The Sudden Epiphany of Kazakhstan’s Ex-Oil Minister

When reporters asked if Sauat Mynbayev co-owns a com­pa­ny that made mil­lions from gas and oil deals with Kazakhstan while he was the country’s oil min­is­ter, there was a one sen­tence reply.

Credit: Sauat Mynbaev, chair­man of Kazakhstan’s state oil and gas com­pa­ny, KazMunayGaz. “S.M. Mynbayev is not a founder or share­hold­er of Meridian Capital Limited,” said KazMunayGaz, the state oil and gas com­pa­ny he cur­rent­ly heads.

But that was last week, while reporters were final­iz­ing their analy­sis of the 6.8 mil­lion con­fi­den­tial records from a Bermuda law firm that were leaked to the German news­pa­per Süddeutsche Zeitung and shared with inves­tiga­tive jour­nal­ists worldwide.

In the mass of doc­u­ments, OCCRP reporters found evi­dence that Mynbayev and a group of pow­er­ful bankers had in 2002 cre­at­ed Meridian Capital Limited, a mul­ti-bil­lion-dol­lar empire that grew thanks to Kazakhstan’s boom­ing oil indus­try at a time when Mynbayev was either the country’s oil min­is­ter or chief exec­u­tive of the state oil company.

Paradise Papers is the largest ever leak of cor­po­rate data. An inves­ti­ga­tion was car­ried out into the trove of doc­u­ments by the International Consortium of Investigative Journalists in part­ner­ship with 96 media part­ners includ­ing The Indian Express.

The rev­e­la­tion was pub­lished on Sunday as part of the “Paradise Papers” leak that offers anoth­er insight into how the rich and pow­er­ful secret­ly move mon­ey around the world.

Once the evi­dence was exposed, Mynbayev sud­den­ly remembered.

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,” he told Radio Free Europe on Tuesday.

Even if he did declare the own­er­ship in Meridian, nego­ti­at­ing oil deals on behalf of Kazakhstan while being share­hold­er in an oil com­pa­ny is a con­flict of inter­est at best.

And one he nev­er declared even to KazMunayGas, which he still heads.

Meridian was worth US$3 bil­lion, accord­ing to a 2006 dis­clo­sure, but the com­pa­ny is so secre­tive that the full extent of its invest­ments may nev­er be known. It doesn’t even have a website.

The leaked doc­u­ments, how­ev­er, show that Mynbayev was in 2006 the sec­ond-largest share­hold­er, with 18.75 per­cent. His oth­er six co-own­ers had occu­pied top posi­tions in Kazkommertsbank, the fourth-largest in the for­mer Soviet republics.

Another leak OCCRP obtained ear­li­er revealed that the bank approved loans to Meridian with which the com­pa­ny fund­ed project after project. If one project failed, they would dump the loss­es onto the bank’s bal­ance sheets until the state had to bail the bank out at least twice.

The true cost of the bank’s behav­ior in bailouts and bad deals will like­ly nev­er be known, but Kazakhstan’s cit­i­zens could be on the hook for bil­lions of dollars.

All in all, as the bank was going down, Meridian kept grow­ing. Three years after its cre­ation, the com­pa­ny was pay­ing mil­lions in div­i­dends to its shareholders.

It is not known how much Mynbayev prof­it­ed from the com­pa­ny, but it would have been in the millions.

But it is known that Ian Connor, Meridian’s only non-Kazakhstani co-own­er, had done so well for him­self that he was prepar­ing to move to Monaco to low­er his tax payments.
This is accord­ing to notes from a May 2005 meet­ing he held with his bank, HSBC, in the French Riviera.

In that meet­ing, Connor esti­mat­ed the company’s total assets at $1.2 bil­lion, and said he had received a $9 mil­lion div­i­dend pay­ment from the group the pre­vi­ous month.
This is why Meridians’ co-own­ers need­ed the secre­cy Bermuda offered. The island doesn’t require com­pa­nies to dis­close their owners.

And per­haps this is why Mynbayev claimed he had noth­ing to do with Meridian on a Wednesday but sud­den­ly remem­bered he co-owns the mul­ti-bil­lion com­pa­ny two days after the Paradise Papers revealed he does.

The Sudden Epiphany of Kazakhstan’s Ex-Oil Minister

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