Aysultan Nazarbayev’s father-in-law and Dariga Nazarbayeva’s co-parent-in-law Kayrat Boranbayev seems to have mixed himself up in a scandalous story with the double sale of the exploration licenses. We are talking about the fraudulent scheme targeting foreign investors.

This year, we have already touched upon the subject of attracting foreign investments in the country more than once by analyzing individual business-cases. And we have arrived at the conclusion that the foreign investors who do take the risk of coming to Kazakhstan are invariably faced with the corruption problem.

The story with the attempt of Dutch company Babylon B.V. to buy 90% participation interest in MTS-Ertis LLP was one of the foundations for such a sad conclusion. You can learn more on this scandalous story from these publications — «Feedbag» for a Vice Minister, In the Footsteps of the Great Combinator, On Those Able to Bustle About, Who Holds the Permits Black Market , A Shield for Baksheesh.

But here is what had happened in a nutshell.

MTS-Ertis LLP that, on October 15, 2014, signed a contract on carrying out the polymetallic ore explorations at the Vavilonkoye* ore field (East-Kazakhstan region) with the Ministry for Investment and Development was the «key» figurant of the story. At the same time, Metal Trade Company LLP owned the 90% participation interest in MTS-Ertis LLP.

The thing is that Director of MTS-Ertic LLP Ryskaliy Dzhakishev had sold this participation interest twice — first, to the Dutch investor Babylon Holdings B.V. and then to SK Atrium LLP. With that:

«It appears that the Ministry’s employees, being aware of what was going on, were trying to conceal that fact from the investor probably hoping that the truth would never see the light of day. Moreover, they quietly gave SK Atrium the official rights for the object of mineral resource management even though they had the same application from Babylon Holdings B.V».

«According to the insiders, the reasons for such behavior on the part of the Ministry’s employees lie in a demand for a bribe. Apparently, a Vice-Minister (the sources name Timur Toktabayev) demanded US250 $ thousand from each contender and made a decision in favor of SK Atrium that agreed to satisfy the demand. Another suggestion is that the reasons of this kind of behavior lie in his passions for gambling including paying visits to casinos abroad».

When foreign investor Babylon Holdings B.V. filed a claim and the court found for the claimant having deemed invalid the transaction between Metal Trade Company LLP and SK Atrium LLP and the illegal actions of the individual employees of the then Ministry for Investment and Development became known to the public, Governor of the East-Kazakhstan region Daniyal Akhmetov was the first one to respond to it.

The thing is that MTS-Ertis LLP has a co-owner, SPK Ertis which is a socio-entrepreneurial corporation founded by the East-Kazakhstan Regional Governor’s Office (namely, by the Head Department for Entrepreneurship and Industrial-Innovative Development). In other words, the brewing scandal has affected the regional Governor’s Office and the Governor himself who has used what happened to fire Chairman of the Management Board Anton Kramarenko and appoint Eldar Tumashinov instead.

As it turns out, Babylon Holdings B.V., as early as the beginning of January 2019, informed Mr. Kramarenko that it had purchased the participation interest in MYS-Ertis LLP from Metal Trade Company LLP. Therefore, the second sale of the participation interest in the latter would have been illegal. However, the then Chairman of the Management Board of SPK Ertis did not respond to the warning and the transaction was completed. All of this happened because Kramarenko depended heavily on the Ministry for Investment and Development that was in charge of handling the exploration licenses.

In view of the articles cited above, we were not at all surprised that, despite the high-profile scandal with the double sale of the 90% participation interest in MTS-Ertis LLP (that signed a contact on carrying out the polymetallic ore explorations at the Vavilonkoye ore field in the East-Kazakhstan region with the Ministry for Investment and Development) first, to Dutch company Babylon B.V. and then to Kazakh SK Strium LLP, Vice-Minister Timur Toktabayev has kept his post.

«On April 23, 2019, the Specialized Interdistrict Economic Court of the East-Kazakhstan region (located in Ust-Kamonogorsk) reviewed the claim filed by Babylon Holdings B.V. on rendering the sale-purchasing agreement between Metal Trade Company LLP and SK Atrium LLP on the sale of MTS-Ertis’ share unlawful and subject to denunciation. The court sustained the claim. On the same day, the appellate agency too found the re-registration of MTS-Ertis’ share in the Semey Department of Justice unlawful. However, these verdicts do not at all mean that the foreign investor has already won and may begin implementing their investment project.

According to the information provided by our insiders, Vice Minister of Industry and Infrastructural Development Timur Toktabayev has commissioned the legal services of his agency to prove that the approval for the sale-purchasing deal between Metal Trade Company LLP and SK Atrium LLP was issued legally while his shadowy business-partners are already trying to find an access to the top-officials of the East-Kazakhstan District Court. So, it looks like the foreign investor will have to invest their money again and again albeit not in the business-project but in advocating their interests in court.

Then again, even if Babylon Holdings B.V. will be able to defend its interests, we believe the company’s chances for conducting successful business in Kazakhstan are minimal. For it is not only the defeated party, the Ministry of Industry and Infrastructural Development, that will be fighting against it but many other officials as well. One may even say it will be the country’s entire state apparatus».

Now, we can confirm that our forecast scored not even 100% but 200%.

Based on the information provided by our insiders, Head of MTS-Ertis LLP Ryskaliy Dzhakishev was going to sell the 90% participation interest of Metal Trade Company to a third party without settling the matters with the two previous buyers.

This allows us to make yet another conclusion of the systemic nature: apart from the massive and indestructible corruption among the Kazakh state officials and managers of the quasi-governmental structures, foreign investors must also be on a look-out for dishonesty on the part of local entrepreneurs who try to not so much make money together with the investors as to defraud the latter.

The irony lies in the fact that SK Atrium LLP having apparently resolved its disagreements with Babylon Holding B.V. is currently trying to force MTS-Ertis LLP and Metal Trade Company LLP to complete the buy/sell transaction of the 90% participation interest. This, among other things, can be observed from the fact that, on August 23, Judge Ibrayeva N.E. of the Specialized Interdistrict Economic Court of the East-Kazakhstan region admitted SK Atrium’s claim to examination. However, there is no guarantee that, by the time the verdict is reached, the 90% participation interest in MTS-Ertis LLP will not be sold for the third time.

The fact that the likelihood of such an event is rather high follows from the information provided by our insiders that the potential buyers of the asset include some quite respected people in Kazakhstan, namely — Erlan Atamkulov (was in charge of NAC Kazakhstan Temir Zholy in 2002 — 2007) and Kayrat Boranbayev (Aysultan Nazarbyave’s father-in-law and, therefore, Dariga Nazarbayeva’s co-parent-in-law).

Curiously, certain Kazbek Kapanov is acting as Boranbayev’s trusted representative in the transaction.

If we are to believe the information posted on the web, Mr. Kapanov heads the Caspian Sport Development Foundation (Fond Razvitiya Sporta «Kaspiy»). However, judging by his actions, he has tight connections to the criminal world. As we have been told, he has shown some very aggressive behavior when contacting whose who, one way or another, have been dragged into this business-conflict. In particular, he has promised to send everyone who does not agree with him to prison or to «screw their heads off». Apart from that, he stated absolutely unequivocally that the polymetallic ore deposit at the Vavilonkoye ore field is to be his and no one else’s.

We will continue following this investment business-case and we are keen on finding out who the winner will be after all. Then, we will be able to draw our conclusions on what is in store for the foreign investors who dare to try and earn money in Kazakhstan.

*Vavilon, in Russian, means «Babylon»