For too long, the United States and Europe have acted as a safe haven for the wealth acquired by families of corrupt leaders. While some of the countries that once formed part of the Soviet Union have managed to transition to democratic forms of government overseen by the rule of law, many – predominantly in Central Asia and the Caucasus – suffer from high levels of corruption, human rights’ abuses and a lack of political freedom. Many can be described as kleptocracies – where the ruling elite abuse their power to make vast fortunes from the country’s assets (often oil and gas, and other natural resources) at the expense of the people.
Much of this wealth ends up in foreign bank accounts: the recent FinCEN scandal highlights how global banks help kleptocrats launder their ill-gotten gains into the United States and Europe. The corrupt are thus helped by coterie of Western ‘gatekeepers’: bankers, real estate agents, company service providers, PR agents, lobbyists and lawyers, who turn a blind eye on the origin of the wealth in return for a share of the spoils.
The transfer of illicit capital into the West from kleptocracies not only deprives citizens who live in these countries of much-needed revenue, it also has a corrosive effect on the jurisdictions where the money ends up: lawmakers’ opinions are swayed by shadowy lobbyists, paid-for articles in Western media paint rosy pictures of corrupt autocracies, house prices are distorted by the influx of dubious foreign capital. The global community needs to do more to stem the tide of dubious and illicit cash flowing from kleptocracies into the so-called developed world.
The continuing protests in Belarus highlight the close link between a lack of political plurality and kleptocracy. Though Belarus does not possess plentiful oil and gas reserves this has not stopped the ruling elite from taking vast sums of money out of the country. Non-profit organisation The Journalism Fund estimate that since coming to power President Lukashenko and his entourage have misappropriated an estimated $10 billion from the Belarussian people. Much of this money has made its way into Western Europe and offshore zones. The UK Times recently reported how a Belarusian businessman with close links to Lukashenko bought London property worth £18 million ($23.2 million) through a web of offshore companies.
In Azerbaijan, major business holdings are controlled by President Ilham Aliyev’s wife’s family and his two daughters, Leyla and Arzu. Ata Holding, a Panamanian company founded in 2003 that holds over $490 million in assets in Azerbaijan’s banking, telecommunications, construction, mining, and oil and gas sectors, was revealed to be owned by Leyla and Arzu following a data scrape of the Panamanian company registry. Other potentially lucrative deals have ended up in the hands of the first family in murky circumstances. In 2007, 30-year leases on five lucrative mineral fields in Azerbaijan were awarded to an Azerbaijani company, AIMROC. Panamanian registration records list Leyla and Arzu Aliyeva as senior managers of a company involved in AIMROC’s ownership structure. The wealth that such deals creates is often reinvested into international property. The Aliyev family have been reported to own property in Dubai worth around $40 million and in London worth at least £50 million ($74.8 million). President Aliyev’s recent call to privatize state oil and gas company SOCAR can only raise red flags.
When such a privatization was touted in the 1990s, the proposition of getting a slice of Azerbaijan’s lucrative oil company led to widespread fraud and bribery. One fraudster from the Czech Republic attempted to fix the deal (which ultimately did not happen) in his favour by paying bribes amounting to millions of dollars to Azerbaijani officials, including to President Heydar Aliyev (Ilham’s father, the third president of independent Azerbaijan) and his family.
In 2017, OCCRP and other news outlets reported on the ‘Azerbaijani Laundromat scandal’, a money-laundering operation and slush fund that handled $2.9 billion over a two-year period. The money passed through four shell companies registered in the UK that held accounts in an Estonian branch of Danske Bank, Denmark’s biggest bank. The exact origin of the money is unknown, but over half of the money came from an account held by a company at the state-owned International Bank of Azerbaijan (IBA). The UK’s National Crime Agency has frozen two properties worth a combined £22 million ($28.4 million) from the wife of IBA’s former chairman, Zamira Hajiyeva, who famously spent over £16 million over a ten year period in luxury department store Harrods.
Much of the ‘laundromat’ cash was used to try and influence policy makers in the U.S. and Europe. For example, as reported by OCCRP, one recipient of these dubious funds was a Baku-based organization called Renaissance Associates, which received over $1.65 million to bank accounts it held in Liechtenstein and Switzerland. Between July 2012 and December 2015 Renaissance Associates paid a lobbying firm in Virginia $1.533 million.
Worryingly, between 2008 and 2016, the company’s president was invited to recommend foreign aid budgets to Azerbaijan and Armenia before the House Appropriations Subcommittee on State, Foreign Operations and Related Matters. The lobbyist painted Armenia, Azerbaijan’s regional rival, as a rogue nation while praising Azerbaijan’s supposed progress. Furthermore, according to OCCRP, “between 2012 and 2015, individuals registered as lobbyists acting directly or indirectly on behalf of Renaissance made thousands of dollars in donations to political candidates, including to Senators and Representatives who were sitting on, or chaired, appropriations subcommittees at the time.” In Europe, further investigations by OCCRP indicate that at least three politicians and a journalist who wrote positive stories about Azerbaijan were among the recipients of these tainted funds.
Another recipient of ‘laundromat’ cash– receiving over $250,000 through a company registered in Wyoming – was a U.S. oil and gas consultant of Azerbaijani origin. He attempted to influence American policy regarding Azerbaijan, including through a non-profit organization, U.S. Azeris Network (USAN) based in Houston, Texas. USAN helped organize a conference in Baku, Azerbaijan, that was attended by eleven members of Congress, ten of whom were paid for. This led to an investigation by the House Ethics Committee as the conference was secretly funded by SOCAR.
In Kazakhstan, the country’s first president, Nursultan Nazarbayev, stepped down in 2019 after 29 years in office, yet the kleptocratic system remains the same, with members of his family and close political allies controlling vast sections of the economy. A recent investigation by Swiss NGO Public Eye demonstrated how the sale of Kazakh oil is monopolised by structures controlled by Nazarbayev’s son-in-law, Timur Kulibayev, in partnership with the Vitol Group. Over the last three decades, structures owned by Kulibayev have quietly privatized large sections of the Kazakh oil, gas and mining industry, netting the businessman billions of dollars.
Along with his wife Dinara – Nazarbayev’s daughter – Kulibayev also owns Kazakhstan’s largest bank, Halyk. A sizeable chunk of the family’s wealth has been put into real estate: in 2007, Kulibayev bought the mansion of Prince Andrew, a member of the British Royal Family, for £15 million, despite the fact it was valued at £12 million. It was later reported that Andrew was advised by one agent that the house was worth about only £8 million on the open market and possibly as little as £6.4 million at auction — £8.6 million less than what Kulibayev bought it for. In the same year, Kulibayev also bought other properties in the UK, one of which – a mansion in the exclusive London district of Mayfair – has stood empty for 14 years, according to property blog Who Owns England.
The Swiss media reported that Dinara bought a huge property in Geneva in 2010 worth SFr74.7 million ($71 million). The Nazarbayev family also built a mansion with 13 bedrooms in Lloret de Mar, just outside of Barcelona, despite it being in an environmentally protected zone.
Nazarbayev’s eldest daughter, Dariga, is a politician who first became a member of the Kazakh parliament in 2004. She became a member of the Senate In 2016, and served as Senate Chair from 2019 to 2020. Forbes estimated her wealth in 2013 to be around $595 million, indicative of the complete enmeshing of the business and political spheres in Kazakhstan. Such wealth was under scrutiny recently when £80 million ($103.3 million) of property owned in London by Dariga and her son Nurali was subject to an Unexplained Wealth Order (UWO) in the UK, where property owners have to explain the origins of the wealth used to buy the houses in question, else risk having them frozen.
Although the UWO was dismissed by a London court – which drew in large part on court rulings from Kazakhstan, which lacks an independent judiciary – questions remain about the system that allowed Nurali and Dariga to acquire such vast wealth in the first place. For example, Nurali bought one London property after receiving a $65 million loan from Nurbank, a bank that he chaired at the time and whose largest shareholder was Dariga. There is no evidence that the loan was ever paid back. Another unsolved question is the ownership of a large section of London’s famous Baker Street, worth around £130 million ($167.8 million). Nurali and Dariga owned this lucrative property as of 2018, although the property did not form part of the UWO, and current ownership is unclear.
Nursultan Nazarbayev himself has been shown to be the personal recipient of suspicious transactions in a scandal that came to be known as ‘Kazakhgate’. A case was brought under the U.S. Foreign Corrupt Practices Act against an American businessman who was accused of making more than $84 million of unlawful payments to Kazakh officials and buying them luxury items. Court document indicates that the main recipients of the payments (which were related to Kazakhstan’s oil deals) were President Nazarbayev himself, and the then Minister of Oil & Gas, Nurlan Balgimbayev.
The funds were used by Balgimbayev to buy a $910,000 house in Massachusetts, over $180,000 worth of diamond jewellery and a $20,000 Swiss spa vacation for his family. Nazarbayev used around $45,000 of the money to pay for an exclusive Swiss boarding school for his youngest daughter, Aliya. $201,000 had also been withdrawn from an account held in Switzerland that prosecutors alleged was controlled by Nazarbayev. On top of this, the American businessman also purchased two fur coats worth $30,000 for Nazarbayev’s wife and daughter, an $80,000 Donzi speedboat (given by Balgimbayev as a gift to Nazarbayev), two snowmobiles for Nazarbayev and his wife, and paid for the tuition fees of Nazarbayev’s daughter at George Washington University in Washington, D.C.
Headlines regarding Uzbekistan have been dominated in recent years by legal proceedings against Gulnara Karimova, the daughter of Uzbekistan’s first president, Islam Karimova. In March 2019, Gulnara was subject to criminal charges brought by the U.S. Department of Justice (DoJ) in relation to a telecoms bribery scheme. A 2013 DoJ press release alleged that Karimova received more than $800 million from a variety of international companies in order to enable them to enter and operate in the Uzbek telecommunications market. One such company, VimpelCom, a Russian-Norwegian telecom operator that is registered in Netherlands and publicly traded in the U.S., agreed to pay $795 million in penalties to U.S. and Dutch authorities. A second, Swedish firm Telia, agreed to pay $965 million in fines and penalties. Much of what Karimova received was ploughed into international real estate (UK, France, Switzerland, Dubai, Hong Kong) whose value is conservatively estimated at around $200. The UK’s Serious Fraud Office froze three of Karimova’s properties held in and around London. How to repatriate the funds back to Uzbekistan has proven to be a controversial topic in Switzerland: the Swiss authorities are examining claims against a prosecutor who is alleged to have agreed to return the $800 million to Uzbek authorities in exchange for Uzbekistan’s recommitting to Switzerland’s voting block at the IMF.
Kyrgyzstan has lived through two revolutions, one in 2005 and a second in 2010, that in large part were caused by the corruption and cronyism of its first two presidents, Akaev and Bakiyev. Much attention has been focussed on Bakiyev’s son, Maxim, who occupied a key position in the state’s business sector while trying to consolidate the country’s assets in private structures controlled by him. Maxim was even accused of profiting from the supply of jet fuel to an American airbase in Kyrgyzstan’s capital, Bishkek. After the revolution, Maxim fled to the UK, where he was granted asylum, despite being accused by the Kyrgyzstan’s new authorities of stealing millions of state funds. In 2010, Maxim bought a £3.5 million ($4.5 million) mansion just outside London, using an anonymous company that anti-corruption NGO Global Witness linked to an alleged money-laundering scheme used to get the funds out of Kyrgyzstan.
A more recent OCCRP investigation has demonstrated how, since 2012, hundreds of millions of dollars have been transferred into bank accounts in Europe, the United States, and the Middle East on behalf of a single well-connected Kyrgyz family. The money has been used to purchase a $1.2 million home near Washington, DC, and a house in California for $722,000, and other property in Austria and Dubai. OCCRP report that a co-investor in the Dubai property was the wife of a powerful former deputy head of Kyrgyzstan’s state customs service.
In Tajikistan, the ruling family has virtually privatised the state aluminium firm TALCO by routing its profits through a company in the British Virgin Islands, Talco Management Ltd (TLM), which exclusively conducts trade for Talco. In 2013, the Economist alleged that the profits that pass through TLM amount to hundreds of millions of dollars a year, and that Tajikistan’s president Emomali Rakhmon “personally oversees TALCO.”
Turkmenistan remains the most repressive country in Central Asia, if not the world. The country’s business sector if dominated by the family of President Berdymukhamedov. His relatives (most notably his six sisters and their children) monopolise large sections of the company, including the import and export of goods. Meanwhile, Berdymukhamedov’s son-in-law has been reported to have acquired property in France and the UK, and the Turkmen Ambassador to the United States and his family has acquired property in the U.S. worth over $6 million dollars, including four houses, three apartments and a tract of forest near the Canadian border.
Recommendations for the United States
• Support the sanctioning of corrupt actors from Central Asia and the Caucasus via the Global Magnitsky Human Rights Accountability Act;
• Consider adding corrupt actors from Central Asia and the Caucasus to the U.S. Department of the Treasury’s Office of Foreign Assets Control’s Specially Designated Nationals List (SDN list);
• Support the continued enforcement of the Foreign Corrupt Practices Act to hold to account those involved in bribery in kleptocratic countries;
• Support the Department of Justice in investigations that aim to identify, freeze and repatriate funds stolen by corrupt officials from kleptocratic countries, and to hold to account those gatekeepers that help these individuals launder criminal proceeds into the United States;
• Support the continued use of Geographic Targeting Orders that require additional reporting requirements for high-value real estate transactions in locations across the United States;
• Support in Congress H.R.3441, the Kleptocrat Exposure Act, a bill that aims to make publicly available the names of those individuals denied a visa due to involvement in gross violations of human rights or significant acts of corruption;
• Support in the Senate S.1889, the TITLE Act (True Incorporation Transparency for Law Enforcement), that will require registered U.S. companies to submit to the State a list of their beneficial owners, making it harder for the politically exposed to use anonymous shell companies registered in the United States to launder corrupt funds.
Recommendations for the European Union
• Consider adding to the list of those subject to EU financial sanctions members of the Eurasian ruling elites who have been shown to have been involved in dubious or illegal financial activity;
• Review the ‘golden visa system’ of certain member states that allows the politically exposed to ‘buy’ EU citizenship, conferring on them both legitimacy and further opportunities for money laundering;
• The European Commission should crackdown on those Member States that have failed to properly implement the 5th AML Directive EU’s 5th Anti-Money Laundering Directive requiring all Member States to set up a centralised register of the ultimate beneficial owners of companies;
• Consider setting up an European Anti-Money Laundering Agency, as recommend by the Hudson Institute in 2019;
• Co-ordinate on anti-kleptocracy initiatives and criminal investigations with the United States and the United Kingdom.
- Ermurat Bapi, chief editor of “DAT” newspaper, Kazakhstan
- Botagoz Isaeva, civil society activist, Kazakhstan
- Zhandos Kashkimbay, IA Voice of Kazakhstan
- Fatima Zhandosova, civil society activist, Kazakhstan
- Togzhan Kozhalieva, chair of movement “Hak”, Kazakhstan
- Omіrhan Altyn, EuroKazakh Forum, Kazakhstan
- Aytkul Kashirbekova, co-chair of movement ”Qazaq Ulttyқ patriottary”, Kazakhstan
- Nurlan Bulanbaev, co-chair of movement Qazaq Ulttyқ patriottary, Kazakhstan
- Timur Tokseitov, chair of unregistered party “Shanyraq”, Kazakhstan
- Ardak Ashim, civil society activist, prisoner of conscience by AI, Kazakhstan
- Zhuaspaeva Gulnar, civil society activist, Kazakhstan
- Zhenіsbek Sybraim, co-chair of unregistered party Halyq democratic party, Kazakhstan
- Zhanat Kazakpay, co-chair of unregistered party Halyq demoratic party, Kazakhstan
- Nurul Rahimbek, civil society activist, Kazakhstan
- Kanagat Takeeva, head of the mortgage movement, Kazakhstan
- Azamat Raev, civil society activist, independent observer, Kazakhstan
- Ermek Kulshanov chair of movement Qazaq bіrlіk tuy, Kazakhstan
- Kurmangazy Rakmetov, head of OO ”Zheltoqsan”, Kazakhstan
- Ersen Tolkeev, civil society activist, Kazakhstan
- Kydyrali Amir, head of of OO “Atazhurt zhastary”, Kazakhstan
- Akezhan Magzhanovich Kazhegeldin, ex-prime minister of Kazakhstan
- Serik Medetbekov, representative of Kazakhstani Initiative for Asset Recovery), Kazakhstan
- Ermek Narymbaj, independent journalist, Kazakhstan
- Miras Nurmukhanbetov, independent journalist, Kazakhstan
- Baltash Tursumbayev, civil society activist, former deputy Prime Minister, Kazakhstan
- Sergei Duvanov, former political prisoner, independent journalist and blogger, Kazakhstan
- Kanat Ibragimov, civil society activist, painter, Kazakhstan/US
- Pulatjan Ahunov, Chairman of Association Central Asia, Uzbekistan/Sweden
- Abdurahmon Tashanov, Human Rights organization of Uzbekistan “Ezgulik”, Uzbekistan
- Qubad Ibadoglu, Chairman of Movement for Democracy and Prosperity in Azerbaijan, Economics professor Rutgers University, Azerbaijan/US
- Khadija Ismayil, independent journalist, Azerbaijan
- Chemen Ore, Turkmenia Unite/SES Movement, Turkmenistan / US
- Hanum Rasulova, Turkmenia Unite/SES Movement, Turkmenistan / Turkey
- Dowlet Bayhan, World Turkmens’ Democracy Platform, Turkmenistan / Germany
- Bayram Shikhmuradov, editor of Gundogar news portal, Turkmenistan/Dubai
- Farid Tukhbatullin, Turkmen Initiative for Human Rights, Turkmenistan/Austria
- Yashnar Khayitov, Head of Russian-Turkmen Oguz Community, Turkmenistan / Russia
- Ogulnur Charyyeva, Owadan Dere Youtube Channel, Turkmenistan/US
- Nadezhda Atayeva, “Human Rights in Central Asia” Association, Uzbekistan / France
- Bobodzhon Kayumzon, journalist, Tajikistan / Lithuania
- Humairo Bahtiyor (Muminova), journalist, Tajikistan / Germany
- Mahmudjon Faizrahmonov, activist, Tajikistan / Austria
- Ilhomjon Yokubov, activist, Tajikistan / Lithuania
- Muhiddin Kabiri, activist, Tajikistan
- Temur Varki (Klychev), journalist, Tajikistan / France
- Dinara Oshurakhunova, Kyrgyzstan Civil Control Committee, Kyrgyzstan
- Leyla Nazgul Seiitbek, KyЛейла Назгуль Сеитбек, Kyrgyzstan Civil Control Committee, Kyrgyzstan