As President Kassym-Jomart Tokayev continues his campaign to root out the crony capitalism that flourished during his predecessor Nursultan Nazarbayev’s long rule, his investigators have turned their sights on a bank linked to the Nazarbayev family.
Prosecutors have launched a court case to annul a deal under which control of First Heartland Jusan Bank, Kazakhstan’s sixth-largest by assets, passed into a foreign jurisdiction shortly after receiving a multi-billion-dollar government bailout.
A banking sector probe had “revealed an untransparent scheme to change Jusan group’s ownership structure,” the Prosecutor-General’s Office said on February 16.
“The implementation of this scheme led to the transfer without recompense of control over the group to organizations registered abroad.”
Prosecutors cited the approval in April 2020 by shareholders of a company called Pioneer Capital Invest to hand the bank’s equity to a company based abroad called Jusan Technologies Ltd.
A firm by that name was incorporated in the UK days earlier.
At the time, the UK government agency that maintains the company registry identified several senior Jusan Bank figures as “persons with significant control” over Jusan Technologies.
They included Yerbol Orynbayev, who resigned as deputy chairman of Jusan Bank’s board last April, then stepped down from the board of Jusan Technologies as it replaced Kazakh board members with international figures.
The ownership structure surrounding the companies involved is convoluted.
Jusan Bank itself is controlled by a company called First Heartland Securities, which owns a 79 percent stake in the bank and is itself owned by Jusan Technologies. Galymzhan Yesenov, an entrepreneur who is the son-in-law of Akhmetzhan Yesimov, a former Almaty mayor who is close to Nazarbayev, owns the remaining 20 percent.
Pioneer Capital Invest, the company that transferred the bank’s jurisdiction to London, is owned by the Nazarbayev Foundation.
An investigation published by the Organized Crime and Corruption Reporting Project in January 2022 suggested that, as well as controlling educational institutions, the ostensibly charitable foundation and associated structures own a multibillion dollar network of assets including a private jet, luxury hotels, a golf course and various businesses.
“Nazarbayev’s non-profit organizations actually own larger business portfolios than many multinational conglomerates,” the OCCRP said.
Those entities denied any wrongdoing and filed defamation cases against OCCRP and other media outlets, which are pending.
“We are not owned or controlled by Mr. Nazarbayev, nor do we benefit him,” a spokesman for the plaintiffs, who include Jusan Technologies, said. “Our sole mission is to support public education in Kazakhstan.”
The OCCRP report came out as Nazarbayev’s star started to wane following the fatal civil unrest in Kazakhstan in January 2022, amid suspicions that his relatives and cronies were involved in stoking the violence.
He has since been stripped of the personalized powers he had enjoyed since stepping down as president in 2019.
In parallel, President Tokayev has been pursuing his onslaught against crony capitalism, albeit selectively.
But, in what is proving an opaque process, the business empires of others, including Nazarbayev’s other daughters, Dariga Nazarbayeva and Dinara Kulibayeva (who owns Kazakhstan’s largest bank), remain intact.
Leading the charge against corruption is a commission Tokayev created last year to return illicit assets, which has now opened a court case to have the 2020 deal involving Jusan Bank declared illegal.
“These actions created a threat to public interests, including the interests of tens of thousands of Kazakh students and schoolchildren from the Nazarbayev University and Nazarbayev Intellectual Schools, one of whose sources of financing is dividends from the Jusan group’s shares, bonds and deposits,” the prosecutor’s office said.
The Nazarbayev Foundation had itself approached prosecutors to take measures over “illegal actions by a number of entities as a result of which the Jusan group moved under the control of citizens of foreign states,” it added.
The goal of the case was “the restoration of justice and the return to the jurisdiction of Kazakhstan of control over Jusan group shares.”
Both the bank and Kazakhstan’s financial regulator moved to allay concerns over the institution’s financial position.
As “one of the most reliable and financially stable banks in Kazakhstan,” it has assets equivalent to 2.8 trillion tenge ($6.3 billion) and liquid assets of 1.5 trillion ($3.4 billion), Jusan Bank said on February 16. It recorded profits of 82.5 billion tenge ($186 million) last year.
Jusan Bank is “financially stable” and fulfilling all prudential requirements, Kazakhstan’s financial regulator added.
Prosecutors’ intent of returning the bank to Kazakhstan’s jurisdiction is overtly stated. However, in a manner that is typical of the lack of transparency surrounding Tokayev’s asset return program, much remains unstated – including what all this means for the financial institution’s future ownership structure and other companies associated with the group.