Jet Fuel Sales to U.S. Base Are an Issue in Kyrgyzstan

nytimesBISHKEK, Kyrgyzstan — Back in 2005, the last time angry crowds toppled the government of Kyrgyzstan, the United States found itself in an awkward position: among the rallying cries was an allegation that the ruling family had benefited handsomely from Pentagon contracts. Now, substantially the same thing appears to be happening again.

Senior leaders in the interim government that took power last week are accusing the United States of allowing family members of the ousted president, Kurmanbek Bakiyev, to enrich themselves with contracts supplying jet fuel to Manas Air Base outside Bishkek, the Kyrgyz capital.

Companies controlled by the president's 32-year-old son, Maksim, who became a loathed figure during the uprising, skimmed as much as $8 million a month from fuel sales to the base, according to senior leaders in the new government, relying on a monopoly and favorable taxes.

That such accusations became a factor in last week's uprising speaks to the entrenched cronyism of former Soviet states, where power often blends seamlessly with wealth.

For the United States the base is integral to the logistics of supplying fuel, troops and equipment to Afghanistan. The uprising on Wednesday, in which more than 80 people died, has created some uncertainty about those logistics.

While establishing offices and mulling what to do with the president, who is in the south of the country, officials have already begun releasing details of an elaborate payment system for up to a quarter million gallons of jet fuel used at the base each day.

They accuse the United States of having used that system to curry favor with the ousted president in order to hold onto the air base, the only remaining Amerian military refueling site in Central Asia after Uzbekistan closed a base in a dispute with the United States over human rights.

"Whatever the Pentagon's policy of buying warlords in Afghanistan, the state of Kyrgyzstan demands more respect," Edil Baisalov, chief of staff of the interim leader, Roza Otunbayeva, said in an interview. "The government of Kyrgyzstan will not be bought and sold. We are above that."

Officials with the military agency that buys fuel, the Defense Energy Supply Corporation, have said no United States laws would be violated if contracts were awarded to companies owned by relatives of a foreign heads of state.

In an interview with The New York Times on Sunday, Mr. Bakiyev denied that his family profited from the deals. "Money that comes in for services at the Manas airport does not go into the pocket of the president," he said. "It goes into an account that everyone can check. Everything goes through the bank."

The contracts to supply the base have been coveted, and delicate.

In the haste of the buildup for the war in Afghanistan after the Sept. 11, 2001, attacks, companies controlled by Aidar Akayev, son of Askar Akayev, who was then the president, had wound up with lucrative contracts to sell fuel to Manas, according to Kyrgyz officials. A lawyer for Mr. Akayev's son has also said the contracts were not illegal.

Nonetheless, when President Akayev was deposed in 2005, the prosecutor's office under the new leader, Mr. Bakiyev, opened a criminal investigation, asked for F.B.I. cooperation and hired an independent corporate investigations company to untangle the arrangement.

According to a report prepared by that investigator, who asked not to be identified, as he was not authorized to disclose the report, the primary source of aviation grade kerosene used at the base is an oil refinery in the Siberian city of Omsk, owned by the oil division of Gazprom, the Russian energy giant.

Red Star, a company with offices in London and Bishkek, contracted with Defense Energy Supply to buy the fuel and move it across several Central Asian countries to Manas. Chuck Squires, a former American Army lieutenant colonel, was hired to handle the contract.

The outside investigator met with Mr. Bakiyev to present the initial findings, and characterized his responses as: "Thank you very much for your job. Your services are no longer needed." The investigator said he suspected the new president was in fact taking over the same business model.

"They changed the names of the companies but the scheme remained the same," he said.

Some of Red Star's business had been assumed by another company, the Mina Corporation Limited, he said.

Turusbek Koyenaliyev, an aide to the new acting minister for economic affairs, said one company supplying the base today was Manas Aerofuels. He said it was controlled by Maksim Bakiyev, the son of the president.

Manas Aerofuels and the Mina Corporation share office space in the Hyatt Regency hotel in Bishkek. A man who opened Mina's door said the company sold jet fuel to Manas but declined to answer other questions. On a list of companies in the business center provided by Hyatt, the contact for Mina is a "Mr. Squires."

In interviews, the acting prime minister, the president's chief of staff, a former foreign minister and a former acting president asserted that the younger Mr. Bakiyev was the owner of the fuel-supply companies. They were unable to provide documentation, citing the chaotic state of the government.

Omurbek Tekebayev, the former acting president, said in an interview that the trading companies made money selling cheap Russian jet fuel at world prices to the American base.

Until April 1, when the Russian government abruptly imposed a steep tariff on refined products for Kyrgyzstan, these exports were tariff-free under a customs agreement. Within Kyrgyzstan, sales to the base were exempt from the usual 20 percent sales tax, Mr. Tekebayev said.

The Bakiyev family, Mr. Tekebayev said, assumed control of part of the business immediately after the 2005 uprising.

Alikbek Jekshenkulov, who was serving as Mr. Bakiyev's foreign minister at the time, said the ruling family consolidated its control of the trade in 2006, after Mr. Bakiyev issued the first of several public threats to expel the base. The threat, he said, was used to compel the transfer of the remaining fuel contracts to the Bakiyev-family-controlled firms.

Mr. Jekshenkulov, in an interview, said he met with Mr. Bakiyev to object and explain that others, too, would like the business. "I said, 'There is a war between the clans to sell gas to the base. There ought to be an open tender, so people will believe it is honest, and you can be clean as a politician,'" Mr. Jekshenkulov said. "As always, he just nodded his head and said, 'That's all.' "

"Nothing changed," Mr. Jekshenkulov said. "They changed the names."

Partly as a result of this confrontation, however, Mr. Jekshenkulov said he was dismissed as foreign minister in February 2007, and later joined the opposition, which was repressed under Mr. Bakiyev. Last year, he was imprisoned in solitary confinement from March until August.

Michael Schwirtz contributed reporting from Teyit, Kyrgyzstan.

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