Timur Kulibayev, the billionaire chairman of Kazakhstan's state oil company Kazmunaigas (KMG) and the son-in-law of President Nursultan Nazarbayev, is coming under mounting pressure as new allegations about his past business dealings come to light.
But well-placed Kazakh sources believe the revelations, which have been posted on the internet by fugitive banker Mukhtar Ablyazov and are accompanied by hundreds of pages of top-secret documents, are unlikely to affect Kulibayev's status as the undisputed heavyweight of Kazakhstan's oil and gas sector.
The allegations by Ablyazov, who currently lives in London after leaving his native Kazakhstan early last year to escape charges of embezzlement and money laundering, are potentially damaging for Kulibayev. They include the claim that Kulibayev owned a large stake in 120,000 barrel per day onshore producer Mangistaumaigas (MMG) before it was sold for $2.6 billion at the end of last year to KMG and China National Petroleum Corp. (NC Dec.3,p8). Another allegation is that companies controlled by Kulibayev bought up most of the shares in KMG's London-listed upstream affiliate Kazmunaigas Exploration Production (KMG EP) in its $2 billion initial public offering in 2006.
Ablyazov has forwarded documents related to these and other transactions in a letter to Nazarbayev and Kazakh law enforcement agencies, urging them to take action. The Kazakh financial police say they will complete a preliminary investigation into the allegations by Apr. 2 before deciding whether to probe further.
So far, Kulibayev has made no public comment on the allegations, although last month he obtained a court ruling in Kazakhstan that banned local media from repeating the claims. The ban was subsequently lifted, but there has been no coverage in the Kazakh newspapers on the affair since then (NC Feb.4,p8). KMG has also remained silent, but there was an anonymous posting on the internet at the end of last week which defended the MMG sale at great length and refuted any suggestion of illegal activity. The posting, which is assumed to have come from a senior KMG executive, pointed out that a team of large Western banks including Royal Bank of Scotland, Goldman Sachs and Citibank were employed as advisors on the deal and had carried out thorough due diligence on MMG and its previous shareholders.
Kazakh observers have questioned Ablyazov's motives for mounting his propaganda war, especially when his own reputation is so tarnished. People close to Ablyazov say one of his chief objectives is to convince the UK government to grant him political asylum on the grounds that he would not get a fair trial if he returned to Kazakhstan.
The leaked documents do not make pleasant reading for Kulibayev, his associates and some of the Western banks who did business with them. One of the issues raised is a potential conflict of interests between Kulibayev's official positions as chairman of KMG and deputy head of state holding firm Samruk-Kazyna, which owns all of KMG's shares, and his private activities. For instance, one of the allegations made by Ablyazov is that Kulibayev and his Indian business partner Arvind Tiku bought oil services firm Kazstroyservice from KMG several years ago for around $9 million, when the company's true value was close to $1.5 billion. Ablyazov also claims that Sat&Co, an outfit allegedly controlled by Kulibayev, sold its stake in a petrochemicals firm to KMG last year for an inflated price. Neither Kulibayev nor Tiku could be reached for comment.
It is no secret in Kazakhstan that Kulibayev has a wide range of private business interests. Some of his assets, most notably a majority stake in one of Kazakhstan's largest banks, Halyk Bank, are held jointly with his wife, Dinara Nazarbayeva, the president's second daughter. Kulibayev's father Askar, a prominent former communist party official in Kazakhstan who has known Nazarbayev for decades, also has his own business portfolio, which includes oil, construction and trading.
Several oil industry sources who have been involved in Kazakhstan for over a decade and know Kulibayev well agree that he is a highly effective operator who, despite his public positions, prefers to wield his influence from behind the scenes with the help of proxies. "He knows how to operate with a low profile, without fanfare, and he usually succeeds in what he does," a senior Western oil executive in Kazakhstan says. "He doesn't take a clear position and can be a bit evasive, but at the end of the day he's the one making most of the decisions."
Energy Intelligence
Thursday, March 11, 2010
