WikiLeaks: Is Avaza the Black Hole Through Which Millions are Disappearing in Turkmenistan?
Le Monde has obtained WikiLeaks cables that reveal how the French construction company Bouygues has expanded its business in Turkmenistan, and Bouygues has responded in a statement by claiming that the allegations in the cables are "defamatory," EurasiaNet.org reported. Jean-Baptiste Jeangène Vilmer, a former French diplomat, in a book published this year, described how Bouygues built about 50 buildings for the Turkmen government between 1994 and 2010, worth about two billion euros.
Now that the full text of the alleged cable has been published on the WikiLeaks site, we can see more of what is behind specific claims of corruption in Turkmenistan, including the report that bribes by foreign contractors have risen 10-15 percent.
(We could also ask what the system is for doling out the cables to some newspapers in advance, and only later posting them on the WikiLeaks page, despite an earlier claim by Julian Assange, "We always release the source material simultaneously.")
In a cable alleged to have been cleared from the U.S. Embassy in Ashgabat by an unknown diplomat whose name has been redacted by WikiLeaks (normally the dispatches published by WikiLeaks reveal the name of the official who classified the cable), titled "Turkmenistan Corruption: What Happens in Ashgabat, Stays in Ashgabat," we learn the thesis that "President Berdimuhamedov is engaging in more construction contracts in order to amass more personal wealth, of which Avaza (Ref. A) is a part."
There's no question that Avaza, the Caspian resort town near the city of Turkmenbashi (formerly Krasnovodsk), is President Gurbanguly Berdymukhamedov's pet project (the differences in the spelling of the president's name are due to different transliteration systems).
Every foreign business representative who comes to Ashgabat to try to make a deal with the Turkmen government has to page homage to Avaza in some fashion, either by offering to invest in the infrastructure there, or sometimes having to meet the president there in a ritual that involves children bringing traditional bread and salt and dancing, Turkmen rugs rolled out and tables laden with local delicacies, and usually flowery speeches at a meeting in a newly-built marbled hotel, inevitably described as "fashionable" by the state media. Sometimes, companies seeking ultimately to get a drilling permit in Turkmenistan's gas-rich Caspian Sea shelf will use an Avaza proposal as a gateway.
The sprawling project has had many excesses of both the Soviet school of gigantism and the classic "dictator chic" school of architecture, replete with plans for buildings in the shape of boats or wedding cakes, golden statues of historical figures, lavish facilities including Olympic pools and skating rinks in this desert nation, and an artificially constructed canal.
The cable seems to lend credence to the impression that Avaza is a black hole through which funds intended for the state budget and various "extra-budget" funds such as outright bribes can disappear. The cable writer laments that the U.S. has to compete with overseas firms not bound by U.S. anti-corruption laws.
The cable sources make various claims about foreign businesses willing to pay bribes, not substantiated in the cable itself and difficult to check, but explains that because "it's very likely that the Government of Turkmenistan won't pay the last ten percent," contractors throughout the chain tack on 10 or 20 percent.
Adding up all the stories reported in the state media of commissioned buildings and their claimed price tags, it's always hard to match this to the reported numbers of the state budget -- such as they are, which are very incomplete; the situation has gotten so out of hand that recently the Turkish media said they paid more for a construction project than the Turkmen media said it cost.
President Berdymukhamedov is himself constantly berating foreign companies openly in cabinet meetings covered by the state media, implying they are not fulfilling contracts on time, and in full. Reports from the Turkmen Initiative for Human Rights have said that in Avaza, Turkish construction companies didn't finish certain jobs (apparently they weren't paid enough), and local workers are pressed into service to do the finishing touches on buildings for free. The president is constantly harping about the need to combine the aesthetics of global modernity with local culture (however that is supposed to be done) and complaining about jobs not being done to standard. Clearly, he is paranoid that foreigners are going to take advantage of him.
In a section of the cable sub-titled, "Perhaps an Explanation for the Mystery that is Avaza," the anonymous diplomat writes:
The source mentioned the Avaza Tourism Zone (Ref. A) as an example of corruption -- and lack of any understanding of infrastructure development -- in Turkmenistan. Depending on the moment, the project plays the role of a free economic zone, a touristic zone, or a port development project. As the source pointed out, in a properly organized port development project, studies on traffic and passenger flows and architects' studies should precede work, and planners would allocate approximately ten percent of the entire budget to pay these technical experts before work began. As far as anyone can tell, none of these studies have been done or planned for in the Avaza budget, but planners expect to spend $2.8 billion to upgrade the completely dilapidated jetties and wharfs at the port alone -- including $212 million for a seven-kilometer canal alone.
Indeed, Avaza is all three -- the president has repeatedly promised foreign investors that they may enjoy a tax holiday in this area, which isn't just for tourism, but is next to the very ports the government has renovated to use to ship liquefied natural gas across the Caspian to Baku, in a plan supported by the Italian energy company Eni, as one of the ways it can reduce its dependency on Russian-dominated gas and oil corridors.
Although many rumors and claims of corruption are passed along in this cable, the author writes:
All of this being said, no one knows the precise mechanics of corruption due to anti-money laundering procedures currently in place in the United States and European Union, which require various proofs of identity and residency in order to open a legitimate bank account. However, the source said that XXXXXXXXXXXX-- a former deputy minister -- has an account at Citibank in New York. Some also suspect that, despite the Baltic countries' ascension to the EU, Baltic banks are not following anti-money laundering procedures, since many Turkmen citizens have Baltic bank accounts.
Recently the Financial Action Task Force (FATF), the international financial monitor, moved Turkmenistan from the "high-risk and non-compliance jurisdictions" list to the 'improving list," and Turkmenistan joined the Eurasia Group, which in turn joined FATF, apparently to work on strengthening laws and practices against money-laundering.
But while Turkmenistan has prosecuted one complex case involving large-scale embezzlement of nearly $20 million from the Central Bank of Turkmenistan to a Russian bank, there is still a mystery surrounding the account maintained at Deutsche Bank held by past Turkmen dictator Saparmurat Niyazov, the subject of a report by the watchdog group Global Witness.