August 13, 2021 admin 0 Comments

This is the story of a young man who married into one of Kazakhstan’s most prominent political families and was able to build a fortune by fronting deals for his powerful father-in-law.

Galimzhan Yessenov was 25 when he married the daughter of Kazakhstan’s former deputy prime minister in 2008 and his wealth is now estimated at more than $500 million, according to Forbes.

The mystery that Kazakh experts have pondered for some time is where did Yessenov get the money to do big deals and build this enormous fortune? The documents detailed in this report show that Yessenov received money from offshore companies that are ultimately controlled by his father-in-law Akhmetzhan Yessimov.

And this raises a troubling question: how did the career bureaucrat Yessimov have access to hundreds of millions of dollars? The suspicion must be that this money was corruptly looted from Kazakh companies, banks and the state.

When Galimzhan Yessenov married Ayzhan Akhmetzhankyzy Yessim in 2007, he was relatively unknown in the Kazakh business world. He does not appear to have inherited any wealth or to have had access to family money.

But almost immediately after Yessenov’s marriage in Dubai, his fortunes started to change. Just a few months after the wedding, Yessenov bought a UK-based company called Kazphosphate, which owned the Kazakh fertilizer business Kazfosfat. The price paid was $120 million. Then in 2013, when Yessenov was just 31, he bought ATF Bank for $500 million from the Italian lender UniCredit.

Where did this man with no obvious wealth or business experience find the millions of dollars needed to buy these companies? The answer is that the money appears to have come from his father-in-law: Akhmetzhan Yessimov.

So who is Akhmetzhan Yessimov? In April 2021, Yessimov was named as a personal advisor to the First President of Kazakhstan, Nursultan Nazarbayev. This was by no means Yessimov’s first high-level appointment: a career politician, Yessimov had previously served as Minister of Agriculture (2001-2004 and 2006-2008), Mayor of the city of Almaty (2008-2015) and Chairman of the sovereign wealth fund Samruk-Kazyna (2016-2021).

Yessimov has carefully cultivated an image as a dedicated public servant and relatively little is known about him, despite the substantial political influence and economic power he has wielded in Kazakhstan for decades.

Yessimov has purposely steered clear from direct involvement in private enterprise, mindful of the inevitable appearance of conflict of interest this would generate and the potential problems triggered as a result of his political exposure.

However, the image of Yessimov as a dedicated public servant is undermined by revelations that he may be the ultimate beneficial owner of numerous offshore companies that have regularly been laundering huge sums of money.

An investigative report by SonntagsZeitung, a Swiss newspaper, revealed that more than $300 million had been transferred via various offshore entities that appear to be linked to Yessimov and other Kazakhs.

According to the newspaper, a money laundering complaint has been filed with the Financial Markets Supervisory Authority (Finma), the Swiss regulator, in relation to these transactions. The newspaper wrote: “The case concerns the alleged money laundering of at least $300 million transferred via complex structures with no traceable business background and on the basis of false documentation. These acts were carried out in order to conceal the beneficial owners behind the funds.”

The bank used to process the transfers was Compangnie Bancaire Helventique (CBH), which has previously been linked to other money laundering investigations. There were reportedly at least 12 CBH accounts linked to offshore companies in the BVI, Marshall Islands and Panama. These companies were loaning each other money but the loans went either unpaid or were written off.

An illustration of how Yessimov’s money laundering network operates can be seen in an usual deal that was struck five years after his son-in-law purchased Kazfosfat. A company called Mainam Ventures Ltd., based in Ras Al Khaimah in the United Arab Emirates, signed a Sale and Purchase Agreement with Danover Finance Ltd of the British Virgin Islands. The value placed on the deal was $585 million.

Mainam was selling a company called TOO Tsentralnoaziatskaya Agrarnaya Kompaniya (“TAK”), which had a single asset: an option to buy a 49% stake in Kazfosfat.

Danover was not buying 49% of Kazfosfat. It was merely buying an option that would then allow it to buy a stake in Kazfosfat.

This deal is ridiculous for several reasons. First, why would Danover buy an option on Kazfosfat rather than buying the shares directly – this deal would require it to pay twice.

Second, the valuation implied by this deal suggests that Kazfosfat is worth at least $1.2 billion despite the parent company being bought for $120 million just five years earlier.

And third, why was the documentation to support such an apparently valuable deal so amateurish? The quality of the document is extraordinarily poor, with the entire agreement consisting of less than two pages and is riddled with basic errors.

Click to download document.

Following the completion of this agreement, Mainam received at least two loans from Danover: one for $37 million in July 2015 [See Doc here] and another loan for $20 million in February 2017 [See Doc here].

This is what compliance experts call a “laundromat” – a system that allows money to be laundered through offshore companies until it is regarded as clean by the banking system. The sale and purchase agreement between Mainam and Danover created an asset that could be acquired (even if that asset was just an option to do something in the future). So, when $57 million+ was sent from Danover to Mainam, the owners could claim that it was all part of a legitimate business transaction.

Who was behind this scam? The identity of Mainam’s beneficiary would typically remain hidden, as is normal for companies based in secretive offshore jurisdictions. However, corporate documents reveal that the nominal owner of Mainam is Flordeliza Manarin Duller, who is a representative of the corporate services provider EDG Consulting. She holds dozens of nominee directorships and shareholdings on behalf of clients that remain hidden. But a declaration of trust has come to light that shows Duller owns Mainam on behalf of another individual, Anthony Espina.

Click to download document

Anthony Espina is a Hong Kong-born UK national, with a prior career in accountancy and finance. When Akmetzhan Yessimov was made chairman of the sovereign wealth fund Samruk-Kazyna, he nominated Espina as his special advisor and later appointed him to sit on the board of energy giant KazMunayGaz as a representative of Samruk. Espina held this position until April this year – when Yessimov stepped down as chairman of Samruk.

Prior to that, Espina served as Chairman of ATF Bank – the bank owned by Yessimov’s son-in-law. The close connections between Espina and the Yessimov family are evidence that he acts as a proxy for them. The true beneficiary of Mainam Ventures is therefore likely to be Akhmetzhan Yessimov.

And what about the buyer of the Kazfosfat option: Danover Finance Limited (now redomiciled in the Marshall Islands)? It is nominally owned by an individual called Miriam Estela Rivera, who acts as a trustee for the Viewlake International Foundation [See Doc here]. This is clearly another front and the ultimate beneficial owner is rumoured to again be Yessimov.

Stripping out all the front companies and individuals, the Mainam-Danover transactions are simply a means of transferring tens of millions of dollars and laundering the proceeds using a bogus option agreement.

SonntagsZeitung, the Swiss newspaper, also looked at the Kazphosphate deal from 2008 – the deal that started Galimzhan Yessenov’s rise to prominence. The newspaper said that $131.6 million had been transferred from BVI-based Kennon Finance to Kazphosphate at the time of the deal, presumably to finance the acquisition. Yessimov is associated with Kennon Finance, according to media reports.

Kennon was repaid $109 million in 2015. This repayment was financed by a loan from Disport International, which in turn, had received loans worth approximately $72 million from yet another offshore entity, Luriato Corporation. Luriato waived repayment of that debt in 2017 and wrote off the $72 million loan.

The image Yessimov portrays is of a senior political figure with few personal ties to business. That image is, however, challenged by the information that has come to light on the back of a recent document leaks. These documents strongly point to Yessimov covertly accumulating considerable personal wealth with assistance from an elaborate scheme devised to secretly extract and move money around the world on his behalf.

This laundromat system has allowed Yessimov to pursue undeclared, and probably corrupt, personal enrichment to the tune of hundreds of millions of US dollars. This was carried out in total disregard of Yessimov’s public duties and responsibilities, including as advisor to the President Nazarbayev, and has likely come at the expense of the Kazakh state and its people.

Revealed: Documents Show Akhmetzhan Yessimov and Galimzhan Yessenov Laundered Millions Through Offshore Companies was last modified: August 13th, 2021 by admin

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