BTA Bank accuses American businessman of money laundering for Ablyazov and Khrapunov

On October 12, American real estate businessmen Joseph Chetrit was accused of participating in an international money laundering scheme and helping Mukhtar Ablyazov and Victor Khrapunov hide $40 million in New York real estate deals, Tengrinews reports citing The Real Deal.

The new claims against Joseph Chetrit were filed in Manhattan federal court in response to Chetrit Group's July lawsuit. In its lawsuit, the group asked the judge to determine whether it should pay the disputed $21 million to the company allegedly controlled by Ablyazov and Khrapunov or to Almaty city, which had claimed the money had been stolen, Bloomberg reported.

According to the filing, Ablyazov and Khrapunov, who are in-laws, invested in Manhattan Flatotel and Cabrini Medical Center through a shell company with Chetrit's help.

Mukhtar Ablyazov is a former chairman of a Kazakhstani bank. He was accused of stealing billions of dollars from the bank. Khrapunov, a former mayor of Almaty, was accused of stealing $300 million from Almaty city through rigged auctions, embezzlement and sale of public property to friends.

Viktor Khrapunov. Photo © viktor-khrapunov.com

Khrapunovs’ fortunes and troubles

In April 2008, Viktor Khrapunov fled to Switzerland, where he currently lives with his family. In 2012, Swiss magazine Bilanz listed him among Switzerland's 300 richest people and estimated his fortune at 300 to 400 million Swiss francs (or $324 million to $432 million at the time). Khrapunov denied being wealthy calling the estimated fortune an exaggeration. A translation of Khrapunov's interview with Tages Anzeiger, Swiss newspaper, was published on viktor-khrapunov.com. In it, he claims "what the Bilanz wrote is highly exaggerated. As mayor of the city of Almaty or as a government minister, I certainly did not amass a fortune. I did not have any Swiss bank accounts then and have none today. My family's wealth comes primarily from my wife, who was a successful businesswoman in Kazakhstan."

In the same interview he is asked about the money laundering, fraud and organized crime charges against him, to which he replies "these are trumped-up charges." Then Khrapunov tries to persuade the audience that he is a poor politician and a martyr persecuted by a dictator.

As for his wife, who is the source of his family’s fortune, Leila Khrapunova was indeed very successful in Kazakhstan. But here is how she achieved the success according to Kazworld reports: while Khrapunov served as mayor from 1997 to 2004, he and his wife arranged auctions of state-owned real estate at below market value to entities they controlled and later sold the properties at substantially higher prices.

In 2012, Forbes published the list of the family’s properties in Kazakhstan and Switzerland. Among 37 types of Almaty properties, his family owned, and maybe still owns, trade and office buildings, numerous houses, apartments, kindergartens, parking lots including two recreation properties Dubovaya Roshcha located in the state natural park Medeu and Lesnaya Skazka located in Talgar district next to Kotyrbulak gorge, and two plots of land equaling 2.6 hectares in water conservation zones of the Esentai and Bolshaya Almatinka rivers. Astonishing. However, the family’s list of Swiss properties is equally impressive. There are apartments, residences, hotels, companies and a villa located by the Lake of Geneva on Chemin de Ruth 49, Cologny 1223.

Leila Khrapunova. Photo © leila-khrapunova.com

Both the husband and wife are on the Interpol’s wanted list since 2012. Switzerland authorities froze the family’s Swiss bank accounts in 2013 to run an investigation, but denied Kazakhstan’s petitions to extradite Viktor Khrapunov, twice. In spite of such constrains and pressure, the family found ways to diversify its investment portfolio by buying luxurious cars and real estate properties in California and investing in New York companies, spending millions of dollars. The international laws and regulations clearly have some loopholes the Khrapunovs are well aware about.

In 2014 Almaty city filed a lawsuit against Victor Khrapunov in the US federal court located in Los Angeles, claiming Khrapunov had stolen hundreds of millions of dollars by selling 80 properties belonging to the city. Almaty city also claimed that the defendant purchased four homes in California and four luxury cars, invested $6 million in a New York company producing medical equipment as well as $67.5 million in Manhattan Flatotel hotel, and transferred $4.3 million from Swiss to US bank accounts. The Almaty city asked the court to confiscate the properties and freeze the bank accounts belonging to Khrapunov’s family in the US.

Despite the seriousness of the allegations and the US involvement, Federal Judge Fernando Olguin dismissed Almaty’s claims ruling that the claims must be litigated in Switzerland because “the evidence and witnesses required to prove those allegations are located primarily in Kazakhstan and Switzerland."

Children of Viktor Khrapunov and Mukhtar Ablyazov seem to be in trouble as well. Ilyas, who became a successful businessman and politician in Switzerland, is also wanted by Interpol. He is suspected of creating and managing a criminal organization, participating in organized crime dealings, and legalizing (laundering) money assets or other property acquired by illegal means, Tengrinews reported. His sister’s and wife’s names (Elvira Khrapunova and Madina Albyazova) appear among the sued parties in Los Angeles suit. Madina is accused of running a trust fund which of suspected to have served as a hedge tool for the illegal transactions, Kazworld reported.

Ilyas Khrapunov. Photo © Interpol.int

On July 16, 2014, Madina and Ilyas published a joint statement on Madina's facebook page accusing Nursultan Nazarbayev, President of Kazakhstan, of wanting to destroy their family. "It is not enough for the President Nazarbayev to settle accounts only with Mukhtar Ablyazov and his associates, who are being hunted down in all parts of the world. (...) Mukhtar Ablyazov’s opposition to the Nazarbayev family has lasted for two decades."

Mukhtar Ablyazov's extradition

Mukhtar Ablyazov, a former chairman of BTA bank in Kazakhstan, was accused of stealing $4 billion from the bank (according to some other sources, this figure reaches $6 billion). In 2009, when BTA Bank was seized by the sovereign wealth fund and declared insolvent, Mukhtar Ablyazov was able to successfully flee Kazakhstan. BTA launched 11 fraud claims against him in England while Kazakhstan, Russia and Ukraine also brought charges against him.

Mukhtar Ablyazov. Photo by S. Kozlov

Claiming his life was in danger, he obtained a political asylum in the Great Britain in 2011. But Mukhtar Ablyazov's luck turned away from him when in July of 2013 he was arrested in France. Ablyazov has long denied fraud charges, arguing that Kazakh President Nursultan Nazarbayev wanted to eliminate him as a political opponent and rob him of his assets, Reuters reported. On October 24, 2014, the Lyon Court of Appeal ruled in favor of Mr. Ablyazov's extradition to Ukraine or Russia, and on March 4, 2015, the Cassation Court rejected Mr. Ablyazov's appeal of the extradition ruling. Heavyweight humanitarian organization Human Rights Watch appealed to the Prime Minister of France Manuel Valls not to extradite Ablyazov in the fear that he might be re-extradited to Kazakhstan where he would face 13 years in prison and confiscation of his properties. Despite the appeals made by Ablyazov's attorneys and Human Rights Watch, the Prime Minister of France signed Ablyazov's extradition papers on September 17, 2015, Tengrinews reported citing AFP. Ablyazov will try to appeal the decision again.

Corruption in Kazakhstan

Transparency International, a non-governmental organization founded in Germany in 1993, publishes annual reports on the perceived level of corruption in various countries. Kazakhstan's ranking is currently 126th out of 175 countries. The further down the list a ranking is, the higher the country's corruption is perceived to be.

"Corruption is rampant throughout Kazakhstan's political circles and negatively affects the country's business environment. Facilitation payments and bribery are illegal, but the state bodies responsible for combating corruption are ineffective, unreliable and fail to hold high-level officials responsible for corruption, abuses of office or conflicts of interest," Business Anti-Corruption Portal wrote about Kazakhstan.

Natalya Malyarchuk, the Chairman of a Kazakhstani anti-corruption group Transparency Kazakhstan, shared with Nomad.su that "according to experts of different agencies, the main form of corruption in Kazakhstan is misuse of public funds. According to the Kazakh Agency for Combating Economic and Corruption Crimes (Financial Police), 78% of all the corruption crimes are committed by mayors, their deputies and city hall employees who deal with procurement." In the other words, wanna make a lot of money? Join the labor force of a city hall.

By Aidana Ramazanova, editing by Tatyana Kuzmina