Central Asian money trails come into corrupt focus
US probes into alleged Russian interference in the 2016 US election are scrutinizing the lobbying and slush funds of certain regional leaders
Investigations into alleged Russian interference in the 2016 US presidential election have put new focus on the lobbying activities of certain suspect Central Asian political leaders abroad – and the cash trails of their multi-billion dollar slush funds.
Donald Trump’s former campaign director, high-profile Washington lawyer Paul Manafort, and Manafort’s partner Richard Gates have been indicted by Special Counsel Robert Mueller for failing to disclose US$75 million they received for work conducted on behalf of ex-Ukrainian President Viktor Yanukovych.
Mueller has also charged George Papadopoulos, a Trump foreign policy adviser, with making false statements to the Federal Bureau of Investigation about his efforts to coordinate a meeting between Trump and Russian leader Vladimir Putin before the poll.
Two other former Trump associates, Felix Sater and Daniel Ridloff, have been implicated in a civil lawsuit against Kazakhstan’s ex-Energy Minister Viktor Khrapunov, who is accused of laundering stolen government money through luxury properties, including Trump-branded condos in New York.
Meanwhile separate inquiries are being conducted in Europe and the US into a US$2.9 billion Azerbaijani money laundering operation and slush fund that paid off European politicians and financially benefited the country’s ruling elite for two years.
Another US inquiry will decide the fate of US$850 million that was seized from Gulnara Karimova, daughter of the late Uzbek President Islam Karimova. It is allegedly bribe money paid by telecommunications firms for contracts.
Former Soviet republics have funneled billions of dollars into lobbying activities since the end of the Cold War in an effort to influence the policies of Western governments, including sanctions imposed against their own corrupt actions.
The US Foreign Agent Registration Act records 54 “foreign principals” from Georgia that have recruited lobbyists, law firms and publicists to represent their American interests. There are 44 from Azerbaijan, 34 from Kazakhstan, and 19 from Uzbekistan; Turkey and Afghanistan also have principals listed.
Uzbekistan and Kazakhstan in particular have made public efforts to tighten rules against corruption in recent years. Tajikistan has arrested more than a dozen officials in its own anti-corruption agency for abusing their positions.
In Kazakhstan, two former prime ministers are serving jail terms for corruption and a one-time sports minister was given 14 years in 2016 for embezzling about US$18 million in kickbacks from contractors building Expo 2017 projects.
But graft charges often are little more than a lever for discrediting political rivals and taking their seat aboard the gravy train. Hence the US Department of Justice’s reluctance to hand over the money seized from Gulnara Karimova, now under house arrest, which Uzbekistan insists belongs to its citizens.
American agencies got involved because the money was transmitted through US financial institutions to accounts that were set up by Karimova in Hong Kong, Latvia, the United Kingdom, Ireland, Belgium, Luxembourg and Switzerland.
“What do you do when assets stolen from a country’s state coffers by corrupt individuals have been recovered and can now be returned to the country – but the government is still controlled by corrupt people?” asked Transparency International, noting that cronies of Karimova run Uzbekistan’s government.
Uzbekistan was ranked 156th of 176 assessed nations in the 2016 Transparency International Corruption Perceptions Index; Afghanistan was ranked 123rd, Kazakhstan 131st, Kyrgyzstan 136th, Tajikistan 151st and Turkmenistan 154th.
Transparency International says that bribery and slush funds have become institutionalized in most of the region, and the sheer scale of the Azerbaijani operation suggests that money still opens many political doors, at least in Western European capitals.
Labeled the ‘Azerbaijani Laundromat’, the scheme used four shell companies registered in the UK to buy the silence of European lawmakers who were initially critical of Azerbaijani crackdowns on political opponents. These included the detainment of scores of human rights activists and journalists.
A collaborative investigation by the Organized Crime and Corruption Reporting Project and a dozen media groups also found the slush fund was used to launder money, purchase luxury goods and enrich Azerbaijani politicians.
More than 16,000 transactions were handled by the Estonian branch of Denmark’s Danske Bank on behalf of four front Azerbaijani companies. US agencies are tracking claims that some money funded terrorist activities.
Further disclosures of funding links to Central Asian governments are likely, with much attention focusing on apparent dealings by Felix Sater, the key figure in the civil lawsuits surrounding Kazakhstan’s Viktor Khrapunov.
An ex-convict with known links to organized crime syndicates in Russia and the US, Russian-born Sater – birth name Felix Sheferovsky – once stabbed a man in the face with a cocktail glass but avoided a 20-year jail sentence by agreeing to turn federal informant in a case involving fraud and extortion by the mafia.
Sater is now assisting US Mueller with his investigations, and reports from Washington suggest that the Kazakhstan money trail – with its meandering route to Donald Trump’s Administration – remains the center of attention.