Kazakh prosecutors have initiated legal proceedings to cancel the transfer of the ownership of First Heartland Jusan Bank, the sixth-largest bank in Kazakhstan, from a non-profit foundation established by former president Nursultan Nazarbayev to British company Jusan Technologies.
The prosecutors allege that the transfer endangers the public interest. In response, Jusan Technologies' parent company, Jysan Holding, has filed a lawsuit in a US federal district court against the Kazakh government, accusing it of intimidation and attempting to take control of the company's assets in Kazakhstan worth over $1.5bn for its own benefit and that of associated individuals.
The lawsuit claims that Kazakhstan has tried to wrongfully seize the assets of Jysan Holding, New Generation Foundation and its direct and indirect subsidiaries by means of threats, intimidation, investigations, litigation, asset freezes and the blocking of $387mn in dividends. The suit details an alleged history of corruption and intimidation mounted by Kazakh government agencies against Nevada and English entities, further alleging that the conduct against the Jusan Group represents a timeworn tactic used against the international investor community. The lawsuit seeks injunctive and declaratory relief, as well as compensatory and punitive damages for the defendants' illegal conduct.
The move to stop the transfer of Jusan Bank will be represented by the Kazakh government as the latest step in President Kassym-Jomart Tokayev’s campaign to root out crony capitalism, as explained by Eurasianet.
The Nazarbayev Foundation acquired Jusan Bank in 2019 following a bailout by the state. Prosecutors said the foundation asked them to investigate the case this month, describing the transfer to Jusan Technologies as a result of illegal actions by several entities.
Reuters on February 16 reported a spokesperson for the Jusan Group as saying that former president Nazarbayev, 82, had "never had any role or connection—directly or indirectly—with Jusan".
The legal proceedings undertaken by the Kazakh prosecutors appear to have been initiated straight after the signing into law of a bill removing the legal immunity of the immediate family members of Nazarbayev.
Last year, six members of the Kazakh parliament, including four from the ruling Amanat party, challenged the government on how it plans to return billions of dollars given to Jusan Bank, the Organised Crime and Corruption Reporting Project (OCCRP) reported.
Based on financial statements of Jusan Bank, the lawmakers concluded that the bank received around $3.9bn from the state budget between 2017-2019 on “preferential terms” and then modified its obligations to the state. The lawmakers wrote in a request submitted to the prime minister that the bank converted about $907mn from “highly profitable deposits” to “long-term obligations with meagre profitability”.
As such, the bank was said to have profited by around $275mn and paid $250mn in dividends to shareholders. The lawmakers asked the prime minister to analyse the efficiency of the state aid provided to Jusan Bank within the past five years and to develop a plan on returning the money to the state budget.
Jusan Bank’s then PR director Olegzhan Beketayev has claimed that the bank's profits go to Nazarbayev University and the Nazarbayev Intellectual Schools. Beketayev’s claims cannot be independently confirmed due to the university, the schools and the Nazarbayev Foundation, run by former education minister Aslan Sarinjipov, never having published their financial statements and reports.