Kazakhstan: BTA in recovery mode after Ablyazov arrest
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Kazakhstan: BTA in recovery mode after Ablyazov arrest

Former chairman arrested in France; $112 million net profit in first half.

Five years after nearly collapsing under the weight of bad debts, the once-hobbled Kazakh bank BTA has a spring in its step.

Kazakhstan’s third-largest lender, 97% owned by sovereign wealth fund Samruk-Kazyna, posted first-half earnings of T15.6 billion ($112 million), compared with a T658 billion loss a year ago. BTA chairman Kadyrzhan Damitov attributed the turnaround to a second debt restructuring completed in December 2012, helping boost first-half net interest income to T17 billion.

BTA’s focus this year has switched to locating and recouping billions of dollars that the bank alleges former chairman Mukhtar Ablyazov stole. Ablazov was arrested in France on July 18 on a request from Ukraine. He maintains the charges of fraud are false and politically motivated, and that BTA’s problems stem from its nationalization in 2009.

Former BTA chairman Mukhtar Ablyazov

Speaking from southern France, where Ablyazov is being held in prison, Peter Sahlas, a lawyer employed by the banker’s family, tells Euromoney Ablyazov is still in "fighting mood", and has filed for a new trial at the European Court of Human Rights. Sahlas says Ablyazov fled London in February 2012 – hours before being sentenced to 22 months in a UK jail for contempt of court – as he feared being killed on British soil by Chechen assassins. Ablyazov, who bought BTA in 1998, is wanted by the authorities in several countries, including Kazakhstan and Russia. Ukraine filed for his arrest on August 1, although Sahlas is confident this request will be denied.

In a series of rulings between November 2012 and March 2013 from London’s High Court, Justice Nigel Teare granted BTA more than $4 billion in assets also claimed by Ablyazov and his associates. Pavel Prosyankin, a board member and managing director at BTA, tells Euromoney he believes that total "will rise to $6 billion" over the next few months.

Ablyazov might have channelled as much as $15 billion out of Kazakhstan in the decade to early 2009, according to sources close to BTA. Some of the assets already located might prove relatively easy to package and sell: notably a £20 million ($31 million) London mansion on a Hampstead road popularly known as ‘billionaire’s row’, and a £20 million Surrey estate with helipad once owned by computer tycoon Michael Dell.

Other assets claimed by BTA might take longer to locate, value and sell. Sources close to BTA say they have identified mining assets in the Ukraine and Kyrgyzstan, along with bank accounts scattered in Malta, Cyprus and the Cayman and British Virgin islands.

"We are continuing our search for other assets that Ablyazov may own, but which we haven’t yet unearthed," says Prosyankin, who is also overseeing the asset-recovery process. "Many of the assets he stole are hidden in opaque ways, in far-flung places, and we are working day and night with authorities across multiple jurisdictions to unwind some very complex and tangled structures."

In the UK alone, BTA employs PwC as its forensic accountants, KPMG as receivers and Hogan Lovells as part of its legal team. They appear to be digging in for the long haul. One source believes that tracking everything down could take up to 20 years.

It might take years before BTA is able to recoup assets at a price considered acceptable to potential buyers and the bank’s chief shareholder. The last thing BTA wants to do, notes one adviser, is to be "seen to be holding a fire sale. It wants to sell these assets at the right price and at its own pace."

Perhaps another positive factor for BTA, in addition to its mounting legal victories, is the arrest of Ablyazov, and the arrest or disempowerment of individuals the bank, or sources close to the bank, say might have acted as Ablyazov’s associates. Some of these, says Prosyankin, spent years "hiding the assets he stole".

Sources close to BTA point, for example, to Ablyazov’s brother-in-law, Syrym Shalabayev, who is one of the figures the bank considers to have acted in a similar role. In 2011 Shalabayev was sentenced in his absence to 18 months’ imprisonment in the UK for contempt of court in a case related to BTA’s case against Ablyazov.

Another connection to Ablyazov is a 37-year-old Ukraine lawyer, Yelena Tischenko, who attracted the attention of detectives, sources say, after providing evidence on Ablyazov’s behalf in the High Court in April; she was then followed to France, inadvertently leading the authorities to the former BTA owner’s Provence hideout.

Tischenko was arrested in a Moscow hotel on September 2 after flying in from Cyprus. She was whisked off to be quizzed by Russian investigators, Kommersant newspaper said – an act Sahlas likens to hostage-taking.

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