Mukhtar Ablyazov

Mukhtar Ablyazov (born 16 May 1963, Galkino, South Kazakhstan) is a Kazakh businessman, former banker and politician. He is currently the subject of a legal investigation in the UK High Court after he allegedly embezzled billions of dollars out of BTA Bank between 2005 and 2009; and now faces a jail threat for failing to comply with a High Court order to reveal his true assets.^[1] In January 2014, he was ordered to be extradited from France.^[2]

Early life and education

Ablyazov earned a degree in theoretical physics.^[3]

Career history

In 1992, Ablyazov established Astana Holding in Kazakhstan, a multi-sector private holding company.

In 1998, together with a consortium of Kazakhstan investors, he acquired shares in Bank TuranAlem in a privatization auction for $72 million.^[4] The bank later came to be known as BTA Bank.

Ablyazov was appointed as head of the state-owned Kazakhstan Electricity Grid Operating Company in 1997 and in 1998 was named Minister for Energy, Industry, and Trade.^[5]

Ablyazov has been described by Radio Free Europe/Radio Liberty (RFE/RL) as “part of a younger generation” that Nursultan Nazarbaev, president of Kazakhstan, “hoped to harness as he pushed his resource-rich nation into the 21st century.” Yet after a few years, “Ablyazov and the others had broken ranks, citing disenchantment with endemic corruption in Nazarbaev's inner circle.”^[3]

Political career

In November 2001, Ablyazov and other colleagues, including fellow disenchanted proteges of Nazarbaev, co-founded the Democratic Choice of Kazakhstan (DCK), an opposition political movement that challenged the Nazarbayev regime. The DCK included a combination of existing politicians and major businessmen and called for the decentralisation of political power, a strong legislature, and an independent judiciary to balance the power concentrated in the executive branch. This opposition initiative, according to RFE/RL, “quickly drew the wrath of the regime.”^[3]

In July 2002, Ablyazov was convicted of “abusing official powers as a minister” and sentenced to six years in prison. Also sent to prison were his fellow would-be reformers and former Nazarbaev proteges Galymzhan Zhakiyanov and Altynbek Sarsenbaev.^[3]

Many observers, including the European Parliament^[6] and Amnesty International,^[7] considered the charges against Ablyazov to be politically motivated. His trial failed to meet international fair trial standards.^[7]

It is alleged that Ablyazov was subject to torture, beatings and other ill-treatment while he was in prison.^[8] In response to pressure from the international community, including Amnesty International and the European Parliament,^[9] he was released in May 2003 after only serving ten months, on the condition that he renounce politics.^[5]

Unlike Ablyazov, Zhakiyanov refused a pardon. Sarsenbaev was released from prison and later became head of Ak Zhol, an opposition party. He was assassinated in 2006.^[3]

Ablyazov moved to Moscow in 2003 to rebuild his business ties and in 2005 became the Chairman of the Board of Directors of BTA Bank.

After his release from prison, Ablyazov reportedly spent “millions of dollars funding opposition groups and independent media.” RFE/RL has quoted Yevgeny Zhovtis, head of the Kazakhstan International Bureau for Human Rights and Rule of Law, as saying that “Nazarbaev to a certain extent felt betrayed” by Ablyazov and the others, given that “he thinks that he provided them the space to become wealthy, to become well-known, to make a career in state service or in business, and they challenged him. When he pardoned Ablyazov in 2003 and allowed him to return to business in exchange for a promise not to be involved in politics and then found out that he was again involved in politics, of course Nazarbaev felt betrayed twice.”^[3]

While living in Russia and Kazakhstan, Ablyazov was the target of assassination attempts and an effort was made to kidnap his son from school.^[10]

BTA Bank and fraud charges

Logo of BTA Bank

BTA Bank

BTA Bank growth

Ablyazov served as the Chairman of the Board of Directors of BTA Bank from 2005 to 2009. During this period, the bank grew rapidly. However, the growth in loans was not matched by an equivalent growth in deposits, which led to latent credit risks. Between 2003 and 2007, BTA's outstanding loans grew by 1,100%.^[11]

Fraud charges

24 March 2009 BTA Bank launched legal proceedings against Ablyazov in the UK High Court shortly after his arrival in London as a part of its restructuring agreement with creditors to recover assets allegedly misappropriated by Ablyazov during his tenure at BTA Bank.^[12][13][14] Since August 2009 the High Court in London has found sufficient cause to freeze Ablyazov’s assets and confiscate his passport.^[15]

In September 2009, Kazakhstan's sovereign wealth fund, Samruk-Kazyna, injected significant funds into BTA in an effort to keep the bank solvent, effectively becoming its majority shareholder.^[16] Shortly before Samruk-Kazyna's intervention Ablyazov fled Kazakhstan to London.

In 2010, a warrant was also issued for Ablyazov's arrest in Russia, where he was charged on four counts of financial crime and placed on an international wanted list.^[17]

Ablyazov was the subject of seven legal claims in the English High Court totalling $3.7 billion (£2.26 billion).^[18]

In October 2010, Ablyazov lost a legal fight to prevent his assets from being subject to a receivership order. The ruling came after Justice Teare stated that Ablyazov “cannot be trusted” not to dissipate his assets prior to trial.^[19][20] Ablyazov argued, in his defense, that the takeover of BTA Bank by Samruk-Kazyna in February 2009 was “the culmination of the campaign by President Nazarbayev and his allies to wrest ownership and control of [BTA] from [Ablyazov].”^[21] A High Court judge and a panel of Court of Appeal judges, however, have questioned this claim. In October 2010, Lord Justice Maurice Kay stated in a Court of Appeal ruling that he did not find Justice Teare's concerns over Ablyazov's honesty about these matters “in the least surprising.”^[22]

In February 2011, Ablyazov lost a legal fight to have BTA Bank's claims thrown out after a High Court judge ruled that he could not use allegations of a presidential conspiracy to avoid claims he had embezzled as much as $4 billion. The February judgment stated: “The claims are those of the bank. They are not the claims of the government of Kazakhstan, which is said to have brought about the nationalization in breach of international law and human rights.”^[23]

In a May 2011 letter, Ablyazov accused Nazarbaev and his advisor Bulat Utemuratov of being the real owners of a 48.73% share in KazZink, a firm that Glencore International was planning to buy at the time. Ablyazov wrote that “in 2005-2009, when Mr. Utemuratov was blackmailing me on behalf of” Nazarbaev, demanding a share in BTA Bank, “he asked me to transfer the stocks to the companies that control KazZink now.” Ablyazov said that he had testified to this effect in a London court.^[24] Ablyazov was granted asylum in the UK in July 2011, a recognition that he would face political persecution if sent back to Kazakhstan.^[25] Kazakhstan's request for his extradition was ignored.^[26] According to the Daily Telegraph, the Kazakh government threatened to punish British firms by awarding lucrative contracts to China if the UK granted Ablyazov asylum.^[27]

In early 2012, Kazakh authorities sought to impliciate Ablyazov in an alleged terror plot. One report suggested that an “obvious reason for trying to nail Ablyazov” was that “unlike other political figures in exile, he has a presence inside Kazakstan through his links to an opposition group and local media outlets.” The accusation was, according to this report, “designed to tarnish his reputation – and that of his associates, too – in the eyes of the international community,” as well as to provide “a useful distraction from the embarrassment which the government suffered after violence in the western town of Janaozen in December [2011], in which its police force is accused of opening fire on protesters, killing 14 and injuring over 100.” The report said that “authorities seem dead set on eliminating Ablyazov’s capacity to exert any influence in Kazakstan.”^[28]

In November 2012, a U.K. court ordered Mukhtar Ablyazov to pay £1.02 bln ($1.63 bln) plus interest. The court also ordered "new post-judgment asset-freezing orders be made against Mr. Ablyazov in an unlimited sum and new asset-freezing orders in relation to certain other defendants."^[29]

BTA Bank efforts

Shortly thereafter, Kazakhstan's sovereign wealth fund, Samruk-Kazyna, injected significant funds into BTA in an effort to keep the bank solvent, effectively becoming its majority shareholder.^[16]

It has been argued that BTA Bank “threatened to dominate the other Kazakh banks – banks that Nazarbayev controlled” and that the bank's forced nationalization in 2009 was part of an effort by Nazarbayev “to dispose of Ablyazov.”^[30]

Ablyazov's flee

Following the issuing of the Kazakh warrant, Ablyazov left Kazakhstan for London.^[31] This made him, according to RFE/RL, one of “dozens of former high-ranking Kazakh officials who have fled abroad after falling out of favor.”^[3]

Soon after Ablyazov's move to London, BTA Bank, in partial fulfillment of its restructuring agreement with creditors, launched legal proceedings against Ablyazov in the UK High Court, charging that he had misappropriated assets during his tenure at BTA Bank.^[12][13][14] In response, the High Court froze Ablyazov’s assets and confiscated his passport.^[15]

During his time in London, Ablyazov told The Standard that he was an “innocent...victim of persecution” by Nazarbaev and was “in fear of his life from his country's secret police, the KNB.”^[10] Claiming to be innocent of all charges, he “employed tight security to protect him from murder attempts” while living in London.^[32] Once, while he was being driven in London, a car “rammed his vehicle repeatedly.”^[10]

While in Britain, Ablyazov maintained close ties to opposition media in Kazakhstan. RFE/RL has noted that in 2011, the broadcaster K+ and the newspapers Vzglyad and Golos Respubliki, along with other private Kazakh media with ties to Ablyazov, “gave full-scale coverage to the bloody police crackdown on striking oil workers in the western city of Zhanaozen.” Not long after, Kazakh courts ordered these media outlets closed, along with the opposition Algha party, headed by Avladimir Kozlov, an Ablyazov ally, who was sentenced to a long prison term. The Nazarbaev regime reportedly considered Ablyazov to be implicated in these media outlets' critical coverage of the regime.^[3]

Also during his time in Britain, Ablyazov was the main source of funding for Aksara, an independent theater company whose productions challenge the Nazarbaev regime and seek to provide an alternative to the state-subsidized theater, which toes the government line.^[33] In 2012, a British judge ordered Ablyazov imprisoned for purportedly lying in court about his financial assets.^[34] Shortly thereafter, Ablyazov left Britain. It was charged that he exited the country in order to avoid imprisonment. His lawyers, however, said that he left because he had received a death threat. The lawyers further maintained that Ablyazov “did not embezzle the $6 billion claimed by the Kazakh government, but restructured the bank's holdings in order to protect them from precisely the kind of government takeover that took place in 2009.”^[3]

Since his departure from Britain, it has been unclear where Ablyazov is living, although he was widely believed to have gone to France.^[35] On May 29, 2013, Italian police raided a villa in Rome and took Ablyazov's wife, Alma Shalabaeva, and 6-year-old daughter, Alua Ablyazova, into custody. They were deported within 72 hours to Almaty, Kazakhstan, on charges of carrying falsified documents. According to Radio Free Europe/Radio Liberty (RFE/RL), the explanation for this action was that Nazarbaev was taking them as “political hostages.” Ablyazov’s oldest daughter, Madina, told RFE/RL that Nazarbaev wants to get his hands on Ablyazov. “Not as a hostage. Probably, the minute they have him, they will just kill him. They want to kill him, because my father is the biggest opponent for the president.”^[3] Ablyazov's lawyer, Riccardo Olivo, rejected the claim that Ablyazov's wife and child had false papers, saying that both of them had “valid Kazakh passports and EU residency permits issued by Latvia.”

Olivio also charged that their rapid deportation from Italy “raised suspicions that Italian and Kazakh authorities had colluded on the deal.” A lawyer close to the Ablyazov family said: “A person could get arrested committing a violent crime in broad daylight and get better due process than they did.” Italy's Justice Ministry claims to have been unaware of the arrests and deportation until after the fact; Emma Bonino, the Italian Foreign Minister, has called the operation “abnormal.” Ablyazov, for his part, accused Nazarbaev of “kidnapping” his wife and child and of employing “outright terrorist tactics.”^[3]

Ablyazov supporters

RFE/RL has characterized the seizure of BTA Bank and the accusations of embezzlement as part of an effort to by Nazarbaev to destroy Ablyazov in the wake of his efforts to build a civil society in Kazakhstan.^[3] Ablyazov has been described as a victim of something known as the Super-Khan Project, “a detailed and systemic plan” by Nazarbaev “to control all institutions or people that could threaten his hold on power.”^[30]

According to RFE/RL, supporters of Ablyazov suggest “that Italy and Britain, both massive investors in Kazakh energy projects, are far from neutral parties to the conflict.” RFE/RL also noted that former British Prime Minister Tony Blair took $13 million from Nazarbaev in 2012 to serve as an “adviser.”^[3]

Personal life

In addition to his wife and youngest daughter, now detained in Kazakhstan, and his daughter Madina, who lives in Switzerland, Ablyazov has a son, also in Switzerland, and another son, who currently lives in London.^[3] During his time in London, Ablyazov was described as not fitting “the Western stereotype of the fabulously wealthy businessman from the old Soviet Union. No bling, no yachts, no trophy wife and no ostentatious cars, he cuts a modest figure, favouring Marks and Spencer suits.”^[10]

References