MUKHTAR KABULOVITCH ABLYAZOV

54 years old | Abuse of power, embezzlement and tax evasion

Mukhtar Kabulovitch Ablyazov is a Kazakh businessman and politician, born in 1963. He studied nuclear engineering and physics at the Moscow Engineering Physics Institute. Successively president of various firms and minister, he was one of the most powerful Kazakh oligarchs before fleeing the country, where he was sentenced on 7 June 2017 to 20 years in prison, on multiple accounts, including charges of embezzlement.

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A fortune tainted by suspicious deals

On 16 December 1991, Kazakhstan declared its independence from an imploding USSR. In this context of systemic instability and generalized economic predation, Mukhtar Ablyazov got into business, with the clear objective of making the most of any opportunity available to him in order to create a commercial and financial empire. In December 1992, he gathered his various industries (salt, sugar, banking, financial services, agribusiness, medical services, hotel industry etc.) within a unique holding company named “Astana”.

However, as soon as his empire grew, Ablyazov was suspected of practicing illegal financial and fiscal deals, tarnishing his reputation along the way. His firm Astana Sugar was convicted of tax fraud in 1996, and numerous investigations are opened into Astana Holdings’ other subsidiaries.[i]

Blurring the lines between private and public interests

Despite suspicions and allegations made against him, Ablyazov was appointed head of the Kazakh electricity network, KEGOC, in July 1997. The Kazakh authorities had hoped that he would be able to save the firm, which was in a dire financial situation.

This nomination enables him to become one the country’s most powerful men, thanks to which he expanded his political connections. Using his experience as the president of the KEGOC, Ablyazov became Minister of Energy, Industry and Trade as early as April 1998.

He later appointed his right-hand man, Aset Naurybayev as president of KEGOC’s Supervisory Board, who discovered that 20 million dollars had gone missing from the firm’s accounts. Despite requests from the newly elected President of KEGOC, no investigation was opened into the origins of the missing funds.[ii]

Justice finally catches up to Ablyazov

Mukhtar Ablyazov pursued his shady endeavours to get control of public assets while a minister. The oligarch is suspected of having sought personal benefits from the renegotiation of Kazakhstan’ energy debt to Russia at the expense of his country’s public finances. He supposedly proposed to Russia to decrease the value of KEGOC’s transferred assets in exchange for a kick-back. In exchange for this operation, which constrained Kazakhstan to grant Russia more money than it was due, Ablyazov allegedly asked to receive ownership rights on parts of the transferred assets.[iii]

Towards the end of 1999, Ablyazov was drawing more and more negative attention to him, which drove the Kazak justice department to open an investigation into his dealings. Using a trumped-up pretext – namely a political disagreement with the President, Nursultan Nazarbayev – Ablyazov resigned from government in October of the same year. He was eventually convicted of abuse of power, embezzlement and tax evasion.[iv]

It is at this moment that Ablyazov, previously on good terms with the Kazak authorities, decided to cofound a political opposition party, the “Democratic Choice of Kazakhstan” (DCK), officially created in 2001. In the following years, the businessman repeatedly claimed that the judicial proceedings against him were a result of his political views – but it is worth noting that the investigation was initiated before he conveniently created a political party.[v]  

Following his 2002 trial, Ablyazov was sentenced to 6 years in prison. He benefitted from a presidential pardon in 2003, after just a year of imprisonment. Once free, the businessman committed to retiring from the political scene and left to Moscow.

Back to shady deals and embezzlement cases

In 2005, he returned to Kazakhstan and became President of the TruanAlem Bank (BTA), on which he was already the majority shareholder. Under Ablyazov’s presidency, the bank appeared to grow significantly and soon became the first banking institution in the country.

The financial crisis shed light on Ablyazov’s management methods. In 2009, investigators discovered a 10-billion-dollar hole in BTA’s balance sheet.[vi] On the verge of bankruptcy, the bank was nationalized– while its president fled to the UK in order to escape prosecution. He was suspected of having embezzled billions of dollars thanks to offshore companies. Repeating a pattern he had previously resorted to in 2001, Ablyazov claimed to be a victim of politically motivated persecution in order to justify fleeing his country. [vii]

Exile to the United-Kingdom and first legal proceedings in London

In March 2009, the BTA launched judiciary proceedings against Ablyazov at London’s High Court of Justice, where the businessman was residing at the time. The bank obtained for his assets to be frozen by the British justice in November 2009. A year later, in November 2010, the High Court nominated managers to administer Ablyazov’s goods and the firms related to them. [viii] In July 2011, he obtained political asylum in the United Kingdom – a status the British government tried to revoke in 2014 to no avail.[ix]

In May 2011, the BTA bank asked for Ablayzov to be arrested on charges of contempt for court, because of his refusal to declare his assets – thus de facto preventing the British authorities from freezing them. Recognized guilty on the charges of contempt for court by the High Court in February 2012 and convicted to 22 months in prison[x], the businessman decided to flee to France, using a diplomatic passport issued by the Central African Republic.[xi] This didn’t prevent the High Court from delivering two judgements by default in favor of the BTA, between 2012 and 2013, for the total sum of 4.5 billion dollars.[xii] On 21 October 2015, the Supreme Court of the United Kingdom also convicted Ablyazov on charges of having illegally attempted to obtain part of the frozen assets through the use of abnormal loan agreements.[xiii]

Escape to France and arrest

Thinking he would be free from justice in France, Ablyazov settled in a villa in the outskirts of Nice, on the French Riviera. He was nevertheless arrested by the French police in Nice in July 2013, as requested by Interpol. In August 2013, the French authorities received extradition requests from Kazakhstan, Russia and Ukraine – who also accused Ablyazov of financial wrongdoing. After long legal proceedings and a judgement by the Court of Cassation, the Court of Appeal of Lyon issued two advisory statements: the first partially favorable to Ablyazov’s extradition towards Russia, the second entirely favorable to his extradition towards Ukraine.[xiv] 

On these grounds, Manuel Valls, then French Prime Minister, signed an authorization for Ablyazov’s extradition towards Russia – provided that he would not be extradited to Kazakhstan following his arrival to Russia. The Russian authorities agreed to the conditions set forth by Manuel Valls.[xv]

Sensing trouble, Ablyazov deposited a request before the French Council of State asking for the revocation of the Prime Minister’s decision. Assuming that the extradition request issued by Russia was politically motivated, and fearing his future extradition to Kazakhstan, the Council of State rescinded Manuel Valls’ decision on 9 December 2016.[xvi]

Although it invoked the political background of the case, the Council of State did not deny the veracity of the embezzlement allegations against Ablyazov. In fact, they had been judged credible enough for the Justice Minister, Christiane Taubira, to issue a report added to with Russia’s extradition request before it was submitted to the French Prime Minister. [xvii]

Ablyazov is currently residing in France, where he is not being held accountable for the crimes he committed. Nine procedures are still ongoing at the High Court of Justice in London, where Ablyazov, was convicted multiple times by the British judicial system and still refuses to set foot, despite his political refugee status.

Legal actions were also attempted in Kazakhstan, where 3 former executives of the BTA bank pleaded guilty (Zhaksylyk Zharimbetov, former VP of the Board of Directors) and partially guilty (Saduakas Mamesh, former President of the Board of Directors, and Kairat Sadykov, former manager of Lending Operations) of embezzlement on 3 April 2017.[xviii] This trial ended on 7 June 2017 and Ablyazov was sentenced to 20 years in prison and found guilty on multiple charges ranging from abuse of power to embezzlement.[xix]

[i] VAN DER LEEUW Charles, Fugitive Long-fingered Gentry From the Plains, Caspian, 2009, p. 22
[ii] Ibid, p. 23 - 24
[iii] Ibid, p. 24 - 26
[iv] http://www.finances.net/infos/actions/Abliazov-loligarque-en-fuite-ennemi-jur%C3%A9-du-pr%C3%A9sident-kazakh-544879
[v] http://fr.mukhtarablyazov.org/p/99,engagement-civique
[vi] https://www.forbes.com/sites/andrewcave/2017/02/06/how-to-get-back-a-lost-10bn-one-banks-tale-in-europes-biggest-alleged-fraud/#df2fa1516cd1
[vii] http://www.vanityfair.fr/actualites/international/articles/moukhtar-abliazov-trouvez-cet-oligarque-/16129
[viii] http://bta.kz/en/about/assets/keysuccesses/
[ix] https://www.ft.com/content/9afa62ae-cafe-11e3-ba9d-00144feabdc0
[x] http://www.reuters.com/article/us-ablyazov-jail-idUSTRE81F1L220120216
[xi] http://afrique.lepoint.fr/actualites/la-centrafrique-malade-de-ses-faux-passeports-et-diplomates-05-11-2015-1979554_2365.php
[xii] http://bta.kz/en/about/assets/keysuccesses/
[xiii] https://www.supremecourt.uk/cases/docs/uksc-2013-0203-press-summary.pdf
[xiv] http://www.france24.com/fr/20150304-justice-francaise-confirme-demande-extradition-abliazov-russie-ukraine-kazakhstan
[xv] http://www.leparisien.fr/flash-actualite-monde/extradition-en-russie-du-kazakh-abliazov-feu-vert-de-la-france-12-10-2015-5178331.php
[xvi] http://www.conseil-etat.fr/Actualites/Communiques/Decision-d-extradition
[xvii] http://www.lemonde.fr/international/article/2016/12/09/le-conseil-d-etat-annule-l-extradition-de-l-opposant-kazakh-moukhtar-abliazov_5046666_3210.html
[xviii] http://rapsinews.com/judicial_news/20170403/278147891.html
[xix] https://www.rferl.org/a/kazakhstan-ablyazov-20-years-banker-embezzlement/28533214.html

TIMELINE OF THE ABLYAZOV CASE IN THE UNITED KINGDOM AND IN FRANCE

Facts Commercial LitigationJudicial CooperationAdministrative Litigation

 

UK

FRANCE

2009

  • 2009 : M. Ablyazov flights from Kazakhstan to the United Kingdom after the nationalisation of his company, the BTA bank, by the Kazakh government
  • November 12, 2009: BTA obtains the freezing of M. Ablyazov's assets in the UK
 

2010

  • November, 2010: The High Court of London appoints administrators to manage M. Ablyazov's assets and directors to the head of the companies linked to him
 

2011

  • January 29, 2011: M. Ablyazov receives a threat alert for his personal safety. This alert is issued by the Metropolitan Police of London
  • May 16, 2011: The BTA Bank requests the arrest of M. Ablyazov for contempt of court because of his refusal to declare his properties and assets, and thus prevents their freezing.
  • 12 July 2011: The UK Home Secretary Theresa May grants political asylum to M. Ablyazov
 

2012

  • February 16, 2012: M. Ablyazov is found guilty of contempt of court by the High Court of London. Sentenced to 22 months in prison, he runs away to France.
  • February 29, 2012: The High Court of London issues a coercive order against M. Ablyazov in 8 legal proceedings against him if he does not return and hand himself over to the justice.
  • November 9, 2012: Without any trial, the High Court rules that M. Ablyazov may not defend himself in 8 of the 11 lawsuits intended against him, because he evaded justice.
  • November 23, 2012: The High Court rules in absentia in favour of the bank in one of the 11 lawsuits filed by the BTA bank against M. Ablyazov.
  • February 16, 2012: M. Ablyazov flies from the United Kingdom to France

2013

  • April 19, 2013: The High Court rules in absentia in favour of the bank in one of the 11 lawsuits filed by the BTA bank against M. Ablyazov.

 

 

  • July 31, 2013: At the request of Interpol, the Police of Nice arrests M. Ablyazov in the Alpes-Maritimes.
  • August 1, 2013: Detention at the Luynes penitentiary centre.
  • August 6, 2013: M. Ablyazov refers to the investigation chamber of the Court of Appeal of Aix-en-Provence.
  • August 22, 2013: M. Ablyazov's release is refused by the Court of Appeal of Aix-en-Provence. Requested extradition of M. Ablyazov by Ukraine on behalf of Kazakhstan.
  • December 12, 2013: Beginning of an extradition process from France to Russia, initiated by the General Prosecutor's Office of the Court of Appeal of Aix-en-Provence.

2014

  • January 8, 2014: M. Ablyazov receives a letter from the UK Home Secretary Theresa May, whom considers to end his political asylum.
  • April 16, 2014: Theresa May decides to revoke M. Ablyazov political asylum.
  • April 24, 2014: The Upper Tribunal blocks Theresa May's decision until May 15, and asks for additional documents to illustrate links between the British government and the Kazakh government. M. Ablyazov still benefits from his political asylum nowadays.
  • August 11, 2014: The High Court of London gives the order to M. Ablyazov to disclose all documents related to his assets.
  • January 9, 2014: The CA of Aix-en-Provence rules in favour of M. Ablyazov extradition to Russia and Ukraine in two separate decisions, but gives priority to extradition to Russia
  • April 9, 2014: the Court of Cassation reverses the two decisions of the Aix-en-Provence CA on formal ground.
  • October 24, 2014: The Court of Appeal of Lyon rules twice: once partially in favour of the extradition to Russia, once totally in favour of the extradition to Ukraine.

2015

 

 

 

 

 

  • October 21, 2015: The British Supreme Court upholds the decision requesting the freezing of M. Ablyazov's assets at the request of the BTA bank.
  • March 4, 2015: the Court of Cassation dismisses the appeals of the defence.
  • September 17, 2015: French Prime Minister Manuel Valls allows the extradition by issuing a decree.
  • November 4, 2015: M. Ablyazov asks to the Council of State to annul the extradition order and to recognise the political motive of the extradition request.
  • December 9, 2016: annulment of the extradition by decree, on the grounds of misuse of authority, following the implied refusal of the French Prime Minister Manuel Valls to retire its extradition decree from France to Russia, and on the basis of the British authorities' recognition of M. Ablyazov's political asylum on July 12th, 2011. This annulment recognises the political motive of the extradition request and the existing threat for M. Ablyazov that Russia could extradite him to Kazakhstan.

KEY NUMBERS:

  • $10 billion diverted
  • 455 lawyers and 40 Partners for Hogan Lovells involved in the prosecution of M. Ablyazov in the UK
  • Over 200 court hearings in the UK
  • 11 different trials in the UK
  • 8 years of commercial litigation in the UK
  • 4 years of proceedings on extradition in France
  • 3 years imprisonment for M. Ablyazov in France
  • 10 European countries refused to extradite M. Ablyazov, his associates or members of his family in addition to France (Belgium, Poland, Austria, Czech Republic, United Kingdom, Italy, Switzerland, Spain and Lithuania)
  • 3 countries requesting extradition (Russia, Ukraine, Kazakhstan)