Kazakhstan - Corruption

In Kazakhstan, market economy means capitalism, which means big money, which means large bribes for the best connected. Timur Kulibayev is currently the favored presidential son-in-law, on the Forbes 500 list of billionaires (as is his wife separately), and the ultimate controller of 90% of the economy of Kazakhstan. Almost everyone at the top is confused. They're confused by their Soviet mentality. They're confused by the corrupt excesses of capitalism. 'If Goldman Sachs executives can make $50 million a year and then run America's economy in Washington, what's so different about what we do?' they ask." The law does not provide for an independent judiciary. The executive branch sharply limited judicial independence. Prosecutors enjoyed a quasi-judicial role and have the authority to suspend court decisions. Corruption was evident at every stage of the judicial process. Although judges were among the most highly paid government employees, lawyers and human rights monitors stated that judges, prosecutors, and other officials solicited bribes in exchange for favorable rulings in many criminal and civil cases.

Corruption in the judicial system was widespread. Bribes and irregular payments were regularly exchanged in order to obtain favorable court decisions. In many cases the courts were controlled by the interests of the ruling elite, according to Freedom House’s Nations in Transit report for 2018. According to the same report, the process is not public and open as “all participants in criminal processes sign a pledge of secrecy of investigation.” Recruitment of judges was plagued by corruption, and becoming a judge often required bribing various officials, according to the Bertelsmann Stiftung’s Transformation Index report for the year 2018.

Business entities were reluctant to approach courts because foreign businesses have a historically poor record when challenging government regulations and contractual disputes within the local judicial system. Judicial outcomes were perceived as subject to political influence and interference due to a lack of independence.

The law provides criminal penalties for official corruption, however the government did not implement the law effectively, and officials frequently engaged in corrupt practices with impunity. Transparency International (TI) maintains a national chapter in Kazakhstan. Kazakhstan's rating in TI's annual Corruption Perceptions Index is currently 2.8, placing Kazakhstan at 133 out of 176 countries rated -- a relatively weak score but the best for any country in Central Asia. TI experts have pointed out that corruption is particularly prevalent in the judiciary, police, customs, land registration, licensing, and construction projects. The government has signed on to the Extractive Industries Transparency Initiative (EITI) and is working to complete the validation process.

Corruption is widespread in the executive branch, various law enforcement agencies, local government administrations, the education system, and the judiciary. The Ministry of Internal Affairs, the Financial Police, the KNB, and the Disciplinary State Service Commission are responsible for combating corruption. Opposition leaders and human rights NGOs accuse the government of rampant corruption.

It should also be noted that a significant percentage of the private sector of the Kazakh economy was owned and/or controlled by individual, well-connected government officials. Frequently, they are associated with or related to the family of the nation's President, Nursultan Nazarbayev. On several occasions, high-value, state-controlled assets have been nominally privatized simply by transferring control to such individuals. A number of other high government officials in Kazakhstan have amassed vast fortunes and use their government positions to achieve commercial ends. It is difficultto see how such activities could be taking place on such an enormous scale if the economy was actually governed by market principles.

In 2001, a crisis was instigated by Presidential son-in-law Rakhat Aliev's clumsy, and often brutal, attempt to consolidate his own power, and ended with Aliev's four-year exile abroad as Kazakhhstan's Ambassador to Austria and the OSCE. Dariga's husband, the President's son-in-law, General Rakhat Aliev was formerly head of the Tax Police, then Deputy head of the National Security Committee ("KNB"), and then Deputy Chief of the Presidential Security apparatus. He came to control a huge commercial empire in Kazakhstan during his tenure in those government offices. According to Kazakh independent media sources, Russian sources, and the BBC, General Aliev controlled several TV channels and radio stations informally united into a shadowy holding, a number of newspapers, a news agency, a major oil refinery, a large bank, a natural gas company, several Internet websites, and the national sugar monopoly. The fact of Aliev's control over these companies is recognized by most Kazakh citizens, including a number of civil servants, who freely acknowledged it off the record.

Motivated by fears that Aliev had become too powerful to go quietly, during a brief political crisis in November 2001, governmental armed security forces took over Aliev-controlled TV stations on the same day he was forced to leave his post at the KNB. One of stations, KTK, was subsequently off the air for a week. The government's quick and unprecedented move to silence selected TV stationsserved as a de facto acknowledgement of Aliev's control over them, as there was no otherplausible explanation for such drastic yet selective measures. Having kept his most important job, that of the presidential son-in-law, Aliev since moved back into favor with the President, and his business activities continued unhindered.

The murder on 12 November 2005 of former high-level GOK official, and more recently outspoken opposition figure, Zamanbek Nurkadilov touched off a series of rumors and accusations among the Kazakhstani public and political elite. Nurtadilov had reportedly told several people that he was planning to reveal compromising information about President Nazarbayev before the December 4 presidential elections. Following opposition journalist Askhat Sharipzhanov's death after being hit by a car in July 2004, Nurkadilov accused Nazarbayev and then-Presidential Administration head (and now Almaty City akim) Imangali Tasmagambetov of ordering the killing. Nurtadilov claimed the reason was to suppress information Sharipzhanov had obtained in interviews with Nurkadilov and opposition leader Altynbek Sarsenbaiuly

The body of leading opposition figure Altynbek Sarsenbaiuly, along with those of two associates, was found in an Almaty field on 13 February 2006. All three men had been shot to death and appear to have been murdered. The men, whose bodies were found on the ground, had each been shot once in the back and once in the head. Sarsenbaiuly was co-chair of True Ak Zhol and For a Just Kazakhstan, former Minister of Information, and former Kazakhstani ambassador to Russia. Both Nurkadilov and Sarsenbaiuly had been "very close" to Nazarbayev, and thus may have possessed compromising materials about the President.

Kazakhstani law enforcement officials detained the alleged mastermind of the Sarsenbaiuly murder, current Head of the Senate Administration, Yerzhan Utembayev. From 2000 to 2004 he served as Deputy Head of the Presidential Administration, and from 1999-2000 as Deputy Prime Minister. At different times, he had served as the Chairman of the Board of Directors of National Railroad Company, the Development Bank of Kazakhstan, and KazakhOil.KNB Chief Nartai Dutbayev resigned because the investigation had revealed that members of the KNB's "Arystan" paramilitary team had "betrayed the interests of the people and entered into criminal collusion."

The Sarsenbaiuly family issued a letter on 03 March 2006 claiming that their relative had been killed for his political activity, in particular his criticism of Nazarbayev's family and close associates. They strongly implied that Rakhat Aliyev was behind the killing. Aliyev was said to be motivated by Sarsenbaiuly's key role in getting him exiled from Kazakhstan in 2001. They highlighted in particular his confrontation with Rakhat Aliyev and Dariga Nazarbayeva. They also noted the fact that Aliyev was formerly the deputy head of the KNB, whose operatives have been charged in connection with the crime. They characterized the premise that Utembayev had ordered the murder for personal reasons as absurd Sarsenbaiuly had provided convincing evidence to Nazarbayev that Aliyev was using his KNB position to gather compromising information on influential people with the goal of succeeding Nazarbayev. As a result, Aliyev was "exiled" to Vienna and Sarsenbaiuly was sent to Moscow. Despite continuing allegations of a coverup and political theories for the murder, there was still no evidence to substantiate any involvement by either the president or anyone in his immediate circle. The chairman of the international relations committee of the lower house of parliament, Serik Abdrakhmanov, dismissed the official version of events.

Timur Kulibayev, President Nazarbayev's influential son-in-law and Deputy Chairman of National Welfare Fund Samryk-Kazyna, filed a libel suit on 01 February 2010 against four newspapers -- "Respublika," "Golos Respubliki," "Vzglyad," and "Kursiv" -- after they published a story accusing him of corruption. An Almaty district court, acting with uncharacteristic swiftness on the same day, ordered the confiscation of all print runs containing the story and placed a ban on future stories that "insult the honor and dignity" of Kulibayev.

The source of the offending story was a letter to media outlets from Mukhtar Ablyazov, the ousted and self-exiled chairman of the Bank Turam Alem (BTA) bank who fled the country following accusations of embezzlement and financial fraud. In the letter, Ablyazov accused Kulibayev of pocketing a portion of the proceeds from the sale of a government stake in a Kazakhstani oil company to the China National Petroleum Company in 2003. According to Radio Free Europe/Radio Liberty, Ablyazov has documents proving Kulibayev's illegal machinations. Ablyazov's accusations appeared in the media at the same time as a story that Dinara Kulibayeva, Kulibayev's wife and Nazarbayev's daughter, bought a luxurious villa in Switzerland for a record 74 million Swiss franc (approximately $68.4).

The court reversed its ruling on a technicality after an outcry from civil society leaders and criticism from the Organization for Security and Cooperation in Europe's (OSCE) Representative on Freedom of the Media. Ousted, self-exiled chairman of Bank Turam Alem (BTA) bank Mukhtar Ablyazov is the source of the corruption allegations. The Financial Police opened an investigation into Ablyazov's allegations on February 11.

Ablyazov's allegations started a flurry of guessing games about the state of play in the power games among the Kazakhstani elite. Most independent political analysts agree that Ablyazov must have received the incriminating evidence from a third party -- either Rakhat Aliyev, Nazarbayev's exiled former son-in-law, or someone high enough in Kazakhstan's power echelons to have access to this kind of information. Some allege that Ablyazov is the front man for interests in the oil industry that want to diminish Kulibayev's far-reaching influence in the energy sector. Others speculate that this is a power play from one of the rival political clans.

Although the Kazakhstani Criminal Code contains special penalties for accepting and giving bribes, corruption is common throughout Kazakhstan. The President issued an anti-corruption decree in April 2009 that provides whistle-blower protection, punishes state officials who fail to report corruption cases, and tries to prevent conflicts of interests. Amendments to the anti-corruption law were signed on December 7, 2009 increasing punishments for corruption, instituting mandatory asset forfeitures, broadening the definition of corruption crimes to include fraud committed by government officials, and criminalizing the acceptance of a bribe on behalf of a third party. The law also extended the definition of government official to managers of companies in which the government holds more than a 35% stake.

The Ministry of Interior, Financial Police, Disciplinary State Service Commission, and Committee for National Security (KNB) are responsible for combating corruption. However, questions of jurisdiction and competition between the Financial Police and KNB have occurred recently.

On 05 August 2011, a court sentenced former health minister Zhaksylyk Doskaliyev to seven years in a maximum security prison for bribery and ordered the confiscation of his property. He planned to appeal the verdict.

Lower- and middle-ranking officials and minor political figures were penalized on corruption charges. The government reported that during the first 11 months of the year 2011, a total of 1,799 corruption crimes were disclosed, and 24 government officials were convicted. The government issued disciplinary penalties for 758 employees for corruption. In response to 2,011 cases of corruption, the Ministry for Internal Affairs dismissed 78 police officers for corruption and convicted 18. On 19 July 2011, Supreme Court Chairman Musabek Alimbekov told the media that 24 judges had been fired for incompetence since the beginning of the year. Two judges were convicted for corruption. Authorities dismissed 61 law enforcement officers for corruption during the year.

On 24 March 2011, the government launched a program aimed at combating corruption by improving citizens’ awareness of recourses against corruption and increasing confidence in state institutions by 2015.

The law mandates that the government, public associations, officials, and media outlets provide citizens with information that affects their rights and interests; in practice citizens’ requests for information were not fulfilled in a timely manner. NGOs reported problems with access to information from state agencies and cited red tape, poor content on official Web sites, and long lines in state agencies. Government and public employees, including parliamentarians and their spouses, are subject to financial disclosure requirements.

Although parliament published several draft laws, some parliamentary debates, and occasionally its voting record, many parliamentary activities remained outside public view. Accredited journalists and representatives of public associations could observe some parliamentary sessions via video link from a separate room. Transcripts of parliamentary sessions were not available to the public. During the year parliament closed public and media access to discussion of controversial legislation.

U.S. firms have cited corruption as a significant obstacle to investment. Law enforcement agencies occasionally have pressured foreign investors who are perceived to be uncooperative with the government, a practice that is made possible by the fact that many errors or omissions that would constitute routine civil violations in OECD countries are treated as criminal cases in Kazakhstan. The government and local business entities are widely aware of the legal restrictions placed on business abroad, such as the Foreign Corrupt Practices Act and the UK Bribery Act.