On November 28, 2018, Court #2 of the Semey city refused to grant early release on parole to former Head of the Kazakh uranium company Mukhtar Dzhakishev. On the other hand, we believe the court would have never reached a different verdict at the time of Kazatomprom’s IPO. In this article, we intend to recall how and why the successful top-manager was convicted.

The criminal persecution of top-managers and entrepreneurs in Kazakhstan has become a trivial matter. Nonetheless, the trial against businessman Iskander Erimbetov is likely to enter the Kazakh history as a vivid example of the absence of justice and the demonstration of the lawlessness on the part of the law-enforcement agencies as well as the proof of the fact that the Kazakh judges follow not so much the law and their own consciousness as Akorda’s political will and the bosses’ orders.

It is obvious that the people who “requested” and organized this notorious criminal case did not count on this kind of moral, political, informational and propagandistic effect. However, now we have what we have – a big scandal that has expanded beyond the country’s borders and launched a significant blow to Kazakhstan’s image abroad.

In this regard, Iskander Erimbetov’s case is quite comparable to the case against Mukhtar Dzhakishev, the former President of Kazatomprom NC, the person whose personal merits to the fatherland are enormous since it was he who was able to revive the uranium-mining industry in Kazakhstan, to make it not simply a commercially viable field but to establish it among the best in the world.

Apart from being successful businessmen, Dzhakishev and Erimbetov are united by other three important circumstances that had influenced their fates and, eventually, put them in prison.

• First, they had never been engaged in politics and had no political experience.
• Second, they kept the family and friendly ties with Nursultan Nazarbayev’s and Akorda’s opponents and did not wish to cut those ties when the time came to do so.
• Third, sacrificing them at that exact moment of time allowed the Kazakh authorities to achieve the desired effect – to turn the business and the citizens away from supporting the opposition.

For this reason, Iskander Erimbitov, the same way as Mukhtar Dzhakishev before him, was, in our opinion, doomed. They both were foredoomed to slaughter because they did not think that Akorda’s repressions could be turned against them (in 2009, Dzhakishev returned to Kazakhstan from an international trip despite the warning that he would be arrested). They were foredoomed because they did not understand that the demonstrative sacrifice is the standard practice of any authoritarian system that uses it to morally repress everyone who is dissatisfied with the regime by showing through the live example that even family and friendly ties with the regime opponents will be punished.

Unfortunately, not many people realize this in Kazakhstan and beyond its borders. To prove it, we have written this article in which we present, in a meticulous and honest manner, all the versions of why Mukhtar Dzhakishev, a well-known, distinguished and established in his field and country person, was sentenced to 14 years of imprisonment and, to this day, is serving his sentence practically without a chance to be released early or at least to be released on parole.

We believe, to certain extent, all these versions correspond to the facts since the final decision on Dzhakishev’s fate was made in Akorda by several people and on several grounds. In any case, that excessive despotism that had previously been demonstrated in the criminal persecution, legal trial and the strict prison regime of Mukhtar Dzhakishev and is now appearing in the case against Iskander Erimbetov is no fluke. It is intrinsic and is used by the authorities to frighten the Kazakh society, the business and the part of the ruling elite that does not agree with Akorda’s decisions.

Here is an in-depth study of Mukhtar Dzhakishev’s case and the scenarios of why he was persecuted.

When and why was he jailed

On May 21, 2009, former President of Kazatomprom Mukhtar Dzhakishev was arrested in his company’s office in Astana. In three days, he was formally charged with “embezzling the property entrusted to him by the state; namely the shares in Kazakhstan’s largest uranium fields via their alienation in favor of a number of companies registered in the offshore zones”. He was also accused of massive scale property appropriation committed by a group of people as well as inflicting harm on the uranium industry of Kazakhstan.

The legal trial was conducted behind closed doors and began in January 2010. On March 12, 2010, Dzhakishev was found to be guilty of violating Article 176 (“appropriation or embezzlement of entrusted property”) and Article 311 (“acceptance of bribe”) of the Kazakh Criminal Code and sentenced to 14 years of imprisonment in a high-security facility, deprivation of property and deprivation of the right to hold a public office for 7 years.

The matter of the embezzlement and fraud was separated out as a different case and was dealt with at a second legal trial. It was held on June 21, 2012. Saryakinskiy District Court #2 of the Astana city found Mukhtar Dzhakishev guilty and sentenced him to 10 years of imprisonment. Cumulatively with the 2010 verdict, the punishment was determined as follows – 14 years of imprisonment, deprivation of the right to hold a public office for the duration of 7 years. The serving of the sentence began on May 21, 2009.

The scandalous video recording

Despite the fact that the trial against one of Kazakhstan’s best top-executives was conducted behind closed doors, it was accompanied by scandals. One of the most notorious ones was the appearance on the internet of a video recording showing Mukhtar Dzhakishev’s interrogation by the NSC officers.

The recording was given to Dzhakishev’s wife on September 10, 2009, by NSC Chief Aman Shabdarbayev in the courtyard of the Astana Department of the NCS Pretrial Detention Center. As Mukhtar Dzhakishev said later, the recording was made on the initiative of Shabdarbayev. As his reason, the NSC Chief alleged his desire to pass the information along to the President since no such possibility was available to him.

The recording is quite remarkable. For those who had not seen it, we present the most illustrative parts.

Where was Kazatomprom heading? To the future, the free and independent one. As Dzhakishev explained to the interrogators, “our position was that Kazakhstan had to claim its significant share in the sphere of supplying the energy to the humankind”.

How was it supposed to be done?

“…Progressively, as the HSNPs are developing, we must claim our niche and become one of the fuel sources for them. Most importantly, by the time the ultrahigh-temperature reactors appear, we must also become a part of this process”.

“HSNPs do not need the uranium. They need the fuel. Note the trend: starting from 2015, all of them will prefer to buy ready-made fuel. And, to sell fuel to HSNPs, we need a partner for whom, simply stated, we will become a resource colony. And there are not many of those out there – Russia, France, China, Japan and the US”.

But Kazatomprom of the Dzhakishev time aimed to make the fuel out of the raw material, not to become someone’s colony.

“Kazatomprom’s strategies aimed to develop the nuclear-fuel cycle and start producing the fuel by itself. But since all the countries I mentioned are the superpowers, we had trouble competing with them directly. We chose a different strategy – Kazatomprom and Kazakhstan were to become a connecting link between the Japanese, the Americans and the Russians, between the Americans and the Chinese, between the French and the Chinese”.

Thus, Dzhakishev believed, Kazakhstan would have a chance to gain access to the new technologies and knowledge.

“This was the policy we were pursuing. With the Canadians, it was the conversion, with the Russians – enrichment, with Japan, China and the US – fuel pellets, with the US and France – fuel assembly”.

Another episode recorded on the video has to do with company Uranium One. It is a Canadian uranium-mining company that owns mines in Australia, Canada, Kazakhstan, RSA and US.

“Understandably, we were not keen on starting the resource deliveries, so we said to the Americans: no negotiating with the Russians unless and until we give a signal. To prevent the Russians from entering Uranium One as the majority shareholder, we decided to increase the presence in the company of those partners who would follow our policy. So, at the end of last year (2008 – kz.expert), I contacted Toshiba and convinced them to become one of the Uranium One shareholders. The deal was completed in March 2009. Toshiba bought 20% of Uranium One.

Our next step was to attract the Chinese companies that were working cooperatively with us as Uranium One investors so they would own 20% of the company. Then, having secured 40% of the shares, we would obtain the possibility to pursue our own policy even in the event of the Russians entering the company. With that, we warned the Americans that all our agreements on all the uranium produced by Uranium One beyond the Kazakh borders fell within the Kazatomprom marketing deal and were to remain valid.

Unfortunately, on May 21 of the current year, I was arrested. It was here, in the NSC Detention Center, that I received the information that the Russians had made a deal with Uranium One the outcome of which was that they had obtained the right for the uranium produced by Uranium One. The Russians would have never obtained this right without Kazatomprom’s approval. In other words, the Americans made this decision only after the Russians convinced them that they were in control of Kazatomprom and were the ones determining its policy”.

The Chinese example is just as illustrative.

“At the beginning of May 2009, we launched a joint venture with the Chinese. In July of that year, we and the Chinese were supposed to sign an agreement in which we would state clearly what share of the natural uranium, the fuel, the pellets etc. China would take from Kazakhstan. The agreement was never signed. I know that no one would even go to sign it”. 

“It seems like all the progress we have made, all the work we have prepared is now simply taken by the Russians and Kazatomprom is being replaced in all the directions”.

Unfortunately, the Head of Kazatomprom was 100% correct. The Kazakh uranium industry has become exactly what he feared it would – a resource colony of the international players.

By the way, Aman Shabdarbayev lost his post as the NSC Chief several days after the recording of Dzhakishev’s interrogation had been published on the internet. He was exiled to serving as the President’s advisor. Then, he was in charge of the Republican Guard for a year, and, in March 2013, he left the service.

Two scenarios: Ablyazov and uranium

There are two main scenarios of why Mukhtar Dzhakishev was persecuted.

1. His friendship with banker and oppositional politician Mukhtar Ablyazov.
2. The redivision of the uranium market.

In his interview to newspaper Respublika of May 29, 2009, Kazakh political expert Dosym Satpayev directly links the events surrounding Mukhtar Dzhakishev and Kazatomprom with the results of the powerful informational and legal war started by the authorities against Mukhtar Ablyazov. Nonetheless, he considers the friendship between Dzhakishev and Ablyazov only a pretext. He names the fact that, during the reign of Dzhakishev, Kazatomprom became one of the world-class companies as the real reason for his arrest.

“…I think more and more people desired to gain control over this company. In other words, there were two reasons for Dzhakishev’s dismissal. And the first one (Ablyazov) is only a backdrop, while the second one is the key”, said Dosym Satpayev.

In his interview to the Respublika, Editor-in-Chief of the Atomnaya Strategia magazine Oleg Dvoynikov expressed the same sentiment.

“As the manager of the European making, Dzhakishev had turned Kazatomprom into a vertically integrated holding in order to enhance the redivisions and manage the resources from the very extraction all the way to the fuel pellets. In other words, he understood that they needed to supply the end product and not the raw material to the international market”.

Having correctly assessed the situation from the marketing standpoint, Dzhakishev, according to Dvoynikov, was able to predict the coming deficit of the natural uranium on the market and made a seemingly risky move – the building of the new extracting facilities and the dramatic increase in the natural uranium production. When everyone realized that the prediction was correct and the uranium boom was about to begin, Dzhakishev was arrested due to the fact that Kazatomprom turned out to be a very nice bit of goods.

After all these years, the two scenarios have not changed. Moreover, they have become more nuanced.

Former Vice-President of Kazatomprom Rustem Tursunbayev whom we asked to answer our questions on the matter suggests that it was the collision of the interests of many players that had performed the fatal role in Dzhakishev’s destiny. First and foremost, he was speaking of Russia.

“Everyone knows that the Russian uranium is Putin’s personal enterprise. Vladimir Smirnov, one of the members of the Ozero co-op, was the first person in charge of TENEX, a uranium trader. He held this position for quite some time. “The cable of December 2009 received by Wikileaks from the US Embassy in Kazakhstan confirms the theory that the purchasing of Uranium One was a part of the Russian conquest (of the Kazakh uranium). It contains the words of a German diplomat that Rosatom, with the assistance of Russia’s military intelligence service, was trying to weaken Kazatomprom’s ties with the Western and Japanese companies since Rosatom was aiming to increase its own uranium resources. An analyst from Stratfor Global Intelligence whose clients include the US Government also suggested that Nazarbayev acted under the Russian pressure when trying to suppress the ties with the Western firms”.

The second factor, Tursunbayev believes, is the Kazakh oligarchs, particularly, the Vladimir Ni group. The uranium prices started to rise, and they got interested in Kazatomprom which is clearly demonstrated by, say, the wiretaps posted on YouTube.be. The recordings also show that Dzhakishev was not backing down.

The President’s family, too, showed interest in the company.

“Remember that Kulibayev became the Chairman of this company not too long before Mukhtar Dzhakishev’s arrest? I was forced to sell the PVC pipes production plant for 25% of its real value. It was purchased by a member of the President’s family”, says Rustem Tursunbayev.

Kazatomprom’s former Vice-President believes this game had one more player – the NSC whose employees had found themselves in the ideal situation: to be able to fatten their wallets under the cover of the criminal investigation. 

“They shook down everyone, forced to sell the property and give them the cash. Take the companies working together with Kazatomprom and look at the founding members prior to May 2009 and then a year later – they had changed dramatically. Let’s say a relative of CSI Team Head D. Estemesov was introduced into a drilling company. I have already said that, through his acquaintance, an Azerbaijanian citizen, that same Estemesov tried to extort $15 mln from me personally demanding the “desired testimony” against Dzhakishev. Once I refused, he opened a criminal investigation against me and put me on the Interpol wanted list. I can name the names of other people from whom they were also extorting the money, but they live in Kazakhstan, so the exposure could be dangerous. And the fact that the NSC people are not joking around can be confirmed by the deaths of the two key witnesses in the Dzhakishev case separated by only two weeks – that of Bakhyt Myrzakulov and Ruslan Salimov. Estemesov made them bring him the cash from the companies. I was told about the sum of $400 000 given by Myrzakulov to Estemesov”.

In other words, Kazatomprom was the point of collision of the interests of the countries, the companies and the persons. However, Rustem Tursunbayev believes that, even altogether, they could not have performed the crucial role against Mukhtar Dzhakishev who was in good standing with the President. They needed a different kind of rationale. And this rationale was created around the friendship between Mukhtar Dzhakishev and Mukhtar Ablyazov.

“How they presented it, was exactly they said, I do not know, but the President’s reaction was excessively violent as if it had hit a personal nerve. Those in the know said that the order was given to “raze Dzhakishev to the ground”, but even then, the 14 years of imprisonment seemed too unexpected and cruel a punishment. And as is that weren’t enough, they are now “cooking” a third case against Dzhakishev involving both Ablyazov and Dutbayev (ex-Chief of the NSC – kz.expert)”, said Rustem Tursunbayev.

Kazakh political expert Ruslan Tusupbekov whom we also consulted on the scenarios of Mukhtar Dzhakishev’s persecution also believes that the two factors (internal and external) had simultaneously been at play against the top-manager.

“The internal factor was his friendship with Ablyazov. The external factor was the redivision of the uranium market. And this involves the interests of the biggest international players such as Russia, the USA, China, because uranium is not only a product on the market, it is also nuclear weaponry and influence”.

To this, we should add that, simultaneously with the news on Mukhtar Dzhakishev’s arrest, they released information on the new appointments of Nazarbayev’s son-in-law Timur Kulibayev. At the moment of Dzhakishev’s arrest, he was already in charge of Kazatomprom’s Board of Directors and later became the Chairman of three national companies at once – KazMunaiGas, Kazakhstan Temir Zholy and Samruk-Energo. And what a striking coincidence! After his introduction into these companies, the heads of KazMunaiGas and of Kazakhstan Temir Zholy were arrested and convicted.

As of November 29, 2018, Mukhtar Dzhakishev still has four and a half years of his term to serve. His health raises serious concerns on the part of the human rights activists. He had recently applied for early release on parole, but the court refused his application stating the unpaid claim for several bln tenge as the reason. According to his lawyer, Dzhakishev has no means to pay the damages.

Finally, we should add that Mukhtar Dzhakishev does not admit his guilt, has never backed out of the friendship with Mukhtar Ablyazov and is hopeful that, sometime in the future, the criminal case against him will be ruled illegal.