Fugitive Kazakh banker Mukhtar Ablyazov has been engaged in a he-said-she-said clash with his former posse within the Kazakh elite ever since the near collapse of the country’s biggest lender BTA Bank back in 2009. Released last year from detention in France, Ablyazov is now taking his legal battle against the bank he used to lead back to London — where he previously lost rulings worth some $4bn. 

Ablyazov’s case is often portrayed as being deeply intertwined with the woes of the Kazakh banking sector, which is currently embroiled in multiple bailouts. He has been accused of embezzling over $4bn, precipitating the fall of BTA. 

In exile for the last eight years, Ablyazov has been a vocal critic of Kazakh President Nursultan Nazarbayev’s regime. He has claimed that the Kazakh authorities’ accusations against him are part of a vendetta for his betraying Nazarbayev by breaking the code of trust among Kazakh oligarchs. 

Prior to falling out of favour, Ablyazov briefly led an opposition movement called Democratic Choice of Kazakhstan alongside fellow billionaires and members of the intelligentsia in 2002, before re-aligning himself with the ruling regime. Then the global financial crisis reached Kazakhstan, and the authorities declared BTA was nearing collapse. For his part, Ablyazov claimed the bank’s troubles were intentionally blown out of proportion to create a scenario that justified what he said was Nazarbayev’s long-held desire to snatch the bank. When BTA’s nationalisation became imminent at the beginning of 2009, Ablyazov fled to London.

As well as blaming him for the collapse of BTA, the Kazakh authorities also claim he is plotting against Astana — an argument that seems to have some truth behind it. In a September FT article titled “Spies, lies and the oligarch: inside London’s booming secrets industry” Ablyazov is cited claiming he had set himself “a two-year timetable to remove Nazarbayev from office and install himself as Kazakhstan’s interim leader until a western-style parliamentary democracy is in place”. 

With that in mind, Ablyazov’s case cannot be simply seen as a story of either a demon or a saint. The stakes are high for both sides of this political game, but it still appears to be a mudslinging contest between two former allies rather than a conflict between an honest dissident and an oppressive regime, or between a fraudster and a justice-seeking government. 

The pendulum swings

Kazakhstan’s sovereign wealth fund Samruk-Kazyna took over BTA in 2009 and subsequently accused Ablyazov and his subordinates of siphoning off $5bn from the lender. Since then BTA has won judgements against Ablyazov in London worth $4bn in holdings, much to the dismay of Ablyazov, who had sought political asylum in the UK. After a British court issued an order to arrest him for contempt of court, he fled to France, where he was arrested in 2013 after 18 months in hiding. He was released from jail on December 9 last year after France's highest administrative court cancelled an order for his extradition to Russia, based on Ablyazov’s claims that the whole case against him was politically motivated. Extradition to Russia would mean his immediate extradition to Kazakhstan, he said.

After Ablyazov’s release, it didn’t take too long for the legal battle to resume in London.

Charles Samek, an attorney representing Ablyazov’s son-in-law, Ilyas Khrapunov — the son of the former mayor of Kazakhstan’s largest city Almaty — is now contesting claims made by BTA’s lawyers based on former Ablyazov associate Elena Tyschenko’s statements. Ukrainian attorney Tyschenko alleged that Khrapunov conspired with Ablyazov to conceal his ownership of shopping centres, hotels and other properties. Her testimony played a major part in BTA’s lawsuit against Ablyazov and Khrapunov in 2015 — Khrapunov’s assets have since been under a worldwide freezing order. 

Samek is now arguing that Tyschenko gave her testimony under duress after being arrested by the Russian authorities at the request of BTA, and that she now denies the allegations. Tyschenko, who was supposedly testifying in exchange for amnesty from being charged with financial crimes, claimed Ablyazov’s shell companies and family members were helping him hide his holdings. 

“It’s clear that the bank was intimately involved in her arrest and detention and in the criminal proceedings against her,” Samek told a London court on November 20. “The bank hasn’t told the court that there was duress.”

This latest turn of events could help swing the pendulum back in Ablyazov’s favour, but even if it doesn’t Ablyazov has already prepared a Plan B. Reports from earlier in November revealed Ablyazov has agreed to a deal giving him Belgian citizenship and immunity from Russian, Ukrainian, Kazakh and UK prosecutors in exchange for providing evidence to the Belgian parliament’s "Kazakhgate commission" which is investigating two other wealthy Kazakh businessmen. They are Patokh Chodiev and Alijan Ibragimov, who are accused of paying bribes to obtain Belgian citizenship in the 1990s and later pressuring politicians to change Belgium’s criminal transaction law. Dispatchweekly.com said Ablyazov has held a number of secret talks with Dirk Van der Maelen, the president of the Belgian commission, during the summer and is expected to appear in front of the panel in Brussels before long. 

But while the billionaire-in-exile sees his long struggle against Nazarbayev beginning to move in his favour, the Kazakh government is not sleeping either. An in-absentia trial in Kazakhstan sentenced Ablyazov on June 7 to 20 years in prison for crimes including the theft of pension assets and savings as well as loans received from foreign financial institutions, causing damages estimated at $7.5bn. An Almaty court convicted him of abuse of office, organising and leading a criminal group, financial mismanagement and embezzlement. Ablyazov reportedly described the trial as a farce. 

Everybody does it

By turning against Nazarbayev and escaping to Europe, Ablyazov won himself a number of supporters, including human rights activists and Kazakh dissidents. His allies argue that the supposed diversion of money by Ablyazov, assuming it did happen, would only show that he played by the rules of the Kazakh oligarchs and that he now poses a threat to the regime due to the insider secrets he learned by partaking in the kleptocracy.

“In Kazakhstan the assets of wealthy individuals such as myself are subject to the threat of unlawful seizure by the authorities,” he said in a 2010 witness statement. “This leads to an almost universal practice among high net worth Kazakhstanis of holding our assets through nominees, both corporate and individual.”

In other words, ‘everybody does it’, and to an extent Ablyazov is not wrong. The Organised Crime and Corruption Reporting Project (OCCRP) revealed on November 5 that a Kazakh offshore investment and holding company, Meridian Capital, might be behind a large portion of the bad loan woes faced by Kazakhstan's largest lender Kazkommertsbank (KKB). 

When Ablyazov abandoned BTA’s rotting corpse in 2009, the bank was eventually consumed by KKB, then the country’s second largest lender, in a merger. It was commonly understood that KKB’s unexploded bad loan time bomb largely stemmed from unresolved BTA issues, and the problem was thus blamed on Ablyazov.

However, in an unexpected plot twist, OCCRP through the ‘Paradise Papers’ leaks revealed “[Meridian] used a large portion of the Kazkommertsbank’s deposits to fund project after project. This enabled them to grow quickly, and at little risk to themselves. According to an email from a central bank official, whenever a project failed, the bank’s owners and executives — who were also Meridian’s owners — would dump the losses onto the bank’s balance sheets.” The revelation placed an entirely new perspective on the Kazakh government’s banking sector bailouts this year, including the approximately €6bn bailout green-lighted for KKB, which was recently bought by the country’s second biggest lender, Halyk Bank.

Some of the initial co-founders of Meridian are technocrat and head of the KazMunaiGas oil and gas company Sauat Mynbayev and his six co-owners Askar Alshinbayev, Yevgeniy Feld, Nurzhan Subkhanberdin, Nina Zhussupova, Azat Abishev and Ian Connor, based on information from 2006. Considering the massive size of the KKB bailout, not to mention other recapitalisation and consolidation efforts in the Kazakh banking sector, one would expect Mynbayev and other Kazakh oligarchs would be under scrutiny for potentially engaging in practices not too dissimilar to those of Ablyazov. Moreover, Meridian, as a multi-billion dollar empire, likely represents only a fragment of a larger chain of offshore operations, but this appears to have left the Kazakh government completely unfazed. 

“The offshore economy remains ignored — in fact, it is the legal capital outflow channel of Kazakhstan’s economy,” Kazakh economist Magbat Spanov told bne IntelliNews in February. “Most of the world understands the disadvantages [an offshore economy] can carry to the national economy and, thus, implements de-offshorisation measures – but, not us.”

“The main reasons [behind] the outflow of capital [from the country] have been and still remain the weak definition and enforcement of property rights, high risk of expropriation and other manifestations of the weak institutional environment,” Halyk Finance analyst Nurfatima Dzhandarova told Tengrinews.kz back in 2014, as she explained that Kazakhstan’s capital amnesty campaigns cannot help “fix the issues of capital outflow”.

The government claims to have already embarked on measures to “withdraw out of the shadows” capital located in 19 offshore territories under the Strasbourg anti-money laundering convention. Astana ratified the convention in 2016, close to a decade after it first applied. The whole ordeal, however, is shrouded in secrecy.

“We cannot speak now about [the amounts] withdrawn out of the shadows, from these countries. Because even in the case of legalisation of these funds… from offshore jurisdictions, we do not keep track of such statistics. Because [the information] still remains under [state] secrecy," deputy head of risk management, analysis and statistics of the State Revenue Committee Yerlan Sagnayev said in September 2016.

Bloomberg referred to Ablyazov’s tale as “one of the biggest bank fraud cases in modern history”, but perhaps Ablyazov’s alleged actions at BTA are only the tip of an iceberg. This partially lends credence to the politically motivated angle to the hunt for Ablyazov.

Blood on his hands?

Whether or not the Kazakh billionaire refugee is deserving of sympathy is an entirely different question. At the end of the day, he was a member of the same group of Kazakh elites he now claims to be fighting. 

This fight was recently taken to yet another battlefield when a re-investigation of the death of prominent Kazakh banker Yerzhan Tatishev was launched in October. Ablyazov recently condemned the Kazakh government for forcing Kazakh businessman Muratkhan Tokmadi to testify against him after a number of reports emerged suggesting the Kazakh state services were forcing Tokmadi to “admit” he killed Tatishev on behalf of Ablyazov. The authorities allowed Tokmadi off the hook quite easily back in 2004, when he claimed Tatishev’s death during a hunting trip was an “accident”, spawning much speculation by opposition media at the time about the possible role of the Kazakh authorities in his death. 

When the re-investigation was announced by Kazakh state prosecutors, they did not explicitly tie the claims of a “hit job” to the exiled banker, but Ablyazov launched into a rant on the topic on his Facebook page anyway, accusing the government of falsely tying him to Tatishev’s death. Tatishev was BTA’s chief executive at the time and Ablyazov became chairman of the bank only after his death. However, it’s unclear whether Ablyazov's rise to the BTA chairmanship was facilitated by Tatishev's death or not. 

What is clear is that Ablyazov was largely comfortable playing by rules of the Kazakh kleptocrats until they came after his pockets, which makes it as hard for the fugitive billionaire as for his former cohorts in Kazakhstan to lay claim to the moral high ground.