As President Kossym-Jomart Tokayev is promising new political reforms to his fellow citizens and Askar Mamin’s government is developing new grandiose plans for restructuring individual economic sectors, the life in Kazakhstan continues as usual. And it looks like the Kazakh authorities will fail finding new ways of living it.
In the Footsteps of the Great Combinator*
To confirm our idea, let us go back to the story we had been following throughout the year 2019. This story, as we have learned recently, is not finished yet. Moreover, it has got even more interesting.
We first wrote about it two years ago, on February 18, 2019, in the article «In the Footsteps of the Great Combinator».
Here is how it started (quoting) -
«The foreign investors who dare to pour their money into Kazakhstan have become used to the appetites of the local officials. All kinds of „feedbags“ given for „разведение“ проблемыhave been the norm for a very long time. However, it is something of a novelty when the state agencies employ fraudulent schemes. As, for instance, the case of the Ministry for Investment and Development demonstrates».
To prove that this had really happened, we citied the case of MTS-Ertis LLP that, on October 15, 2014, signed a contract to carry out the polymetallic ore explorations at the Vavilonkoye ore field (East-Kazakhstan region).
The thing is that Metal Trade Company LLP that used to own 90% of MTS-Ertis’ shares had sold them twice, first, to Netherlands’ Babylon Holdings B.V. And then to SK Atrium LLP. It was done with silent agreement from the Ministry’s officials including Vice Minister Timor Toktabayev. It can be confirmed by the following (quoting) -
«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.»
The explanation for such an abnormal behaviour on the part of the officials was simple (quoting) —
«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».
Our next publication on the subject was released on April 3, 2019, and was titled «Who Holds the Permits Black Market» (quoting) -
«After the foreign investor, Babylon Holdings B.V., filed a claim to the court and the latter sustained it having cancelled the contract between Metal Trade Company LLP and SK Atrium LLP and the story with the illegal activities of certain officials from the then Ministry for Investments and Development became available to the public, Daniyal Akhmetov, the Governor of the East-Kazakhstan region, was the first one to respond to the situation».
The information on the way in which he responded can be found in the article. What is more important is that the story became public as a result of which Timur Toktabayev’s further career was in question.
The matter is that, a short time before, the Ministry for Investments and Development was reorganised into the Ministry of Industry and Infrastructural Development with a new head, Roman Sklyar. By that time, Mr. Toktabayev had already been outstaffed as «interim». At the same time, according to our insiders, «one of the main reasons for that was not so much the scandal surrounding the fraud involving the double sale of the participation interest in MTS-Ertis LLP as the change in the control over the Kazakh „black“ market of the natural resources’ exploration and production permits».
The thing is that (quoting) –
«Previously, rewards were demanded in exchange for all the permits (minus, of course, those given to the foreign and Kazakh investors based on the agreements sanctioned by Akora). Among the end handlers of this shadowy sector of the national economy — Timur Kulibayev, son-in-law of the First President of the Republic of Kazakhstan and Temirkhan Dosmukhambetov (in the other branches of industry)».
Our next publication «A Shield for Backsheesh» appeared on the website on April 29, 2019. Among other things, it said (quoting) –
«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.
A Shield for Backsheesh
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».
Later, Toktabayev did lose the post of Vice Minister of Industry and Infrastructural Development but the story of MTS-Ertis was far from being over.
Our last publication on the matter titled «Seizing Babylon?» was released on September 23, 2019. Enter Kayrat Boranbayev, son-in-law of the late Aysultan Nazarbayev and Dariga Nazarbayeva’s co-parent-in-law. Here are some quotes from the article -
«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».
«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».
«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)».
Now, after a two-year pause, we are returning to examining this case that has become even more interesting if not downright shocking and astounding.
Let us start by saying that, according to our insiders, the project has now got a different potential investor. Allegedly, we are talking about Kazakh businessman Tleukabyl Abdulin, the Chairman of the Supervisory Board of Cooper Kz Ca that has interest in the oil business. Note (and this is much more indicative) that he is though to be a handyman of Kayrat Satybaldy, former Deputy Chief of the NSC and Nursultan Nazarbayev’s nephew.
Our sources quite allow for the possibility that it is Satybaldy (in 2018, ranked No. 7 in Forbes’ Kazakhstan’s most influential businessmen list and No. 36 in Forbes’ Kazakhstan’s richest businessmen list) who’s got interested in exploring the Vavilonkoye ore field.
Especially since, according to our insiders, the Ministry of Industry and Infrastructural Development has made a decision to prolongate the term of contract No. 4473 to carry out the polymetallic ore explorations thus confirming MTS-Ertis’ right of subsurface use. According to the sources, the role of the main lobbyist belonged to Vice Minister Ruslan Baymishev who has replaced Timur Toktabayev not only as deputy minister but as the shadow fixer of the project’s fate.
Note that he’d been directly linked to the project even before since he used to chair the Department of Subsurface Use. Now he seems to have become the main play along in the matter.
Photo from http://metalmininginfo.kz
According to our insiders, Baymishev maintains official and unofficial contacts with the two key persons — Chairman of MTS-Ertis LLP A. Khatkin and Chairman of SK Atrium LLP Zh. Dzhakishev. Allegedly, both of them intend to obtain the right to sell 90% of MTS-Ertis’ ownership capital to SK Atrium from the Ministry of Industry and Infrastructural Development.
Our sources say that, in this matter, the parties are being vigorously assisted by certain Erzhan Kumarov, the chair of the Kazakh branch of the Norton Rose Fulbright global law firm. Obviously, he is doing this not without his own motives but for a solid reward (allegedly amounting to 300 mln tenge). They say that the money is to be transferred not to the branch’s account but to be paid to Kumarov personally.
And this is not all. The other side has also undergone some changes. Now, instead of Babylon Holdings B.V., the UK’s GTEEN Investments Limited that has entered the game (note that the latter owns 55% of the former).
The curious thing is that Erzhan Kumarov used to provide legal services to GTEEN Technologies Investments Limited and also represented Babylon Holdings B.V. in Kazakhstan. And it was he who, on February 17, 2020, without Babylon Holdings’ shareholders’ approval, sent letter No. 037/2020 to the competent state authority requesting opting out of participating in the Vavilonskoye project on behalf of the company.
Consequently to all these events, a new clinch has been formed — the Ministry of Industry is playing the side opposing the foreign investor. The thing us that, when GTEEN Technologies Investments Limited asked the state agency not to grant SK Atrium and MTS-Ertis the right to sell 90% of the company’s ownership capital, the agency stayed on passive defence. And continues to do so today.
According to our insiders, the reason lies in the fact that new Vice Minister Ruslan Baymishev, acting as the main point guard, has now got an opportunity to make some extra cash.
And we are curios to see what comes next.
We are not to predict the story’s turns and twists as well as its finale for is would be the bathos of stupidity. However, it looks like the foreign investor’s plans and hopes will be outweighed by the Kazakh realia. This makes us presume that President Tokayev’s intention to conduct political reforms as well as the abundance of the governmental plans will encounter the problem called «it was very smooth on paper, wish we had a bloody grader».
And we have no doubt that, in the absence of «the grader», «the paper» will take a severe drubbing.