My unique blog 6242

(Bloomberg) — Royal Dutch Shell Plc dropped plans to pur­chase a stake in KazMunayGas National Co. after a due dili­gence process that includ­ed dis­cus­sions about the risk of cor­rup­tion at the Kazakh state oil com­pa­ny, peo­ple with knowl­edge of the mat­ter said.

An inves­ti­ga­tion con­duct­ed on Shell’s behalf dis­cussed the infor­mal con­trol one of Kazakh President Nursultan Nazarbayev’s sons-in-law exer­cis­es over the oil and gas pro­duc­er, three peo­ple said, ask­ing not to be iden­ti­fied as the issue is not pub­lic. U.S. law firm Debevoise & Plimpton LLP con­duct­ed the due dili­gence, one of them said.

Shell had been con­sid­er­ing buy­ing a stake in KazMunayGas before a planned ini­tial pub­lic offer­ing. Instead, the Anglo-Dutch com­pa­ny has agreed to help KazMunayGas to improve its cor­po­rate gov­er­nance, two of the peo­ple said.

Shell, the world’s sec­ond-largest oil pro­duc­er by mar­ket cap­i­tal­iza­tion, already has a sig­nif­i­cant pres­ence in Kazakhstan, work­ing with KazMunayGas in the giant Kashagan and Karachaganak oil and gas fields. The Karachaganak part­ners agreed Oct. 1 on a $1.7 bil­lion set­tle­ment to end a dis­pute with Kazakhstan over their con­trac­tu­al obligations.

Family Links

The KazMunayGas sale is part of Kazakhstan’s biggest wave of pri­va­ti­za­tion and the ‘100 Step’ pro­gram of reforms Nazarbayev put for­ward in 2015 as a slump in oil prices ham­mered the cen­tral Asian country’s com­modi­ties-depen­dent economy.

Timur Kulibayev, the leader for life’s son-in-law, left his post as first vice pres­i­dent at KazMunayGas in 2005 but there’s evi­dence of a con­tin­u­ing link. He became chair­man of the Kazenergy asso­ci­a­tion, a group of ener­gy pro­duc­ers that liais­es with the government.

Spokespeople for Shell, Samruk-Kazyna, Kazenergy and Deboise & Plimpton https://www.opendemocracy.net all declined to com­ment. KazMunayGas and had no imme­di­ate com­ment when con­tact­ed by Bloomberg News.Kazakhstan’s nation­al cham­ber of entre­pre­neurs Atameken, which is chaired by Kulibayev, didn’t reply to request seek­ing comments.

One direc­tor on KazMunayGas’s eight-mem­ber board is an exec­u­tive from Kazenergy, and one mem­ber of KazMunayGas’s sev­en-per­son man­age­ment board came from a com­pa­ny owned by Kulibayev.

Pipeline Contract

In 2014, it was pub­licly dis­closed that Kulibayev owned a stake in KazStroyService, an ener­gy ser­vices com­pa­ny with $1.2 bil­lion in rev­enue. One of its biggest projects has been a 644-kilo­me­ter gas pipeline built for a KazMunayGas ven­ture in 2013 and 2014.

As of December 2016, Kulibayev held a 32.2 per­cent stake in KazStroyService Global BV, accord­ing to the finan­cial state­ments of his hold­ing com­pa­ny Steppe Capital.

KazStroyService has “qua­si-monop­oly posi­tion on Kazakhstan’s engi­neer­ing, pro­cure­ment and con­struc­tion pre­mi­um oil and gas mar­ket,” Moody’s Investors Service said in 2014.

KazMunayGas has rec­og­nized cor­rup­tion as a sig­nif­i­cant issue in Kazakhstan, cit­ing the country’s rank­ing in Transparency International’s Corruption Perceptions Index among the risk fac­tors in its April bond prospec­tus. Kazakhstan ranked 122 out of 180 coun­tries in 2017, com­pared with 131 out of 176 coun­tries in 2016.

With assistance from Kelly Gilblom.

To con­tact the reporters on this sto­ry: Jack Farchy in London at [email protected];Nariman Gizitdinov in Almaty at [email protected]

To con­tact the edi­tors respon­si­ble for this sto­ry: Torrey Clark at [email protected], Will Kennedy, James Herron

For more arti­cles like this, please vis­it us at bloomberg.com

Jack Farchy and Nariman Gizitdinov

Sater claims that the cam­paign against him­self and Trump was coor­di­nat­ed by Kenes Rakishev and Karim Massimov, who was arrest­ed for trea­son by the Kazakh author­i­ties in January.

Kenes Rakishev, one of Kazakhstan’s high­est-pro­file busi­ness­men, has been named in an explo­sive new legal case that alleges for­eign inter­fer­ence in the 2016 US Presidential election.

Rakishev is accused of act­ing as a “hench­man” and “wal­let” for Kazakhstan’s for­mer prime min­is­ter Karim Massimov in a plot to under­mine Donald Trump’s 2016 elec­tion campaign.

The alle­ga­tions are con­tained in a com­plaint brought by Felix Sater, a for­mer senior advi­sor to President Trump and a financier who helped bankroll the Trump Soho tower.

Sater is suing BTA Bank, which is owned by Rakishev, the City of Almaty in Kazakhstan, the Kazakh Government and a pri­vate inves­ti­ga­tion firm called Arcanum.

According to the law­suit, which was filed in the Southern District of New York fed­er­al court, Sater was hired by the defen­dants to help recov­er bil­lions of dol­lars stolen from BTA Bank by its pre­vi­ous own­er Mukhtar Ablyazov.

However, Sater alleges that this arrange­ment was mere­ly a cov­er to hide the Kazakhs’ true intent, which was to dig dirt on Sater and then use it to harm Trump’s elec­tion bid.

window.tgpQueue.add(‘tgpli-64a7dcb0cd1a4’)2016 US Presidential elec­tion vot­ing results by coun­ty. Red for Donald Trump. Blue for Hillary Clinton. Shade scaled by per­cent of vote. County size scaled by pop­u­la­tion. Image by Mark Newman, cour­tesy of Wikimedia Commons. CC BY 2.0

The law­suit states: “Arcanum and the Kazakh Parties, under the guise of work­ing togeth­er with Sater pur­suant to a con­fi­den­tial assis­tance agree­ment signed in June 2015 for Sater to help recov­er assets belong­ing to fugi­tive Kazakh oli­garch Mukhtar Ablyazov and his asso­ciates, con­spired to leak false and defam­a­to­ry infor­ma­tion about Sater to media out­lets includ­ing ABC News. This was part of a con­cert­ed effort to false­ly (and absurd­ly) por­tray Sater, a long­time busi­ness part­ner of Donald Trump, as a Russian agent and Kremlin stooge.”

Sater was a key wit­ness in Special Prosecutor Robert Mueller’s inves­ti­ga­tion into Russian inter­fer­ence in the 2016 elec­tion. A leaked 2015 email writ­ten by Sater implied that he would arrange for Vladimir Putin to help Trump’s elec­tion bid as part of a scheme to build a Trump tow­er in Moscow.

Sater claims that rather than being a stooge for the Kremlin, his work for US intel­li­gence and law enforce­ment agen­cies meant that the Russians want­ed to exe­cute him for treason.

The law­suit states: “Felix Sater is a leg­endary fig­ure in the U.S. Intelligence Community. He is known for risk­ing his life con­duct­ing espi­onage oper­a­tions against North Korea, Taliban- con­trolled Afghanistan, al Qaeda, Russia and Russian hack­ing net­works, includ­ing oper­a­tions he exe­cut­ed on the ground in Russia and Afghanistan.”

Sater claims that the cam­paign against him­self and Trump was coor­di­nat­ed by Kenes Rakishev and Karim Massimov, who was arrest­ed for trea­son by the Kazakh author­i­ties in January.

“Massimov and Rakishev were active­ly seek­ing influ­ence with American politi­cians,” the law­suit states. “In 2016, they believed that they would be reward­ed for help­ing the Hillary Clinton cam­paign (who was con­sid­ered cer­tain to win the elec­tion) by smear­ing Sater and Trump. Massimov and Rakishev’s efforts to cur­ry favor with promi­nent American politi­cians includ­ed lav­ish­ing mon­ey on Hunter Biden, who called Rakishev a ‘close friend’.” 

According to a US Senate inves­ti­ga­tion, Rakishev paid $142,300 to a com­pa­ny run by a close friend of Hunter Biden. Rakishev also invest­ed in deals intro­duced by Biden.

The law­suit states: “Rakishev is reput­ed to have raped under­age girls in Russia and orga­nized “no holds barred” fight­ing con­tests involv­ing eight-year-old chil­dren. The Russian more info author­i­ties refused to inves­ti­gate these crimes because Rakishev was under Massimov’s pro­tec­tion and also because Rakishev’s father-in-law (Imangali Tasmagambetov), Kazakhstan’s ambas­sador to Russia, inter­vened to stop the investigation.”

Rakishev has also been linked to fig­ures involved in a January upris­ing in Kazakhstan and is report­ed­ly close friends with Ramzan Kadyrov, the leader of the Chechnya who has been accused of human rights abuses.

Sater has brought his law­suit as a coun­ter­claim to a 2019 com­plaint filed by BTA Bank and the Kazakh author­i­ties. That claim alleges that Sater stole mon­ey from BTA.

Matthew Schwartz, a part­ner at the law firm Boies Schiller Flexner and coun­sel for BTA Bank and the City of Almaty, said: “Felix Sater’s fil­ing is noth­ing more than con­spir­a­cy the­o­ries and des­per­a­tion dressed up like a law­suit. We are con­fi­dent that the court will see through his tactics.”

Original source of arti­cle: www.legalreader.com

Priti Patel’s new law would make it an offence for cer­tain organ­i­sa­tions to reveal ‘restrict­ed’ information

UK MPs are set to debate the government’s new ‘nation­al secu­ri­ty’ law, which could crim­i­nalise pub­lic inter­est jour­nal­ism while grant­i­ng min­is­ters immu­ni­ty from involve­ment in war crimes.

Priti Patel’s National Security Bill, unveiled in the Queen’s Speech last month, would make it an offence for jour­nal­ists to report ‘restrict­ed’ offi­cial infor­ma­tion in the pub­lic inter­est if they or their organ­i­sa­tion has received fund­ing from a for­eign state.

The bill is now set to enter what is known as ‘com­mit­tee stage’ and ‘report stage’ as it moves through Parliament – a chance for MPs to scru­ti­nise it in detail and vote on changes.

Tory back­bencher David Davis has already warned that media organ­i­sa­tions such the Organised Crime and Corruption Reporting Project, and non-gov­ern­men­tal organ­i­sa­tions (NGOs) such as Reprieve, Transparency International and Anti-Slavery International – all of which have been giv­en grants by over­seas gov­ern­ments while car­ry­ing out impor­tant trans­paren­cy work – could face pros­e­cu­tion under the new laws.

window.tgpQueue.add(‘tgpli-64a7dcda84675’)The Home Secretary has been crit­i­cised for fail­ing to include safe­guards to pro­tect jour­nal­ists and whistle­blow­ers in the bill.

The Home Office argues that the bill, which was debat­ed in Parliament on Tuesday, is need­ed because the UK’s secre­cy laws are out­dat­ed and no longer counter “mod­ern-day state threats” from coun­tries includ­ing Russia and China. The Official Secrets Act, a series of laws gov­ern­ing nation­al secu­ri­ty and the pro­tec­tion of state secrets, was last updat­ed in 1989. 

But crit­ics say the laws are too broad and risk crim­i­nal­is­ing the act of chal­leng­ing the gov­ern­ment. The pro­pos­als come after just weeks after the gov­ern­men­t’s recent­ly passed Police, Crime, Sentencing and Court Bill, which has been wide­ly crit­i­cised for crack­ing down on protest, and an Elections Bill that civ­il rights groups say under­mines the inde­pen­dence of the UK’s elec­tions watchdog.

These are the most con­tentious proposals.

Criminalise whistleblowers and civil society organisations

Any indi­vid­ual or organ­i­sa­tion that receives fund­ing from a for­eign gov­ern­ment, includ­ing the UK’s allies, could be con­sid­ered as act­ing for or on behalf of that gov­ern­ment under the new laws.

Civil rights groups have warned that jour­nal­ists and activists who share leaks of offi­cial infor­ma­tion to oppose gov­ern­ment poli­cies could face impris­on­ment under the National Security Bill if they belong to organ­i­sa­tions that have been giv­en grants by oth­er countries.

The Campaign for Freedom of Information and human rights char­i­ty Article 19 said that the changes were “oppres­sive and disproportionate”.

“If the gov­ern­ment decid­ed that the UK’s ener­gy sit­u­a­tion required an imme­di­ate expan­sion of frack­ing or the build­ing of coal fired or nuclear pow­er plants, the use of leaked infor­ma­tion which could under­mine that pol­i­cy could be a crim­i­nal offence under the Click here for more info bill,” they said in a brief­ing to MPs.

Protect, the UK’s lead­ing whistle­blow­er char­i­ty, has also crit­i­cised the bill for fail­ing to safe­guard whistleblowing. 

“The offences are so wide­ly drawn that our fear is that whistle­blow­ers who reveal a trade secret while rais­ing con­cerns about fraud or cor­rup­tion to for­eign reg­u­la­tor or law enforce­ment such as the FBI or to a for­eign-owned media out­let could be com­mit­ting a crim­i­nal offence that car­ries a sen­tence of life in prison,” said Andrew Pepper-Parsons, the organisation’s head of policy.

The gov­ern­ment ignored a rec­om­men­da­tion by the Law Commission to include a pub­lic inter­est defence in the bill, which would allow cam­paign­ers and jour­nal­ists to chal­lenge offences for shar­ing leaks.

Widens the definition of what information is illegal to share

The shar­ing of cer­tain con­fi­den­tial offi­cial infor­ma­tion is already a crim­i­nal offence under the Official Secrets Act 1989 – but only if the data relates to secu­ri­ty and intel­li­gence, defence or inter­na­tion­al relations.

The National Security Bill removes these lim­its. It would make the shar­ing of any offi­cial infor­ma­tion for or on behalf of a for­eign pow­er (a def­i­n­i­tion that includes work­ing for an organ­i­sa­tion that has received fund­ing from over­seas gov­ern­ments) an offence if it is restrict­ed in any way “for the pur­pose of pro­tect­ing the safe­ty or inter­ests of the UK”.

This is a bit of a mouth­ful – but what it poten­tial­ly means is that if a media organ­i­sa­tion or NGO has ever received fund­ing from a non-UK gov­ern­ment, then it can­not share any infor­ma­tion that the gov­ern­ment hasn’t active­ly dis­closed. Finding and report­ing offi­cial infor­ma­tion that is ‘restrict­ed’ in some way is more com­mon­ly known as journalism.

The Campaign for Freedom of Information and Article 19 both argue that this law could also be applied to any infor­ma­tion that the gov­ern­ment has refused to dis­close via a Freedom of Information (FOI) request, as that refusal would con­sti­tute a restric­tion. The government’s record on dis­clos­ing infor­ma­tion through FOI has been abysmal.

Allow ministers to decide what information is legal or illegal to share

The bill would make shar­ing offi­cial infor­ma­tion an offence when it is used in a way that is prej­u­di­cial to the UK’s “safe­ty or interest”.

In the bill’s explana­to­ry notes, even the gov­ern­ment admits that this term is “not defined” – but argues that case law has set a prece­dent for min­is­ters to deter­mine what is the safe­ty or inter­est of the UK.

The bill sets no lim­its to what could be con­sid­ered “an inter­est” – only that min­is­ters would get the final say.

Grant ministers and spies immunity from assisting in overseas crimes

While mak­ing it hard­er for jour­nal­ists to reveal min­is­ters’ wrong­do­ing, the bill also per­verse­ly grants immu­ni­ty to min­is­ters or spies who assist in over­seas crimes. 

The Serious Crime Act, which was passed in 2007, made it an offence to do any­thing in the UK encour­ag­ing or assist­ing a crime over­seas. But the Home Office is propos­ing an exemp­tion if that assis­tance was “nec­es­sary for the prop­er exer­cise of any func­tion” of the armed forces or UK intel­li­gence services.

Reprieve, an inter­na­tion­al human rights organ­i­sa­tion, said it would mean offi­cials who pro­vide infor­ma­tion to for­eign part­ners lead­ing to some­one being tor­tured or unlaw­ful­ly killed in a drone strike, for instance, would be shield­ed from prosecution. 

The char­i­ty also raised con­cerns that vic­tims of those crimes could be pre­vent­ed from seek­ing jus­tice in court. 

The senior Tory MP David Davis has come out against the clause, warn­ing in the Guardian that it could “let min­is­ters off the hook if they autho­rised crimes like mur­der and tor­ture from the safe­ty of their desks in Whitehall”.

Restricts legal aid for people who have been convicted of terrorism offences

Human rights organ­i­sa­tions have raised con­cerns that the bill will unnec­es­sar­i­ly lim­it access to jus­tice by restrict­ing legal aid for indi­vid­u­als pre­vi­ous­ly con­vict­ed of ter­ror­ism offences – leg­is­la­tion that has been applied to peace­ful protesters. 

Jacob Smith, a legal expert at Rights and Security International, said the leg­is­la­tion would “pun­ish an indi­vid­ual twice for the same con­duct” by mak­ing it hard­er for them to chal­lenge mis­treat­ment by the government.

The bill would also allow the gov­ern­ment to reduce the amount of dam­ages an indi­vid­ual with a ter­ror con­vic­tion can receive, even if they win their case.

Smith said that the pro­pos­al was par­tic­u­lar­ly con­cern­ing giv­en the recent mis­ap­pli­ca­tion of ter­ror­ism legislation.

In 2019, the UK was crit­i­cised by the United Nations for using anti-ter­ror and secu­ri­ty leg­is­la­tion to pros­e­cute a group of peace­ful protests who pre­vent­ed a depor­ta­tion flight from tak­ing off at an airport.

The so-called Stansted 15 were giv­en sus­pend­ed sen­tences before their con­vic­tions were lat­er quashed on appeal.

Original source of arti­cle: www.opendemocracy.net/en

Billionaire banker Mukhtar Ablyazov was Kazakhstan’s min­is­ter of ener­gy and trade from 1998 to 1999. In 2009, Ablyazov fled Kazakhstan after $10 bil­lion was report­ed miss­ing from BTA Bank, where he was chair­man. He was arrest­ed in France in 2013 in response to extra­di­tion requests from Russia and Ukraine. Ablyazov denied alle­ga­tions of loan fraud and embez­zle­ment. He was released in December 2016 after a French court ruled that Russia’s request was polit­i­cal­ly motivated.

window.tgpQueue.add(‘tgpli-64a7de8ee4d7d’)

Ablyazov owned CFJ Star Trust, which was set up in the Cayman Islands in 2007, with a broth­er-in-law, Syrym Shalabayev. Shalabayev check here was also accused of involve­ment in the alleged BTA loan fraud. He denied the charges and was grant­ed refugee sta­tus in Lithuania in 2016. CFJ Start Trust became inac­tive in November 2011 and closed in October 2012. “Efforts are being made to resign as Trustees,” an Appleby employ­ee typed in red as part of a 2012 audit of high-risk clients.

window.tgpQueue.add(‘tgpli-64a7de8ee4d94’)

Response

Ablyazov did not respond to a request for com­ment from ICIJ before publication.

On 5 Nov., a spokesman for Ablyazov told ICIJ that the trust was estab­lished “in view of a pri­vate place­ment for investors in BTA Bank.” The place­ment did not take place. The com­pa­ny was incor­po­rat­ed off­shore to mit­i­gate the risks of state cor­rup­tion, Ablyazov said. Ablyazov said he did not flee Kazakhstan. “BTA Bank’s finances were in strong shape and the bank was prepar­ing for an IPO on the London mar­ket,” Ablyazov said, and loss­es “were caused not by Mr Ablyazov, but by the whol­ly ille­gal forced nation­al­i­sa­tion of BTA Bank.”

Related documents

2012 Compliance Document From Appleby — Ablyazov

Offshore Leaks Database

STATEMENT

(in accor­dance with Article 181 of the Code of Criminal Procedure of the Republic of Kazakhstan)

On October 27, 2022, the Elge Qaitaru Public Foundation addressed you with a state­ment regard­ing the activ­i­ties of the Eurasian Group (ERG).

On December 15, 2022, we received a response from the Ministry of Finance of the Republic of Kazakhstan to the above statement.

In addi­tion, we have at our dis­pos­al the response of the Ministry of Finance to a sim­i­lar request from NEGE Media LLP about the activ­i­ties of the same com­pa­ny and a num­ber of oth­er documents.

An analy­sis of the avail­able doc­u­ments allows us to con­clude that a sig­nif­i­cant dam­age was caused to the inter­ests of the Republic of Kazakhstan. This dam­age is the result of the action or inac­tion of the for­mer mem­bers of the Government of the Republic of Kazakhstan Mr. Marat Beketayev, Mr. Bakhyt Sultanov and Mr. Beybut Atamkulov in the process of rep­re­sent­ing the inter­ests of our state as mem­bers of the ERG Board of Directors.

1. It fol­lows from the response of the Ministry of Finance to NEGE Media LLP that for the peri­od from 2017 to 2021 in favor of the Republic of Kazakhstan, which owns a 40% stake in ERG, div­i­dends total­ing $365.6 mil­lion were accrued.

At the same time, from cor­po­rate report­ing avail­able on the ERG.sarl web­site, it fol­lows that the com­pa­ny’s EBITDA for 2017 is — $ 2.09 bil­lion, for 2018 — $ 1.913 bil­lion, for 2019 — $ 1.538 bil­lion, for 2020 — 2.023 bil­lion dol­lars, for 2021 — 4.210 bil­lion dol­lars, and free cash flow (free cash flow) only by the results of 2021 amount­ed to 1.830 bil­lion dollars.

A sim­ple arith­metic cal­cu­la­tion shows that ERG’s prof­it for the peri­od 2017–2021 was $11.774 bil­lion. Considering that the share of the Republic of Kazakhstan in the ERG is 40%, why were accrued div­i­dends over that peri­od equal to $365.6 mil­lion instead of sev­er­al bil­lion dollars?

2. Our state­ment also raised the issue of the exces­sive debt bur­den of Kazakh enter­pris­es of the Eurasian Group. However, in its response, the Ministry of Finance, while rec­og­niz­ing the group’s debt of $7 bil­lion in 2021, reas­sures us that the net debt to EBITDA ratio is about 1.5. However, the ERG cor­po­rate report­ing proves that in 2021 its debt exceed­ed EBITDA almost twice, and by 3–4 times in the pre­vi­ous years. The doc­u­ments we have at our dis­pos­al show that there is no clear pur­pose in the bil­lions of dol­lars of cred­it agree­ments between the Kazakhstani enter­pris­es of the ERG and the sanc­tioned Russian banks VTB and Sberbank, which allows us to con­clude that the pur­pose of obtain­ing these loans is to enslave Kazakhstani enterprises.

3. Another con­cern for the Kazakh econ­o­my was the issue of intra-group loans, and the Ministry of Finance sees noth­ing wrong with that. The doc­u­ments at our dis­pos­al indi­cate that under the agree­ment dat­ed December 2, 2021, the Kazakhstani enter­pris­es of the Eurasian Group pro­vid­ed a loan to the par­ent for­eign com­pa­ny equal to $500 mil­lion. In addi­tion, on January 10, 2022, imme­di­ate­ly after the so-called “January clash­es”, the ERG decid­ed to with­draw anoth­er $1.1 bil­lion from the coun­try by pro­vid­ing a loan from its Kazakh enter­pris­es to a par­ent com­pa­ny reg­is­tered in Europe. As the result of these actions alone with­in a short peri­od of time funds equal to $1.6 bil­lion were with­drawn from the coun­try. There is some infor­ma­tion about oth­er sim­i­lar loans. At the same time, it must be not­ed that a num­ber of Kazakhstani enter­pris­es of the ERG are bor­row­ers under loans received from the Development Bank of Kazakhstan and the Eurasian Development Bank, one of the founders of which is the Government of Kazakhstan.

The with­draw­al of mon­ey earned by Kazakhstani enter­pris­es from the sale of the coun­try’s nat­ur­al resources or from loans from the state bank caus­es enor­mous dam­age to the repub­lic’s economy.

In addi­tion, in prin­ci­ple, the ques­tion aris­es of the expe­di­en­cy and legal­i­ty of the that the ERG is reg­is­tered in the Grand Duchy of Luxembourg, since almost 68,000 of the ERG’s employ­ees or more than 94% of its staff work at https://www.opendemocracy.net the ERG enter­pris­es in Kazakhstan. Does not this cir­cum­stance cre­ates con­di­tions for com­mit­ting cor­rup­tion offences?

We believe that all inter­nal cor­po­rate deci­sions that led to these facts are sig­nif­i­cant and couldn’t be made with­out the par­tic­i­pa­tion of rep­re­sen­ta­tives of the Government of the Republic of Kazakhstan in the Board of Directors of the ERG. At var­i­ous times these func­tions were per­formed by the for­mer mem­bers of the Government, Mr. Marat Beketaev, Mr. Bakhyt Sultanov and Mr. Beybut Atamkulov.

We believe that in these cas­es, the indi­cat­ed per­sons com­mit­ted crim­i­nal offences under Part 4 of Art. 370 and part 1 of Art. 371 of the Criminal Code of the Republic of Kazakhstan, and caused sig­nif­i­cant harm to the inter­ests of the State.

In this regard, we ask you to check the activ­i­ties of the above-men­tioned rep­re­sen­ta­tives of the Directors for cor­rup­tion offences, reg­is­ter this appli­ca­tion in the auto­mat­ed data­base of crim­i­nal offences, ini­ti­ate a crim­i­nal case, pros­e­cute those respon­si­bly, rec­og­nize the Republic of Kazakhstan as a vic­tim and tell us the reg­is­tra­tion num­ber of the crim­i­nal case.

We have been warned on crim­i­nal lia­bil­i­ty under Art. 419 of the Criminal Code of the Republic of Kazakhstan.

Elge Qaitaru Foundation

A Court Ruling that May Resonate Across the Globe

The High Court in London recent­ly struck down three “Unexplained Wealth Orders” that U.K. law enforce­ment had hoped would foil an alleged mon­ey laun­der­ing scheme by Kazakh polit­i­cal elites. Instead, the Court found that the government’s evi­dence was insuf­fi­cient to com­pel fam­i­ly mem­bers of the for­mer Kazakh President to explain how they acquired approx­i­mate­ly £80 mil­lion worth of prop­er­ty in the U.K.

The Court’s Order is detailed, and it care­ful­ly pars­es through some poten­tial­ly eye­brow-rais­ing facts regard­ing the play­ers and prop­er­ties embroiled in this saga. Ultimately, the pri­ma­ry point of con­tention between the Court and the U.K. enforce­ment author­i­ties comes down to a very basic ques­tion in all glob­al mon­ey laun­der­ing enforce­ment: if cor­po­rate struc­tures are com­plex and poten­tial­ly opaque, is that nec­es­sar­i­ly a strong sign of under­ly­ing ille­gal­i­ty? Here, the Court seemed to answer that ques­tion in the neg­a­tive. This appears to be a clas­sic sto­ry of sus­pi­cion ver­sus per­sua­sive proof, and how that dynam­ic can play out in a court of law in a con­crete dis­pute. This out­come, and the lan­guage used by the Court, like­ly will res­onate for some time.

The “Unexplained Wealth Order,” Explained

In 2017, the U.K. passed the Criminal Finances Act (CFA) “to tack­le mon­ey laun­der­ing, cor­rup­tion, and ter­ror­ist financ­ing.” There are sev­er­al meth­ods that U.K. law enforce­ment have been using to com­bat mon­ey laun­der­ing, about which we pre­vi­ous­ly have blogged. The Unexplained Wealth Order (UWO) is one of these tools, and per­haps the pri­ma­ry tool, aimed specif­i­cal­ly at access­ing evi­dence to jus­ti­fy large pur­chas­es made by alleged high-risk individuals.

The UWO is intend­ed to fill the gaps of pre­vi­ous laws, which often left law enforce­ment in a bind: even if they had rea­son­able sus­pi­cion to con­clude that someone’s assets were the fruit of ill-got­ten gains, with­out a tool to freeze or recov­er those assets, they could not pro­duce enough evi­dence to bring a charge. This was espe­cial­ly prob­lem­at­ic in the mon­ey laun­der­ing con­text because of the inter­na­tion­al, mul­ti-juris­dic­tion­al nature of many mon­ey laun­der­ing schemes.

Two pri­ma­ry set of cir­cum­stances can cause a UWO to be issued: 1) a per­son sus­pect­ed of being involved in crim­i­nal activ­i­ty, and 2) that person’s pro­cure­ment of assets that are dis­pro­por­tion­ate to their income. The first com­po­nent is intend­ed to cov­er not only indi­vid­u­als involved in or con­nect­ed to seri­ous crimes, but also “Politically Exposed Persons” (PEPs). PEPs are politi­cians or pub­lic offi­cials from out­side the European Economic Area, and include fam­i­ly mem­bers and close asso­ciates of such offi­cials. Because of con­cern over the cor­rup­tion of for­eign gov­ern­ments, PEPs are con­sid­ered high-risk indi­vid­u­als in the mon­ey laun­der­ing con­text; thus, they them­selves do not need to be sus­pect­ed of seri­ous crim­i­nal activ­i­ty to fall with­in a UWO.

Procedurally, enforce­ment agen­cies must file an appli­ca­tion for the High Court to issue a UWO, and be able to prove that all require­ments for the UWO were met. The court retains ulti­mate dis­cre­tion over the issu­ing of a UWO. The court also can issue an inter­im freez­ing order, which tem­porar­i­ly pre­vents the own­er of the prop­er­ty from sell­ing or trans­fer­ring it while law enforce­ment inves­ti­gates fur­ther. If the inves­ti­ga­tion shows that the prop­er­ty was obtained through unlaw­ful con­duct, law enforce­ment then can apply for civ­il for­fei­ture of the property.

Once the UWO is issued, it requires the respon­dent to explain, among oth­er things, how they obtained the prop­er­ty in ques­tion. If the respon­dent fails to reply to the UWO, the prop­er­ty is “pre­sumed” to have been obtained through ill-got­ten gains. This pre­sump­tion makes the respondent’s inter­est in the prop­er­ty recov­er­able by civ­il for­fei­ture. If the respon­dent does com­ply with the UWO by explain­ing, among oth­er things, how they obtained the prop­er­ty in ques­tion, the UWO does not give rise to a pre­sump­tion of illegality.

The Government’s Case

This case sur­round­ed the alleged prop­er­ties and assets of Rakhat Aliyev (RA), the for­mer chief of Kazakhstan’s tax police, deputy chief of the KNB state secu­ri­ty ser­vice, ambas­sador to Austria, and first vice for­eign min­is­ter, who had faced mul­ti­ple crim­i­nal charges of mon­ey laun­der­ing, as well as the alleged kid­nap and mur­der of two Nurbank employ­ees. RA died in prison before he could be adju­di­cat­ed on those charges.

There were three prop­er­ties in the U.K. that law enforce­ment sought to poten­tial­ly seize with UWOs. Property #1, whose ulti­mate ben­e­fi­cial own­er is Dariga Nazarbayeva (DN), the ex-wife of RA and the daugh­ter of the for­mer President of Kazakhstan, was val­ued at £6 mil­lion. Property #2, whose ulti­mate ben­e­fi­cial own­er is Nurali Aliyev (NA), the son of RA and DN, was pur­chased with a $65 mil­lion loan (from Nurbank). Property #3, also owned by DN, was pur­chased for £32 mil­lion. Together, the three prop­er­ties are val­ued at over £80 mil­lion, or $100 mil­lion U.S. dollars.

The government’s over­ar­ch­ing the­o­ry was that these three high­ly-val­ued prop­er­ties were acquired as a means to laun­der the mon­ey that RA had obtained ille­gal­ly pri­or to his death. The gov­ern­ment hinged its the­o­ry on a series of links among RA, mem­bers of his fam­i­ly, and the prop­er­ties at issue. The gov­ern­ment appar­ent­ly did not argue that the prop­er­ties were acquired through any ille­gal activ­i­ties direct­ly com­mit­ted by the ben­e­fi­cial own­ers themselves.

On appeal in the High Court of London, Justice Lang found that links between RA and the prop­er­ties were insuf­fi­cient to jus­ti­fy the UWOs. A key fac­tor for Justice Lang was the time­line: RA and DN had divorced in 2007; they were sep­a­rat­ed before their divorce; NA was estranged from his father by the time of the divorce; and the acqui­si­tion of the prop­er­ties by DN and NA occurred after the divorce. Further, the Kazahk gov­ern­ment already had seized assets which it found had been acquired by RA through ille­gal activ­i­ty, and those assets were not linked with the three prop­er­ties at issue in the UWOs. Stated oth­er­wise, if dirty mon­ey had been used by RA to acquire assets, it pre­sum­ably had been account­ed for already by the Kazahk government.

The out­come seemed to turn on the inabil­i­ty or unwill­ing­ness of the U.K. gov­ern­ment to mean­ing­ful­ly engage with, or try to refute, the alter­na­tive fac­tu­al expla­na­tions offered by the defense for the (legal) source of the funds for the acqui­si­tions. In her opin­ion, Justice Lang point­ed to these alter­na­tive expla­na­tions for many of the government’s the­o­ries; for exam­ple, that DN, a busi­ness­women who was once named in Forbes rich­est peo­ple of Kazakhstan (and the daugh­ter of a for­mer President of Kazakhstan), aquired wealth inde­pen­dent­ly of her ex-hus­band. Another gap in the government’s proof was that DN acquired prop­er­ties #1 and #3 after her sep­a­ra­tion and divorce from RA. There was no evi­dence to sug­gest that the two were in con­tact through­out the pur­chase of any of the opendemocracy prop­er­ties. Again, the the­o­ry of the gov­ern­ment was not that the prop­er­ties were acquired through any ille­gal pro­ceeds, but specif­i­cal­ly through RA’s ille­gal proceeds.

As to prop­er­ty #2, Justice Lang found that NA pur­chased the estate inde­pen­dent of influ­ence from his par­ents, using funds law­ful­ly bor­rowed from a Nurbank loan, through a trans­ac­tion vet­ted by third-par­ty con­sul­tants. Although RA had faced charges for the kid­nap­ping and mur­der of Nurbank employ­ees, Justice Lang found that “there was no longer any con­nec­tion between Nurbank and RA at the time of the loan in August 2008.”

Takeaways for Global Money Laundering Enforcement and Forfeiture: Corporate Complexity Does Not Equal Illegality

The care­ful pars­ing of the facts by Justice Lang was informed by a basic val­ue judg­ment regard­ing the poten­tial evi­den­tiary mean­ing of com­plex cor­po­rate struc­tures in mon­ey laun­der­ing and for­fei­ture cas­es. This is the fund­man­tal con­tro­ver­sy pre­sent­ed by this case. The Court imposed a rel­a­tive­ly rig­or­ous stan­dard of proof for the gov­ern­ment. Here, the seem­ing­ly mun­dane deci­sion regard­ing an evi­den­tiary stan­dard of proof actu­al­ly rep­re­sents a much larg­er debate over basic prin­ci­ples. On the one hand, cor­po­rate opac­i­ty and com­plex­i­ty are often cit­ed as masks for ille­gal­i­ty, par­tic­u­lar­ly by glob­al watch­dog groups right­ful­ly con­cerned about cor­rup­tion, klep­toc­ra­cy and the social inequal­i­ties they fuel. However, the rule of law also means that the depri­va­tion of lib­er­ty and prop­er­ty should not occur until after due process: a rig­or­ous inves­ti­ga­tion and the pre­sen­ta­tion of reli­able and com­pelling proof of cul­pa­bil­i­ty, sub­ject to being test­ed by the defense. Generalized social con­cerns regard­ing cor­rup­tion and income inequal­i­ty do not nec­es­sar­i­ly equate to actu­al proof of ille­gal­i­ty in a spe­cif­ic case, although the social con­cerns always form a backdrop.

Specifically, Justice Lang stressed a “need for cau­tion in treat­ing com­plex­i­ty of prop­er­ty hold­ing through cor­po­rate struc­tures as grounds for sus­pi­cion,” and stated:

The use of com­plex off­shore cor­po­rate struc­tures or trusts is not, with­out more, a ground for believ­ing that they have been set up, or are being used, for wrong­ful pur­pos­es, such as mon­ey laun­der­ing. There are law­ful rea­sons – pri­va­cy, secu­ri­ty, tax mit­i­ga­tion – why very wealthy peo­ple invest their cap­i­tal in com­plex off­shore cor­po­rate struc­tures or trusts. Of course, such struc­tures may also be used to dis­guise mon­ey laun­der­ing, but there must be some addi­tion­al evi­den­tial basis for such a belief, going beyond the com­plex struc­tures used.

Justice Lang’s opin­ion also set forth the stan­dard for sim­i­lar cas­es that may come up: “where the Crown seeks to prove that prop­er­ty derives from crime by evi­dence of the cir­cum­stances in which the prop­er­ty is han­dled, it must be ‘such as to give rise to the irre­sistible infer­ence that it can only be derived from crime.’”

Of course, cor­po­rate com­plex­i­ty and its con­se­quences has been a major issue in the AML realm across the globe for years, par­tic­u­lar­ly the issue of ben­e­fi­cial own­er­ship and the scourge of anony­mous shell com­pa­nies – high­light­ed by the Panama Papers scan­dal. Although this is just one case out­come – which the U.K. gov­ern­ment has stat­ed that it will appeal – it sin­gu­lar­ly illus­trates the clas­sic ten­sion between gen­er­al­ized sus­pi­cion of ille­gal­i­ty, which can dri­ve both finan­cial insti­tu­tions’ AML sys­tems and leg­isla­tive efforts, and the need to prove ille­gal­i­ty and effec­tive­ly refute expla­na­tions of inno­cence in spe­cif­ic enforce­ment actions.

Shauna Pierson Ballard Spahr LLP

window.tgpQueue.add(‘tgpli-64a94808f2baa’)Nursultan Abishevich Nazarbayev is a Soviet and Kazakh states­man and politi­cian. President of the Kazakh SSR. The first President of the Republic of Kazakhstan from December 16, 1991 to March 20, 2019.

Dolfin Financial went bust after being accused of mis­lead­ing reg­u­la­tors over its ties with Nurali Aliyev, an oli­garch with lux­u­ry prop­er­ty in London

With The Daily Telegraph and openDemocracy.

The grand­son of Kazakhstan’s auto­crat­ic for­mer leader was the mys­tery client at the cen­tre of the col­lapse of a City firm spe­cial­is­ing in ‘gold­en visas’ for the super-rich, SourceMaterial and openDemocracy have learned.

Dolfin Financial went bust last https://www.opendemocracy.net year after the Financial Conduct Authority banned it from reg­u­lat­ed activ­i­ties say­ing it “dis­hon­est­ly or reck­less­ly pro­vid­ed mis­lead­ing infor­ma­tion” about its visa schemes and a rela­tion­ship with an “ultra-high net worth client”.

The FCA did not name the client but openDemocracy and SourceMaterial have estab­lished that it was Nurali Aliyev, the favoured grand­son of Nursultan Nazarbayev, Kazakhstan’s long-time “leader of the nation”.

In the first week of January, at least 225 peo­ple were killed in clash­es between secu­ri­ty forces and demon­stra­tors against the Kazakhstani regime, whose lead­ers have become spec­tac­u­lar­ly rich from the country’s abun­dant oil, gas and met­als. Much of that wealth is stored in London: a pre­vi­ous SourceMaterial inves­ti­ga­tion revealed that Aliyev’s moth­er, Dariga Nazarbayeva, was the secret own­er of icon­ic prop­er­ties in Baker Street worth £140 million.

“UK law is still rid­dled with loop­holes that enable klep­to­crats to come and go in the UK with impuni­ty and stash their cash here”, said Susan Hawley, head of Spotlight on Corruption, a cam­paign group.

Dolfin’s eva­sions about its rela­tion­ship with Aliyev, 37, are sig­nif­i­cant because foun­da­tions he owned had been sub­ject to an Unexplained Wealth Order, pop­u­lar­ly known as a ‘McMafia order’ after a BBC dra­ma about Russian oli­garchs. The mea­sure requires an indi­vid­ual to account for the ori­gin of their wealth, paving the way for author­i­ties to seize assets if there is no legit­i­mate source of cash.

The FCA said that Dolfin, which man­aged over £1 bil­lion in clients’ assets, was not open with the watch­dog about its con­nec­tions and tried to cov­er its tracks after a jour­nal­ist began ask­ing about its rela­tion­ship with a client served with a McMafia order.

At first Dolfin told the reg­u­la­tor that it had not dealt with the client—now iden­ti­fied as Aliyev—in the pre­ced­ing year. In fact, there was a “sig­nif­i­cant amount of ongo­ing activ­i­ty” between Dolfin and the client, his wife and their busi­ness inter­ests, accord­ing to the FCA’s investigation.

Dolfin hired a “cri­sis man­age­ment con­sul­tan­cy” to pre­vent it being pub­licly linked with Aliyev, while a staff mem­ber was instruct­ed to scrub any ref­er­ences con­nect­ing them to the client from pub­lic reg­is­ters, the FCA said.

Lawyers for Aliyev and Nazarbayeva suc­ceed­ed in over­turn­ing the McMafia order at the High Court last year—though a SourceMaterial inves­ti­ga­tion lat­er cast doubt on some of the evi­dence they pre­sent­ed to the court. The case was “a ground­less and vicious legal action” Aliyev said at the time.

Dolfin spe­cialis­es in secur­ing UK invest­ment visas for wealthy clients. The visas are intend­ed to help attract entre­pre­neurs to Britain if they invest at least £2 million—but the FCA said that the com­pa­ny used a net­work of com­pa­nies to engi­neer a sys­tem that allowed investors to con­tribute only £400,000.

There is wide­spread con­cern that these “gold­en visas” are open to abuse. In 2020 a par­lia­men­tary com­mit­tee called for a review of the UK’s invest­ment visa pro­gramme as part of a report into the threat of Russian inter­fer­ence in British politics.

Court papers reveal that in 2016 Aliyev—who at the age of 19 was head of Kazakhstan’s largest sug­ar pro­duc­er and by 22 was run­ning one of the country’s largest banks—applied for a gold­en visa using his address on The Bishops Avenue, the North London address dubbed “Billionaires’ Row”. The doc­u­ments do not spec­i­fy if he was suc­cess­ful or whether Dolfin facil­i­tat­ed the application.

Dolfin was found­ed in 2013 by Roman Joukovski, a British invest­ment banker named in court papers as hav­ing pre­vi­ous­ly act­ed as a finan­cial advis­er to Aliya Nazarbayeva, the youngest daugh­ter of Nazarbayev.

Joukovski’s work for Aliyev goes back at least as far as 2014 when an enti­ty con­trolled by the banker began man­ag­ing a com­pa­ny through which the oli­garch owned his £33 mil­lion Bishops Avenue property.

In a High Court claim Aliya Nazarbayeva, now 41, alleged that Joukovski and his busi­ness asso­ciates in 2007 cre­at­ed a com­plex off­shore struc­ture “in order to hide and pro­tect” her for­tune because she was a “polit­i­cal­ly exposed per­son”. The asso­ciates then used it to shift more than $300 mil­lion out of Kazakhstan, accord­ing to Nazarbayeva’s claim.

The pur­chas­es includ­ed anoth­er Bishops Avenue man­sion and a pri­vate jet, accord­ing to the High Court claim which was lodged in 2016 but was set­tled ear­li­er this month. In the suit, Nazarbayeva accused two of Joukovski’s asso­ciates of siphon­ing off her cash. The asso­ciates denied any wrong­do­ing and Joukovski him­self was not a defendant.

In a let­ter to SourceMaterial and openDemocracy, Joukovski’s lawyers denied that he had ever pro­vid­ed Ms Nazarbayeva with “any finan­cial or busi­ness advice”. Joukovski, who was not named in the pub­lished FCA notice on Dolfin, had “no mate­r­i­al role” in the regulator’s inves­ti­ga­tion, the lawyers said.

Kazakhstan erupt­ed into vio­lence in ear­ly January when the gov­ern­ment cracked down on peace­ful ral­lies that were trig­gered by a fuel price hike but quick­ly expressed wider anger at an oli­garchic regime under which it is esti­mat­ed 162 peo­ple own 50 per cent of the nation’s wealth.

The coun­try has been plagued by crony­ism and cor­rup­tion since inde­pen­dence from the Soviet Union in 1991. In 2003 James Giffen, an American busi­ness­man was charged with divert­ing $78 mil­lion in bribes from oil com­pa­nies to the Kazakh gov­ern­ment, and released after claim­ing he was work­ing with the CIA at the time.

A 2019 inves­ti­ga­tion by SourceMaterial found that Glencore, a min­ing con­glom­er­ate, had effec­tive­ly gift­ed the own­er­ship of an exclu­sive pri­vate school and two gold­mines to a bil­lion­aire friend of Nazarbayev. Glencore denies any wrongdoing.

The fail­ure of Dolfin throws a spot­light on the UK’s gold­en visa scheme, which offers “red car­pet” treat­ment for oli­garchs seek­ing a haven for sus­pect mon­ey, accord­ing to Hawley of Spotlight on Corruption.

Half of all gold­en visas issued in the UK are now being reviewed by the Home Office. A gov­ern­ment report into the pro­gramme was announced near­ly four years ago but has yet to be published.

“It is essen­tial that the gov­ern­ment urgent­ly pub­lish their report and come clean about how they are going to stop the gold­en visa route rolling out the red car­pet for klep­to­crats,” Hawley said.

Aliyev and his rep­re­sen­ta­tives did not respond to requests for comment.

Picture by UNESCO/Nora Houguenade licensed under cre­ative commons

Original source of arti­cle: https: https://www.source-material.org/

The Offshore Leaks Database spans five dif­fer­ent leaks, and now includes infor­ma­tion on off­shore com­pa­nies, foun­da­tions and trusts from sev­en off­shore ser­vice providers from ICIJ’s lat­est inves­ti­ga­tion on the use of tax havens.

The International Consortium of Investigative Journalists is adding a large vol­ume of new infor­ma­tion to its Offshore Leaks Database — incor­po­rat­ing addi­tion­al data from the Pandora Papers inves­ti­ga­tion about ben­e­fi­cial own­ers, share­hold­ers, direc­tors and oth­er types of offi­cers from more than 9,000 off­shore com­pa­nies, foun­da­tions and trusts.

The new data comes from sev­en off­shore providers head­quar­tered in Hong Kong, Belize, the British Virgin Islands, Panama, Switzerland and Dubai.

They are Asiaciti Trust Asia Limited, CILTrust International, Commence Overseas Limited, IlShin, Overseas Management Company Inc, SFM Corporate Services and Trident Trust Company Limited. Sixteen cur­rent and for­mer coun­try lead­ers were con­nect­ed to off­shore enti­ties that received ser­vices from these providers.

ICIJ believes that pro­vid­ing this data to all for free helps shine light on the off­shore econ­o­my and, in many cas­es, the dam­age it caus­es. ICIJ is pub­lish­ing this infor­ma­tion in the pub­lic inter­est. There are legit­i­mate uses for off­shore com­pa­nies, trusts and foun­da­tions; the pres­ence of a person’s or a company’s name is not intend­ed to sug­gest or imply that they have engaged in ille­gal or improp­er conduct.

As with pre­vi­ous sets of leaked data, ICIJ is not pub­lish­ing raw doc­u­ments or per­son­al infor­ma­tion en masse. The Offshore Leaks data­base con­tains a great deal of struc­tured infor­ma­tion about com­pa­ny own­ers, prox­ies and inter­me­di­aries in secre­cy juris­dic­tions, but it doesn’t dis­close pri­vate com­mu­ni­ca­tions, bank accounts infor­ma­tion, pass­ports and oth­er iden­ti­fi­ca­tion documents.

With the addi­tion of this data, the Offshore Leaks data­base now has infor­ma­tion on more than 750,000 names of peo­ple and com­pa­nies behind secret off­shore struc­tures with links to more than 200 coun­tries and ter­ri­to­ries. In all, the Offshore Leaks data­base has data on more than 810,000 off­shore enti­ties from five dif­fer­ent leaks: Pandora Papers, Paradise Papers, Bahamas Leaks, Panama Papers and Offshore Leaks.

In October 2021, ICIJ revealed as part of its Pandora Papers inves­ti­ga­tion that it had iden­ti­fied the secret deals and hid­den assets of more than 330 politi­cians and high-lev­el pub­lic offi­cials in more than 90 coun­tries and ter­ri­to­ries, includ­ing 35 cur­rent or for­mer coun­try lead­ers. An ICIJ analy­sis also found more than 45 Russian oli­garchs using off­shore enti­ties. Some of the data explored for these ana­lyzes is now avail­able in the Offshore Leaks Database.

The Pandora Papers inves­ti­ga­tion, the largest-ever jour­nal­is­tic col­lab­o­ra­tion in his­to­ry, was based on a trove of more than 11.9 mil­lion records from 14 off­shore ser­vice providers that offer ser­vices to wealthy indi­vid­u­als, celebri­ties, crim­i­nals and multi­na­tion­als world­wide. By using shell com­pa­nies, trusts, foun­da­tions and oth­er enti­ties in low- or no-tax juris­dic­tions, pro­vid­ing lit­tle to no trans­paren­cy, the ser­vice providers’ clients often con­cealed their iden­ti­ties from the pub­lic and some­times from regulators.

The pub­li­ca­tion of the Pandora Papers trig­gered reac­tions around the world: gov­ern­ments promised tougher laws, con­vened pub­lic hear­ings and launched inves­ti­ga­tions. Other pub­lic offi­cials were forced to answer ques­tions about their own finan­cial deal­ings, or the off­shore maneu­vers of peo­ple close to them. Watchdog groups clam­ored for more efforts to end the shad­ow finan­cial sys­tem that cov­ers up tax dodg­ing and mon­ey laundering.

Russia, the United Kingdom, Argentina, China, Brazil, Ukraine and Venezuela are among the coun­tries with the largest num­ber of ben­e­fi­cial own­ers hid­den behind off­shore enti­ties in the Pandora Papers.

The com­pa­nies, foun­da­tions and trusts that are part of this new pub­li­ca­tion were reg­is­tered between the 1970s and 2019 in secre­cy juris­dic­tions such as the British Virgin Islands, Panama, Singapore, Seychelles, and Hong Kong, among oth­ers. More than 4,500 enti­ties pub­lished with this new release are reg­is­tered in the British Virgin Islands.

A sig­nif­i­cant part of the ben­e­fi­cial own­er­ship infor­ma­tion in the Pandora Papers, includ­ing the data being pub­lished today, comes from doc­u­ments that some of the off­shore ser­vices providers  need­ed to com­pile for the British Virgin Islands’ ben­e­fi­cial own­er­ship reg­is­ter (also known as “BOSS”), which BVI author­i­ties estab­lished in the wake of ICIJ’s pub­li­ca­tion of the Panama Papers in 2016. This ben­e­fi­cial own­er­ship infor­ma­tion which ICIJ has now inte­grat­ed into its Offshore Leaks data­base is espe­cial­ly impor­tant as it is not made avail­able else­where to the pub­lic. Nearly half of all the providers in the Pandora Papers have pro­vid­ed ser­vices as reg­is­tered agents in the British Virgin Islands — estab­lish­ing com­pa­nies for thou­sands of clients look­ing for anonymity.

The biggest por­tion of the Pandora Papers trove, more than 3.3 mil­lion records, came from a sole off­shore ser­vice provider: Trident Trust. Trident Trust, with offices in the British Virgin Islands and oper­a­tions in more than 20 juris­dic­tions, is one of the world’s largest off­shore ser­vice providers. Questions about who owns Trident Trust went unan­swered last year when ICIJ con­tact­ed the company.

According to an ICIJ Great site analy­sis, near­ly a third of all politi­cians and pub­lic offi­cials iden­ti­fied in the Pandora Papers data were clients of Trident Trust, the provider with the sec­ond largest num­ber of this type of clients in the data. Among these 97 politi­cians and offi­cials are sev­en cur­rent and for­mer coun­try lead­ers, includ­ing Gabon’s pres­i­dent Ali Bongo, Qatar’s cur­rent ruler Tamim Al Thani and Haiti’s for­mer Prime Minister Laurent Salvador Lamothe.

The Offshore Leaks Database now con­tains records on more than 1,500 off­shore enti­ties reg­is­tered in the British Virgin Islands that got ser­vices from Trident Trust.

Trident Trust also pro­vid­ed ser­vices to U.S. trusts cre­at­ed from 2000 to 2019 that ICIJ iden­ti­fied dur­ing the Pandora Papers inves­ti­ga­tion. Out of 206 trusts, 43 were reg­is­tered with Trident Trust’s local office in South Dakota. ICIJ’s data analy­sis shows that in total, the U.S. trusts in the Pandora Papers held assets worth more than $1 bil­lion, includ­ing real estate in Florida, New York and Germany, and accounts with banks in Panama, Switzerland, Luxembourg, Puerto Rico, the Bahamas and elsewhere.

Along with the off­shore enti­ties asso­ci­at­ed with Trident Trust, anoth­er more than 7,000 enti­ties linked to the oth­er six providers in this data release are also now includ­ed in the Offshore Leaks data­base. Data asso­ci­at­ed with those six providers includes at least 71 politi­cians and high lev­el pub­lic offi­cials who used those enti­ties. Among them are 10 cur­rent and for­mer coun­try lead­ers from Chile, Colombia, the Dominican Republic, Gabon, Honduras, Jordan, Paraguay, Peru and Qatar. One of them also got ser­vices from Trident Trust.

While the new­ly released data con­tains rel­e­vant infor­ma­tion that was pre­vi­ous­ly unavail­able to the pub­lic, not every offi­cer or sig­nif­i­cant indi­vid­ual fea­tured in Pandora Papers report­ing appears in the Offshore Leaks data­base. This is because infor­ma­tion about own­er­ship is often buried in emails, pow­er-of-attor­ney let­ters and inter­nal notes and can­not eas­i­ly be extract­ed in a sys­tem­at­ic manner.

ICIJ’s data and tech teams ded­i­cat­ed months to the struc­tur­ing of the infor­ma­tion that was iden­ti­fied as being impor­tant by the teams’ data jour­nal­ists and devel­op­ers as well as by reporters and media part­ners across the world. To extract infor­ma­tion from the mil­lions of records, ICIJ com­bined a series of meth­ods that var­ied for each of the 14 off­shore ser­vices providers. The team com­bined and stan­dard­ized infor­ma­tion com­ing from spread­sheets; used pro­gram­ming lan­guages to auto­mate data extrac­tion and struc­ture the infor­ma­tion; and employed machine learn­ing and oth­er tools. The team also man­u­al­ly extract­ed details from hand­writ­ten or hard-to-read forms. After struc­tur­ing the infor­ma­tion, ICIJ staffers put the data through a rig­or­ous fact-check­ing process that incor­po­rat­ed ICIJ’s bespoke data clean­ing and val­i­da­tion tool, Prophecies.

Since December 2021, ICIJ has added more than 25,000 off­shore enti­ties records from the Pandora Papers to the Offshore Leaks data­base. They are explorable through the search engine and can be fil­tered by data sources, linked coun­tries and reg­is­tered juris­dic­tions fil­ters, among oth­er options. The data in the Offshore Leaks Database is also avail­able for down­load for non-com­mer­cial purposes.

Original source of arti­cle: www.icij.org

Court Description: MEMORANDUM OPINION & ORDER re: 1243 LETTER MOTION for Oral Argument on 1231 Objection to 1221 Order grant­i­ng sanc­tions addressed to Judge Alison J. Nathan from Matthew L. Schwartz dat­ed 4/17/20. filed by City of Almaty, BTA Ba nk Extra resources JSC. For the fore­go­ing rea­sons, the Court over­rules the Kazakh Entities’ objec­tions (Dkt. No. 1231) to Judge Parker’s March 12, 2020 Opinion. The Kazakh Entities’ motion for oral argu­ment (Dkt. No. 1243) is DENIED as moot. This resolves Docket Numbers 1231 and 1243. (As fur­ther set forth in this Order.) (Signed by Judge Alison J. Nathan on 3/29/2021) (cf)

window.tgpQueue.add(‘tgpli-64a7df3eb5ddc’)

Finally, the Court con­cludes that Judge Parker did not clear­ly err in the sanc­tions she imposed. The par­ties had exten­sive­ly lit­i­gat­ed whether the Kazakh Entities would be allowed to make use of wit­ness­es they did not time­ly dis­close. Judge Parker care­ful­ly bal­anced the inter­ests of the par­ties by allow­ing the Kazakh Entities to amend their Rule 26 dis­clo­sures but lim­it­ing their depo­si­tion ques­tion­ing to issues relat­ed to the rea­son she allowed the late dis­clo­sures— name­ly, authen­ti­cat­ing and lay­ing foun­da­tion for admis­sion of the spreadsheets.

Download PDF

While the indus­tries are now barred from work­ing with any­one inside Russia, pro­fes­sion­al enablers of finan­cial secre­cy in states like Wyoming and Alaska have opposed pro­pos­als to increase transparency.

The United States has for the first time sin­gled out trust com­pa­nies and cor­po­rate ser­vice providers in a sanc­tions pack­age, bar­ring the indus­tries from future work with any­one inside Russia.

The U.S. Treasury announced its ban on Sunday as part of a coor­di­nat­ed glob­al response to Russia’s inva­sion of Ukraine. The deci­sion will “cut off access to ser­vices that are used by the Russian Federation and Russian elites to evade sanc­tions,” the depart­ment said.

“To the best of my knowl­edge this is the first time we’ve sin­gled TCSPs out like that,” said Morgan Finkelstein, the U.S. Treasury spokesper­son on ter­ror­ism and finan­cial intel­li­gence, refer­ring to trust and cor­po­rate ser­vice providers.

The announce­ment comes five months after the release of the Pandora Papers, a media inves­ti­ga­tion pub­lished in October by the International Consortium of Investigative Journalists, The Washington Post and more than 150 oth­er media out­lets. The sto­ries exposed how oli­garchs, polit­i­cal elites and oth­ers hide wealth in tax havens around the world, includ­ing the United States.

The inves­ti­ga­tion iden­ti­fied U.S.-based trust com­pa­nies that helped cre­ate more than 200 trusts hold­ing com­bined assets worth more than $1 bil­lion. Nearly 30 trusts, many of which were in South Dakota, held assets linked to peo­ple or com­pa­nies accused of fraud, bribery or human rights abuses.

window.tgpQueue.add(‘tgpli-64a7dceb0db7a’)Photo tak­en on Feb. 28, 2022 shows the U.S. Department of the Treasury in Washington, D.C., the United States. The Treasury Department on Monday announced a fresh round of sanc­tions tar­get­ing Russia’s cen­tral bank, the coun­try’s finan­cial tools as well as a rel­e­vant indi­vid­ual, in response to Moscow’s ongo­ing mil­i­tary oper­a­tions in Ukraine. (Photo by Liu Jie/Xinhua via Getty Images)

One cor­po­rate ser­vice provider in Jackson, Wyoming, helped Russian oli­garch Igor Makarov cre­ate a secre­tive trust and com­pa­ny in 2016, records show. Makarov has since been sanc­tioned by Canada and Australia for his alleged ties to the Kremlin. Makarov pre­vi­ous­ly denied hav­ing ties to President Vladimir Putin.

The Pandora Papers inves­ti­ga­tion and Russia’s inva­sion of Ukraine prompt­ed law­mak­ers across the coun­try to con­sid­er changes to state laws that allow own­ers of trusts and lim­it­ed lia­bil­i­ty com­pa­nies to oper­ate in almost total anonymity.

One bill before the leg­is­la­ture in Alaska requires trusts to share with the state the names of so-called set­t­lors and ben­e­fi­cia­ries. A sep­a­rate bill in New York goes fur­ther, propos­ing a pub­lic reg­is­ter of own­ers of lim­it­ed lia­bil­i­ty com­pa­nies, a pop­u­lar cor­po­rate struc­ture that also has a long his­to­ry of abuse by klep­to­crats, drug and arms traf­fick­ers and fraudsters.

Trust and cor­po­rate ser­vice providers have opposed reform, argu­ing that the 2021 Corporate Transparency Act will large­ly solve the prob­lem. Requiring own­ers of trusts and com­pa­nies to dis­close their iden­ti­ties in one U.S. state will lead them to relo­cate else­where, lob­by­ists and trust providers have warned.

“There’s noth­ing this body can do to resolve this prob­lem,” Christopher Reimer, a part­ner with law firm Long Reimer Winegar, told Wyoming law­mak­ers dur­ing a hear­ing last month in response to ques­tions about bad actors exploit­ing trusts and companies.

Lawmakers called the hear­ing in response to ICIJ and the Washington Post’s rev­e­la­tions that showed how Russian bil­lion­aire Makarov set up a trust and com­pa­ny in Wyoming to own a pri­vate jet and real estate projects in Europe.

Makarov, who made his for­tune sell­ing Russian gas, was includ­ed in a 2017 U.S. Treasury Department list of oli­garchs and polit­i­cal fig­ures close to the Russian gov­ern­ment. Last month, Canada and Australia sanc­tioned Makarov. In a state­ment, Canada’s gov­ern­ment called a hand­ful of Russians, includ­ing Makarov, who made his for­tune sell­ing Russian gas, “close asso­ciates of the Russian regime … who were sanc­tioned for their com­plic­i­ty in Russia’s unjus­ti­fi­able inva­sion of Ukraine.” Makarov is not sub­ject to sanc­tions by the United States.

Records show Frontier Registered Agency Services LLC, an affil­i­ate of Long Reimer Winegar, rep­re­sent­ed Makarov’s trust com­pa­ny in Wyoming from 2016 until ear­li­er this year.

Long Reimer Winegar did not respond to requests for comment.

Makarov’s U.S. attor­ney, Brian Wolf, did not respond to ques­tions about sanc­tions or why the trust com­pa­ny was closed months after the https://www.opendemocracy.net Pandora Papers investigation.

Mike Yin, a Democratic law­mak­er in Wyoming who attend­ed the hear­ing, said he would have pre­ferred to know about Makarov’s con­nec­tion to Long Reimer and Winegar before Reimer’s pre­sen­ta­tion on the Pandora Papers.

“Sure, there have been some eco­nom­ic ben­e­fits from the trust indus­try,” said Yin, who rep­re­sents areas of the town from where Makarov’s trust and com­pa­ny were man­aged. “But I’m a lit­tle skep­ti­cal that any issues we have with ter­ri­ble peo­ple who hold mon­ey here are just going to mag­i­cal­ly end.”

Original source of arti­cle: www.icij.org