Ablyazov's fall from grace continues, given marching orders by French court

By:
Elliot Wilson
Published on:

Court in Aix-en-Provence rules that Mukhtar Ablyazov, the former chairman of BTA, once Kazakhstan’s largest bank, should be extradited to either Russia or Ukraine to face fraud charges. The ruling is the latest twist in the saga of a man who once bestrode Kazakhstan's banking sector. Euromoney explores his fall from grace.

The court in Aix-en-Provence made the ruling on January 9. It stated that Ablyazov’s extradition to Russia would take precedence, although a final decision is not expected for several weeks. Sources close to the case previously expected the former banker to be sent to Ukraine, but recent unrest in Kiev appears to have militated against that move. Russian president Vladimir Putin mollified some critics in December by releasing former oil tycoon Mikhail Khodorkovsky, making a Moscow extradition more palatable, sources say.

Ablyazov’s lawyers and advisers believe that their client will suffer personal harm if sent to a prison in Russia or Ukraine. But the Kazakh banker’s critics note that he survived a stint in a Kazakh jail in 2002 unscathed, and by all accounts does not appear to have suffered unduly in Aix-en-Provence, where he has been held in prison since his capture by French paramilitary forces last July.

The extradition will be seen as a victory for BTA, the Kazakh bank Ablyazov once chaired and co-owned, and which he is accused of bring close to bankruptcy in the years before its forced nationalization in early 2009. Once central Asia’s largest lender, BTA has undergone two painful restructurings in recent years, a process that penalized long-time creditors including Barclays, Credit Suisse and HSBC, and only returned to profit in late 2013. 

According to a Euromoney investigation in our January issue, BTA has long accused Ablyazov of channelling up to $15 billion out of the bank between 2004 and 2009, money they accuse him of diverting into more than a thousand companies based largely in offshore jurisdictions. The bank’s case against Ablyazov has wound tortuously through the UK High Court for five years. Along the way, a series of UK judges awarded judgments worth a combined total of more than $4 billion against Ablyazov. That number might rise past $6 billion, sources close to the case say. Other winners include London legal firm Hogan Lovells, and risk and regulation specialist John Howell, both of which have spent years working on the case with BTA.


For an in-depth investigation, read our January cover story: 

 
The hunt for Mukhtar Ablyazov: Banker, criminal, fugitive, victim?

What is the truth about Mukhtar Ablyazov? Is the former head of Kazakh bank BTA a fraudster on a par with Madoff and Stanford, as prosecutors from Russia and Ukraine to England and France claim? Or is he the persecuted victim of his home country’s political elite? One thing is for sure: the hunt for Ablyazov, and billions of dollars in assets he is alleged to have illegally appropriated, is one of the great sagas of our time.




Ablyazov’s now likely extradition to Russia draws a thicker line under a case that has divided opinion across the former Soviet bloc and Europe. His supporters, of which there are many, from family and lawyers to large portions of the French, Italian and British media, portray him as a political victim of Kazakh president Nursultan Nazarbayev, noting that his previous prison sentence stemmed from efforts to create a domestic opposition party.

Critics portray him as a financial fraudster on a scale comparable to Bernard Madoff, Allen Stanford or BCCI. No one will likely ever know the full picture of his financial dealings in the lead-up to BTA’s nationalization. In November 2013, a UK High Court justice found Ablyazov guilty of transferring $300 million in AAA rated securities out of BTA in 2008-09, dividing them up between various offshore companies. In late 2008, BTA, then still under his stewardship, lent $1 billion to a series of offshore oil companies: there was no oil and no business, and much of the capital wound up in Ablyazov’s hands offshore, our investigation reveals.

Ablyazov is accused of overpaying to boost stakes in BTA’s network of banks: up to $400 million was spent in late 2008 to buy shares in BTA Ukraine and BTA Belarus. BTA’s current owners say their former chairman merely siphoned much of that capital offshore. At his apogee, he owned, via associates, multi-million-dollar properties in London, and is believed to have controlled mines in Kyrgyzstan, and commercial property in Russia, Belarus and the Ukraine. His children were ferried to a private London school by a personal chauffeur.

UK judges have at various times called him “devious” and “cynical”. Solaine Legras, Aix-en-Provence’s advocate-general, who bore witness at the original hearing on December 12, and who ordered the July 2013 raid on the banker’s luxurious local residence, described Ablyazov in court as a “criminal on a grand scale”. More scathing yet was her observation that it was “easy to be an opponent to hide one’s true nature as a fraudster”.

For his part, Ablyazov maintained his virtue. In December, he claimed that the entire case against him was fabricated. “Everything has been fabricated in Kazakhstan,” he told the court. “The money is still in the bank’s accounts. It was never stolen. I’m convinced I am being persecuted for political reasons.”

True or not, the ruling by a respected European regional court hardly helps support such protestations of innocence. Ablyazov has fled trouble twice before, the first time in early 2009, when BTA, at the height of the financial crisis, was nationalized by a government finally comprehending the breadth of his fraud. In February 2012, Ablyazov hightailed it out of London, his home for three years, in the dead of night, days before being handed a 22-month UK prison sentence.

He wound up in Provence, where he was finally found last July by BTA’s surveillance team, who had tailed a Ukrainian lawyer, Yelena Tischenko, from London. The team followed Tischenko to one of Ablyazov’s local Provencale houses, where the former banker was spotted laying lilies on a bed, dressed in just a pair of underpants, and awaiting her arrival. The team informed advocate-general Legras, and Ablyazov’s fate was sealed.

For an in-depth investigation, read our January cover story.