President of Kazakhstan Kassym-Jomart Tokayev On July 12, he signed the law “On the return of illegally acquired assets to the state.” The document, which, both supporters and critics of the current government, is called nothing more than a “watershed” between the old and new Kazakhstan. This, however, does not negate the numerous claims to the law – someone believes that it can provoke a redistribution of property and a revision of the results of privatization, others call the document “toothless”. Raise questions and methods of searching for illegal assets. Details – in the material “Fergana”.
How and who will search
Tokayev raised the issue of returning to Kazakhstan illegally acquired and withdrawn assets abroad immediately after Bloody January 2022. At the same time, he told the people of Kazakhstan about the oligopoly that is flourishing in the country (a colossal concentration of business in one hand) and created a fund that the oligarchs, who had become rich under the first leader of the country, were supposed to regularly replenish Nursultan Nazarbayev. This was followed by a series of high-profile criminal cases – the former head of the National Security Committee was behind bars. Karim Massimovone of the most influential and close to Nazarbayev people, as well as the nephew of the ex-president Kairat Satybaldy and his ex Kairat Boranbaev. Both were in the top 50 richest businessmen of the republic.
After the change in the Constitution and the loss of the law “On the First President”, the former president’s associates and members of his family, who had finally lost their privileges, began to be mentioned more and more confidently in the context of asset stripping and illegal enrichment.
It seemed that everything would end there, because the authorities were in no hurry to return the loot, limiting themselves to reports on the work of two specialized commissions in this direction.
Meanwhile, early presidential elections were held in the country, and only on November 26, the day of his inauguration, Tokayev signed Decree No. 4 “On measures to return illegally withdrawn assets to the state.” The government was instructed to develop and submit a relevant bill in parliament by March 31, 2023. It was not possible to meet the deadline – the deputies began work on the project only at the end of May. It took about two more months to consider it, and on July 12, this document, without exaggeration, unprecedented for the post-Soviet space, was signed by the President.
According to the law and explanations to it on Akorda website, to look for illegally obtained assets will be from the subjects of “great corruption and oligopoly”. Also, the law will apply to people who hold or have held responsible government positions, officials of the quasi-public sector, and citizens affiliated with them.
This will be done by a specially authorized body under the Prosecutor General’s Office. To get into his field of vision, a citizen needs to have total assets worth more than 13 million MCI (monthly calculated indicators) – this is 44.85 billion tenge or about $100 million. Information about whose assets will cause doubts will fall into a special commission. It will include a person in the register and oblige to report on the origin of funds. If this fails, the assets will be recognized as unreasonably acquired and turned into state revenue. It will be possible to return them to the treasury voluntarily, or forcibly – by a court decision.
“If people get into the registry, they will no longer be subject to all kinds of secrets that are provided for by our legislation. This is a banking secret, a tax secret, – said in interview with Tengrinews Deputy Prosecutor General Ulan Baizhanov. – In order to establish the facts of the withdrawal of funds or some other economic violations, scrupulous work will begin on the collection and analysis of these materials. And if violations that fall under criminal punishment are found, they will already initiate and investigate cases.”
If a citizen voluntarily reveals everything and returns, he will be released from all types of responsibility.
Why is there a separate law for this? “I will explain simply. We should talk about the return of illegally acquired assets, and our Constitution defines the inviolability of the right of ownership to property. But he emphasizes that we are talking only about legal property,” Baizhanov explained. – Accordingly, in order to return something, it is necessary to prove illegality. But it turned out to be difficult, because when certain questions were asked, or when some kind of anomaly was established, the relevant objects or subjects presented documents: government decrees, referred to approved rules that were registered by the Ministry of Justice, showed documents, corporate decisions of national companies. That is, all the time they secured this or that document. Formally, they cannot be recognized as illegal.”
Now the document signed by the President changes the rules of the game and, in fact, will allow the state to brush aside what it itself previously legitimized. How this will work in Kazakhstan is impossible to predict.
Lists of “negatives”
For several months now, the public has been demanding from the security forces the names or at least hints of those oligarchs who may be on the register. The Prosecutor General’s Office names only Satybaldy and Boranbaev, on which there are already court decisions, and whose assets have already been transferred to the state.
Unofficially, “negative heroes” and at the same time candidates for getting into the register – 162 people. This figure was taken from Tokayev’s speech at a meeting with businessmen after Kantar (the Kazakh name for January, which became the designation for the January events of 2022). President then declaredthat only 162 people own half of Kazakhstan’s wealth, while half of the population’s income does not exceed 50,000 tenge (slightly more than $1,300) per year. “It’s impossible to live on that kind of money, such inequality is dangerous, the situation needs to be urgently changed,” Tokayev urged.
What awaits these 162 people? “They will be notified, they will be forced to submit a declaration confirming the legitimacy of their assets, and if the billions are not confirmed, the work of the security forces will begin,” wrote Majilis Deputy Sergey Ponomarev is on his social networks.
“A state fund is already being created, where the returned assets will be placed, they will be spent on the social needs of the people. I feel that numerous relatives of the first president will have to sweat in the courts,” he added.
Of course, Ponomarev did not name any names, but they were voiced by the former Kazakh prime minister Akezhan Kazhegeldin, who has long been studying the schemes of the “Family” for the illegal acquisition of assets. By the way, he was rather skeptical about the new law. At the end of May in interview Kazhegeldin explained to the editor-in-chief of Orda.kz Gulnara Bazhkenova what and how to do in order to surely return capital to the country.
Here is just one of the “cases” described by the politician: “…I will give a simple example. If a new authorized body starts an investigation into the so-called Intelsat Embassy Fraud, in essence it will come to how the family Rakhat Aliyev (former son-in-law of Nazarbayev – ed.), together with Dariga Nazarbayeva, Nurali’s eldest son, married relatives, withdrew state budget money through the embassy in Austria, using the Austrian Mediterranean Bank, then New York-based Bank Audi. And thus they laundered these funds by acquiring property in the United States.
When this investigation takes a simple OCCRP report on Panama Papers And Paradise Papers (The Panama Dossier and the Paradise Dossier are archives of documents that revealed data on the withdrawal of funds by world leaders to offshore zones – ed.), then he will see all transactions that are associated with a whole chain of holdings through which this money was laundered.
Thus, we will enter a transaction related to the Atlantic Partnership, a group of companies of the Maximus holding, then we will enter the Greatex, Kaltex group of companies. And we will go out to launder this money in the USA and in the UK. This is a property that has been infamous for several years now. If we act in this way, then we can return these assets, capitals, dividends received over so many years,” Kazhegeldin concluded.
The politician also suggested that the authorities investigate the privatization of the second main Kazakh oil company, MangistauMunayGas, with the participation of Timur Kulibaeva (son-in-law of Nazarbayev), outlining several schemes used in this case, and to find out the role of the ex-head of the KNB Massimov in the situation with Jusan Bank, which was previously brought to foreign jurisdiction. Two weeks after Kazhegeldin’s interview, the Kazakh Ministry of Justice announced that the Jusan group had been returned to the republic, promising to reveal the details later. And although the law on the return of assets had not yet been adopted, the department confirmedthat Jusan became the “first sign” on this path.
Announcement of the verdict in the criminal case against Karim Massimov. Photo by the press service of the Specialized Inter-District Court for Criminal Cases of Astana 18 years in prison, is now of great interest to the investigation from the point of view of the new law. The political scientist, expert on Central Asia Arkady Dubnov is also convinced of this. He suggestedthat Massimov could be directly related to the withdrawal of assets from Kazakhstan. At the same time, the expert called the former head of the KNB a possible executor, but not the organizer of such schemes.
Criticism
Although the law has already been adopted and signed by the president, everything indicates that the current version of it will be further developed. The powers of the body under the Prosecutor General’s Office, which will search for illegal assets, are not entirely clear to the general public. The principles for selecting dubious assets and how to prove their legitimacy are not entirely transparent. The question is brewing whether this initiative will slide into a banal redistribution of property. Or vice versa – will it not stall on the replies of auditors.
The position on foreign nationals owning assets in the country is also unclear. Akezhan Kazhegeldin argues that the law takes them out of the scope of the investigation, considering this a big mistake.
Raises questions and the provision on leniency towards the owners of illegal assets in the event of their voluntary transfer to the state. “The developers propose, under certain conditions, not to punish and even leave part of the illegally seized property to those who were convicted of illegal enrichment of $100 million or more. And then what about the Criminal Code, where corruption violations on an especially large scale include crimes of more than 20,000 MCI, that is, more than $150,000? In this case, liability from 5 to 15 years of imprisonment with confiscation of property comes, – indignant deputy Azat Peruashev.
“It turns out that for stealing a bicycle or a bag of flour they will put you in jail, and for stealing $ 100 million they will get into a position and even allow you to keep something for yourself?”
Finally, it is not known whether the names of those who agree to a deal with the state will be announced or who will be investigated. After all, the public is waiting for the next high-profile revelations, but they may not happen. Or the return of prodigal assets can drag on for decades, like the proceedings of Kazakhstan against a Moldovan businessman Anatole Stati and his son.
In any case, this process will not be quick – according to independent experts, about $160 billion was withdrawn from Kazakhstan during the years of independence. These are three National Funds or about four annual budgets of the republic. Channel 31 journalists calculatedthat the exported billions could be used to build nine thousand schools according to the standards of the Nazarbayev Intellectual School or buy 4 million one- and two-room apartments, thus closing the issue of housing shortages for Kazakhstanis.