INVESTIGATIONS

Vitol, the king of oil in Kazakhstan

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The Swiss giant Vitol holds the lion’s share of the market in Kazakhstan. The company was already marketing nearly a quarter of Kazakh crude earmarked for export in 2014; it then obtained strategic access to the biggest oil fields in the country. What’s the recipe for such success? Through access to exclusive documents, Public Eye reveals that Vitol has entered into a partnership with individuals close to the ruling powers in Kazakhstan through a discrete joint venture – Ingma Holding BV – and that the President’s son-in-law, Timur Kulibayev, has indirectly benefitted from this lucrative alliance.

Welcome to Kazakhstan

Where the story unfolds

Dobro pojhalovat’ v Kazakhstan” — “Welcome to Kazakhstan,” a country five times the size of France whose natural resources act as a magnet for commodity firms and traders. Kazakhstan and its capital Astana, with its futuristic decor, its uranium, nickel and coal mines, its 240 oil and gas fields that contain the world’s 12th largest proven reserves of ‘black gold.’

Since 1990, Kazakhstan has been ruled by Nursultan Nazarbayev, the 78-year-old all-pow­er­ful ‘father of the nation’. Since 2015 he has proud­ly enjoyed the title of the elect­ed leader with the great­est man­date hav­ing won with 97.9% of the vote. In 2014, he was also cho­sen as ‘best dic­ta­tor’ of the year, or the man who had ‘best pil­laged his country’s resources for his own ben­e­fit’ by the French organ­i­sa­tion Geopolitical Crime Observatory. This mul­ti-bil­lion­aire pres­i­dent rules with an entourage of fam­i­ly and oli­garchs who con­trol entire sec­tors of the econ­o­my. 

Black gold serves the powers that be

Oil accounts for 35–50% of state rev­enue and 57% of export rev­enue in this large cen­tral Asian nation, ranked 122nd (of 180) on Transparency International’s Corruption Perception Index. In the first half of 2017, 45% of the crude oil import­ed by Switzerland came from Kazakhstan; accord­ing to Swiss fed­er­al cus­toms author­i­ties, Kazakhstan is Switzerland’s sec­ond largest sup­pli­er behind Nigeria.

The Kazakh oil sec­tor has been part-pri­va­tised since the mid-1990s and has been opened up to sig­nif­i­cant for­eign invest­ment. Yet the state – or specif­i­cal­ly the rul­ing clan – has kept a tight grip on this strate­gic sec­tor. As a share­hold­er in the best oil busi­ness­es, the gov­ern­ment con­trols three quar­ters of the country’s pipelines and grants con­tracts for nat­ur­al resource exploita­tion.

Natural resource rev­enue helps cement the far-reach­ing pow­er and pros­per­i­ty of Nazarbayev and his entourage. The pres­i­den­tial fam­i­ly and indi­vid­u­als close to him have been able to accu­mu­late tremen­dous wealth.

The ruling clan has been able to accumulate tremendous wealth from natural resource rents.

The ‘ideal’ son-in-law

One man in par­tic­u­lar has set him­self up to lead this oil dynasty: Timur Kulibayev, the hus­band of Dinara Kulibayeva, the Kazakh President’s mid­dle daugh­ter. In January 2018, he was named Businessman of the Year by the Kazakh edi­tion of Forbes Magazine. Today he is esti­mat­ed to be worth US$3 bil­lion, on equal foot­ing with his wife who has also become huge­ly wealthy.

The influ­en­tial son-in-law’s trade­mark has been con­stant mix­ing of pub­lic and pri­vate affairs. From 1997 to 2011, his main role was as a senior civ­il ser­vant, notably serv­ing as a mem­ber of the exec­u­tive board of the state oil and gas com­pa­ny KazMunayGas (KMG) and sub­se­quent­ly at the sov­er­eign wealth fund Samruk Kazyna (SK), whose port­fo­lio is 62% com­prised of stakes in state oil and gas com­pa­nies. In par­al­lel, the President’s son-in-law held pri­vate inter­ests in the oil sec­tor, admin­is­tered by third par­ties, as per­mit­ted by Kazakh law. 

Today, he no longer plays an offi­cial role with­in gov­ern­ment and ded­i­cates his time to mak­ing his busi­ness empire a suc­cess, yet Kulibayev remains head of an impor­tant ener­gy lob­by group, Kazenergy, and con­tin­ues to call the shots in the oil sec­tor.

In this environment – in which the line between the public and private sectors is extremely blurred – a Swiss trading company has managed to work its way to the top.

Vitol goes after Kazakh black gold

The name Vitol may be a famil­iar one. The biggest pri­vate oil trad­er in the world is also Switzerland’s sec­ond largest com­pa­ny; in 2017 its rev­enue was US$181 bil­lion. Comfortably housed at 28 Boulevard du Pont-d’Arve in Geneva, this busi­ness giant has nev­er shied away from going after mar­kets where cor­rup­tion is endem­ic – be it in Iraq, Libya, Nigeria, Serbia or Venezuela. As Russell Hardy, one of its direc­tors, put it mod­est­ly in 2016, the com­pa­ny grew through acqui­si­tions using the mot­to “oppor­tu­ni­ty is defined exter­nal­ly”. 

This mot­to also applies to Kazakhstan, which gained inde­pen­dence when the USSR col­lapsed in 1991. Since then, Vitol has been quick off the blocks to seize a large share of the mar­ket. Nearly three decades lat­er, it has risen impres­sive­ly in the coun­try: 

Nowadays, Vitol prac­ti­cal­ly shares the Kazakh mar­ket with Chinese com­pa­nies and leaves mere crumbs for oth­ers”,

Blessings from above

From 2015 to 2018, Vitol achieved a mas­ter­stroke by win­ning two ten­der process­es to pro­vide a total of US$5.2 bil­lion of pre-financ­ing (loans) to KazMunayGas, the nation­al oil com­pa­ny. Vitol will be refund­ed over a five-year peri­od through ship­ments of oil from the country’s two giant fields, Tengiz and Kashagan, in which KazMunayGas is a share­hold­er. This con­tract, known in indus­try jar­gon as a ‘cash for crude deal’ guar­an­tees priv­i­leged access to Kazakh crude and excel­lent long-term rela­tions with the state. 

Our investigation tells the story of Vitol in Kazakhstan – based on exclusive access to documents.

What the ‘KazakhLeaks’ reveal

Leaked documents reveal the friendly conversations between two Vitol executives and individuals close to the President.

When you dis­cuss trans­paren­cy in the resource sec­tor with Vitol man­agers, they recoil. In March 2018, David Fransen, the company’s chair­man in Geneva, stat­ed:

What is impor­tant in our eyes is that the pri­ma­ry moti­va­tion (…) is com­bat­ting cor­rup­tion rather than sys­tem­at­i­cal­ly and pub­licly rip­ping apart every deal we make.”

Public Eye under­took its inves­ti­ga­tion with pre­cise­ly this moti­va­tion. 

Living up to its rep­u­ta­tion of being a ‘black box’, Vitol has always drip-fed infor­ma­tion about its busi­ness in Kazakhstan. In 2013, the British news agency Reuters attempt­ed to analyse its dom­i­nant posi­tion, report­ing that Vitol had found a niche in which it “aggregate[s] small parcels from all Kazakh pro­duc­ers into full tanker-size por­tions.” In one month, Vitol filled 9 tankers worth approx­i­mate­ly US$700 mil­lion, which would mean the annu­al turnover of the com­pa­ny could have reached about US$8 bil­lion. Eight oth­er tankers fol­lowed swift­ly. Responding to these fig­ures, Vitol high­light­ed its exem­plary busi­ness prac­tices, voic­ing its “pride in its long-stand­ing part­ner­ship with the Kazakh oil indus­try”. 

Yet what is the basis of this “long-stand­ing part­ner­ship with the Kazakh oil indus­try”? Providing an answer to this ques­tion would not have been pos­si­ble were it not for an extra­or­di­nary data leak, which gave us a glimpse behind the scenes.

Living up to its rep­u­ta­tion as a ‘black box’, Vitol has always drip-fed infor­ma­tion about its busi­ness in Kazakhstan.

Kazaword reveals its secrets

From the sum­mer of 2014 to the end of 2016, an anony­mous plat­form called Kazaword appeared online, divulging emails and doc­u­ments hacked from the inbox­es of top-lev­el Kazakh man­agers.

Likely ini­ti­at­ed by the banker Mukhtar Abliazov, arch­en­e­my of President Nazarbayev who the Kazakh courts accuse of hav­ing embez­zled bil­lions of dol­lars, the ‘KazakhLeaks’ shone the harsh light of day on the prac­tices of the rul­ing clan. Several media out­lets cov­ered the sto­ry, in par­tic­u­lar reveal­ing that the gov­ern­ment in Astana had engaged a host of lob­by groups to bur­nish its image, includ­ing the for­mer Swiss ambas­sador Thomas Borer. In 2015 the Kazakh author­i­ties filed a com­plaint against what they claimed was wide­spread hack­ing, there­by con­firm­ing the authen­tic­i­ty of the doc­u­ments.

Vitol’s privileged relations

Thanks to Kazaword, Public Eye gained access to cor­re­spon­dence between Vitol exec­u­tives and two Kazakh mul­ti­mil­lion­aires, Dias Suleimenov and Daniyar Abulgazin. Their cor­re­spon­dence dates from 2009 to 2015. The first ques­tion is: who are these two men?

Brothers-in-law Suleimenov and Abulgazin worked their way up to the high­est lev­els of pow­er and busi­ness in Kazakhstan. They are close to the President’s son-in-law Timur Kulibayev, like the lat­ter, they held top-lev­el posi­tions in the big state oil and gas com­pa­nies while at the same time ensur­ing the suc­cess of their pri­vate busi­ness­es. After quit­ting gov­ern­ment ser­vice, the trio con­tin­ued to work in pri­vate oil com­pa­nies and ener­gy lob­by groups. They are ‘polit­i­cal­ly exposed per­sons’ (PEPs) under the def­i­n­i­tion estab­lished in Swiss mon­ey laun­der­ing leg­is­la­tion. 

Business rela­tion­ships with PEPs requires Swiss bankers – sub­ject to Swiss mon­ey laun­der­ing leg­is­la­tion – to con­duct in-depth due dili­gence. In con­trast, com­modi­ties traders are not sub­ject to any leg­is­la­tion or due dili­gence require­ments in this regard. Rather than a risk, PEPs are seen as a sign of busi­ness oppor­tu­ni­ties. This is evi­dent from the emails dis­cov­ered on Kazaword, which reveal Vitol’s aston­ish­ing prox­im­i­ty to the indi­vid­u­als close to the rul­ing pow­ers.

« Privet Brat ! » 

«Hey bro!» wrote Vitol’s Head of Central Asia and Russia in a mes­sage sent to Daniyar Abulgazin on 14 November 2011. At the time, he held a strate­gic post in the Samrouk-Kazyna, Kazakhstan’s sov­er­eign wealth fund, then over­seen by Timur Kulibayev. Abulgazin was tasked with man­ag­ing its shares in oil and gas, includ­ing those in KazMunayGas.

In the email, Vitol’s exec­u­tive asked his ‘bro’ to deal with an oil and tax mat­ter – even giv­ing him instruc­tions regard­ing the “two issues that are impor­tant to us”, with­out need­ing to give any indi­ca­tion of what he was refer­ring to.

The tone between Vitol and the top dogs of the Kazakh ruling elite had been set.

The mysterious Ingma

An intriguing joint venture between Vitol and a small offshore company yields incredible returns 

In Dias Suleimenov’s hacked inbox an absolute gem was dis­cov­ered. In a short mes­sage from a Vitol trad­er based in London, received on 27 April 2011, the 2009 and 2010 finan­cial reports of Ingma Holding BV were attached.

There is no trace of Ingma Holding BV, a joint ven­ture that spe­cialis­es in the oil busi­ness, in Vitol’s com­pa­ny brochures or on its web­site. And yet this com­pa­ny, reg­is­tered by Vitol in Rotterdam in 2003, is the key to Vitol’s suc­cess in Kazakhstan but had always flown under the radar – or near­ly.

Two years ago, the British dai­ly The Independent briefly referred to it sim­ply as Ingma. The news­pa­per ques­tioned the opac­i­ty of the enti­ty, set up by Vitol in order to “invest in Kazakhstan”. Asked who stood behind Ingma, accord­ing The Independent, “Vitol stren­u­ous­ly denies claims that Kazakh President Nursultan Nazarbayev, his son-in-law Timur Kulibayev or oth­ers owing their posi­tions to them are ben­e­fi­cia­ries.” Nevertheless, the com­pa­ny refused to iden­ti­fy who the ben­e­fi­cia­ries actu­al­ly are. Public Eye’s sub­se­quent queries received the same response.

The cash machine Ingma Holding BV

The doc­u­ments found on Kazaword as well as oth­ers that Public Eye gained access to shone light onto the mys­te­ri­ous Ingma. The results were aston­ish­ing: in 2009, incon­spic­u­ous Ingma was a com­pa­ny with shares worth over a bil­lion dol­lars, made up of 10 sub­sidiaries, four of which are reg­is­tered in Switzerland – in Geneva, Baar and Lausanne. 

Mainly active in “trad­ing crude oil and petro­le­um prod­ucts”, in 2009 Ingma enjoyed near­ly US$8 bil­lion in rev­enue and US$124 mil­lion in net prof­it. In 2010, its rev­enue reached US$20 bil­lion accord­ing to the unau­dit­ed report sent by Vitol to Dias Suleimenov, which equates to 10% of the total rev­enue gen­er­at­ed that year by the Vitol through all of its activ­i­ties in the world.

Using the Dutch com­pa­ny reg­is­ter Public Eye was able to com­plete the pic­ture for the years 2011 – 2016 (finan­cial reports for years pri­or to 2009 are no longer avail­able). From 2009 to 2016, Ingma’s rev­enue reached US$93.9 bil­lion, with net prof­its of US$1.1 bil­lion. This is an impres­sive fig­ure for a com­pa­ny that nev­er had more than 11 employ­ees. Commenting on these finan­cial results, a for­mer trade finance banker in Geneva com­ment­ed: 

« Such vol­umes are enor­mous for a pri­vate com­pa­ny. I thought you were talk­ing about a sub­sidiary of the state oil com­pa­ny KazMunayGas. »

A major actor

Using the rev­enue fig­ures dis­closed by the Kazakh state to the Extractive Industries Transparency Initiative (EITI) in 2015 and 2016, Public Eye was able to esti­mate that Ingma’s sales account­ed for 18–20% of all the Astana government’s export rev­enues gen­er­at­ed by crude oil in these two years.

In a pro­mo­tion­al brochure dis­cov­ered on Kazaword, which has nev­er been pub­lished, Vitol con­grat­u­lates itself on “20 years of expe­ri­ence in Kazakhstan”. Once again the sta­tis­tics tell the sto­ry –, the Geneva-based trad­er Vitol claims that in 2014 it trad­ed 21% of the 62.45 mil­lion tonnes of oil sold by Kazakhstan, which equates to an aver­age of sev­en tanker deliv­er­ies a month. Although nev­er men­tioned by name, Ingma clear­ly plays an instru­men­tal role in this trade.

Copious dividends

The last but by no means least piece of infor­ma­tion revealed by Ingma’s finan­cial reports is that the joint ven­ture paid out near­ly all of its prof­its in the form of div­i­dends. Over a bil­lion dol­lars effec­tive­ly land­ed in its shareholder’s pock­ets from 2009 to 2016 – and that is an incom­plete fig­ure because the fig­ures for 2010 and 2012 are lack­ing.

But who are Ingma’s mysterious shareholders? 

The right-hand man

Introducing Arvind Tiku. Simultaneously Vitol’s partner in Ingma and proprietor of companies from which Timur Kulibayev indirectly profits

It’s easy to get lost in the maze that is Ingma Holding BV and its numer­ous sub­sidiaries, which are reg­is­tered in Switzerland as well as the Netherlands, Luxembourg and Austria. While the num­ber of sub­sidiaries and shares has fluc­tu­at­ed at a star­tling pace over the years, the struc­ture of their cap­i­tal is always the same.

The major­i­ty share­hold­er in Ingma is then Oilex NV, a small com­pa­ny set up in 2002 in Curaçao, the tax haven of the Dutch Antilles. During these years, Oilex NV held 51% of Ingma’s shares while Vitol FSU BV, Vitol’s Dutch sub­sidiary, owned the remain­ing 49%; a strange alliance between a world-renowned trad­ing com­pa­ny and an obscure off­shore com­pa­ny. 

Who owns Oilex? At the end of 2009, its head­quar­ters were trans­ferred to Luxembourg, mak­ing it pos­si­ble to dis­cov­er the name of the sole share­hold­er named in the com­pa­ny reg­is­ter – Arvind Tiku a bussi­nessmn of Indian ori­gins. His com­pa­ny Nelson Resources Limited qui­et­ly acquired stakes in numer­ous oil fields and Tiku was also head of a host of oth­er off­shore com­pa­nies active in oil trad­ing. He is also Timur Kulibayev’s right-hand man and busi­ness part­ner. 

Ingma Holding BV? A strange alliance between a trad­ing com­pa­ny known around the world and an obscure off­shore com­pa­ny

A duo under investigation

From September 2010, Timur Kulibayev and Arvind Tiku were also con­nect­ed in the face of adver­si­ty. Just as Ingma Holding BV was earn­ing bil­lions of dol­lars, the Office of the Attorney General of Switzerland (OAG) opened an inves­ti­ga­tion into mon­ey laun­der­ing, direct­ly tar­get­ing President Nazarbayev’s son-in-law and his part­ner, who were sus­pect­ed of hav­ing organ­ised the sale of under-priced oil assets in Kazakhstan. The two men had alleged­ly received bribes that had end­ed up in numer­ous Swiss banks. The affair was not linked to Vitol.

The case caused quite a stir and yet was closed after three years of inves­ti­ga­tions had failed to prove that the funds had been acquired unlaw­ful­ly. The Swiss pros­e­cu­tors request­ed help from their Kazakh coun­ter­parts, who con­clud­ed that no crime had been com­mit­ted. Such an out­come is hard­ly sur­pris­ing in a coun­try where accord­ing to an OECD report “courts are con­trolled by the rul­ing elite” and “cor­rup­tion is said to be present at all stages of the judi­cial process”. 

Nevertheless, Public Eye gained access to legal doc­u­ments in which sev­er­al sec­tions detail how Arvind Tiku and Timur Kulibayev were hap­pi­ly mix­ing their rev­enues and invest­ments. This rais­es ques­tions as to the role of the President’s son-in-law in Vitol’s part­ner­ship with Arvind Tiku.

An explosive document 

The let­ter is dat­ed 23 October 2008, addressed to a Credit Suisse banker by one ‘JN Gupta’, Arvind Tiku’s finan­cial advi­sor. He is writ­ing on behalf of the President’s son-in-law, fresh­ly appoint­ed as the head of Samrouk-Kazyna, Kazakhstan’s sov­er­eign wealth fund. Mr Gupta wants to push back the dead­line for repay­ing a loan grant­ed to Merix International Venture Limited, an off­shore com­pa­ny belong­ing to Timur Kulibayev. In doing so, he makes assur­ances that the remain­der of the loan will be paid off “through div­i­dends or loans from our oper­at­ing com­pa­nies”.

Surprise – one of the six oper­at­ing com­pa­nies pre­sent­ed as belong­ing to Kulibayev is Vitol Central Asia, reg­is­tered in Geneva in 2003. According to the let­ter, the com­pa­ny is a joint ven­ture in which Vitol has a 51% stake. The let­ter states:

« This joint ven­ture has been trans­port­ing Kazakh crude oil via a pipeline to the port on the Black Sea. The vol­ume of sales is 6 mil­lion tonnes [per year] »

It is impor­tant to note that Vitol Central Asia is a sub­sidiary of Ingma, there­fore the above-men­tioned « joint ven­ture » refers to Ingma (the part­ner­ship between Oilex and Vitol). Vitol Central Asia cur­rent­ly exports all of the oil from the Ayrankol Field exploit­ed by the com­pa­ny Kaspyi Oil – which in turn is 100% owned by Timur Kulibayev.

According to this let­ter, the President’s son-in-law does indeed indi­rect­ly ben­e­fit from Vitol Central Asia, that is, from Ingma. The bil­lion­aire may not be a Vitol Central Asia share­hold­er on paper, but he is will­ing to dip into the div­i­dends of this sub­sidiary to repay his bank loans. Is Gupta sim­ply mis­lead­ing Credit Suisse? Or is Arvind Tiku in fact one of Timur Kulibayev’s front­men?

When con­tact­ed by Public Eye, Arvind Tiku declined to com­ment while Timur Kulibayev respond­ed through the lob­by group Kazenergy, claim­ing to have always act­ed in con­for­mi­ty with the applic­a­ble reg­u­la­tions regard­ing pri­vate and state activ­i­ties. According to Kazenergy, Mr Kulibayev has “always fol­lowed all such rules and reg­u­la­tions in full accor­dance with the require­ments”, adding that he “does not exer­cise man­age­ment con­trol over any com­pa­ny in which he holds an interest.”Kazenergy con­firmed Kulibayev indi­rect­ly owns Merix. According to them, the let­ter addressed to Credit Suisse con­tains incor­rect infor­ma­tion: “It is not cor­rect that these com­pa­nies (ie Vitol Central Asia SA, Ingma Holding BV or Euro Asian Oil AG), were ever ‘part of Mr Kulibayev’s oper­at­ing com­pa­nies’.” 

According to Vitol, “Merix Ventures International has nev­er been a share­hold­er of Vitol Central Asia SA” and “Mr Kulibayev is not a direct or indi­rect ben­e­fi­cia­ry of Ingma. It is incor­rect to state or sug­gest oth­er­wise”. Vitol vehe­ment­ly denies that the President’s son-in-law direct­ly or indi­rect­ly ben­e­fits from prof­its gen­er­at­ed by the joint ven­ture. This “has been con­firmed by the due dili­gence of all the major inter­na­tion­al banks which have a com­mer­cial rela­tion­ship with Ingma.”

Public Eye’s investigation shows that the situation is not quite so cut and dry.

« Follow the money »

Public Eye’s research shows that Arvind Tiku shares his money with the Kazakh President’s son-in-law in a trust held at Credit Suisse, which has had nearly US$600 million paid into it – US$100 million of which came from Oilex.

The Swiss judi­cial inves­ti­ga­tion also uncov­ered a trust set up in 2006 and admin­is­tered by Credit Suisse, in which the ‘Tiku-Kulibayev’ duo pool their funds. From May to August 2006 the trust, which con­tains an invest­ment fund known as Handoxx, took in near­ly US$600 mil­lion from three com­pa­nies, none of which offi­cial­ly belongs to Timur Kulibayev. One of the com­pa­nies is Oilex NV, the com­pa­ny that joint­ly owns Ingma with Vitol. Oilex paid over US$100 mil­lion into the trust in two tranch­es. The mon­ey came from the Geneva branch of BNP Paribas where Oilex has its bank accounts – as can be seen in a doc­u­ment from the bank includ­ed in the court files.

Generous transfers

What hap­pened to these funds? In 2007, the invest­ment fund Handoxx paid out US$283 mil­lion from the trust in the form of zero-inter­est loans grant­ed to Merix International Ventures (the com­pa­ny belong­ing to Timur Kulibayev). Notably, these funds enabled the Kazakh bil­lion­aire to pur­chase lux­u­ry prop­er­ties in the United Kingdom, includ­ing that of Prince Andrew. Clearly extreme­ly gen­er­ous, Arvind Tiku also award­ed Merix a loan of US$101 dol­lars via Oilex.

Confronted with the fact that its part­ner Arvind Tiku was pool­ing his funds in a trust shared by the Kazakh President’s son-in-law and direct­ly fed by Oilex, and the fact that the lat­ter was loan­ing it nine-fig­ure sums, Vitol stat­ed it “is nei­ther a share­hold­er in Handoxx nor Oilex and is there­fore unable to com­ment on pur­port­ed pay­ments made between the two com­pa­nies.” Neither Arvind Tiku nor Timur Kulibayev have respond­ed to clar­i­fy this point.

Business as usual?

For the pur­pos­es of the inves­ti­ga­tion, the Swiss Office of the Attorney General had ordered the Tiku-Kulibayev accounts to be blocked, includ­ing two belong­ing to the com­pa­ny Oilex; they were frozen until November 2011. It was an embar­rass­ing sit­u­a­tion for Vitol, whose code of con­duct claims to “not tol­er­ate bribery or cor­rup­tion”. Regardless, the com­pa­ny con­tin­ued its lucra­tive busi­ness deal­ings with Arvind Tiku.

The ‘comrades’

We learn that the new arrival within Ingma, Dias Suleimenov, is another of Timur Kulibayev’s loyal followers. In 2011, he received US$11.8 million in dividends at HSBC Geneva.

In 2010, while the pros­e­cu­tors were work­ing in Berne, Ingma Holding BV con­tin­ued to run its oil busi­ness. As the judi­cial storm clouds were build­ing, Ingma Holding BV restruc­tured its cap­i­tal. A new enti­ty, Omega Coöperatief UA, took a 10% stake in the joint ven­ture, leav­ing Oilex Sàrl (Arvind Tiku), now renamed Xena Investments Sàrl, with 47.5% and Vitol FSU BV with 42.5%.

Who does Omega Coöperatief UA belong to? In Kazaword, we dis­cov­er that Dias Suleimenov – whose inbox was hacked – is one of the ben­e­fi­cial own­ers of the Dutch com­pa­ny owned by sev­er­al off­shore com­pa­nies. According to its 2009 finan­cial report, at the end of that year Ingma acquired the oil trad­ing com­pa­ny Euro Asian Oil AG belong­ing to Dias Suleimenov and prob­a­bly to Daniyar Abulgazin for US$45 mil­lion. This trans­ac­tion enabled Omega Coöperatief UA to acquire the 10% stake in Ingma. According to a source famil­iar with the mat­ter, Daniyar Abulgazin also has inter­ests in Omega, prob­a­bly on an equal foot­ing with Dias Suleimenov. Abulgazin held high-lev­el state posi­tions with­in Kazakhstan’s sov­er­eign wealth fund, Samrouk-Kazyna, until 2012.

In the shadow of the mentor

Of all Timur Kulibayev’s part­ners, Suleimenov is undoubt­ed­ly the most loy­al. The two men share the same love of the chic sub­urbs of Geneva, where their spous­es have set­tled just a few kilo­me­tres apart. At the end of 2009, Dinara, Timur’s wife and the Kazakh President’s daugh­ter, bought a palace in Anières for CHF 74.7 mil­lion. According to a June 2018 report released by the Swiss inves­tiga­tive TV pro­gramme Temps présent, in 2010 Dias’s wife Alina bought a plot of land in Cologny where she had a lux­u­ry prop­er­ty built, esti­mat­ed to be worth CHF 40 mil­lion. Kazaword revealed that Suleimenov even man­ages some of Dinara’s liv­ing expens­es in Switzerland, deal­ing with bills and com­plaints.

Dias Suleimenov grew up in the shad­ow of Timur Kulibayev, from 2003 work­ing in the logis­tics depart­ment of the giant KazMunayGas (KMG), where his pro­tec­tor was num­ber two. From 2004 to 2006, he head­ed the Trading House JSC KazMunayGas(THKMG), a branch of KMG that con­trols a share of Kazakhstan’s crude exports with offices in London, Lugano, Dubai, Singapore and Astana. Even after this date – again revealed by Kazaword – he remained in con­tact with employ­ees of the THKMG branch in Lugano as if he were still the boss. 

Vitol’s complaints

On 7 December 2009, Vitol’s Head of Central Asia and Russia wrote an email to Suleimenov – with Arvind Tiku in CC – com­plain­ing about the com­pe­ti­tion. Gunvor had bought “10,000 tonnes of Russian crude oil” and shipped the car­go to Socar Trading (Azerbaijan’s state com­pa­ny) using two tankers based in Aktau, the biggest port in west­ern Kazakhstan, locat­ed on the Caspian Sea where Vitol had invest­ed. The email implores 

« We must get this stopped. Just crazy. Sorry but this is a big prob­lem and total­ly emblem­at­ic of the bor­dak [mess] at Aktau which is also now endan­ger­ing our busi­ness and mar­gins. »

We do not know whether Suleimenov was able to ‘deal with the issue’ or what means he could have used to do so. At the time, Suleimenov was man­ag­ing Petroleum Operating LLP, a pri­vate petro­le­um logis­tics com­pa­ny in which his insep­a­ra­ble broth­er-in-law Daniyar Abulgazin, and also Timur Kulibayev, are share­hold­ers. According to our infor­ma­tion, Suleimenov already had a foot in Ingma.

When it respond­ed to Public Eye’s enquiry, Vitol con­firmed that Xena Investment Sàrl (ex-Oilex), Vitol FSU BV and Omega Coöperatief UA are the share­hold­ers of Ingma Holding BV’s, stat­ing that 

« due to Swiss pri­va­cy and data pro­tec­tion laws, we are unable to pro­vide any infor­ma­tion to third par­ties regard­ing the per­sons asso­ci­at­ed with Omega. »

Through his lawyer, Dias Suleimenov informed Public Eye that he does 

« not com­ment on pri­vate busi­ness mat­ters and that he did not wish the infor­ma­tion to be pub­lished because it is not in the pub­lic domain and there­fore must have been obtained through unlaw­ful means. »

Daniyar Abulgazin did not respond to Public Eye’s ques­tions. 

Our conclusions

Here we share our demands in the form of an epilogue

There are two ways for com­modi­ties traders oper­at­ing in juris­dic­tions where the rule of law is weak to gain mar­ket share. Both are risky and rely on the fact that com­mod­i­ty trad­ing is not reg­u­lat­ed in Switzerland.

Strategy n°1

The tra­di­tion­al strat­e­gy involves out­sourc­ing the risk by pay­ing inter­me­di­aries. As soon as anti-cor­rup­tion agree­ments have been signed, the inter­me­di­ary is free to pay all or part of their com­mis­sion to pub­lic offi­cials tasked with award­ing the desired con­tract. As Public Eye painstak­ing­ly exposed, this is the option cho­sen by Gunvor in Congo-Brazzaville – and that caused the Office of the Attorney General of Switzerland to ini­ti­ate pro­ceed­ings against the com­pa­ny for pos­si­ble organ­i­sa­tion­al short­com­ings.

Strategy n°2

Just as adven­tur­ous, the sec­ond strat­e­gy involves asso­ci­a­tion with polit­i­cal­ly exposed per­sons (PEPs) in a joint ven­ture which can then enter into con­tracts. From 2003 onwards, Vitol opt­ed for one such alliance in Kazakhstan, enabling the world’s biggest pri­vate oil trad­er to mar­ket huge vol­umes of Kazakh crude through Ingma Holding BV. From 2009 to 2016, this unknown com­pa­ny paid out at least US$1 bil­lion in div­i­dends to its share­hold­ers, dis­trib­uted between Vitol and its part­ners: first­ly, to Arvind Tiku alone through Oilex, then as from 2010 onwards to Dias Suleimenov and prob­a­bly Daniyar Abulgazin, through Omega. Our inves­ti­ga­tion also shows that even though his name does not appear on paper, the President’s son-in-law Timur Kulibayev indi­rect­ly ben­e­fit­ted from this part­ner­ship.

Has the risk really been covered?

Vitol recog­nis­es that it had a direct or indi­rect busi­ness rela­tion­ship with the PEPs Arvind Tiku, Dias Suleimenov, Timur Kulibayev and Daniyar Abulgazin. The com­pa­ny does not believe that this breach­es its code of con­duct: 

« It is appro­pri­ate and often nec­es­sary for com­pa­nies to enter into busi­ness activ­i­ties with PEPs. Enhanced due dili­gence checks are per­formed on any trans­ac­tion involv­ing a PEP. »

Vitol vehe­ment­ly denies that Timur Kulibayev is or ever has been the direct or indi­rect ben­e­fi­cia­ry of Ingma. The com­pa­ny claims that it can­not com­ment on the finan­cial links between Arvind Tiku and the President’s son-in-law because it does not hold shares in either Oilex or the trust. Is this response sat­is­fac­to­ry? In light of the con­text in Kazakhstan, where the rul­ing clan amass­es huge wealth off the back of the oil indus­try, our answer is no. Careful due dili­gence would have uncov­ered the close rela­tion­ship between Tiku and Kulibajew, in 2010 at the lat­est when the press began to report on the Swiss inves­ti­ga­tion into the two.

A misleading argument

According to Vitol, the banks involved in Ingma’s com­mer­cial activ­i­ties did not detect the pres­ence of Kulibayev in the shad­ows of Arvind Tiku. Precisely this sit­u­a­tion reveals the weak­ness of one of the main argu­ments put for­ward by the industry’s lob­by and the Swiss fed­er­al author­i­ties in oppo­si­tion to any sem­blance of reg­u­la­tion; name­ly, that com­mod­i­ty trad­ing is indi­rect­ly reg­u­lat­ed by the banks that fund their activ­i­ties.

In 2011 the Wolfsberg Group, which brings togeth­er 13 of the biggest inter­na­tion­al banks in an effort to pre­vent mon­ey laun­der­ing, stressed the lim­its of their super­vi­so­ry pow­ers, stat­ing 

« it is extreme­ly rare for any one Bank to have the oppor­tu­ni­ty to review an over­all trade financ­ing process in com­plete detail giv­en the premise of the trade busi­ness that banks deal only in doc­u­ments »

Moreover, the traders them­selves pro­vide these doc­u­ments.

Essential measures

The case of Vitol in Kazakhstan shows the need to apply bind­ing pro­vi­sions to the com­modi­ties trad­ing sec­tor at three lev­els:

  • Transparency of pay­ments to gov­ern­ments
  • Transparency of ben­e­fi­cial own­er­ship
  • A duty of due dili­gence regard­ing busi­ness part­ners

In light of the risky busi­ness mod­el of com­pa­nies like Vitol, the lat­ter point is cru­cial. Traders must be oblig­at­ed by law to apply height­ened due dili­gence checks to reduce cor­rup­tion risk when they enter into busi­ness rela­tion­ships with PEPs. Introducing such a require­ment would serve a dual pur­pose. Firstly, it would be pre­ven­tive by oblig­ing traders to ask them­selves the right ques­tions and to doc­u­ment their prac­tices. Secondly, it would be repres­sive because it would pro­vide the basis for sanc­tions in the event of non-com­pli­ance. 

Although the Federal Council has recog­nised that Switzerland has a par­tic­u­lar respon­si­bil­i­ty as the world’s biggest com­modi­ties trad­ing hub, it still refus­es to act to mit­i­gate the risks. Instead of wel­com­ing Kazakh oli­garchs and their for­tunes with open arms, Switzerland should final­ly estab­lish a Commodity Market Supervisory Authority to reg­u­late the sec­tor in order to min­imise Switzerland’s con­tri­bu­tion to the ‘resource curse.’

Shining a light where nefarious people prefer their activities to remain hidden in the shadows, denouncing harmful actions and proposing specific solutions: these are Public Eye’s aims. 

We fight against injus­tice that has a sig­nif­i­cant link to Switzerland and demand the respect of human rights around the world. Through our research, advo­ca­cy and cam­paign­ing, we express the voice of close to 25,000 mem­bers in call­ing for a respon­si­ble Switzerland. Public Eye: focus­ing on glob­al jus­tice. 

Investigation : Agathe Duparc, with Camille Chappuis, Marc Guéniat and Andreas Missbach
Editing : Géraldine Viret
Online: Floriane Fischer & Raphaël de Riedmatten, in col­lab­o­ra­tion with 
Opak

Vitol, the king of oil in Kazakhstan

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