Fugitive Kazakh clan has deep ties to Trump associates

thegrafA powerful Kazakh family and a developer linked to Donald Trump enlisted the law firm of a high-profile Trump confidante to create a web of offshore companies designed to minimize taxes.

The firm: Bracewell & Giuliani, which carried the name of former New York City Mayor Rudolph Giuliani. Giuliani was a frequent surrogate for Trump during the 2016 campaign and was considered for a position in his Cabinet.

Bracewell & Giuliani had an office in Kazakhstan, and Giuliani even raised funds from expatriates there for his failed 2008 presidential bid.

An ongoing investigation by McClatchy and its reporting partners has shown that the developer, Bayrock Group, which partnered with the Trump Organization on at least three projects in the mid-2000s, was in business with the Khrapunov family.

Bayrock is believed to be under the microscope of Justice Department and congressional investigators looking at Russian meddling in the 2016 election, in part because of its foreign investors and buyers and in part because Bayrock’s Russian-born then-managing director Felix Sater, who served time in prison in the U.S. in the mid-1990s, became an adviser to Trump’s company.

Sater and Trump Organization lawyer Michael Cohen were seeking a hotel deal in Moscow even during the election, according to emails that recently surfaced and are now in the hands of investigators. The emails undercut Trump’s post-election claim that he had no business in Russia, showing he was actively trying to develop a luxury tower.

Documents obtained by McClatchy, Dutch broadcaster Zembla and the Organized Crime and Corruption Reporting Project show that the Khrapunovs — former Kazakh politician Viktor, his anchorwoman wife Leila and Geneva-based son Ilyas — joined forces with Bayrock and Sater during a period that Bayrock was developing the famed Trump Soho project in Manhattan, which Trump touted often on NBC’s hit show The Apprentice.

Together, the Khrapunovs and Bayrock Group created KazBay B.V. in the Netherlands in 2007, with the legal advice of Bracewell & Giuliani.

The Khrapunovs, with the help of a partner of Sater’s, later purchased and quickly flipped three condos in the Trump Soho hotel and condo complex. They are accused in Kazakhstan of embezzlement and money laundering. The Khrapunovs face civil lawsuits in New York and Los Angeles that seek to claw back what the Kazakh government says is stolen money. Some of the cash allegedly washed through U.S. real estate, including the Trump properties.

When Zembla readied to air a documentary this week (Sept. 27) about the relationship between the Khrapunovs and Sater, the Khrapunovs sued in the Netherlands to block it, accusing the Kazakh government of defamation.

Dutch courts rejected the argument and the program, which featured prior reporting by McClatchy, aired as scheduled. An English language version was shared widely on the Internet.

Internal records show KazBay B.V. was 50 percent owned by Bayrock B.V. and its owner Tevfik Arif, and 50 percent owned by Helvetic Capital S.A., a Swiss company whose true owner, according to the documents, was Leila Khrapunova. She’s the former TV anchor and back in 2007 was the wife of Viktor Khrapunov, the former mayor of Kazakhstan’s largest city, Almaty, and an ex-energy minister.

Kazbay Agreement
This snippet of a document from September 2007 obtained by McClatchy and reporting partners shows the ownership structure of the joint venture KazBay B.V. between a now-fugitive Kazakh family and Trump-linked developer Bayrock Group.
Wieder, Ben

People familiar with KazBay describe the joint venture as a company operating on multiple tracks. Some documents show the ventures oil-drilling business, but it also planned open-mouth coal mining, where extracted coal would go to a nearby power plant.

How long the venture lasted and why it ended are unclear.

KazBay wasn’t the only project involving the Khrapunovs and Bayrock. They partnered on a luxury condominium project overlooking Lake Geneva, and established a Swiss corporation in early 2008 called Swiss Capital IB SA that listed two addresses on its website: Bayrock’s New York offices in Trump Tower, two floors down from Trump, and a Switzerland address used by Helvetic Capital.

A series of investigative reports by McClatchy earlier this year showed how Sater maintained a business relationship with Khrapunovs, including investing together in a shopping mall debt deal in Ohio that ended in litigation and a sealed settlement. They also worked together in Syracuse, N.Y, to purchase a former state institution, another deal mired in lawsuits.

Multiple people with knowledge of the KazBay deal describe Bracewell & Giuliani’s work as limited to creating a tax structure that worked to reduce tax exposure and benefit investors in Switzerland, the United States and Kazakhstan. It’s why Holland was chosen as the home base, on paper, for KazBay.

Houston-based Bracewell & Giuliani was one of the few prominent U.S. firms in 2007 with an office in Kazakhstan, at once both a land of promise because of its rich natural resources and a “kleptocracy” run by President Nursultan Nazerbayev since 1989.

Giuliani joined the law firm as a partner in 2005, staying until 2016. It’s unclear how involved he was in Kazakhstan, but the head of the law firm’s Kazakh office at the time, Gregory Vojack, raised money there for Giuliani’s failed presidential bid in 2008.

Federal records show that Vojack and his wife donated about $4,400 in early 2007 to the campaign. Months later, a Wall Street Journal story spotlighted attempts to raise campaign money from Americans working there.

That was not illegal but raised eyebrows. Giuliani greeted the guests via video conference at a fundraiser held at Vojack’s home in Almaty.

Reached in China, Vojack declined comment, saying that although he no longer works for Bracewell (which last year parted ways with Giuliani), he is bound by rules that prevent him from discussing work for private clients.

Vojack’s bio shows he has worked in Kazakhstan since 1994, shortly after the collapse of the Soviet Union. In early 2007, Bracewell & Giuliani issued a news release, in which Vojack touted the law firm’s role as international counsel for the offering of $1 billion in corporate debt for Bank TuranAlem, or BTA.

“We are in the best position now that we’ve ever been,” he said at the time. “This is an exciting time for Kazakhstan, and we are thrilled to be a part of its expansion and wealth consolidation.”

But soon afterwards, the Nazerbayev government sought to claw back ownership of the fast-growing bank. BTA Chairman Mukhtar Ablyazov refused, and a power struggle came to a head early in 2009 when Ablyazov fled to London and Kazakhstan seized the bank, alleging widespread embezzlement.

Bracewell & Giuliani was not accused of impropriety. However, the BTA debt issuance intersects with the KazBay venture in a curious way.

Numerous people familiar with the KazBay deal describe it as driven by Sater and Ilyas Khrapunov, who is married to Ablyazov’s daughter Madina.

The Kazakh government has accused Ablyazov of hiding massive theft through a complex web of offshore shell companies. U.S. lawyers representing the city of Almaty in civil lawsuits in Los Angeles and New York against the Khrapunovs allege that they comingled funds stolen by Mukhtar Ablyazov.

Attorneys for the Khrapunovs and Ablyazov have repeatedly countered that they are the targets of political persecution. President Nazerbayev and members of his extended family have also been accused of hiding fortunes in offshore havens.

Kazbay Bracewell

This portion of a document from September 2007 obtained by McClatchy and reporting partners shows the true owners of Dutch companies created as a joint venture between a now-fugitive Kazakh family and Trump-linked developer Bayrock Group.
Wieder, Ben

Reasons for KazBay’s collapse vary based on who tells the story. Some blame a New York Times story in late 2007 that revealed the Russian-born Sater had a criminal past, forcing him to step down from his public role at Bayrock, later becoming a senior advisor to the Trump Organization. Others involved in KazBay assert the Khrapunovs were to blame.

None of the actors involved have publicly commented since initial reports earlier this year.

Numerous former Bayrock employees, now spread across the globe, declined to comment on the record for the story, wanting nothing to do with a company under scrutiny by investigators probing Trump’s businesses.

Bayrock spokeswoman Angela Pruitt declined to comment Thursday, providing a statement given earlier this month to partner Zembla.

“Bayrock B.V. and KazBay B.V. were entities formed with the advice of outside legal counsel as part of the structuring of an investment by Bayrock,” it read. “The investment was not successful, and the structure subsequently was abandoned.”

There’s no evidence that Trump or Giuliani participated in KazBay, or even knew of it.

Yet because the Khrapunovs worked with Sater over the course of a decade, were buyers in Trump Soho in 2013 and are involved in numerous legal disputes playing out in U.S. courts, investigators probing Russia’s 2016 election meddling may well consider the Khrapunovs and Sater as persons of interest.

This story involved collaboration between McClatchy , Dutch public broadcaster Zembla and the Organized Crime and Corruption Reporting Project, a global journalism network that investigates transnational corruption



Kevin G. Hall: 202-383-6038, @KevinGHall Ben Wieder: 202-383-6125, @benbwieder

ablyazov1This graphic from Dutch broadcaster Zembla shows Mukhtar Ablyazov, a fugitive Kazakh banker who through marriage is connected to the Khrapunovs, another family of Kazakh fugitives sought for alleged embezzlement. Zembla

www.miamiherald.com, 28.09.2017


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