How CenterCredit Conned a Borrower

What made Bakhytbek Bayseitov, Bank CenterCredit’s key shareholder and the 12th Kazakhstan’s most influential entrepreneur according to Forbes Magazine, jump into a risky venture that may end badly not only for him personally but for the financial institute as well?

We at find this story utterly shocking.

In one of our recent publications, we have predicted that Bank CenterCredit (BCC) JSC is to become the next victim of the National Bank’s attempt to reform the banking sector and/or save it from the final collapse.

Particularly, in the article called CenterCredit Will Be Next (text available in Russian), we quote Fitch Ratings’ assessment of the situation. On one hand, the analysts confirm that BCC’s financial standing is better than that of Tsesnabank JSC before the latter was rescued by the National Bank and the Problem Loans Fund and the bank may count on the support of the state. On the other hand, however, they point out that the scale of the problems related to the quality of the assets may turn out to be «especially substantial».

Our forecast is also based on the fact that, on April 3, 2019, having tentatively affirmed Bank CenterCredit’s «B-» international scale (local currency) credit rating (outlook stable), Fitch, at the same time, withdrew all the ratings previously assigned to BCC. Most likely, this had to do with the fact that the bank had stopped using the services of the rating agency. And this alarmed the market even more since it showed BCC’s desire to either save on expenses or (which is more likely) to escape the close attention of the independent observer whom, among other things, the bank was obligated to provide with all the inside information.

In our opinion, it was BCC’s dire financial situation that forced its key shareholder Bakhytbek Bayseitov, Kazakhstan’s 9th richest and 12th most influential entrepreneur according to Forbes’ rating, to jump into a risky venture that, by the looks of it, may end badly not only for himself but for the bank as well.

Since this story has not yet become a part of the public domain and the law-enforcement agencies are still continuing the investigations whose results cannot be predicted, we will limit ourselves to the general description of the case (even though we do have the relevant documents at our disposal).

So here is the story. Four Kazakhs had decided to buy the limited liability company that is the only shareholder of the oil field’s operator in the Aktobe region. The seller wanted US 6 $ mln for the asset. To obtain such a substantial sum, the buyers asked BCC for a loan. At first, the bank’s management agreed to provide the loan, but then, for some reason, started to delay the transaction.

When the situation became critical, BCC’ Chairman Galym Kusainov suddenly demanded (unofficially, of course) that the potential borrowers gave 35% of their share in the purchasing asset to the bank without compensation. Since the transaction was on the verge of falling through and the buyers were at risk of losing the already paid advance money (US 500 $ thousand), they had no choice but accept the deal.

The story, however, does not end here. At the signing of the loan agreement, Kusainov voiced yet another strange demand. The debtors had to borrow not US 6 $ mln but US 12 $ mln. The additional 6 $ mln were to be handed over to the company affiliated with the bank’s key owner Bakhytbek Bayseitov.

To appease the utterly shocked borrowers, Bayseitov had personally guaranteed the safety of the transaction and the return of the 6 $ mln. The document was signed in Almaty on June 26, 2018.

However, something went wrong and, as a result, the four people that borrowed 12 $ mln from BCC and handed over 6 of them to the silent participant of the transaction on Bayseitov’s word and statement of liability have found themselves up in the air. They cannot get back these 6 mln from either the company affiliated with Bakhytbek Bayseitov or from the man himself. Moreover, BCC’ management is initiating an enforced recovery of the entire debt from the limited liability company that has received the loan. Thus, the enterprise may eventually come under the control of the bank.

In our opinion, even if the documents that we have at our disposal contain mistakes and vagaries, the mere fact that this has taken place shows that foreign investors in Kazakhstan will have to face not only a dishonest but a criminal attitude towards themselves and not just on the part of the numerous officials but on the part of the market players (including the owners and shareholders of private banks) as well. It looks like the latter are also trying to make as much money as possible, as soon as possible and by any means possible.

Since the story in question has long been widely known in the narrow circles (for the injured parties filed the complaints to practically all the law-enforcement agencies of the country), the National Bank of the Republic of Kazakhstan could not but respond to the situation.

Based on the information provided by our insiders, Chairman of the National Bank Erbolat Dosayev had already summoned Bakhytbek Bayseivov in connection to the matter and had had an unpleasant talk with him. It was after this talk that Anvar Saydenov suddenly appeared on the BCC’ Board as a non-executive (independent) director.

Since, in the past, Saydenov used to be the Chairman of the National Bank and, for four years, had been in charge of BTA’s management and, later, Board of Directors after the bank was seized by the state in 2009, one can call him «independent» only in theory. As likely as not, he serves as the National Bank’s unofficial representative. Which, in its turn, means that the state, via Erbolat Dosayev, has intensified its presence in BCC. 

By getting to the bottom of the bank’s state of affairs and using the scandal around the 6 $ mln dollar transit loan handed over to the company affiliated with Bakhytbek Bayseitov, the National Bank may get the opportunity to exert an enormous pressure on BCC’ shareholders. Moreover, the NBK may do the same to BCC what the latter is now doing to its unfortunate borrower. In other words, to turn the situation upside down and simply take away the asset now that the reasons and the foundations for that are already there.

So, here is a complicated, multi-leveled and multi-channeled scheme that involves, voluntarily or not, dozens of people including representatives of medium-size businesses, banks’ shareholders and managers, law-enforcement and state agencies’ employees, high-rank officials and very wealthy and influential people. Note that the criminal element of this story lays over its business-rooted foundation.

Unfortunately, the said scheme is typical for the modern Kazakhstan and, in our opinion, is to be used in the country for years to come. If for no other reason than the fact that the process of the initial accumulation of capital in Kazakhstan is nowhere near its end. And as for the nation-wide law-obedience and developed civil consciousness, most Kazakhs must still travel too long a way to obtain it.


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