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September 2000

Mr Clean plays hardball


Grigory Marchenko, Chairman of the National Bank of Kazakhstan




Recently ranked in a nationwide poll as one of the most trusted and admired public Figures in the country, the chairman of the National Bank of Kazakhstan, Grigory Marchenko, has established himself as what the multilaterals could only dream of in a central bank governor.
       
Marchenko has risen through the ranks of government and private business in Kazakhstan, eventually heading up the office of DB Securities, the Deutsche Bank representative in the country. Because of his role as president of the local Deutsche Bank operation, his perfect German and German-accented Fluent English, visitors to his old DB office often assumed he was German. After hearing his Russian language skills, the next guess would be that he is a native of Kiev, given his Ukrainian-sounding surname. The announcement over a year ago that he would be taking up the post of National Bank chairman was the First time many in the emerging-market banking community learnt that he is actually a Kazakh national by birth.
To Kazakhs themselves, by contrast, Marchenko has long been known as a local celebrity during his tenure in various government positions. Renowned for his acerbic and no-holds-barred press briefings, he has even created an award for journalists - for the stupidest question he is asked. Recently, he took aim at major corporates in Kazakhstan, both domestic and foreign, who routinely use clever bookkeeping tricks to underpay taxes. "We can either reconcile ourselves to being a banana republic and be exploited or we must establish civilized relations with large companies which are working in Kazakhstan and using transfer pricing," he told a news conference.
With an accountant's understanding of cashflow, credit risk and solvency ratios, Marchenko has long been the champion of developing a western-style Financial services sector, complete with a system of guaranteed deposits, insurance, leasing and all the other little trappings that make for a successful free-market economy. "Marchenko has personally supported a lot of initiatives that have already made the Kazakh Financial sector one of the most developed in the CIS and certainly the most advanced in central Asia", says Orazaly S Yerzhanov, the chairman of the management board of Kazpost.
Yerzhanov, who previously served at a senior level with Halyk Savings Bank, the Finance ministry, and the National Bank of Kazakhstan, is especially pleased that Marchenko has Firmly backed Kazpost's plans to create a nationwide postal banking system.
This system will bring European-standard banking services to the smallest villages of Kazakhstan.
       
Despite the progress the entire Kazakh banking industry has already enjoyed, Marchenko is still aggressively pushing for much more. "We are years away from having even a Polish or Hungarian level of Financial services but the sector is certainly moving in that direction.
I like to think that, for now, we have at least little 'FDIC' islands within the Kazakh banking world and we are trying to make those islands bigger and bigger all the time," Marchenko explains, referring to the US Federal Deposit Insurance Corporation, a system he has long admired.
Importantly for the multilaterals, Marchenko has established a commitment to keeping the National Bank wholly independent of political bosses. In nearby countries, central bank governors are relied upon to routinely fabricate increases in the money supply by ordering the printing presses to run overtime and to hand out banking licences liberally to government cronies.
"Before I was appointed, I made it clear to [Kazakh president] Nazarbayev that the bank would have to be completely independent of the government or I would not take the job," says Marchenko. "If I ever Find one of my staff using this bank for some political purpose or personal gain, I will personally kick their rear end right out on to the street."
Perhaps Marchenko's most admired trait is his Firm attitude toward corruption. A western banker based in Almaty explains: "Most Kazakhs have long assumed that all national elections are rigged and the top government officials use their job simply for the power and the money they can siphon off to their Swiss bank accounts. Marchenko, by contrast, is seen as the Mr Clean of Almaty. There have never - and I mean never - been any suspicions about him."
In person, Marchenko does not come across as an angel in white, but rather more of a street-tough hard-nosed Fighter ready for combat. "Years ago," he says, "I was offered money to help some businessmen get a licence approved. But those idiots could have gotten their own licence without any problem if they only had a brain in order to Fill out the paperwork correctly.
"By the time I was appointed chairman here, no-one would dare oVer me money. The nearest thing to a bribe I have been offered so far is that lousy plant I got when I took over," he says, pointing to a miniature palm tree in the corner of his tennis-court-sized office.
Outside of his take-no-prisoners attitude to corruption, Marchenko's strongest asset to the economy is that, as a battle-seasoned soldier of the investment banking world, he can stand up to any Wall Street investment banker pitching a deal.
He is openly disdainful of book-smart western academics passing judgement on how emerging economies should manage their lives.
"I have heard all the BS theories and all the boring lectures from egg-head economists before," he complains. "The problem is that they are sitting in their nice, air-conditioned offices in Harvard or Oxford and don't realize that Kazakhstan, as far as they should be concerned, is an entirely different planet."
Making it clear that he is not in the market for a course in Introductory Economics 101 from some foreign know-it-all in an expensive suit, he adds: "I can beat the crap out of any of those Wall Street guys any time they want."






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