Sir, I read with surprise Gillian Tett's article "Lessons to be learnt from Kazakhstan's rescue model" (June 4) about the restructuring of BTA, one of the largest banks in Kazakhstan.
This article seems to swallow hook, line and sinker the regime's spin that it was an orderly restructuring, with creditor haircuts that might even be replicated with American and European banks.
The reality is somewhat different. As the financial crisis impacted in late 2008, BTA was in a robust position with a balanced portfolio of assets across the Commonwealth of Independent States and a strong liquidity position. It was destabilised and then effectively seized by a regime that is increasingly intolerant of dissent, especially of powerful businesses such as BTA – ie businesses outside the control of a small clique connected to the presidential family.
The results of their actions have been disastrous for international investors including $6.8bn of writedowns. In addition, unconventionally this restructuring gives creditors limited control or transparency over the recovery of assets by the new BTA management team installed by the authorities. As a result it will be difficult for creditors to scrutinise this process and recover value.
This is convenient for those close to the regime given their record of securing assets on highly advantageous terms. It is not an approach that would be accepted in any jurisdiction where the normal rules of legal due process and secure property rights apply.
Roman Solodchenko,
London EC4, UK
Chief Executive, BTA Bank, February 2007-February 2009
