands on 22nd August 2011, whose sole shareholder is Luxembourg vehicle Verbela Participations SA (“Verbela”) which was incorporated on 18th June 2010 under company number B153691. The ultimate beneficiaries of Verbela were not established. However, the method in which the company is owned – Dutch and Luxembourg entities – is in line with the method in which Nuriyeva and Klebanov own the majority of the companies.
TOO Telekom Asia
TOO Telekom Asia (“Telekom Asia”) was registered in Kazakhstan on 6th December 2012. Its sole shareholder is Bleston Finance Ltd (“Bleston”), a vehicle registered in the BVI. It was not possible to ascertain Bleston’s ownership structure as BVI-domiciled companies are not legally obliged to disclose shareholder information. In KTC’s 2015 annual report, Telekom Asia is no longer listed as a shareholder. The company appears to have transferred its stake to Murat Abdrakhmanov, KTC’s CEO.
A former Telia senior executive said that Veysal Aral (“Aral”), a Telia Vice President, was also a beneficiary of KTC.
KICKBACKS THROUGH SERVICE CONTRACTS
Sources indicated to the fact that the KCell senior management were siphoning significant funds from the company’s books through payments for fictious services. The recipients, according to two Telia senior executives, were both Kazakh political figures and KCell senior management.
The Ericsson Connection
One Telia and one former KCell senior executive concurred that the majority of the service contracts were conducted with the collaboration of old acquaintances of Aral from Ericsson in Kazakhstan.
The most regularly-occurring scheme in which the low level kickbacks were paid were the contracts between KCell and Ericsson, where the former subcontracted Ericsson to conduct monthly inspections of its antennas. Then, Ericsson formally outsourced these services to shell companies which were used to divert the funds. The inspection of one antenna, for which KCell paid circa $2,000 per month – described by one source as ten times exceeding the average cost of the service – was never carried out and the funds ultimately reached either Kazakh politicians or KCell senior management.
This is supported by information published available in the public domain. The implication of Ericsson was initially flagged up in 2011 by Turkcell, a minority shareholder in KCell. Telia later announced that it would investigate the matter. In February 2015, KCell requested the General Prosecutor’s Office of Kazakhstan to open a criminal investigation into several of its senior management on similar grounds. No further information was reported. It is understood that KCell suspected the culprits to be former General Director Ali Agan and Financial Director Baurzhan Ayazbaev, both of whom resigned in 2014.
The shell companies used in the embezzlement of funds were understood to have included Kazakhstan-registered entities:
Micro Engineering LLP was incorporated on 24th July 2007 and since 2014 has been under special administration following bankruptcy proceedings initiated against it. In 2011 the company was owned by Mohammed Agbulut, identified by the Kazakh press as an erstwhile acquaintance of Aral.
GSM Tech Management LLP was founded in Almaty on 27th January 2009. It is currently owned by an individual named Kadyr Yusupov. Previous shareholders included Aleksandr Yakovenko and DatCom Resources Ltd, a company incorporated in the BVI.
Micro Wireless LLP, was incorporated in Kazakhstan in 2008 and is owned by an individual named Ozturk Orchun.
This feature forms the basis of continuing research on the topic by a group of independent researchers and academics including researchers who worked on previous investigation regarding Swiss repatriation of laundered money from Kazakhstan whose final report will be published in due course.
Related investigation on TeliaSonera and Gulnara Karimova, daughter of Uzbekistan’s former President Islam Karimov. (1991–2016). Subsequently, the United States Department of Justice launched.