‘Kyrgyz laundromat’ still smurfing global money?
The clampdown on the ‘Baltic laundromat’ hasn’t destroyed the global cash-out market. ‘Black cash’ is still laundered at the state level. Apparently, the main money laundering hub is currently located in a small Central Asian country – Kyrgyzstan. Ethnic criminal groups operating in Russia, Europe, and Central Asia use it to legalize their shady proceeds. Revenues generated by the illegal business are estimated at $500 million per year. However, it is impossible to covertly launder money on a global scale. Is the national political establishment involved in the criminal schemes?
In early June, the following persons have been committed to the Pretrial Detention Center of the State Committee for National Security of Kyrgyzstan: ex-Prime Minister Sapar Isakov; Kubanychbek Kulmanov, ex-Chairman of the Kyrgyz Customs Service, Osmonbek Artykbaev, Deputy of the Supreme Council of Kyrgyzstan (Social Democratic Party of Kyrgyzstan), and ex-Prime Minister Zhantoro Satybaldiev. The high-profile arrests have been made following a report published by the commission investigating a breakdown at the Bishkek Thermal Power Plant and spending of the funds allocated for its modernization.
According to the investigation, in 2014, Osmonbek Artykbaev, then Minister of Energy and Industry, has instructed his subordinate to sign a contract with China-based TBEA company on its terms as soon as possible to implement the project “Bishkek Thermal Power Plant Modernization”. Neither him, nor his deputies, nor the General Director of Power Plants Open Joint Stock Company “had requested the mandatory technical and economic feasibility study and other technical documents”. Similar charges have been laid against Sapar Isakov: “while being in charge of the Foreign Policy Department in the rank of a Deputy Head of the Executive Office of the President of Kyrgyzstan, he had lobbied interests of a foreign company”. Satybaldiev is suspected of complicity in this crime. Kubanychbek Kulmanov, while being the Bishkek Mayor, has illegally used funds provided as a special purpose grant in the amount of $2 million in the framework of the project “Bishkek Thermal Power Plant Modernization” to build two new schools. The above deeds fall under part 1 of Article 303 of the Criminal Code of the Kyrgyz Republic (corruption).
According to the commission for investigation of the power plant breakdown, the actions of the officials and managers of power companies have resulted in improper modernization of the power plant and disruption of the completion deadlines. During the peak load caused by cold weather in January 2018, a technical breakdown has occurred: the old equipment failed, while the new equipment wasn’t operational yet. The Kyrgyz capital had no heat supply for several days.
There is an opinion in the Kyrgyz policy circles that the instituted criminal cases are just a formal reason to neutralized some unwanted persons. In fact, there were plenty of reasons to do so, but it was decided to choose the most high-profile one. All the detained officials are fellow party members and associates of the former President Almazbek Atambaev.
Nezygar’ (@russica2) Telegram channel has published interesting insider information: the true reason behind this political purge are not machinations with the power sector modernization – but a clampdown on yet another ‘laundromat’.
“The purge in the local elite of Kyrgyzstan is primarily linked with the suppression of ‘black cash’ flows sweeping to Kyrgyzstan from West European countries, Russian Federation, China, and Kazakhstan,” – Nezygar’ states.
The ‘Kyrgyz laundromat' is allegedly controlled by Atambaev's children; the former President had promised to stem the ‘black cash' flows in exchange for safety guarantees for his associates. However, the revenues generated by the illicit financial flow – $500 million per year – were too high, and the arrangements failed to come into effect.
Ethnic criminal group based in Russia, Armenia, Georgia, Albania, and Montenegro siphoned funds to the republic through diplomatic channels.
“After the legalization, the ‘black cash’ (some $20–30 billion per month) ended up on accounts belonging to legal entities and individuals in Continental China and Hong-Kong and then was further dispersed in banks of Southeastern Asia and the EU,” – Nezygar’ reports.
Despite the severe and grounded allegations against the inner circle of the ex-President, the current authorities – not loyal to Atambaev at all – and free Kyrgyz press have, in fact, ignored the seemingly high-profile materials. Only a few web sites have reposted the information published by the Telegram channel. Members of the local elite admit that the criminal cases against Atambaev’s associates are politically charged and prefer to keep silence to prevent any unwanted information leaks.
Kyrgyzstan had already been named a branch of the global ‘laundromat’ in the past. A report published by the Organization for Economic Co-operation and Development in 2016 and dedicated to money laundering in Latvian banks provides specific examples of siphoning off ‘black cash’ through Latvian banks: “the Canadian company had transferred the bribes to Kyrgyzstan, the American – to Russia, while $1 billion was siphoned off from Moldavia and has literally ‘dissipated’ in three Latvian banks”.
Sergei Leshchenko, Deputy of Verkhovna Rada of Ukraine, said in 2017 that Paul Manafort, ex-advisor to ousted President Viktor Yanukovich, has covertly siphoned off large amounts of money received from the Party of Regions via an offshore company incorporated in Belize and then – through a bank account in Kyrgyzstan. The New York Times also wrote about suspicious financial affairs of Manafort: allegedly, he has received $12.7 million in cash in the period of 2007–2012.
Excerpt from the accounting book
“We obtained copies of official forms of Manafort’s consulting company confirming that $750 thousand had been transferred in 2009 to an offshore company incorporated in Belize under a pretext of purchasing 501 computer. Concurrently, the secret ledgers of the Party of Regions show a sum of $750 thousand against the name of Manafort. I have submitted these records to the National Anti-Corruption Bureau of Ukraine. In the course of the investigation, it was found that Paul Manafort had used an offshore company in Belize and a bank account in Kyrgyzstan to launder money of the former Ukrainian President. The accounting book of the Party of Regions was discovered in a strongbox in one of the offices rented by Manafort,” – Deputy Leshchenko said.
The Kyrgyz Financial Intelligence Service claims that since the change of the President as a result of the revolution in 2010, no episodes involving laundering of foreign monetary funds through Kyrgyz banks and other financial institutions were registered.
However, prior to the change of power in 2010, suspicious transactions had been made in certain banks belonging to partners of Maksim Bakiev – the eldest son of then-President Kurmanbek Bakiev. For instance, Asia Universal Bank, KyrgyzCredit Bank, and Manas Bank were involved, together with foreign offshore companies, in money laundering operations with further siphoning off funds to third countries via Kyrgyzstan. Therefore, external management had been imposed on the banks having ties with Maksim Bakiev, including a number of restrictions on financial transactions, since 2010 and until 2012.
“Should any questions with regards to similar facts arise now, then a respective official inquiry has to be made. We will examine materials and carry out a check. Without an official inquiry, we cannot act on our own,” – Bolot Sadykov, State Secretary of the Financial Intelligence Service, said.
Internet portals close to the official powers in Tashkent have published an article of political expert Usman Khaknazarov about multimillion financial flows siphoned off abroad from Uzbekistan. The article states that large amounts of money belonging to relatives of late President Islam Karimov and individual representatives of his regime were siphoned off via adjacent Kyrgyzstan.
Large sums of money were smuggled to Kyrgyzstan through illegal channels; fictitious histories were produced for these funds; and then the monies were transferred abroad with the support of powerful governmental officials. According to Khaknazarov, these shady financial channels had been established during the rule of Kurmanbek Bakiev, and after the laundering in Kyrgyz banks, the funds were transferred to Russia, China, and Europe. The illegal schemes designed to launder criminal proceeds of Uzbek oligarchs had operated even after the change of power in Kyrgyzstan in 2010.
Prominent opposition activist Edil Baisalov also confirms that a financial ‘laundromat’ has been operating in the Central Asian country for many years.
“Of course, the amount is exaggerated. $500 million per year – not per month! The transformation of our country into a global ‘laundromat’ has begun under the rule of the Akaev family, gained momentum during the presidency of Bakiev, and continued after a reshuffle during the reign of Atambaev,” – Baisalov wrote in his Twitter.
Nezygar’ mentions that Kazakhstan and Russia have also taken a hand in combating the shadow economy. For instance, Kazakh banker Zhomart Ertaev and Russian banker Vladimir Antonov became victims of ‘financial purges'. Ertaev, who has been put on the international wanted list, was allegedly involved in money laundering. In May 2018, he was arrested by Russian special ops troopers near a Moscow City tower. The businessman is suspected of multimillion embezzlements.
According to the investigation, Ertaev was involved in the embezzlement of $80 million received as a loan from Bank RBK Joint Stock Company where he used to be the Chairman of the Board of Directors.
Ertaev insists that he hadn't embezzled funds, while the $80 million were used to purchase a portfolio of shares in Almatel company he has later taken charge of. The banker claims that because of the severe financial issues currently experienced by Bank RBK, the government is trying to put the blame upon its shareholders who had allegedly committed embezzlements.
Banker Vladimir Antonov, a native of Tashkent, was arrested in early April in St. Petersburg. Operatives of the Main Investigations Department of the General Administration for St. Petersburg and the Leningrad Region of the Ministry of Internal Affairs (MIA) of the Russian Federation are currently investigating him for complicity in a fraud affecting 10 banks. This primarily refers to the embezzlement of 150 million rubles ($2.3 million) from Sovetsky Bank. In 2015, its former managers have intentionally granted a knowingly unrecoverable loan. The funds were transferred through organizations controlled by the businessman and then stolen.
Vladimir Antonov is actively collaborating with the investigation and shedding light on numerous shady financial schemes used for years.
Interestingly, Russia Special Flight Detachment – responsible for air transportation of the national leadership and much talked about in relation to the high-profile ‘cocaine case’ – has been mentioned again recently with regards to the Kyrgyz ‘laundromat’.
“Russian banks, mostly those based in the Primorsky krai and Far East, are to become primary victims of the Kyrgyz ‘laundromat’ shutdown; the Bank of Russia has already commenced a routine purge and optimization there,” – Nezygar’ concludes.
In other words, if successful, the clampdown on the money laundering operations in Kyrgyzstan is going to bring to the surface plenty of new names and interesting details.
Zaur Dadaev, who is imprisoned for the murder of politician Boris Nemtsov, may soon be put in stricter conditions of detention. Being sent for any, sometimes contrived violations of the regime in a punitive confinement (SHIZO), Dadaev is being forced to pass a check on the lie detector and give evidence on the Nemtsov case.
The video showing prisoner being tortured by officers of the Yaroslavl correctional camp No. 1 (IK-1), which was published on July 20, caused a public outcry and the initiation of a criminal case by the Investigative Committee. However, a year ago, an ICR officer found no exceeding of official powers in the video, thus justifying the torture.
A large-scale purge of thieves in law, which started shortly after Prime Minister Nikol Pashinyan’s coming to power, continues in Armenia. After receiving threats of arrests, thieves were taken in custody for carrying weapons and drugs.
However, the thief, who is currently dividing the spheres of influence in Ukraine’s Odessa region with Antimoz Kukhilava through his representatives, has been sentenced in absentia. Mindiya Goradze is not in Georgia at the moment.