Does Kazakh banker know the secret of RBS's missing billions?

By Tom Harper

One of the world's biggest suspected fraudsters is living freely in luxury in London - and intends to call on Prince Andrew to help defend himself against Kazakhstan's accusations of a fraud that left British banks £5 billion poorer.

When Kazakh billionaire Mukhtar Ablyazov was interviewed by the Evening Standard last August, Ablyazov gave every impression his London exile was an intolerable nightmare.

The 48-year-old, who is alleged to have salted away £1.27 billion when he was in charge of BTA (Kazakhstan's national bank), claimed someone had tried to kidnap his son from school, while he himself wTom Harperas attacked by a mystery car that rammed his Mercedes repeatedly as he drove through Hampstead.

Casual observers would probably sympathise with Ablyazov, who blames Kazakhstan's dictatorial President Nursultan Nazarbayev for making him a scapegoat when BTA discovered a £10 billion "black hole" in its loan book in February 2009.

The media-phobic tycoon - who eschews flamboyance and favours Marks & Spencer suits over Savile Row - was forced to flee immediately to London, where he is currently fighting seven civil claims in the High Court brought by the new bosses at his former bank.

Asked if he feared his life was in danger, he said: "Of course. I have lived in the situation when I expect assassination for almost 10 years, since the first time I clashed with the president. I am constantly on alert. To the Kazakhstan authorities it doesn't really matter whether I am in England or any other country, they will stop at nothing."

However, any sympathy may start to evaporate with the knowledge that the Royal Bank of Scotland lost an estimated £1.5 billion when Ablyazov was in charge of BTA.

British banks, including Barclays and HSBC, pumped in billions in a bid to profit from Kazakhstan's rich deposits of oil and natural gas.

But when BTA collapsed, British pension funds, on whose behalf RBS had invested in the Kazakh bank, lost 80 per cent of their investments' value.

Kazakhstan claims Ablyazov is a fraudster and want to extradite him to face criminal charges on the scale of those faced by Bernie Madoff in the US. While the process winds its way through the British courts, the Kazakh banker continues to live in luxury in London.

Documents seen by the Standard reveal Ablyazov is allowed to draw £10,000-a-week "ordinary living expenses" from assets that were frozen when a High Court judge decided the Kazakh banker "could not be trusted".

Indeed, Mr Justice Teare was later forced to place a world-record £4 billion of Ablyazov's wealth in the hands of receivers KPMG when it emerged he had failed to declare the £20 million he made through the sale of his interest in the Eurasia Tower, a huge 127-storey building in Moscow.

Despite his obfuscation and the severity of the claims against him, the Standard can reveal Ablyazov's generous, court-approved living expenses allow him to live in one of the most exclusive properties in London.

Forbes magazine once rated his nine-bedroom mansion on The Bishop's Avenue in Hampstead as the sixth most expensive house in the UK. The owner, super-rich Iranian property developer Ali Asghar Mesforoush, agreed to let £4,000-a-week Carlton House to the former banking chief after failing to find a buyer.

Features of the luxury, 15,000 sq ft property include nine ensuite bedrooms with Italian marble baths, an outdoor, full-size heated swimming pool, a 12-person Turkish bath and a futuristic Thunderbirds-style car lift from the forecourt to an underground garage.

Ablyazov lives there with his wife and three children, protected by a 24-hour security team. Gourmet meals are delivered regularly to the property from an upmarket deli nearby, while his children are taken to local private schools in chauffeur-driven cars.

The Kazakh banker's trial at the High Court requires the services of more than 50 lawyers, including 22 partners, 32 barristers and eight QCs. When it finally ends sometime in 2012, it will have been be one of the longest in British legal history. Ablyazov has retained the services of lobbying firm Gardant Communications and, until recently, City PR specialists Hudson Sandler, as he fights claims that billions were squirrelled away to offshore companies he secretly controlled in the British Virgin Islands, the Seychelles and the UK.

Indeed, one of the more bizarre vignettes to emerge is the story of Drey Associates Ltd - a tiny firm based in Guildford apparently run by a British family but controlled by Ablyazov.

Anthony Stroud, 76, his schoolteacher daughter Sarah Wilson, and her husband, John, 47, were all directors of Drey Associates when Ablyazov transferred $295 million from BTA's coffers to it in 2007. At the time, BTA told the Kazakhstan stock exchange that Drey Associates owned 9.8 per cent of the shares in BTA Bank, which were worth hundreds of millions of pounds.

But according to documents registered at Companies House, the firm's declared assets were worth just £46,000 in 2007 and £38,000 in 2008.

The Wilsons live in a surprisingly frugal manner considering they are directors of a firm that presides over multi-million- pound deals. The couple have two mortgages taken out on their modest £250,000 home in Welwyn Garden City. Mr Wilson is listed as an electrical engineer at Companies House. The couple, whose assets were frozen and passports seized pending the outcome of the Ablyazov case, refused to speak to the Evening Standard and directed all enquiries to leading Soho law firm Magrath, which also declined to comment.

Ablyazov has an asylum claim pending with the Home Office since the Kazakh government asked Britain to extradite him back to his homeland where he would face criminal charges.

The case against Ablyazov brought by BTA's new owners, the Kazakh sovereign wealth fund Samruk-Kazyna, alleges that he failed to inform the board of these huge transactions and concealed the fact he effectively owned Drey. He denies all wrongdoing and claims the board were well aware of his interests.

The messy saga also threatens to envelop the Duke of York. The deputy head of Samruk-Kazyna happens to be President Nazarbayev's son-in-law, Timur Kulibayev - the billionaire who paid Prince Andrew £3 million more than the £12 million asking price for his former home, Sunninghill Park. More than three years later, the 12-bedroom property lies derelict.

Mr Ablyazov said he intends to call Prince Andrew as a defence witness in his battle with BTA. He will ask him to give evidence on the sale of Sunninghill to Kulibayev, who was described by an unnamed US diplomat in a WikiLeaks cable as "the ultimate controller of 90 per cent of the Kazakh economy".

Ablyazov claims to have documents that trace the money paid for the house back to an earlier transaction in which part of a state-owned Kazakh oil and gas company was sold to the Chinese.

Anger at the Ablyazov case is starting to boil over. Critics of RBS - 83 per cent of which is owned by the Treasury following the multi-billion-pound bailout in 2008 - claim it should launch its own action against the banker. At present, even if BTA's case against its former chairman is successful, RBS only stands to recoup 50 per cent of the money it lost.

Michael Lamoreux represents 8,500 RBS shareholders who lost savings due to hopeless financial mismanagement at the bank. He said: "One has to question why RBS hasn't been taking action against him? Why has it all been left to Kazakhstan? And why is he living here in luxury when all this money disappeared on his watch?

"It is typical of the bank's carelessness and lack of regard for its shareholders. It should be using every law it can to recover that money instead of just hoping for the best."

Mr Lamoreux claims the Ablyazov case reinforces the perception that it is "business as usual" at RBS - despite owing its continued existence to taxpayers who are struggling in an economic downturn caused, in part, by the bank's collapse.

Disgraced former head of RBS Sir Fred Goodwin was widely blamed for the demise of the banking giant through his disastrous acquisition of the Dutch bank ABN Amro.

Yet he negotiated a £703,000-a-year pension after he was allowed to retire at 50 in January 2009 rather than face the sack. That was reduced to £550,000 after he took a tax-free lump sum of £2.7 million from his £16 million pension pot earlier this year.

And last month, there was uproar when it emerged that more than 100 senior RBS executives each pocketed over £1 million last year, despite the bank posting a £1.1 billion loss. RBS boss Stephen Hester picked up £7.7 million.

Some believe the row over Britain's "soft-touch" treatment of Ablyazov may also threaten the stability of the Coalition government. Senior Liberal Democrat peer Lord Oakeshott - seen as an "outrider" for Business Secretary Vince Cable, says: "We taxpayers are on the hook for 83 pence of every pound lost by RBS. Its management must pursue the foreign billionaires as diligently as they do struggling British businesses and homeowners."
History with Many Crimes

We could say that the likes of Mukhtar Ablyazov are the true “con men” of the 21st century. As a reminder, the international scandal around the scams of Mukhtar Ablyazov, former head of BTA Bank, has been simmering last two years. Moreover, his name could be found at international wanted list.

Ablyazov, who started his career by selling used cars, became a Minister of Energy, Industry and Trade in Kazakhstan in 1998. But he didn’t hold this position for long; in 2002 he was sentenced for economic fraud. For Ablyazov, scam around KEGOC, state-owned energy company, was the most public and fatal event of those years.

According to independent audit reports, KEGOC lost more than $ 25 million in 1998 and first quarter of 1999 (that is, during a fleeting ministerial career of Ablyazov) under Ablyazov and his protégé management. Ablyazov was committed to prison for six years. However, he was prematurely released after two years, and took the post of the head of the largest bank at the post-soviet area – Turan Alem (from January 2008 - BTA Bank). Interestingly, the former chairman and shareholder of the bank - Yerzhan Tatishev, died in strange circumstances during hunting, right before Ablyazov’s appointment.

Being the head of BTA Bank, Ablyazov withdrew money through the issuance of fictitious or initially disadvantageous bank loans to “friendly” companies. The last scam of Kazakh schemer was the sale of 39.99% share in BTA Bank- Ukraine through the Kazakh-controlled BTA Bank.

On February 2, 2009 due to gross violations of a number of banking regulations and failure to establish reserves to cover its obligations to depositors and creditors BTA Bank (Kazakhstan) was nationalized. National welfare fund Samruk-Kazyna bought 78.14% of the bank share, adding $ 2.09 billion into bank capital by buying shares of additional issue at the market rate of the Kazakh Stock Exchange. The same day, Chairman of the Board of Directors of BTA Bank Mukhtar Ablyazov and Chairman of the bank's Credit Committee Zhaksylyk Zharimbetov were dismissed from their posissions.

But Ablyazov not only an ordinary crook, he is also very ambitious and vindictive oppositionist. In November 2001, just before his jailing in 2002 for bunch of crimes, Mukhtar was among co-founders of Democratic Choice of Kazakhstan. In May 2003, Ablyazov returned home under presidential amnesty.

In March 2004, co-founder of the Democratic Choice of Kazakhstan movement, a former minister and “political” prisoner M. Ablyazov founded a new oppositional structure - Democratic Front of Kazakhstan. Main objectives of this organization were: 1) mobilization of resources to support the opposition in the country; 2) organize international pressure on President of Kazakhstan Nursultan Nazarbayev.

The question is - What kind of and whose resources could he “mobilize”, given that until that point he “mobilized” only resources he never owned? Question more rhetorical than practical. It’s clear that Ablyazov, in his “fight” with the president of Kazakhstan, will use, mildly speaking, unconstitutional methods.

Lately, British newspaper The Telegraph, with reference to WikiLeaks, reported that the former head of the BTA Bank, Mukhtar Ablyazov labored to change political regime in Kazakhstan from London. Famous for scandals Wikileaks published a dispatch from one of the embassies in London. The report states: “Ablyazov is seeking legal immigration status in the UK as the base for his self-imposed exile. From London, Ablyazov plans to continue supporting political groups opposing Nazarbayev and to actively seek regime change in Kazakhstan.”

Recently General Prosecutor’s Office of the Republic of Kazakhstan sent extradition request about Ablyazov to UK officials. However, there is no response so far.

It’s not a secret what Ablyazov is seeking for. Obviously, he wants to destabilize the political regime in Kazakhstan, and perhaps, if possible, arrange, so called, “color revolution”. It’s not a secret that Ablyazov may be involved in the “colored” project in Kyrgyzstan. During the riots in Kyrgyzstan, he even appealed to the Kazakhs to repeat something similar in his native country.

Ablyazov is afraid of legal investigation of his case in London’s court and being extradited to homeland, where he will be jailed. Escaped banker is trying to act systemically, because the destabilization in Kazakhstan, inter alia, allows him to move out remaining assets from the CIS's territory.

In fact, every action of Ablyazov is attempted to besmear reputation of Kazakhstan, which makes easier to rob and do whatever he wants. Does he care about future of his country – you decide.
World media monitoring