First, there was a media report hinting at shadowy links between foreign-funded charities and terrorism in Kazakhstan. Then, the taxman came knocking.
The tax inspections served as a prelude to legal action against two non-governmental organizations (NGOs) – action that some civil society campaigners see as evidence that their space to operate is quickly shrinking.
On June 21, the International Legal Initiative (ILI), an NGO promoting the rule of law, lost an appeal against an earlier ruling ordering it to pay corporate income tax. It created a legal precedent that the organization’s president, Aina Shormanbayeva, deemed a reprisal for its advocacy.
“We directly link this to our human rights work,” she told EurasiaNet.org.
The ruling raises questions about the financing of Kazakhstan’s civil society sector, and campaigners fear it could be used to drum independent groups out of existence.
The case dates back to a year ago, when news site Nur.kz published a report entitled “How much do foreign foundations spend on training activists in Kazakhstan?”
A reasonable question, but the report made tenuous connections between foreign-funded NGOs and terrorism, narco-trafficking and arms-trading, before posing a theoretical question: “Are we in a position to resist the proverbial attempts to destabilize the situation from outside?”
The alarmist report was published against a backdrop of two unconnected events that had just rocked Kazakhstan: demonstrations against land reforms in May 2016 that ended in mass arrests; and a fatal armed attack in the city of Aktobe in June.
The Nur.kz report singled out several foreign donors with supposedly suspect intentions, including the Open Society Foundations, Freedom House, the National Endowment for Democracy and the Equal Rights Trust. All are Western-based organizations that promote liberal values and equal opportunities, and have nothing to do with terrorism.
Among the hundreds of Kazakhstani NGOs receiving foreign funding, Nur.kz mentioned only three comparatively tiny organizations: ILI, Liberty, which promotes human rights, and Kadyr-Kasiyet, which monitors the security of rights activists.
After that, a spot tax audit was ordered when the Nur.kz report prompted a purportedly concerned citizen to demand checks on these groups’ funding. Kadyr-Kasiyet was exonerated, but the other two were prosecuted for tax evasion.
This January, a court ruled that foreign grants received by ILI and Liberty were subject to corporate income tax, prompting expressions of concern from international human rights groups, which accused Astana of harassing NGOs.
ILI was ordered to cough up 1.3 million tenge ($4,000) and Liberty, whose appeal is still pending, 2.5 million tenge ($7,700). The sums appear paltry, but they are significant to these small groups – and the principle of their charitable status is at stake.
“Naturally, we do not agree with this, because we are a non-commercial organization. We do not gain a profit from our activity. We work for socially useful goals, for the advancement and protection of human rights in Kazakhstan,” Shormanbayeva said.
The ruling, Liberty’s director Galym Ageleuov told EurasiaNet.org, means that “our grants are not grants,” which “is basically nonsense.”
They believe their NGOs are being singled out for discriminatory treatment because they have rankled the administration of President Nursultan Nazarbayev, which professes to welcome and wholeheartedly support civil society.
Other NGOs receive grants from the same donors, including embassies, the European Commission, USAID, the National Endowment for Democracy and Freedom House. So, said Shormanbayeva, “if the state does not now impose on these organizations the same taxes on money received from the same donors as us, it is an open acknowledgement that it is precisely our organization that is being hounded for our human rights work.”
ILI and Liberty have one important thing in common. Both were active during last year’s land protests, monitoring the number of detainees and the conditions under which they were held, and, in ILI’s case, providing legal support. Both were vocal in their claims that human rights violations had been committed during the crackdown on protesters. Government officials deny those claims.
Officially, the audit was launched at the instigation of a “concerned” citizen, but Ageleuov does not believe that to be true. “It’s clear it’s linked to our country’s power structures, which bluntly gave orders simply to finish us off, to deprive us of the opportunity of working.”
ILI had already needled the government by lobbying aggressively against a law governing the charitable sector. That law was adopted in 2015 in the teeth of fierce opposition from activists, and Shormanbayeva believes its advocacy activities during the land protests served as “the last straw.”
That law established a state body – called the “single operator” – for channeling government funding to NGOs, which critics said effectively gave the state veto power over which groups receive funding, and for what kind of activities, allowing cash to be funneled to government-loyal groups and government-instigated groups – known in the trade as GONGOs, which stands for government-organized, non-governmental organizations.
Astana argued that the law intended to “usher in a new level of transparency” into the distribution of grants in order to help Kazakhstan build a robust civil society. It was passed despite an appeal from 60 NGOs to Nazarbayev to veto it.
In 2016, additional regulations governing NGO funding were adopted, requiring non-profits to report all foreign grants to the government within 10 days of agreeing to them, and to report again on their use after spending the money.
The rules went into force last October, again in the face of opposition from campaigners who deem them burdensome and bureaucratic. The government countered that the rules were designed merely to increase transparency and are “simple and clear” to fulfill.
International rights campaigners see the lawsuits against ILI and Liberty, along with the new NGO legislation, as links in a chain that also includes last year’s jailing of civil society campaigners Maks Bokayev and Talgat Ayan for their involvement in the land protest movement and the imprisonment of trade union leaders on spurious charges this year.
“The government’s increasing intolerance for outspoken and critical civil society activism is highly worrying, and Kazakh authorities should immediately reverse their repressive course,” Mihra Rittman of Human Rights Watch told EurasiaNet.org.
As Liberty awaits its appeal against the tax payments, Ageleuov offered a stark conclusion: “Active independent organizations are simply being choked financially.”
Joanna Lillis is a freelance writer who specializes in Central Asia.