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46 I Eurasia bne December 2017
The country’s armed forces still use ammunition reserves created before the collapse of the Soviet Union in 1991. With the reserves becoming exhausted, Kazakhstan decided to build an ammunition plant instead of importing ammunition from Russia in a sign of minimising its dependence on its intimidating neighbour. It was announced that exports of Kazakh ammunition would even be possible.
In October 2016, Kazakhstan estab- lished a defence and aerospace industry ministry. The ministry’s responsibili- ties include state policy in the defence, aerospace and electronics industries,
as well as cybersecurity and execu-
tion of defence contracts, among other functions. Under the ministry, the government will be forming a number of committees, including an Education Information Security Committee, Aero- space Committee and the Committee for
State Material Reserves of the Ministry of Defence and the Aerospace Industry.
That said, the country’s security is widely seen as mostly hingeing on a single big factor – the ongoing rule of its 77-year-old leader Nazarbayev and the need for him to guarantee the preserva- tion of that security after his departure by setting in motion the presently uncer- tain plans for transferring power to his eventual successor.
The leak reveals that Meridian used a large portion of the Kazkommertsbank’s deposits to fund project after project. This enabled them to grow quickly, and at little risk to themselves. According
to an email from a central bank official, whenever a project failed, the bank owners and executives – who were also Meridian’s owners – would dump the losses onto the bank’s balance sheets.
Ownership and structure
The leaks also reveal that “in November 2002, a clerk at Appleby’s Bermuda office entered 10 names into an internal database. A Kazakhstani technocrat and nine bankers joined thousands of other businessmen, oligarchs, politicians, celebrities, and royals who wanted
to benefit from the anonymity (and tax benefits) that offshore company ownership provides.”
Based on 2006 information, some of the initial co-founders of Meridian information are technocrat and head of the KazMunaiGas oil and gas company Sauat Mynbayev and his six co-owners Askar Alshinbayev, Yevgeniy Feld, Nurzhan Subkhanberdin, Nina Zhussupova, Azat Abishev and Ian Connor.
While Meridian’s profits end up in Bermuda, the leaks reveal it’s not where the group runs its operations. Meridian Capital CIS Fund and Meridian Capital International Fund, which make up the next layer of the group’s pyramid, are registered in another offshore zone, the Cayman Islands.
Meridian sold St. Petersburg Galeria Mall to Morgan Stanley for $1.1bn, a transaction which at the time was recorded as the largest ever Russian real estate deal.
‘Paradise Papers’ team exposes Kazakhstan’s ‘Secret Billionaires’
bne IntelliNews
The ‘Paradise Papers’ leak of 6.8mn confidential records related
to offshore investment from Appleby, a Bermuda legal services firm, and leaked Kazakh banking data have revealed some of the inner workings
of Meridian Capital, a major Kazakh investment and holding company with interests in oil and gas, banks, real estate, mining, aviation, transportation, and other areas, the Organised Crime and Corruption Reporting Project (OCCRP) revealed on November 5.
www.bne.eu
In particular, the data, presented in
the “Kazakhstan’s Secret Billionaires” report exposes one of the primary causes behind the Kazakh government’s banking sector bailouts this year, including the approximately €6bn bailout green-lighted for the country’s largest lender Kazkommertsbank, which was recently bought by the country’s second biggest lender, Halyk Bank. The Kazakh banking sector’s bad loans may, it is feared, be compounding into an unexploded time bomb.