10/18/2022
THE NAZARBAYEV FUND AND JUSAN BANK CAME UNDER SCRUTINY. UK PARLIAMENT.
Mr David Davis
(Haltemprice and Howden) (Con)
On 20 January, a number of us MPs initiated a debate on the use of lawfare by oligarchs and undemocratic states that seek to suppress free speech and scrutiny of their activity. The Ministry of Justice took up the question and has promised new legislation, and I am glad to see the new Minister about to lose his departmental virginity in this debate—it will not hurt; I will be gentle.
Today, I will speak about another outrageous case of lawfare that centres around the former Kazakh President Nursultan Nazarbayev. He was the autocratic ruler of Kazakhstan for three decades. His time in office was characterised by repression, torture and other human rights abuses. He was ousted from power in 2019, but remains a significant influence in the country. He was more or less able to anoint his successor as president, and met Vladimir Putin even after leaving office.
During his 29-year rule, Nazarbayev won elections with claimed results of more than 90% of votes cast, and the capital city was even renamed after him in 2019. The term “rigged dictatorship” comes to mind. As long ago as 1999, the western press aired concerns about assets held by Nazarbayev and his associates. In that year, The New Yorker reported that Swiss officials had found a bank account worth $85 million that was intended for the Kazakh Treasury, but was in fact held by Nazarbayev—$85 million, which turns out to be small change. Three years later, Nazarbayev’s critics in Kazakhstan accused him of hiding $1 billion in oil revenue in offshore accounts.
Now, the Nazarbayev Fund Private Fund, an ostensibly charitable organisation, and a related firm, Jusan Technologies Ltd, have between them started a lawfare campaign against four news bodies, including three based in Britain, which are the Bureau of Investigative Journalism, The Daily Telegraph and openDemocracy. The supposed provocation for that action was the news bodies’ reports on Nazarbayev and his associates, which revealed several ambiguities and a lack of transparency around his charitable foundations.
First, the Organised Crime and Corruption Reporting Project, a non-profit investigative news platform, published an investigation into charitable foundations set up during Nazarbayev’s rule. It revealed that companies connected to those charitable foundations and to his relatives had received bail-out and loan funding from his Government.
One such case involves the St Regis Astana, which is a hotel in the Kazakh capital that opened in 2017. The company that owns the hotel, the Turion Investment Group, has included among its shareholders Nazarbayev’s Toggle showing location ofColumn 498daughter and son in law. The hotel project was built with the help of a loan of $85 million from a state-owned development bank, which even the current President Tokayev conceded has become
“the personal bank of a select group of people representing financial, industrial, and construction groups.”
Let us remember that that is supposed to be a state bank.
In the early 2000s, Nazarbayev’s Presidential Affairs Department joined two Kazakh firms in developing a resort on the Turkish coast where Nazarbayev reportedly spends his own holidays. One of the private firms involved was owned by three businessmen who had previously handed cash to Nazarbayev’s university fund. In another instance, two of Nazarbayev’s foundations owned a landscaping business that received $6.5 million in Government contracts between 2012 and 2018.
After those revelations, openDemocracy covered the story and asked the simple question of whether an autocrat’s riches were being allowed into this country without due scrutiny. It was talking about Jusan Technologies, a firm that is incorporated in the United Kingdom and has nearly $8 billion in gross assets, yet had only one member of staff in the UK in 2020.
The Bureau of Investigative Journalism and The Daily Telegraph then collaborated to investigate Jusan Technologies. It appears that its registered office at the time was a brass-plate address shared with hundreds of other firms. Its assets have been held in several sectors, including banking, telecoms and retail, and in several countries, from Luxembourg and the UK to Kazakhstan itself. Until recently, it was controlled by three organisations, including the Nazarbayev fund via an intermediary organisation.
The Nazarbayev fund is allegedly run for the benefit of educational institutions in Kazakhstan and stipulates in its charter that Nazarbayev cannot benefit personally from the fund. Yet he remains the chairman of its executive body and has the power to change its rules. It is not clear why a fund ostensibly for education and the benefit of the Kazakh population needs assets in banking or retail.
The fund is also connected to senior Kazakh politicians. Nazarbayev’s former Deputy Prime Minister, Yerbol Orynbayev, was a director of Jusan Tech and owned 4.6% of the company. Moreover, the investigation shows that the First Heartland Jusan Bank, the largest asset owned by Jusan Technologies, has received more than $2 billion in bail-outs from the Kazakh Government. This is a company that has paid out $430 million in shareholder dividends in recent years. An oligarch married to one of Nazarbayev’s relatives owns 20% of the bank. It appears to be steeped in Nazarbayev’s influence.
While Jusan Technologies itself has now changed its ownership structure—it did so shortly before the reports were first published—the new structure is, if anything, even more opaque. The new owner is a non-profit organisation based in Nevada, a jurisdiction the secrecy laws of which have been criticised in the past, including in respect of the Pandora papers. That non-profit is owned by another non-profit, whose president is the chief executive of the Nazarbayev fund as well as Nazarbayev’s former Education Minister.
Frankly, Mr Deputy Speaker, if you are confused by this extraordinary cat’s cradle of different and interlocking organisations, you would not be alone. It is designed to Toggle showing location ofColumn 499be confusing and designed to be difficult to understand and opaque. Creating organisations of this level of opacity and complexity is not easy, but it is always done for a reason. In this case, the most likely reason is to conceal the extent of Nazarbayev’s control of this web of assets and wealth.
To come back to the point about lawfare, all the news outlets did was ask legitimate questions and try to shine a light on some apparent irregularities and the opaque nature of Nazarbayev’s foundations. They did not even make any allegations of impropriety or money laundering in the articles for which they are being attacked, yet they are now facing potential legal censure. The Bureau of Investigative Journalism and The Daily Telegraph alone have received three threatening legal letters in four months telling them to retract their claims and apologise, and a case has now been filed in the High Court.
Hansard record of the item : 'Lawfare and Investigative Journalism' on Monday 17 October 2022.
