A corruption crackdown is picking up speed in Kyrgyzstan. Forty-two new criminal cases involving the alleged theft of state assets are now underway against formerly high-ranking government officials. Among the looted assets are hundreds of millions of dollars in Russian economic assistance.
The new cases come on top of 19 indictments already handed down against business associates of Maxim Bakiyev, the controversial son of former president Kurmanbek Bakiyev, whose administration collapsed in April. Among the prosecutors’ targets in those 19 cases are: Mikhail Nadel, Eugene Gourevitch, Alexei Shirshov and Alexei Eliseev.
According to the Prosecutor General’s Office, Kyrgyzstan’s provisional government, which assumed power following Bakiyev’s downfall, has recovered $60.6 million allegedly stolen by the Bakiyev family and their associates. The funds were part of a $300-million loan that was extended by Russia to the Central Asian state.
However, a spokesman for the Prosecutor General told EurasiaNet.org that “pretty much all of the Russian loan” money is missing and has presumably moved offshore. Virtually all of the defendants in the corruption cases are not in custody and are believed to be abroad.
The $300 million Russian loan was part of an overall a $2.15 billion Russian aid package announced shortly before Bakiyev announced his intention in February 2009 to evict US forces from the Manas Transit Center outside Bishkek. He originally gave Washington 180 days to vacate the facility, but in July, 2009, US and Kyrgyz officials reached a new lease deal that tripled the annual payment made by Washington to Bishkek.
Former officials implicated in the 42 new cases include Ilyas Davydov, the ex-energy minister, Salamat Aytikeev, the ex-head of KyrgyzGaz and Igor Chudinov, the ex-prime minister. Thirty-nine other officials are also wanted in connection with illicit activities, the General Prosecutor’s office said in a statement released in late October.
Prosecutors say Maxim Bakiyev, as the head of the Central Agency for Development, Investments and Innovations, along with his business associates, diverted cash intended for the Kyrgyz treasury into private bank accounts and used it to fund personal investment and speculative activities. The indictments also accuse the defendants of pocketing significant sums of interest on the deposits.
According to Prosecutor General, a total of $41.5 million was recovered from Asia Universal Bank (AUB). Prosecution documents portray the bank as a vehicle for various Bakiyev-related money laundering schemes. Money was funneled through accounts held with Bakai Bank, Issyk Kul Investment Bank and Manas Bank, according to prosecutors.
AUB was nationalized in June and declared technically insolvent. Mikhail Nadel, the bank’s former chairman, is charged with a variety of financial crimes. He is currently in London and contemplating moving to Israel, according to media reports.
Eugene Gourevitch, who headed MGN Asset Management, the financial house employed to manage the Central Agency for Development, Investments and Innovations’ funds, including the Russian loan money, is also wanted in Italy on charges of $2.7 billion fraud and money laundering.
These high-rollers are unlikely to ever return to Kyrgyzstan for a trial, experts say.
Tracking the remaining lost money involves daunting challenges, experts say. Nick Kochan, a London-based expert on money laundering, told EurasiaNet.org that schemes as complex as the one Maxim Bakiyev allegedly ran often rely on a vast network of corrupt partners spanning many countries, including professionals in banking, accounting and the law. “They can’t do it by themselves. There has to be compliant individuals, people who will turn a blind eye to suspect activities on a regular basis,” Kochan said. “The chances of these people, never mind the key players, being convicted are almost negligible.”
Although the central figures may well evade justice, the corruption cases can still serve a valuable purpose by exposing and breaking the mechanisms used to loot the state treasury.
Mars Sariev, a Bishkek-based political analyst, alleged that the Bakiyevs expanded and refined “smooth-running” corrupt structures created by the previous ruling family under ex-President Askar Akayev. “Attempts now are being made to break this chain of corruption, and that’s never been done before,” Sariev said. “Those people who are overseas will evade responsibility. Only the small fish, the people who didn’t even make decisions will face the music.”
Pavel Dyatlenko, an analyst at the Polis Asia research center in Bishkek, said that convening trials of defendants in-absentia could send the right message about the state’s willingness to tackle corruption. Such trials could also frustrate some alleged criminals’ attempts to gain asylum in foreign countries.
“Politically, these cases can help us evaluate what went on over the past five years under Bakiyev,” Dyatlenko said. “It’s important for the courts to conclude these cases and prove that economic crimes occurred, at the very least it would rapidly decrease the chances of the accused gaining political asylum abroad.”
Deirdre Tynan is a freelance journalist who specializes in Central Asian affairs.