Mukhtar Ablyazov’s open letter to Sergey Duvanov
© 16.01.2015

Mukhtar Ablyazov addressed, in an open letter, Sergey Duvanov, the Kazakh journalist engaged in the defence of human rights. In his letter, the dissident rebuts the authorities’ allegations against with regards to transferring money from BTA Bank. He also explains why he left the country and describes the chase, organised by Astana, after people associated with the Kazakh opposition in the West. As he asserts, the regime has already allocated the astronomical amount of one billion dollars to fight them.

Full text of the letter:

Dear Sergei,

I am very grateful to you for your support and your appreciation of my activity in politics. I know you as an honest and principled journalist and would like to give you my explanations about the accusation made by Astana against me that I had “siphoned my money out of BTA”. I also wish to explain to you why I left England, and who was hunting me and my family in the West and in what way.

The war that Nazarbayev unleashed against me cannot be described in just a couple of pages of easy-to-read text. Such dirty, senseless and expensive political persecution likely has no precedents in modern history. This is why my open letter will consist of two parts. 

In the first part, I will focus on the situation with the BTA bank and the charges addressed at me. 

To begin with, the situation with the BTA bank is totally different from the way Astana is trying to portray it. In reality, the Kazakh government used force to seize the bank that belonged to me, which until then had been irreproachably carrying out all its obligations. I would especially like to highlight this fact: under me there had not been any complaints from creditors or depositors or from the bank’s customers. The default ensued after the government and the "Samruk-Kazyna" state fund came into the bank. It was specifically after the seizure of the bank by force that the panic began on the market, and depositors took 2 billion dollars from the bank all at once in one month, while creditors began to demand early repayment of about 12 billion dollars. 

In this case, the claims by the creditors were fully legal. The investment contracts contained a clause on the right of creditors to demand early return of funds in the event of a change of ownership of the bank that has been uncoordinated with them. And that is precisely what happened. If the government had not seized BTA, the bank would have continued to fulfill its obligations.

The fact that this was a seizure is confirmed by the chronology of events connected withthe bank in 2009on the eve of its seizure, and by the way this was presented to the public by Astana.

On Thursday evening of the 29th of January, 2009, the Astana branch of the bank (not even the head office in Almaty, where the Financial Supervision Agency (FSA) was also located) received a fax from the FSA with a demand to form additional capital in an amount of 3 billion dollars in a single day.

Consider this figure and contrast it with the time frame - one day. No bank in the world, not even the largest, would be capable of carrying out such a demand! It was not by accident that the FSA had sent this fax not to the head office of the bank, but to its branch. I do not think that they were embarrassed. But they could not fail to understand that this was an insane demand.

Nevertheless, the next day, on Friday, in accordance with the demand of the FSA, the bank's shareholders adopt a decision to increase the bank's capital by 25%. But already on Sunday, the government headed by premier Karim Massimov issues a decision on the nationalization of BTA and on Monday forcibly seizes the bank. In other words, the bank's shareholders didn’t have a chance. 

Meanwhile, the value of BTA at the moment of the seizure, according to appraisals by British experts, comprised  12 billion dollars (appraisal as of the end of 2008). I myself appraisedit at a somewhat lesser sum, but not less than 10 billion dollars. And the credit for the fact that the bank was worth so much belongs to me and my team, but certainly not to Astana!

As far back as May 2005, when I returned to Kazakhstan and became Chairman of the Board of Directors of the BTA bank, its capital comprised about 500 million dollars. By early 2009, the bank's capital had increased to 4 billion dollars. That is, in the 3.5 years under my leadership of BTA, the bank’s capital increased by 3.5 billion dollars. That figure speaks for itself. 

In the years from 2005 through 2007, the bank earned one billion dollars. And just based on the results of 2007 alone the bank posted net earnings of 537 million dollars. As owner of the bank, I could perfectly legally pay all this money out to myself as dividends. But I did not do that - I kept it in the bank. All the profit went to increase BTA’s equity capital. Besides that, I attracted additional capital of about $ 2.5 billion. Therefore, at that moment when they took the bank from me BTA’s capital comprised 4 billion dollars. Nazarbayev’s regime got this entire sum. 

In 2008, we announced a new development strategy: BTA was supposed to become a global world bank and enter the ranks of leading banks of the world in the course of 15 years. Our consultant for the implementation of this idea became the world’s leading bank HSBC. This was a perfectly realistic plan, and already in June 2008, international experts recognized BTA to be one of the rapidly developing banks of the world. By this time we had become the largest private bank in the CIS and were among the world’s leading 173 banks. Only three state banks in Russia were ahead of us in size - Sberbank, "VTB" and "Gazprombank". BTA was honored with a multitude of international awards.

I considered banking to be my main business, and I invested the significant funds I was earning in other spheres of business in BTA. By seizing the bank, Nazarbayev destroyed all these plans. And now, he and his entourage are telling the whole world that I "stole the money". I believed that I could implement the plans for the development of BTA, but they stole from me my bank, my money and my reputation. 

In addition to the bank in Kazakhstan, I had many other different businesses which they likewise seized and destroyed. And the value of these other businesses was also formidable. 

Now, I’d like to speak about the accusations made by the authorities, which many people believe. Which is not surprising. Almost all the mass information media in the country are controlled by the authorities, and propaganda implants in people’s consciousness that which it considers necessary. And the funds that have been spent on fighting me are huge as well. Nazarbayev has already spent more than one billion dollars just on claims in British courts and on all kinds of lobbyists and detectives in different countries. They have even brought in former prime minister of Great Britain Tony Blair for the war against me. How weak must the Kazakh authorities’ arguments be if they need such forces in their fight against me! Just try to imagine the overall scale of the losses,considering that in this time BTA could have become a true flagship of the country's economic growth!

How are the authorities in Astana reasoning their accusations addressed at me, given their obvious absurdity?

I shall cite the first example.

A bank controlled and directed by Nazarbayev accused me that BTA gave loans to companies in which I had an interest, i.e. I was supposedly the owner of these companies. And the nationalized bank will consider that in accordance with the current legislation of Kazakhstan, these transactions should have been further approved by the Board of Directors of the bank, in which I was chairman. And since there was no such a formal approval from the Board of Directors, this means the loans were issued illegally, this is fraud, and the bank (which was seized by the government) considered that I personally am obliged to return the entire sum of the loans that had been issued with interest and fines.

Interestingly, thedispute in England was supposed to have been examined under the Kazakhstan legislation. But there had not been any violations under the laws of Kazakhstan. The bank did not have a single founding document proving my ownershipin support of its arguments. Just a bunch of accusations, , assumptions, presumptions and speculations without any proof.

Such "accusations" were necessary only in order to launch a series of civil legal processes in court in London and wear me down economically. The resources of an entire country were used in the fight against me. The sole purpose of these lawsuits was to create a situation in which I would not have any time to fight Nazarbayev’s regime, in which I would be bogged down in the courts fending off the lawsuits. 

The second example

The trial in England to examine BTA’s claims against me on the merits never did take place. What went on for all these years were disputes between me and BTA (which had been seized by Nazarbayev) about my assets that had been frozen by a British court. It was being cleared up what kind of assets these were, whether there were others, had all the assets been frozen or not, how I managed them, how I gave instructions on managing them to management, did I or did I not violate the orders of the judge on the freezing. Three years were spent on the procedural battle with respect to this question, but not on the essence of the claim.

As a result of the mass of legal subterfuges, the British court did not give me access to the main trial to examine BTA’s claims on the merits, because the judge insisted that I recognize his conclusions that I had supposedly concealed from him some information about my ownership of property, as well as that I return to Great Britain. The judge decided that I had displayed disrespect to him [contempt of court—Trans.], and for this he sentenced me to 22 months in prison. With this I did not agree, and they deprived me of the right to a defense in court and in 2012 awarded damages without examining the claims on the merits. 

I would like to point out: if the bank had filed lawsuits for 100 billion dollars, the court would have automatically recognized this 100 billion as well, even though all the loans of the Bank comprised about 19 billion dollars. But the essence of the claims, their fairness and veracity, the court of London did not examine. The damages were awarded because I left England, which I was compelled to leave because of serious threats to me personally and to my family.

I have now filed a complaint with the Strasbourg court against the decision to deprive me of the right to a defense.

The third example

The bank is declaring about demands in Great Britain for 6 billion dollars, but the European press the regime had been declaring about 15—16 billion dollars. In Russia by special order from Kazakhstan–a report was shown on NTV that I had siphoned off 100 billion dollars. The main thing in this false propaganda is to form the opinion that we are talking about tens of billions of dollars. The more flagrant the lie, as Goebbels used to say, the easier it is to believe it. 

The fourth example

It is interesting that out of the 4 billion dollars awarded to the bank only thanks to the fact that they had deprived me of the opportunity to participate in the trial, about 2 billion fall to the bank’s projects financed in Kazakhstan. All the security on these issued loans is found at the bank in the form of hundreds of finished apartments, lands, etc. The bank could have either sold or developed these properties already in 2009 — 2010 and realized more than the issued sum of the loan. But the bank specially (with the help of a the command from the special services of Kazakhstan) paralyzed the activities of these companies from 2009 onward, destroying their business. Many people suffered, ended up in prisons. Moreover, some of the loans, calculated in the billions of tenge,had been repaid, but the directors were accused of participation in an OCG (organized criminal group) and were thrown in prison anyway.

Penalties, fines, were piled on top of these loans that had been issued in Kazakhstan to various companies. The collaterals were in the bank, while I, as it now emerges, have to personally pay these loans with the fines additionally to the bank. The bank brought a claim in Great Britain for a sum of 2 billion dollars, factually concealing that all the property is found as collateral with them and that part of the loans has been repaid. In other words, the bank wants me to pay another 2 billion whipped up sums above and beyond these secured loans.

But in England, I repeat, no one delved and did not examine the essence of the claims made against me, there simply was no trial on the merits of the demands. They awarded me damages [sic] in absentia, not having allowed me access to the court. Nevertheless, the Kazakh authorities have been declaring everywhere that a British court proved my guilt. That is not so. Many times I have had to explain this, but it is hard to fight state propaganda when the authorities in Kazakhstan control all the mass information media and television, are spending huge funds on propaganda abroad, are hiring a huge quantity of lobbyists all over the world.

Of course there were projects in which I was an indirect shareholder. But I was not a shareholder under the Kazakhstan legislation, under which ownership is recognized when there is direct legal documentation [thereof]. I was not legally documented under the laws of Kazakhstan in such projects and was not required to obtain any permissions from the Board of Directors of the BTA bank. If it were necessary under the law, would not the borrowers have gotten these permissions, given the fact that funded projects were very economically lucrative and worthwhile? 

For example the "Eurasia" tower in Moscow. The building’s height is 300 meters, it has 75 floors. The tallest steel construction in Europe. In 2006, this project was included in the list of the 12 best projects in the world, taking sixth place! I had a 50 percent ownership interest there. Legally, the ownership was documented to my partner, because I always feared an attack on my ownership on the part of Nazarbayev.

The quality of this project was assessed by Sberbank of Russia, which opened a line of credit for the construction of the tower for an overall sum of 500 million dollars. By 2009, 170 million dollars of that money had been spent on construction. The loan at BTA itself comprised 100 million dollars. All the collateral was with Sberbank, as it was Sberbank of Russia which undertook the obligation to finance the construction to full completion.

It is clear that after the completion of construction (which was planned by 2010) BTA could have easily returned all the money invested. By early 2009, out of 75 floors, 45 were already built. And this despite the crisis that had hit real estate projects around the whole world. In Moscow at that moment, the construction of major projects was factually stopped, but "Eurasia" continued being built. Experts estimated the market value of this project after the completion of construction to be more than 2 billion dollars. A similar project in New York is worth 3 billion dollars.

Nazarbayev instructed BTA to ruin my business, regardless of the losses to the bank. As a result, colossal pressure was exerted on Sberbank of Russia to force it to stop further funding. Under the pressure from Kazakhstan Sberbank of Russia it had to go and break its obligations. Sberbank stopped its funding for almost two years, and then simply took this whole project from me, selling it to Russian owners through bankruptcy proceedings. BTA reached an agreement with the new owners for them toreturn the loanthat had obtained for the construction of "Eurasia". But in England, representatives of the bank did not furnish this information to the court, and instead demanded repayment of the loan from me. 

In addition, I invested more than 100 million dollars of my own money in this project, which went to buy out a 50 percent stake from the other shareholders. This money likewisedisappeared as a result of the confiscation of the property conducted by Sberbank of Russia.

But Nazarbayev is not interested in the expenses and losses of the BTA bank. Nazarbayev and his entourage are resolving apolitical task - to destroy me as an opponent of Akorda. And to liquidate at the root any possibility of support for the political opposition in Kazakhstan. This is why Kazakhstan has spent over one billion dollars and is preparedto spend however much more money it takes in order to achieve my destruction. 

I refused to hand over control of the BTA bank to Nazarbayev, continued to support the opposition and civil society, and this is why I was subjected to such large-scale persecution. Not only my bank assets were subjected to looting, but also all my businesses in various countries.

In 2005 — 2008, when I was working at BTA, Nazarbayev was looking for various opportunities to take away my business. The things he came up with! For example, he put a great deal of pressure on me, demanding that I legalize large amounts of funds in Kazakhstan. The way he explained it to me was that a special law on the legalization of capital had come out, and I should support it. Otherwise, it would turn out that only Nazarbayev, his family and his inner circle were legalizing their money, as he told me himself. This he did not like. 

But I figured that if I acceded to his demand and acted according to the law on legalization, Nazarbayev would use this against me. The law says that if the investigative organs decide that this capital is unlawful, then the legalization is considered unlawful. That is, Nazarbayev wanted me to legalize the money, and then the investigators would accuse me of unlawful origin of capital and put me in prison.

Therefore, in 2007, I officially showed my income in the amount of 200 million dollars, and paid income tax of 20 million dollars into the country’s budget. That is, I did not use the law on legalization, but openly showed my income and paid the taxes. Subsequently, Kazakhstan investigators tried to inculpate violations to me, just as I had suspected. But they had not expected that I would not legalize this money under Nazarbayev’s criminalistic law but would reflect it income from entrepreneurial activity.

And Nazarbayev thought up many such ways to find a reason to put me in jail. And in the end it was the bank that got seized, after all the other ways turned out to have been exhausted. 

I overestimated Nazarbayev’s rationality, I did not take into account that by 2009 he had already lost his ability to assess risks, having completely fallen prisoner to his entourage, which was only capable of flattering and misleading him. The lack of political competition and absolute power completely deprived him of good judgment. While trying to gain control of the BTA bank, he shut off the world’s financial markets to all the other banks in the country. The reputation of the banking system of Kazakhstan as the best in the CIS was completely undermined. And yet this is just how it was until 2009. Russia was able to weather it through in 2009, after all. And not just Russia, even economically weak Ukraine! And all this happened because of Nazarbayev’s pathological greed and desire to control everyone and everything. 

All this was self-evident. I told him about all these risks when we met in person and wrote confidential analytical notes. Nazarbayev realized this only in March 2009, when oil prices fell to 45 dollars per barrel. Then he was in panic and begged me to come back. He was saying, passing this on to me through his negotiators, that he was afraid that the economic crisis would lead to a political crisis, like in Ukraine.

But oil prices then quickly recovered to 80 dollars per barrel, and Nazarbayev once again turned deaf, considering that the country would have plenty of oil money and he would not need to worry about counting it in the fight with his political opponent.

I suffered huge losses which were caused to me by Nazarbayev with his entourage, using the political forces of Russia, Ukraine and other countries. The BTA bank, controlled by the government, is not counting how much money it spends - for Astana this does not have any meaning.

Therefore, both those who declare that I "siphoned money out of the bank" and those who consider that I supposedly "took what was mine" are wrong. It is precisely to me that Nazarbayev’s regime has caused enormous and irreparable harm.


Mukhtar Ablyazov. 



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