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DE RUEHTA #0535/01 0840924
ZNR UUUUU ZZH
P 250924Z MAR 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC PRIORITY 5019
INFO RUCNCIS/CIS COLLECTIVE 1408
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
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RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1350

UNCLAS SECTION 01 OF 03 ASTANA 000535 
 
SENSITIVE 
SIPDIS 
 
STATE FOR INL/AAE, INL/C, SCA/CEN 
 
E.O. 12958: N/A 
TAGS: PGOV PINR EFIN KCRM KZ
SUBJECT:  KAZAKHSTAN:  CHARGES FILED AGAINST FORMER CHAIRMAN OF 
LARGEST PRIVATE BANK 
 
REF:  (A) ASTANA 0386 (B) LONDON 0712 
 
ASTANA 00000535  001.2 OF 003 
 
 
¶1. (U) Sensitive but unclassified.  Not for public Internet.  This 
cable is based on open source material and local press reports in 
Kazakhstan.  It should be read in conduction with reftel B. 
 
¶2. (SBU) SUMMARY:  On February 2, the Government of Kazakhstan, 
represented by Samruk-Kazyna National Welfare Fund, acquired control 
of BTA Bank, the largest commercial bank in Kazakhstan, through the 
purchase of 78.14 percent of shares (reftel A).  BTA Bank Chairman 
Muktar Ablyazov was fired the same day and, on March 2, charged with 
embezzlement for laundering funds illegally obtained through loans 
to bogus firms.  END SUMMARY 
 
GOVERNMENT TAKEOVER OF BTA BANK 
 
¶3. (SBU) As reported in reftel A, Chairman of the National Bank 
Gregoriy Marchenko and the State Financial Supervision Agency (FSA) 
made a joint statement that BTA Bank had failed to fulfill liquidity 
ratio and equity capital adequacy ratio requirements under the Banks 
and Banking Activities Laws.  They further noted that BTA Bank's 
operations had been supported by short-term loans from the National 
Bank for the previous several months. They explained that if the 
National Bank had not provided support, specifically had not given a 
loan in the last week of January, BTA Bank would have been in 
default.  Despite a government commitment to buy a 25 percent 
interest in BTA Bank, it instead acquired a controlling share. 
Prime Minister Karim Masimov fired Ablyazov and First Deputy Chair 
Zhaksylyk Zharimbetov, telling them that they were relieved of their 
duties because their actions were against the law and in conflict 
with the interests of BTA Bank's clients and creditors. 
 
ABLYAZOV RESPONDS AND FLEES KAZAKHSTAN 
 
¶4. (SBU) In written statements to the Kazakhstani press, Ablyazov 
has claimed that the government's actions constitute an abuse of 
power and that the takeover was illegal.  He has said that the 
present situation is a result of ongoing efforts by governmental 
agencies to take control of BTA Bank through any means necessary. 
Ablyazov alleges that the government has made withdrawals from 
accounts by national and state holding companies, forced other 
clients to do business with other financial institutions, and 
excluded BTA Bank from participating in state programs.  Ablyazov 
said "the purpose was to get control over the banks by any means, 
and it has been achieved."  He predicted that the officials who 
seized private property "may use their usual methods, such as 
slander and criminal prosecution to justify their actions." 
 
¶5.  (SBU) On February 10, Ablyazov published an open letter to the 
President of Kazakhstan, rejecting accusations that the bank was 
only able to stay in business with short-term loans from the 
National Bank.  He claimed that BTA Bank only borrowed small amounts 
from the National Bank, using securities as collateral. He also 
warned of the negative consequences of the change in management. 
Local media in Kazakhstan have speculated that Ablyazov, having 
achieved independent financial security and knowing of the 
government's plan to arrest him, has fled to London, although there 
has been no official confirmation of this (reftel B).  Police have 
been unable to locate him in Kazakhstan and the Procurator General's 
Office (PGO) plans to file a warrant with Interpol. 
 
ACCUSTIONS AND CHARGES AGAINST ABLYAZOV 
 
¶6. (SBU) Director of the National Bank Gregoriy Marchenko accused 
Ablyazov of holding no shares in BTA Bank and borrowing money to be 
transferred to unknown offshore accounts.  Marchenko also claimed 
that surveillance cameras recorded two vans removing documents from 
BTA Bank on January 31.  He further stated that this was done by 
people loyal to Ablyazov in order to hide Ablyazov's activities in 
Russia and that Marchenko has an official letter from the Central 
Bank of Russia proving that approximately $600 million was 
transferred by BTA Bank in Russia with fake shipping declarations 
from April though October 2008.  Ablyazov categorically denied these 
allegations. 
 
¶7.  (SBU) On February 10, presidential advisor Yermukhamet 
 
ASTANA 00000535  002.2 OF 003 
 
 
Yertysbayev stated that Ablyazov's removal was not politically 
motivated.  On March 2, the PGO filed charges against Ablyazov and 
first deputy Zhaksylyk Zharimbetov at the request of the bank's 
management.  Charges were brought under Article 176 of the Criminal 
Code for illegal acquisition and embezzlement of property.  The 
PGO's case alleges that the embezzled property was laundered through 
multiple loans to fake companies, secured by the same piece of land. 
 An order was sought seizing all assets owned by individuals and 
companies alleged to have been involved in illegal transactions with 
BTA Bank.  Yertysbayev also recommended that entities involved in 
business relations with Ablyazov immediately verify transactions and 
report to the financial police.  At the same time, Sholpan 
Ablyazova, Ablyazov's cousin, said that her son, Tair Dyusembekov, 
was arrested on the basis of his relationship to Ablyazov.  On March 
2, Dyusembekov, Director of Agento-S LLP, was arrested and held in a 
detention facility by the Committee for National Security (KNB) for 
allegedly overestimating the value of properties owned by Ablayzov's 
affiliated companies.  KNB investigators in Almaty believe that, 
using overestimated appraisals, BTA Bank was financing companies, 
including offshore companies, that were transferring funds to 
Ablyazov's personal accounts and his affiliated companies. 
 
OFFICIAL STATEMENT BY PROSECUTOR GENERAL'S OFFICE 
 
¶8. (U) On March 20, the PGO issued a press release on the case.  A 
special prosecutor was appointed to lead an interagency group 
investigating Ablyazov and Zharimbetov. The PGO announced that it 
was "a proven fact that Ablyazov and his vicarious agents were 
giving credits illegally to multiple local and offshore companies 
intentionally created for that purpose, thus providing the outflow 
of the capital of BTA Bank for the period of 2005 to 2008."  The 
investigative group initiated several criminal cases, which are 
currently in the pre-trial investigation stage.  The PGO provided 
evidence of Ablyzov's knowledge that charges would be filed and his 
preparations to flee the country.  They also explained some of his 
schemes.  In one deal, for example, Ablyazov transferred $200 
million from BTA Bank to Tortuga Limited, which he allegedly owned 
and registered in the Seychelles Islands, for the purchase of land 
in Moscow for construction of an apartment complex.  Tortuga Limited 
then bought the land from a subsidiary company.  In another scheme, 
Ablyazov purchased a small amount of shares in companies that would 
take loans from BTA Bank to buy out his shares at an inflated 
price. 
 
ABLYAZOV BIO NOTES 
 
¶9.  (SBU) Ablyazov was one of the founders of the Democratic Choice 
of Kazakhstan movement in 2001.  In 2002, he was imprisoned after 
being convicted of abuse of authority, allegedly while Minister of 
Environment from 1998 through 1999.  The president pardoned him in 
¶2003.  Though he went into private business after his release, he is 
rumored to be the primary source of financial support for the 
unregistered opposition party Alga. 
 
FUTURE OF BTA BANK UNCERTAIN 
 
¶10.  (SBU) The assets of BTA Bank increased in value by 10 percent 
in 2008, from 2.649 trillion tenge (current exchange rate 
approximately 150 tenge to the dollar) to 2.915 trillion tenge. 
However, its profits decreased to 12.687 billion tenge, from 48.683 
billion tenge the previous year.  According to the Interfax Center 
of Economic Analysis, BTA Bank had the seventh highest asset base 
among CIS banks and the first among Kazakhstani commercial banks. 
Since the government's takeover, local media have speculated that 
Bulat Utemuratov, former head of Management of the Presidential 
Administration, or Russia's Sberbank may bid for the bank, but no 
such offers have been made. 
 
MANAGEMENT CHANGES AND CHALLENGES 
 
¶11.  The bank's management faces many difficult challenges.  For 
example, customers withdrew $700 million in the weeks following the 
government's takeover on February 2, and on February 13, shares of 
BTA Bank were down to 1,202 tenge from 14,000 tenge on January 29. 
In an effort to save the bank, on February 2, the government 
appointed Anvar Saidenov, former director of the National Bank, as 
 
ASTANA 00000535  003.2 OF 003 
 
 
Chairman of the Managing Board and Arman Dynaev, current co-chairman 
of the Managing Board of Samruk-Kazyna, as Chairman of the Board of 
Directors. 
 
MILAS