Is Bayseitov Hiding behind Khusainov?

One of the continual discussions on our portal, apart from the internal political processes in Kazakhstan and the developments within the ruling elite, is the conflict between entrepreneur Bekzhan Kulbayev and a group of «fellows» led by co-owner and Chairman of the Board of Directors of Bank CenterCredit JSC Bakhytbek Bayseitov.

We have already devoted a number of publications to this resonant topic and, judging by how the events are unfolding, we will continue to follow the developments of the affair for at least a year. With that, we ourselves are participating in this conflict in no way and, due to this reason, do not release the numerous documents we receive via e-mail, do not analyze them and comment on them; we are simply keeping a close watch on the events.

We believe that our task here is to try and understand, by using this case as an example, what is happening with the Kazakh business today and what can be expected from it in the near future.

We also wish to test our suspicions that the country’s entrepreneurial body is just as «sick» as the state apparatus and is suffering from the same diseases. Therefore, the numerous attempts of the authorities to «cure» themselves of corruption, abuse of authority and indifference to the citizens’ needs are doomed in principle. They are doomed because officials and businessmen are a part of the society that is «sick» as well.

In our latest material on the subject, Thee Problems of BCC , we articulate the three problems experienced by the group of «fellows» led by Bakhytbek Bayseitov and explain how they have come into being. Now we will try and see what the latter may set against their opponents. But first, we must specify that, if before, we were basing our conclusions primarily on the documents and the limited information provided by our sources, now we have to base them chiefly on the inside we receive.

In view of this, it is quite possible that some part of this information may be imprecise and perhaps even incorrect. At this point, we cannot verify it since the public confrontation between Bekzhan Kulbayev and Bank CenterCredit JSC and, therefore, the massive leak of information on this case are yet to come. Moreover, we allow for the possibility that the participants of this conflict will eventually come to some agreement, if not by themselves and voluntarily, then under the pressure from the above and from the side.

So, according to our sources, the publications on our portal and particularly the commentaries under them have resulted in the fact that Bakhytbek Bayseitov has completely distanced himself from the problem handing over its solution and sifting the responsibility for both what is happening now and for the possible consequences of it onto Chairman of the Management Board of Bank CenterCredit JSC Galim Khusainov.

The latter, in his turn, has distanced himself from the people associated with the attempt to gain control over Saigak Kazakhstan B.V. and Flamma LLP.

With that, according to our sources, BCC’ co-owner and Chairman of the Board of Directors feels extremely aggravated by the situation since it casts a bad shadow both on himself and on the financial institute he controls. And he is angry not just with Bekshan Kulbayev but with Galim Khusainov as well.

The thing is that this scandalous story had started as a result of a chain of events each of which was nothing but an attempt on the part of different people to satisfy their personal needs.

In general, this chain of events may be described as follows.

  1. FLAMMA LLP needed a loan in the amount of US5.5 $ mln and, due to this reason, asked Bank CenterCredit JSC for the money.  
  2. The bank’s management provided the borrower with the necessary sum simultaneously solving their own problems. Bakhytbek Bayseitov needed money to finance his personal business-projects including those in the oil and gas sector, while Galim Khusainov and his «fellows» needed to pay off the debt to Rakhat Darmesh, a son of former Prosecutor General Askhat Daulbayev.
  3. As a result, the total amount that Bank CenterCredit provided to borrower FLAMMA LLP constituted US12 $ mln of which the latter, de-facto, received 5.5 $ mln only. The rest of the money went to TP Energy (half a million dollars) and Mangistau Oil Resources controlled by Bakhytbek Bayseitov (US6 $ mln).
  4. With that, Bakhytbek Bayseitov’s personal acknowledgement served as the guarantee of the return of the US6 $ mln received by Mangistau Oil Resources from Flamma LLP (we have in our possession a scan of the document).

One must agree that, generally speaking, this scheme is quite efficient and is in tune with both the Kazakh business-practice and the local mentality as well. It is was started after that, according to our sources, had led to the conflict between Bekzhan Kulbayev and the group of «fellows» headed by Bakhytbek Bayseitov. We are talking about BCC’ Chairman of the Management Board Galim Khusainov’s desire to acquire his own «candle factory»* and of his choosing Flamma LLP and the Temir oil field as such.

And then, they started a raider attack against the business of the Kulbayev family with the active involvement of Erbol Tokkozhin, Anuar Ushbayev and Akbar Tulegenov. As for Bakhytbek Bayseitov, at first he was not against the seizure of someone else’s asset since he hoped that the Temir oil field would become a part of the oils and gas holding that he was planning to found with the participation of some rather influential people and not just in power and in business but in the criminal world as well.

However, the Kulbayev family (that, by the way, has enough of its own «skeletons in the closet») had categorically refused to part with such a valuable and profitable asset and showed resistance.

By the looks of it, Bekzhan Kulbayev thought that, with Bakhytbek Bayseitov’s acknowledgement that the latter assumes the commitment to return US6 $ mln to the former, he would be able to shift the conflict into a criminal direction at any given moment. But alas, he seems to have got his calculations seriously wrong.

The thing is that it was Kulbayev who turned out to be the weaker side in the conflict since Flamma LLP got a loan from Bank CenterCredit JSC and is obligated to service it in a timely manner. However, this is exactly what he is not able to do since Bakhytbek Bayseitov and Galim Khusainov using their informal ties with other Kazakh banks including Eurasian Bank JSC and ATFBank JSC are literally taking all the money that come to the borrower’s account. Therefore, the latter cannot pay the suppliers’ bills, pay the wages and make the mandatory payments to the state budget and social funds.

By the looks of it, the management of Bank CenterCredit JSC has decided to roll the dice and bankrupt Flamma LLP and then seize all its properties and other assets. However, the Achilles’ heel in this raider scheme lies in the fact that the US12 $ mln loan was provided incorrectly (to put it mildly). Therefore, the question who is more guilty in this situation — the bank or the borrower — is probably going to shift from the civil legal field to the criminal legal domain.

And if, to all of this, we are to add the abundance of the forged documents cooked up by the raiders with the involvement of BCC’ employees (we have in our possession a part of these documents and the audio records of the forgers’ conversations), the case is bound to become very high-profile.

According to our sources, the concerns that the events would unfold the way they did had forced the co-owner and the Chairman of the Board of Directors of BCC to not simply distance himself from this story but place all the responsibility for what happened onto Galim Khusainov. Allegedly, at one of the weekly meetings that are usually held over weekends, Bakhytbek Bayseitov stated directly that it was the Chairman of the bank’s Management Board that was responsible for that happened. And, therefore, Khusainov would not acquire the Temir oil field that was now to be given to Bayseitov himself as a compensation for the emotional damage he had sustained.

Although we have used the word «allegedly», we have already been promised that we will receive a video record of this meeting. So, it is quite possible that, in our next publication, we will talk about it in more detail. For the moment though, we will stop here and record our observations.

First, although market relations do dominate Kazakhstan’s multi-structured economy, the market itself is, in its essence, «wild». And, by the looks of it, the initial accumulation of capital that started in the 1990s with the massive-scale expropriation of the public properties by the ruling elite led by Nursultan Nazarbayev is still actively happening albeit in the form of a repartition.

Second, power as such has been, is and probably, for years to come, will continue being Kazakhstan’s main resource. It is power that allows the members of the ruling elite to solve any of their personal problems even in defiance of the law, justice, conscience, ethics etc. With that, even when a conflict irrupts between the members of the elite itself, the victory is usually achieved by those who have more power or a better access to it.

Third, the use of power as such to someone’s personal benefit in the sphere of the economy or social life is the norm for Kazakhstan. And everyone — from the very top to the very bottom of the society — perceives it this way.

In this sense, the co-owner and the Chairman of the Board of Directors of Bank CenterCredit JSC who, with the hands of his subordinates, is trying to bankrupt Flamma LLP due to the fact that the latter is not servicing its debt a half of which he appropriated himself is the NORM in Kazakhstan.

We are especially underscoring this fact since, in our opinion, Bakhytbek Bayseitov is not the most cynical, unscrupulous, dishonest, inconsiderate, brutal and ruthless representative of the ruling elite. Kazakhstan has got enough bad guys that are much worse than him (but we are not going to name any names).

It’s just that Mr. Bayseitov simply needs to survive, and this is what he has been doing (and quite successfully so) albeit at the expense of other people. And here perhaps lies one of Kazakhstan’s biggest problems — the fact that the country does not have a society in which a reputation is more important than money, power and the rest of it.


*The dream of Father Fyodor, one of the characters from Ilya Ilf and Evgeniy Petrov’s satirical novel «Twelve Chairs».


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