Kazakhstan: Political reshuffle involves president's son-in-law

Joanna Lillis 2/09/07

President Nursultan Nazarbayev on February 9 abruptly removed his son-in-law, Rakhat Aliyev, as deputy foreign minister and dispatched him to Vienna to serve as Kazakhstani ambassador to Austria. The move occurred days after Aliyev became embroiled in a controversy over the disappearance of two former bank executives.

The presidential press service provided no reason for Aliyev's sudden departure for Vienna. Aliyev, 44, put a positive spin on the move, saying he would act as a diplomatic troubleshooter to advance Kazakhstan's effort to chair the OSCE. [For background see the Eurasia Insight archive]. "The president is sending me as ambassador to Austria and the OSCE to solve this task," Aliyev told the Kazakhstan Today news agency. It will be Aliyev's second diplomatic tour in Austria. He first served as a diplomat in Vienna from 2002-2005. That appointment followed a political scandal in which several officials accused Aliyev of plotting to unseat Nazarbayev as president. [For background see the Eurasia Insight archive].

Aliyev's departure comes amid an ongoing investigation into suspected financial impropriety at one of Kazakhstan's leading banks, Nurbank. The affair has plunged the country's financial sector into controversy. Aliyev is perhaps the bank's highest-profile shareholder, and in connection with the financial probe, he adamantly denied allegations of unsavory business practices.

The accusations surfaced in early February, when the wives of two former senior Nurbank managers claimed their husbands had disappeared. The former chairman of the board, Abilmazhen Gilimov, and his deputy, Zholdas Timraliyev – who both resigned from the bank in January – had gone missing within the previous five days, their wives announced on February 5, according to reports published by a variety of foreign and domestic news outlets, including The Associated Press. Gilimov had not returned after reporting for questioning to the financial police earlier that day, while Timraliyev had been missing since leaving for a Nurbank meeting on January 31. It has since emerged that Gilimov is being questioned by law-enforcement agencies over financial wrongdoings at the bank, while Timraliyev is wanted by police.

Timraliyev's wife, Armangul Kapasheva, alleges that prior to his disappearance, Timraliyev was kidnapped and subjected to violence and intimidation in an attempt to force him to ensure that management of a lucrative business center in Almaty, Kazakhstan's financial capital, passed to the president's son-in-law. Aliyev denies the charges. In an open letter to President Nursultan Nazarbayev, Kapasheva claims that Gilimov and her husband left their homes on January 18 thinking they were to accompany Aliyev on a business trip. Instead, she said, they were taken to a sauna complex and held against their will for 24 hours. Kapasheva alleged that her husband had been beaten up and threatened with death unless he ceded to the demands.

Aliyev categorically denied the allegations. "The only thing in all these versions, theories and rumors which is true is that I am indeed a Nurbank shareholder. That is no secret to anyone," he said in remarks quoted by the Kazakhstan Today news agency. "Everything else, including information about a supposedly missing former bank employee, is open slander resembling a carefully-planned act of provocation." Aliyev could not be reached for further comment.

Gilimov and Timraliyev resigned from the bank on January 19. Nurbank issued a press release announcing Gilimov's departure, giving no indication that the split was acrimonious. Gilimov was moving jobs and being replaced by his deputy, Gulmira Dzhumadillayeva, Nurbank said, thanking him for his contribution: "Under his management Nurbank entered and firmly consolidated itself in the top 10 banks in Kazakhstan."

On January 31, Kapasheva reported her husband missing after he failed to return from a meeting with Dzhumadillayeva and Aliyev. The facts about what happened next – which subsequently led to the arrests of several senior police officers – are disputed.

Kapasheva says she encountered difficulties in reporting her husband missing, but in the evening a police rapid-reaction squad arrived at the bank, where her husband was thought to have gone earlier in the day. Bank security denied the officers access. In a press release on February 5, Nurbank described the incident as an "attack on the bank's head office in Almaty". Allegations have been leveled that the officers were seeking to remove valuables and documents from the former managers' offices.

When the rapid-reaction squad arrived at the bank, the financial police were already conducting a search following allegations of financial impropriety. They say the rapid-reaction squad tried to hinder the process.

"There has been an attempt by interested parties to cover up illegal actions by rapid-reaction squad officers, [who were at the bank] apparently in response to a statement received from Kapasheva," Almaty financial police chief Vladimir Kurbatov told a news conference on February 5.

Following the raid on Nurbank – which declined to comment to EurasiaNet on the case – the head of Almaty's rapid-reaction squad and the city's deputy police chief were arrested, and several dozen officers submitted resignations. Financial police are investigating a case involving abuse of office, though no charges have yet been brought.

"We do have many questions for the former management of Nurbank," Kurbatov told the press conference. "More than 10 people are currently declining to appear before the investigation." He believes Timraliyev is on the run, and says the police have evidence that he called his wife to say so.

Kapasheva does not deny that Timraliyev has been in touch, but believes it was at someone's instigation. "He has called," she told EurasiaNet. "I know it was his voice, but he was calling under pressure."

The police case centers on a suspicious payment of 809 million tenge – some $6.5 million – said to have been made on January 26 by Gilimov and Timraliyev. Kapasheva dismisses allegations of wrongdoing by her husband, questioning how he could have moved funds from the bank a week after he had resigned. "He wasn't working there then.... His signature was not valid," she told EurasiaNet.

Kurbatov insists that the financial police are keeping an open mind. "We have tried to show maximum objectivity and listen to all sides ... [but] preliminary investigations are not going in favor of the former management," he said.

As the investigation continues, the case is becoming increasingly politicized. MP Dariga Nazarbayeva, Aliyev's wife and the president's eldest daughter, says it is an economic matter. "These are more fabrications; this is an attempt now to take a normal criminal case onto a political level," Nazarbayeva told Kazakhstan Today.

Other members of Aliyev and Nazarbayeva's family are involved with Nurbank. Their 22-year-old son, Nurali Aliyev, was voted onto Nurbank's board on 15 January, and Aliyev's father, Mukhtar Aliyev, holds a 6.73-percent share in the bank.

The Nurbank case has cast an unwelcome spotlight on the country's banking sector. Any damage to the sector's image is unwelcome at a time when Kazkommertsbank and Halyk Bank recently floated on the London Stock Exchange and are under investor scrutiny. Other Kazakhstani banks are preparing to float shares on the LSE.

Just a week before the controversy erupted, Kazakhstan's banks held a publicity drive in London aimed at boosting their reputations and promoting themselves as responsible operators. The controversy casts a shadow on Kazakhstan's investment climate as a whole, raising questions about the manner in which business disputes are settled. Observers will be closely watching the outcome of this case to see if a fair and transparent solution can be found.

Editor's Note: Joanna Lillis is a freelance writer who specializes in Central Asian affairs.

Posted February 9, 2007 © Eurasianet