Nurbank update– and Cartel ex machina?

The undisclosed percentage of Aliev-Nazarbaeva shares in Nurbank has at last been reported at 51% in Financial Times.  Along with the 6.3% owned by Mr. Aliev's father, we now know about 60% of Nurbank ownership is held by Aliev connections.

I don't believe in conspiracy theories very often, for the simple reason that few people keep secrets well.  But last week, Joshua Foust at Registan.net found a doozy: a reference on connections between Nurbank, where Rakhat Aliev has the previously-undisclosed majority stake, and some Austrian banks.  The intimation at the source he found is that Austria-Austrian banks-Kazakhstan-Kazakhstan banks are going to confuse and make even more complex the extradition of Rakhat Aliev to Kazakhstan. 

Okay, so I’ve been digging around, along with banking regulators in Austria, Russia, and the United States–and I’m a rank amateur compared to them.  So I don't intend to build a case, but only to report new research, fill in some blanks for future developments, pose a few conundrums–and hopefully keep people as interested in Nurbank's fate as they are in Mr. Aliev's.

Changing guard
In the midst of kidnappings, buildings being rushed by security personnel, and Rakhat Aliev's indictment, there were board changes at Nurbank.  One of these was the election of Mr. Adolf Wala as Nurbank's new chairman, reported by Interfax-Kazakhstan on May 25, 2007.  Interfax, KASE-TV of Kazakhstan, and Kazakhstan Today announced that Mr. Wala (sometimes incorrectly spelled Vala, but the same person) was to engage in work immediately–which suggests that he was already up to speed on what to do. 

In 1998, Adolf Wala was the chief executive of the executive committee at Austria's National Bank (Oesterreichische Nationalbank, hereinafter OeNB).  That same year, he retired and became President of the OeNB's General Council.  These changes coincided with the arrival of the Euro economy to Austria, and Mr. Wala held that position at least through 2001. (probably 2005, but I’m only going by what I’ve actually found).  Format Magazine, an Austrian business weekly, says that Mr. Wala joined the supervising board of Vienna's V. Maximus Acquisitions AG in 2005.   Format also writes that V. Maximus was the primary financial advisor to Rakhat Aliev 's investments outside of Kazakhstan.  One of their duties was to oversee preparations for the sale of Nurbank, something which has allegedly been planned for about five years.  The sale is supposed to commence this year.

When Mr. Wala was confirmed as Nurbank's head, he brought with him four other advisors to audit and help run Nurbank–presumably to get everything in shape for an orderly sale and transfer.  The banks most interested in purchasing Nurbank include Raiffeisen Bank and Bank Austria (B.A. C. A.), as reported by both Format and EUX-TV, who cited Format as a reference.

Format is mentioning some possible conflicts of interest, which include rumors that Wala was also employed by Raiffeisen Bank to facilitate the Nurbank purchase even while he was employed in a firm with strong Aliev interests.  Mr. Wala has defended himself by essentially saying that he worked for travel expenses–or as Format put it, “Working for Free”.

Nurbank purchaser No. 1: Russian and Ukrainian connections.
But there's some bad stuff going down in the Austrian financial community at the moment, and Raiffeisen Zentralbank (RZB) is smack dab in the middle of it.  Austria is a small state with over 1,000 financial institutions–a financial nexus that needs both foreign capital to come in, and to develop customer niches in foreign locations.  Raiffeisen began about 1864 as a community credit organization, and its central bank is owned more or less by its branches, rather than the other way around.  Raiffeisen Capital, however, is fully owned by Raffeisen:  that particular division of RZB is expanding, and wants to continue to expand, into former Soviet states.  They have a significant presence in Russia.  The Russian connection is currently under investigation  for money laundering conspiracies with Russia's Diskont Bank.

The U.S. is currently investigating RZB in connection with money laundering for RosUkrEnergo, a holding company which makes money off of Russian pipelines on Ukrainian soil.  Fifty percent of RosUkrEnergo is owned by undisclosed parties and administered by the Raiffeisen Bank.  As of May 22, the state of Ukraine owes RosUkrEnergo USD 400 million. The other 50% is owned by Gazprombank, which means that Ukraine owes Gazprom 200 million.

On May 25, RZB denied all allegations of money-laundering, saying that it is an attack on the largest non-Russian bank within Russia's borders.  This certainly fits other recent Russian takeover events, such as the threats to TNK-BP, Sakhalin Island projects, the Caspian Pipeline Consortium, and many others. 

Meanwhile, back in Kazakhstan:
We aren't hearing too much about other banks or other factions in Kazakhstan, but Timur Kulibaev, Mr. Nazarbaev's other, quieter, richer son-in-law, (and CEO of KazMunaiGaz ) has long been seen as Mr. Aliev's main competitor. He also owns a large part of a bank: the more-successful-than-Nurbank Halyk Bank (sometimes called the People's Bank of Kazakhstan).  Halyk was privatized from Soviet structures.  Both Mr. Kulibaev and his wife, Daniya Nazarbaeva, are pegged by Forbes to be worth USD 2.1 billion each.

The Conundrums
The preliminary conclusions to this information do not necessarily facilitate each other–in fact, they make things more confusing and show the need for a Lot More Investigation:

A. If Mr. Wala was working diligently on behalf of Rakhat Aliev at Maximus AG, then it makes sense that he would know a lot about Nurbank's status and be able to weigh in immediately, as he has done.  Nurbank's new board looks positioned to still advocate Aliev business interests, even as Aliev has fallen out of favor.

B. Mr. Gilimov, former Nurbank executive, is in jail for calling in the police to stop Mr. Aliev from causing trouble at Nurbank.  If Mr. Aliev was indeed committing the crimes mentioned in his indictment, then why is Mr. Gilimov still being held?

C. The sale of Nurbank and the arrival of four auditors with Mr. Wala seem to indicate a new oversight to Nurbank, which would mean that money transfers and property transfers before Mr. Wala's arrival could be 1. an effort at profit-taking and consolidation before transfer.  This particularly seems relevant in the case of the transfer of title to the Nurbank bank building.  But it could also be 2. an effort to fix an earlier non-standard transaction that might be investigated  (in essence, putting some mis-handled money back), or 3. both; or, 4. none of the above. 

D. Just as it would be extremely helpful to know the stakeholders for 50% of RosUkrEnergo, it would be nice to know the remaining stockholders of JSC Nurbank.  Because, depending upon who they are, Nurbank could be ripe for a takeover from other elements of the bank, such as: 1. corporate interests already prominent in Kazakhstan, or, 2. rival bank consortiums who own the undisclosed pieces of Nurbank and who want to change stakes before the sale to Raiffeisen and Bank Austria, or 3. non-bank consortiums with influence to burn in Kazakhstan.  If this is so, then Nurbank becomes a microcosm of Kazakhstan's opaquely plural politics in general, where the Aliev faction and the Kulibaev faction duke it out, and the undisclosed members of non-Kazakh corporate consortiums weigh in to influence outcomes.

Ladies and gentlemen: start typing your novels.  It's a little early to build lawsuits against Aliev, Raiffeisen, or anyone else out of any of this, but you can start plotting The da Bankinci Code immediately.

Further reading:
On RZB scandals in regard to Russian money laundering: Robert Amsterdam's blog has really good coverage:  here is a link to the RZB thread
RosUkrEnergo in the St. Petersburg Times, along with Gazprom conspiracies
Eurasia Daily Monitor on RosUkrEnergo  and the IHT on trying to investigate it

Previous posts at FPA Central Asia on Nurbank, with links to NewEurasia.net's reportage and other sources.  Thanks again to Mr. Foust for the initial spur to do the shovel work. . .  seems like there's more dirt to dig, too . . . .