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RUEHLMC/MILLENNIUM CHALLENGE CORP
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C O N F I D E N T I A L SECTION 01 OF 02 BISHKEK 001741 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR SCA/CEN (GEHRENBECK) 
USDOC FOR ITA/MAC (STARKS) 
 
E.O. 12958: DECL: 12/11/2016 
TAGS: PGOV KCOR ECON EINV EMIN KG
SUBJECT: A TALE OF CORRUPTION IN THE KYRGYZ PRIVATIZATION 
PROCESS 
 
BISHKEK 00001741  001.2 OF 002 
 
 
Classified By: Amb. Marie L. Yovanovitch, Reason 1.4 (b) and (d). 
 
¶1.  (C) Summary: Deputy Parliament Speaker Alymbekov revealed 
to Ambassador aspects of a murky privatization deal for the 
Kyrgyz tin and tungsten company "ShPU."  According to 
Alymbekov, the government inexplicably selected the lower of 
two bids for "ShPU," rejecting a much higher bid from a 
U.S.-registered company.  The lower offer, he noted, is from 
a Russian-Kazakh venture, linked to Kyrgyz President Bakiyev 
that plans to transfer the firm to Chinese interests 
subsequent to the sale.  Alymbekov claimed to be the only 
public opponent of the deal, and wanted to inform the 
Ambassador in case "something happens" to him.  Alymbekov,s 
tale, however, underscores the murky nature of Kyrgyz 
privatizations.  End summary. 
 
Setting the Stage for Disclosure 
-------------------------------- 
 
¶2.  (C) Deputy Parliament Speaker Erkinbek Alymbekov invited 
the Ambassador to a December 4 meeting that began with a 
general discussion of the current Kyrgyz political 
environment.  However, Alymbekov soon dismissed his staff 
before outlining to the Ambassador the details of a 
privatization dispute involving a minerals company in his 
district southeast of Lake Issyk Kol along the Chinese border. 
 
A Raw Deal - Metal on the Cheap 
------------------------------- 
 
¶3.  (C) Alymbekov said a recent tender for a state-owned tin, 
tungsten and light bulb firm, identified by the Russian 
abbreviation "ShPU" and located in the eastern Sary Jaz 
region, generated two bids.  The higher $50 million bid 
involved a U.S. firm, Basic International Development 
Corporation (BIDC), and a local Kyrgyz partner.  The lower 
$20 million offer originated from a Russian-Kazakh team, 
which is represented on the Kazakh side by the "Sary Jaz 
Mineral Mining Company (SJMMC)."  Alymbekov claimed the SJMMC 
is owned by the Kazakh bank "Turan Alem," which is, he added, 
closely linked to Kyrgyz President Bakiyev and Deputy Prime 
Minister Usenov.  According to Alymbekov, the government 
decided to sell "ShPU" for the Russian-Kazakh team's lower 
offer.  He claimed the Russian-Kazakh team planned to then 
sell "ShPU" at a large profit to Chinese interests. 
 
Opposing the Deal 
----------------- 
 
¶4.  (C) Alymbekov claimed unspecified "threats" during 
judicial proceedings in a court closer to Sary Jaz forced the 
relocation of a legal case against the sale to the Bishkek 
court system.  An October 10 physical assault on Alymbekov, 
he noted, caused the chairman of "ShPU" to halt his challenge 
of the sale.  (Note: At the time of the assault, Alymbekov 
said publicly that the attack was related to a business deal 
involving a U.S. firm.  End note.)  Alymbekov identified 
himself as the sole remaining opponent of the deal, and has 
hired three bodyguards for protection.  He added that his 
wife, who works for the Central Election Commission, is being 
pressured at her job.  At this point in the meeting with the 
Ambassador, instead of identifying the instigators of this 
entire affair aloud, Alymbekov wrote down two names: Prime 
Minister Kulov and Acting Minister of Interior Suvanaliev. 
 
More Confrontation on the Horizon? 
---------------------------------- 
 
¶5.  (C) The Ambassador asked about the next steps and what 
action he expected from the embassy.  Alymbekov speculated a 
showdown would result if he informed his constituents about 
 
BISHKEK 00001741  002.2 OF 002 
 
 
the deal publicly.  However, Alymbekov said the outcome would 
depend on his behavior.  "If I am quiet," he added, "I will 
lose face, so I must fight."  Alymbekov said he had not been 
approached to stop his opposition, but indicated his 
"sources" had provided him some worrying information.  As a 
result, he wanted the Ambassador to know the details of the 
dispute in case "something happens" to him.  Alymbekov 
expressed interest in more information about the U.S. firm, 
BIDC, and provided the Ambassador with the firm's contact 
information in New York. 
 
What is BIDC? 
------------- 
 
¶6.  (C) According to public New York state corporation 
records, BIDC is a "foreign business corporation" based in 
Delaware using, according to public Delaware state 
corporation records, an agent in New Castle, Delaware. 
Alymbekov's information placed BIDC at 17 State Street, New 
York, NY 10004-1501.  There is scant information available 
about BIDC on the internet - but, it is described as an 
"advisory organization" that provides "financing and project 
management."  Additional internet information indicated that 
a BIDC representative sat on a panel in 2005 with a U.S. 
Department of Commerce official known to the embassy.  That 
USDOC official informed embassy that the BIDC representative 
"perplexed" him, and added that BIDC's apparent website, 
www.bidc.us, displays the European Bank for Reconstruction 
and Development (EBRD) website.  A search of the EBRD website 
revealed no BIDC content.  Local contacts, including the EBRD 
representative, have never heard of BIDC.  BIDC never 
contacted the embassy regarding this deal, despite the fact 
that they have representation in Bishkek, according to 
Alymbekov.  The Ambassador suggested that BIDC, as a U.S. 
corporation, could confer with the American Chamber of 
Commerce or the embassy,s economic officer, but Alymbekov 
was unenthusiastic about this offer. 
 
Comment 
------- 
 
¶7.  (C) Alymbekov presented one side of what appears to be a 
questionable Kyrgyz privatization deal.  He pointed fingers 
at both the President and Prime Minister, raising questions 
about their motives, as well as his own.  Perhaps, he is 
truly fighting for the public interest, and this is a truly 
rotten privatization case.  The optics of a direct Chinese 
purchase of "ShPU" and its mineral resources might have 
presented too many problems -- so it is conceivable that 
Chinese investors might seek to control the assets through a 
Russian-Kazakh venture.  SJMMC and the others may all be 
front operations for the liquidation of a valuable 
state-owned asset.  However, the many unanswered questions 
about this case illustrate the lack of transparency that 
characterizes the murky world of Kyrgyz privatizations. 
 
YOVANOVITCH