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Nazarbayev Rants Against Offshore Holdings

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On December 6, dur­ing an appear­ance on a nation­al­ly broad­cast­ed tele­con­fer­ence detail­ing Kazakhstan’s indus­tri­al­iza­tion, President Nursultan Nazarbayev threat­ened to fire his cab­i­net min­is­ters if they failed in forc­ing com­pa­nies to bring back to Kazakhstan funds held off­shore.

According to Reuters, Nazarbayev didn’t cite a source when he instruct­ed Prime Minister Bakytzhan Sagintayev to look into why state-con­trolled com­pa­nies had tripped their for­eign cash hold­ing from $2 to $6 bil­lion in the first six months of 2017.

If you fail to do this, I warn you in front of the whole Kazakhstan, I will use oth­er ways to return that mon­ey to Kazakhstan, but you will not be here any more,” he said.

That mon­ey could help our econ­o­my… The state pro­vid­ed you with the con­di­tions to make that mon­ey and you are hid­ing that mon­ey of Kazakhstan some­where else? Enough is enough!”Going fur­ther, Nazarbayev stat­ed that 18 com­pa­nies were keep­ing more than $12 bil­lion stashed abroad.

He also took aim, it appeared, at the glo­be­trot­ting Kazakh elite: “Enough of toy­ing around, look at them, car­ried away with their games, keep­ing their mon­ey abroad, buy­ing yachts and man­sions in mul­ti­ple coun­tries.”

Nazarbayev warned those hold­ing off­shore accounts that they were going to lose their mon­ey. “[D]on’t you see that? In times of sanc­tions, no one will help you out. Bring your mon­ey back to Kazakhstan and keep them here. What guar­an­tee do you need? Laws or orders? I’ll give you them. If you won’t do that, we’ll do that for you.”

Nazarbayev named a hand­ful of com­pa­nies: “Tengizchevroil has $4.5 bil­lion abroad. But Kazakhstan owns a sig­nif­i­cant share in the com­pa­ny, so we have a pow­er there. KazMunayGaz has $3 bil­lion abroad, KazMunayGaz Exploration Production — $2 bil­lion, Asian gas pipeline — more than $1 bil­lion, the Beyneu-Shymkent gas pipeline — $100 mil­lion and so on.”

There are a few odd­i­ties in Nazarbayev’s rag­ing against off­shore hold­ings.

First, while he did not name all 18 com­pa­nies, most of those that were named are ven­tures con­trolled by the state. Nazarbayev, who has led Kazakhstan since before its inde­pen­dence in 1991, has all along had an out­sized role in how pol­i­cy is made in the coun­try and over the very same busi­ness­men who have squir­reled away mon­ey over­seas.

One notable excep­tion was Tengizchevroil, which was formed between the Kazakh gov­ern­ment and Chevron in 1993 to explore and exploit the the Tengiz oil fields in the north­ern Caspian. It is cur­rent­ly a joint ven­ture in which the Kazakh state oil com­pa­ny — KazMunayGaz — only holds 20 per­cent. Two U.S. com­pa­nies — Chevron and ExxonMobil — hold 50 and 25 per­cent respec­tive­ly with the remain­ing 5 per­cent held by LukArco, a sub­sidiary of Lukoil, a Russian com­pa­ny.

Second, there’s cer­tain­ly a bit of the ket­tle call­ing the pot black in this — i.e. hypocrisy.

The Panama Papers leak of 2016 fea­tured an appear­ance by Nazarbayev’s grand­son, Nurali Aliyev. Aliyev report­ed­ly worked through a series of shell com­pa­nies to pur­chase a yacht in 2008, named the Nomad.  The more recent Paradise Papers named sev­er­al Kazakhs, as RFE/RL reports, includ­ing Defense Minister Beibit Atamqulov and the chair­man of KazMunayGaz, Sauat Mynbaev, as own­ers of com­pa­nies reg­is­tered off­shore.

Astana has engaged in an anti-cor­rup­tion dri­ve over the past few years, includ­ing the arrests of 21 for­mer offi­cials in 2015, but it has rarely touched the elite, beyond those who have irri­tat­ed Nazarbayev polit­i­cal­ly first.

It’s not emi­nent­ly clear why Nazarbayev is just now rail­ing against off­shore hold­ings. Maybe he just wants to know which gov­ern­ment offi­cial bought that sweet, 13,000-square foot, high-secu­ri­ty, set of apart­ments in Paris for $75.8 mil­lion ear­li­er this year from a Russian investor.

By Catherine Putz

Nazarbayev Rants Against Offshore Holdings

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