INVESTIGATIONS

Meet the secretive Kazakh company backing the Upper West Side’s latest skyscraper

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Meridian Capital Limited was founded by oligarchs investing billions globally, including in Extell’s 50 West 66th St.

Party Girl once went by a dif­fer­ent name.

The 205-foot, eight-cab­in yacht once belonged to Askar Alshinbayev, a Kazakh ener­gy and bank­ing tycoon who sold it in 2016. Alshinbayev, accord­ing to yacht enthu­si­ast web­site SuperYachtFan, had giv­en the ves­sel a less provoca­tive moniker: Meridian.

More inter­est­ing than the ves­sel itself is the inspi­ra­tion for its name, pri­vate equi­ty fund Meridian Capital Limited. The Bermuda-incor­po­rat­ed enti­ty, with oper­a­tions in London and Hong Kong, is linked to some of Kazakhstan’s wealth­i­est indi­vid­u­als and has invest­ed in min­ing, oil, and infra­struc­ture projects across the globe. It was also behind Russia’s largest ever real estate deal in 2012, sell­ing a shop­ping mall in St. Petersburg to Morgan Stanley for $1.1 bil­lion.

Another notable invest­ment for Meridian: Its bet on Gary Barnett’s Extell Development.

According to an analy­sis of prop­er­ty records by The Real Deal, Meridian has invest­ed more than $200 mil­lion into Extell’s lat­est New York real estate projects. The rela­tion­ship appears to have start­ed in 2011. That year, Barnett acquired a site at 16–18 West 57th Street, and a Meridian-linked enti­ty called “Bremsten Finance” assumed the developer’s $65.5 mil­lion mort­gage. The same year, Meridian acquired the debt on Barnett’s devel­op­ment site at 3 West 46th Street, a $10.3 mil­lion loan orig­i­nal­ly held by Anglo-Irish Bank, as well as the $19.3 mil­lion in debt on Barnett’s 570 Fifth Avenue just around the cor­ner, city records show.

Last September, TRD report­ed Meridian, through its Hong Kong-based divi­sion, took a $127 mil­lion equi­ty posi­tion in Extell’s con­do tow­er at 50 West 66th Street. The deal not only made Meridian one of Extell’s biggest known equi­ty investors, it also appears to be the biggest known Kazakh invest­ment in New York real estate. Real Capital Analytics, which tracks glob­al cap­i­tal flows in the real estate indus­try, doesn’t even have any U.S. com­mer­cial real estate invest­ments from the Central Asian nation in its cur­rent data­base, the com­pa­ny said.

It’s a lit­tle bit unusu­al from the point that it’s one invest­ment of that size [$100 mil­lion plus], but there are plen­ty of Kazakh investors invest­ing all over the United States,” said Ed Mermelstein, a real estate attor­ney who has rep­re­sent­ed sev­er­al Kazakh clients in New York deals. “Maybe not $100 mil­lion at a time, but they’re mak­ing $5, $10, $20 mil­lion dol­lar [real estate] invest­ments all over the place.”

Extell did not respond to sev­er­al requests for com­ment for this sto­ry. The firm’s devel­op­ment part­ner on the 66th Street project, Sam Sidhu’s Megalith Capital, declined to com­ment. Representatives for Meridian could not be reached.

An oligarch labyrinth

At the time of the Meridian’s invest­ment in 50 West 66th last year, one of its investors—Sauat Mynbayev, the CEO of Kazakhstan’s pub­lic oil and gas com­pa­ny KazMunayGas and the country’s for­mer ener­gy minister—had just been exposed in the Paradise Papers, the mas­sive leak of off­shore finan­cial doc­u­ments from law firm Appleby. At first, Mynbayev denied being a share­hold­er in the firm, but lat­er admit­ted it, telling Radio Free Europe in November that “I declared my own­er­ship share in Meridian Capital in a tax dec­la­ra­tion, which I sub­mit­ted over many years, as a pub­lic offi­cial should do, and I have nev­er con­cealed this.”

Meridian has been so secre­tive about many of its oper­a­tions that it even refused to pro­vide Appleby key infor­ma­tion about its own­er­ship struc­ture, accord­ing to a report from the Organized Crime and Corruption Reporting Project (OCCRP). But the com­pa­ny has clear ties to a num­ber of oth­er Kazakh oli­garchs.

U.K. reg­u­la­to­ry doc­u­ments filed last year sug­gest Meridian is con­trolled by yacht afi­ciona­do Alshinbayev — who Forbes placed among Kazakhstan’s 10 rich­est peo­ple in 2014 — along with two alum­ni from the country’s largest pri­vate bank, Kazkommertsbank: Yevgeniy Feld, who also made the Forbes list, and Nurzhan Subkhanberdin, one of the bank’s orig­i­nal founders and a report­ed friend of Kazakh President Nursultan Nazarbayev (a recent report states Subkhanberdin no longer owns any shares in the bank). As it hap­pens, the bank is set to merge with Halyk Bank, a com­pa­ny con­trolled by the president’s daugh­ter, Dinara.

Merdian,” fly­ing the flag of Bermuda, in Fort Lauderdale, FL in 2015. The boat is now called Party Girl. (Credit: ZipZapPower)

Many of Meridian’s invest­ments were backed by Kazkommertsbank, accord­ing to OCCRP. The finan­cial insti­tu­tion has required mul­ti­ple bailouts over the last few years, includ­ing a $7.5 bil­lion res­cue in 2017.

According to an email from a cen­tral bank offi­cial,” OCCRP report­ed, “when­ev­er a project failed, the bank own­ers and exec­u­tives — who were also Meridian’s own­ers — would dump the loss­es onto the bank’s bal­ance sheets.”

As for Mynbayev, he nego­ti­at­ed numer­ous oil and gas deals for the Kazakh state while Meridian increased its stakes in var­i­ous glob­al ener­gy assets — though he main­tains that the com­pa­ny made no deals with the gov­ern­ment while he was min­is­ter. While he owned 19 per­cent of Meridian in 2006, OCCRP could not deter­mine his cur­rent stake.

Clay Fuller, a for­eign pol­i­cy schol­ar who stud­ies dic­ta­tor­ships and cor­rup­tion at the American Enterprise Institute, con­sid­ers Kazakhstan a klep­toc­ra­cy. In such states, he said, “the struc­ture of rule is based on exchange of pri­vate goods amongst elites. So they bribe each oth­er off.” Kazakh investors have been caught up in mon­ey laun­der­ing law­suits impli­cat­ing major U.S. real estate projects devel­oped by the likes of the Trump Organization and the Chetrit Group.

Rapprochement

Meridian’s invest­ment in New York real estate isn’t total­ly unex­pect­ed. In 2015, Kazakhstan’s pres­i­dent Nazarbayev host­ed a din­ner at the Four Seasons in Midtown with the heads of major U.S. pri­vate equi­ty firms such as KKRCarlyle Group and Blackstone Group in atten­dance. His country’s sov­er­eign wealth fund was pre­pared to invest $93 bil­lion glob­al­ly, he announced there, includ­ing into real estate.

Kazakhstan’s over­tures to the West have come with a greater spot­light on its finan­cial and polit­i­cal mis­deeds. Mukhtar Ablyazov, a polit­i­cal rival of Nazarbayev, was sen­tenced in June to 20 years in prison in Kazakhstan (though he’s believed to be liv­ing in France). He was accused of embez­zling $6 bil­lion from BTA Bank (par­tial­ly owned by Kazkommertsbank) and is also under inves­ti­ga­tion for the 2004 mur­der of Kazakh banker Yerzhan Tatishev.

The scan­dal has made its way to American shores: In 2014, BTA Bank accusedAblyazov asso­ciate Viktor Khrapunov of laun­der­ing stolen cash into mil­lions of dol­lars of U.S., Middle East and European assets. A Financial Times inves­ti­ga­tion found that some of Khrapunov’s funds went toward the pur­chase of three con­dos at Trump Soho. (When lat­er asked if there was Kazakh mon­ey in the tow­er, President Trump said, “No idea. Really no idea.”)

sep­a­rate law­suit in 2015 alleged Ablyazov laun­dered mon­ey into the Chetrit Group’s Flatotel devel­op­ment at 135 West 52nd Street and Cabrini Medical Center at 227 East 19th Street. The suit has since been set­tled.

In response to some of the cor­rupt prac­tices, Nazarbayev launched an anti-cor­rup­tion cam­paign, which accord­ing to Kazakh news site Tengrinews, called for “rad­i­cal erad­i­ca­tion of legal nihilism in the soci­ety.” The pres­i­dent enlist­ed for­mer British Prime Minister Tony Blair to serve as a kind of lob­by­ist-advi­sor for the country’s Western pub­lic-rela­tions push, though he has since left the posi­tion.

Mermelstein believes con­cerns over cor­rup­tion and mon­ey laun­der­ing are large­ly politi­cized. Kazakhstan’s issues will become less of a con­cern for U.S. reg­u­la­to­ry author­i­ties, he believes, as the two coun­tries forge clos­er polit­i­cal and eco­nom­ic ties and trans­paren­cy increas­es.

Kazakhstan sev­er­al years ago aligned [itself] more with the United States and has been a very strong part­ner and pro­vid­ed an eco­nom­ic pipeline to the U.S.,” he said. “Those types of rela­tion­ships are what even­tu­al­ly tran­scends this issue of mon­ey laun­der­ing.”

The U.S. gov­ern­ment and Kazakhstan have indeed strength­ened ties in recent years. In January, Trump invit­ed Nazarbayev — who once won 98 per­cent of the vote in an elec­tion that was high­ly crit­i­cized by Western mon­i­tor groups — to the White House. Trump called the coun­try, which sup­ports nuclear non-pro­lif­er­a­tion, “a val­ued part­ner in our efforts to rid the Korean penin­su­la of nuclear weapons.”

On the whole, more Kazakh invest­ment in New York City real estate is expect­ed, said Petro Zinkovetsky, a real estate attor­ney who has worked with res­i­den­tial buy­ers from the coun­try. One of his clients recent­ly decid­ed to amass a com­mer­cial port­fo­lio, he said — the first such client he’s had with more on the mind than anoth­er stash pad in a sleek new con­do tow­er.

The dif­fer­ent thing about Kazakhstan from a lot of oth­er post-Soviet states is the gov­ern­ment com­pared to the oth­er republics in the region — Turkmenistan, Tajikistan, etc. — was very sta­ble,” Zinkovetsky said. “And I see the investors are get­ting a lot more sophis­ti­cat­ed when it comes to invest­ing in U.S. real estate than they were before.”

As far as Extell’s 66th Street project, not much else regard­ing Meridian’s rela­tion­ship with the devel­op­er is known. The project itself has come under crit­i­cism from City Council mem­ber Helen Rosenthal, who claims the devel­op­er mis­led the pub­lic about the tower’s scale. Originally filed with the Department of Buildings as a 262-foot build­ing, Extell acquired air rights and increased the planned height to 775 feet last fall.

By Will Parker

Meet the secre­tive Kazakh com­pa­ny back­ing the Upper West Side’s lat­est sky­scraper

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