Q&A with Richard Evans, Chairman of Samruk Holdings: “Our mandate is to make two and two add up to more than four”
A BROAD CAROLINAS accent drawls out across the conference rooms of the Radisson Hotel in Kazakhstan’s new capital, Astana. The American is teaching the basics of corporate governance to a seminar of youthful managers at Kazakhstan’s just-born $40 billion state holding company, Samruk. Some are so young they have acne. "Guys, this part is important!"
The lecturer is a bald late-career consultant from Ernst & Young, doing his bit for post-Soviet reform and, doubtless, per his generous fee for this hardship post, his retirement fund. His frustrated southern twangs are translated into Russian, still the lingua franca here despite 17 years of Kazakh-led independence, and a reminder that Moscow’s powerful bear still lingers covetously in the background here. "There are internal controls," he spells out, "risk management...." The Samruk executives scribble his western wisdom into their notepads.
As the young Samrukis are coming to learn, good book-keeping matters in capitalism. But so does keeping warm on the central Asian steppe, where outside the cosy classroom Astana is a snowbound 25 below zero. A canary yellow Porsche Boxster is aspirationally parked in the hotel lobby, improbably touting itself as a convertible. Outside, workers carve ice bricks from the frozen Ishim River, which divides Astana’s wacky new centre from its stately old town, to fence a decorative promenade that’s too damned cold to meaningfully stroll along until March. A continent away in tropical Bali, the world’s good and great furrow brows over global warming but, wintering here in the world’s chilliest capital after Mongolia’s Ulan Bator, it’s easy to understand why Kazakhstan didn’t see an imperative to sign the Kyoto protocol.
Inside the Radisson, the temperature is rising over what’s proving to be the vexatious topic of best practices within Samruk’s 20-odd satellite companies and monopolies, for the 300,000 employees who run everything from airports, railways and electricity to the postal service, gold mining and the ubiquitous oil and gas that many Kazakhs are getting rich quick on, few questions asked. "The whole purpose of this exercise," the exasperated American implores his bemused class, "is that you have to audit everything that comes across your desk. And I mean everything!"
The Samrukis are here at the insistence of their chairman who, unusually for the helmsmen of a huge government enterprise in the former Soviet Union, isn’t a politician with his fingers dipped in the state spigot, or even a local. The man who notionally stewards as much as a third of Kazakhstan’s economy is a pragmatic 65-year-old westerner called Sir Richard Evans, a hail-fellow-well-met – "call me Dick!" – Briton from Blackpool. Evans is a corporate warhorse best known – some in London say notorious – for his near-decade long stewardship of UK defence company BAE Systems. No stranger to challenging briefs, he has plied his trade in Nigeria, Saudi Arabia, the military dictatorships of South America and myriad outposts of despotism in the almost 40 years he spent at BAE and its predecessors. Indeed, it was his startling ability to eat sheeps’ eyes that so impressed Saudi sheikhs, as they handed him Corporate Britain’s biggest ever business deal, the $60 billion Al-Yamamah arms agreement that saved BAE from collapse. Evans began his career with the British Ministry of Transport in 1960, joining British Aerospace, BAE’s predecessor, when it was still a government-owned statutory corporation. He left a long-privatized BAE Systems as its chairman in 2004, although he remains partly employed by his former company, banking a £300,000 a year "customer relationship" retainer.
Skilful navigator
This is a man who knows how to serve politicians and Mammon – sometimes the same master – and navigate vast bureaucracies: skills he needs in spades at Samruk 18 months after its foundation.
Evans was tapped by president Nursultan Nazarbayev in 2006 to chair this new state enterprise he’d created by presidential decree, naming it after a mythical Kazakh bird symbolizing wisdom and strength. Nazarbayev had visited tightly controlled Singapore and Malaysia in 2003 and liked what he saw. He wanted Kazakhstan to have an enterprise in the image of Singapore’s state-owned Temasek Holdings, which jealously protects the jewels of Singapore Inc – Singapore Airlines, SingTel, Capitaland, even the zoo – in a $120 billion portfolio, and Malaysia’s Khazanah Nasional Berhad, which is closely linked to the ruling party in Kuala Lumpur. Temasek’s close relationship with the government had also impressed Nazarbayev, as did the Lee family’s 50-year hold over power there.
(That Temasek inspired Nazarbayev is openly stated in Samruk’s annual report, and while Evans acknowledges Temasek’s role in Samruk’s genesis, he thinks the more diversified Malaysia is emerging as more relevant for Kazakhstan than Singapore. "I wouldn’t say the McKinsey report concluded definitively that Temasek was the model. I think people here have increasingly realized that the differences between here and Singapore are really much bigger than people may have first thought. As we evolve, you actually get a lot more people talking about the Malaysian model.")
There is another less charitable – but not entirely unrealistic – view of Samruk’s emergence. Unlike the economy of its unavoidable Russian neighbour, Kazakhstan’s is less burdened by what one diplomat described as "insidious oligarchies". Money in the former Soviet Union usually equates with power. In bringing under one umbrella Kazakhstan’s critical money-earners – notably the dominant oil company KazMunaiGas (KMG), the fief of a Nazarbayev son-in-law – Nazarbayev, says one analyst, has created a vehicle to neutralize alternative centres of power, "bringing his friends close but potential enemies closer". Interestingly, the idea of Samruk gathered momentum as world oil prices rose, and as another influential son-in-law, exiled to Austria as ambassador, was breaking with the family in considerable bitterness. Creating Samruk seems to address several dilemmas for Kazakhstan’s leadership.