Kazakhstan: California Court to Hear Almaty Corruption Lawsuit
Kazakhstan has successfully argued in a US appeals court that it can file suit against a former top official — an avowed foe of the government — in California for compensation over alleged acts of corruption that occurred more than a decade ago.
The Justice Ministry said in a statement on March 31 that Almaty city hall will now be able to proceed in seeking recourse for what it says was Viktor Khrapunov’s systematic looting of state assets. The ministry argues that by using those funds to invest in properties in the United States, Khrapunov has left himself open to anti-corruption legislation there.
“This ruling is the result of consistent work against corruption. Now, the lawsuit filed by Almaty against Khrapunov will be considered on its merits in the state of California,” the ministry said.
The verdict from the United States Court of Appeal for the Ninth Circuit on March 30 overturns an earlier ruling by US District Court for the Central District of California.
Khrapunov was a high-profile government official in the 1990s. In 1995, he headed the Energy and Coal Industry Ministry, and then from 1997 to 2004, he served as mayor of Almaty. After that he was named governor of the East Kazakhstan region.
In 2007, he was appointed Emergency Services Ministry, but resigned his post some 10 months later. A few days after stepping down, he reputedly hopped onto a private jet and flew to Switzerland; to treat some unspecified health condition, according to Khrapunov’s own website.
Khrapunov is object of more than 20 criminal investigations in his homeland.
Those who have studied the tortuous progress of Kazakhstan’s international legal campaign against Khrapunov hypothesize that Astana’s eagerness to purse this particular lead is linked to the former official’s relation by marriage to another, even more high-profile, enemy of President Nursultan Nazarbayev. Viktor Khrapunov is the father-in-law of the eldest daughter of Mukhtar Ablyazov, another former minister accused by Astana of embezzling large amounts of money. Ablyazov’s daughter is married to Ilyas Khrapunov, who has been placed by Kazakhstan on the Interpol wanted list.
In substance, the Almaty city hall suit maintains that Khrapunov and his relatives invested millions of dollars rightly belonging to Kazakhstan on the US real estate market, buying at least four houses in California alone, which is why he should be liable for civil action there.
The lawsuit maintains that while Khrapunov was mayor of Almaty, he abused of his authority to sell land to companies ultimately controlled by his family, which then secured development permits that greatly increased the value of that same land. Kazakhstan has in its filings estimated Khrapunov’s worth at around anywhere between $320 million and $430 million.
Khrapunov has previously staunchly denied the accusations made in the suit.
“I have no assets, no real estate in Kazakhstan, nor outside Kazakhstan. I built a residential property in Almaty in which my entire family lived, but later I sold it,” he told RFE/RL’s Kazakhstan service, Radio Azattyq, in 2014.
But just to lend the entire affair some up-to-date piquancy, Khrapunov’s accusers have recently maintained that the former mayor is indirectly the beneficiary of real estate developed by companies belonging to US President Donald Trump.
In October, the Financial Times cited lawyers for Almaty as alleging that among the limited liability companies used by Khrapunov to launder money, three were called Soho 3310, Soho 3311 and Soho 3203.
“The companies were created in April 2013 in New York. A week later, property records show, they paid a total of $3.1 [million] to buy the apartments that corresponded with their names in the Trump Soho, a 46-storey luxury hotel-condominium completed in 2010 in a chic corner of Manhattan,” the Financial Times reported.
A lawyer acting for Khrapunov in the Court of Appeal for the Ninth Circuit sought to argue that the proper forum for Kazakhstan to pursue their case would be in Switzerland, where the former mayor is domiciled. But the court dismissed that argument, stating that the “defendants did not submit an expert declaration explaining how [provisions under which the case is being pursed would apply in Switzerland] in this instance.”
Kazakhstan may bask in its minor victory for now, but the hard part lies ahead.
As a circuit judge noted during arguments, for the lawsuit to ultimately stand any chance of success, the courts would eventually have to pore over the details of the initial wrongdoing.
“Assuming you were to get over all these procedural hurdles, if you got to the merits of the case, you would still have tell the story of what happened in Kazakhstan,” Judge Richard Paez said at an early March hearing.
The lawyer acting for Almaty city hall agreed.
Since only a foolhardy person would seek to argue that the only instance of alleged corruption ever to have occurred in Almaty was engineered by Khrapunov, this implies the danger of unsavory affairs coming to light.