TURKMENISTAN: HOW SOME FOREIGN COMPANIES GAIN

C O N F I D E N T I A L SECTION 01 OF 03 ASHGABAT 000266

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COMMERCE FOR HUEPER

E.O. 12958: DECL: 02/26/2019
TAGS: PGOV EINV KCOR TX
SUBJECT: TURKMENISTAN: HOW SOME FOREIGN COMPANIES GAIN
ACCESS TO TOP OFFICIALS

REF: A. ASHGABAT 00154

B. 07 ISTANBUL 00103

C. ASHGABAT 00235

D. ASHGABAT 00262

E. 08 ASHGABAT 01399

F. 08 ASHGABAT 01498

G. ASHGABAT 00203

H. ASHGABAT 00255

I. ASHGABAT 00117

J. 08 ASHGABAT 00483

K. ASHGABAT 00197

ASHGABAT 00000266 001.2 OF 003


Classified By: Charge Richard Miles for reasons 1.4 (b) and (d).


1. (C) SUMMARY: Perhaps the single greatest challenge in
seeking to do business in Turkmenistan is the lack of access
to the people empowered to make decisions about commercial
contracts here, particularly those involving infrastructural
and energy sector development. Most companies have come to
the conclusion that only the President of Turkmenistan can
decide what contracts will be signed, and with whom. Even if
this perception is accurate, however, foreign companies still
grapple with trying to understand how to navigate through the
mysteries of the Turkmen system in order to get their foot in
the door and access the country's market for the first time.
A meeting with the President does not guarantee that a deal
will be signed, but it helps. Having someone willing to
advocate on your company's behalf at the Deputy Chairman
level or within the Presidential Apparatus to try to get a
presidential meeting or support for your proposal appears to
be extremely valuable. Having the active support of one's
home government in presenting your enterprise to senior
Turkmen officials appears to be important as well.
Corruption, however, also frequently plays a significant role
in gaining access to decision makers. END SUMMARY.


2. (C) According to diplomats and a variety of business
representatives who have lived and worked in Turkmenistan for
long periods, there are two ways that foreign companies
seeking to initiate business activity in the country get a
foot in the door: Through personal relationships with
individuals who have access to the President or to someone
close to the top, or through official, bilateral government
interaction on the company's behalf. Business
representatives and local embassy staff report that
networking through one's personal contacts to reach out to
the President's family members, members of the Presidential
Apparatus, Deputy Cabinet Chairmen or other friends or
advisors close to the President is a highly effective way of
getting presidential attention for a company or a proposal.
Some companies here report that their key to success is
having an employee who is related to someone in a key
government position, allowing them to directly call senior
contacts within the government who can help advance their
proposal (Ref A).

VALUED PERSONAL CONNECTIONS


3. (C) Turkish business magnate, Ahmet Calik, has long been
an example of a government insider who has advocated for
Turkish companies, including his own (Ref B). Calik was
first introduced to Niyazov as part of former Turkish
President Turgut Ozal's official delegation to Turkmenistan
in the early 1990s. In Niyazov's final years he was
considered by many to be the second most powerful man in
Turkmenistan because of his influence over the President. One
of his commercial interests, Gap Inshaat, has been among the
several Turkish construction companies that have dominated

ASHGABAT 00000266 002.2 OF 003


the sector here for years.


4. (C) Calik preserved his influential status when
Berdimuhamedov became President in 2007. He had known the
President since 1997 when he accompanied him, then the Health
Minister, to Istanbul. In later years, Calik lived in the
same Gap Inshaat apartment building as Berdimuhamedov, and
became even closer to him (Ref B). His bona fides were
secured in 2007 when he attended Berdimuhamedov's
inauguration as part of Turkish Prime Minister Erdogan's
delegation, according to a foreign company representative
here. His company is also currently building a large
multi-million dollar mosque in Konye-Urgench on behalf of the
Turkish Government, according to local press.

HOME GOVERNMENT SUPPORT ONE PATH TO ACCESS


5. (C) Calik's case is also representative of how
high-level government interaction can give companies entree
to the highest levels of government here. Many successful
companies trace their "big break" in Turkmenistan to their
own governments helping them to successfully launch into this
market. Some longtime expat residents argue that a major key
to high-level access is having strong support from one's home
government (Ref C). Calik was, in part, able to renew his
high-level connectivity here in part through the continued
efforts of the Turkish Government. The Belgian company,
ENEX, was able to successfully advance an ambitious
commercial proposal by convincing the King of Belgium to host
a dinner for Berdimuhamedov during his official visit to
Brussels in November 2007. The company filled the chairs
with its senior leadership and discussed its proposal
directly with the President (Ref C). Foreign business
representatives say that companies have a more difficult time
competing here without the active support of a home
government and regular, high-level bilateral interaction.
They believe that this, in part, is the reason that Russian,
Chinese, Turkish, and increasingly, South Korean companies
are expanding their presence in Turkmenistan. Further,
commercial players here have observed that there are few
presidential meetings about business issues that have not
been propelled by bilateral government interaction (Ref C).

BRIBES AND ACCESS


6. (C) Some company representatives report that it is
possible to pay a large bribe to get a meeting with the
President, or a smaller bribe to encourage a Deputy Cabinet
Chairman or Minister to advocate on behalf of a company or
its proposal. Weatherford energy company Country Manager,
Trevor Fish, reported hearing of foreign commercial
enterprises paying $100,000-$150,000 to obtain a business
meeting with the President. Another foreign business
representative reported hearing that the price of a
presidential meeting may now average $300,000 or more, and
that obtaining the support of other senior government
officials who could advocate on behalf of a company costs
"$15,000 and up." The same representative added that local
legal and commercial entities, such as the BEREKET legal
group, regularly play the role of intermediary in delivering
cases of cash to representatives of the recipients, including
to members of the Presidential Apparatus. He also reported
that ensuring that the President personally considers a major
project proposal to require a cash bribe of as much as $1.5
million (Ref D).


7. (C) Bribes paid to senior officials can also take the
form of elaborate gifts, either ostensibly benefiting the

ASHGABAT 00000266 003.2 OF 003


state, or benefiting an individual whose assistance is
needed. The most visible example of such a gift was a
mega-yacht which the Russian energy company Itera gave to
President Berdimuhamedov in late 2008 (Ref E). Russian press
indicated that the company has been seeking a PSA to develop
three blocks in the Caspian and other lucrative projects in
Turkmenistan. According to Russian press this week, it won a
$176 million contract to build a gas pipeline that will
connect a field in central Dashoguz province that the company
wants to develop with the Central Asia Center pipeline going
to Russia. A Russian Government delegation's presentation of
a gold diamond-studded watch to Berdimuhamedov in 2008 may
also have been an effort to facilitate Itera's entre,
according to EU TACIS Director Michael Wilson. Some
companies provide all expense paid travel to officials whose
support they need, such as Polimeks' sponsorship of
Berdimuhamedov's trip to Beijing in summer 2008 (Ref F),or a
South Korean company's provision of a trip for Turkmen Motor
Transport Minister Hangulyev to South Korea in 2008 (Ref G).


8. (C) The U.S.-based Worldwide Construction initially
sought access to the Turkmen market back in 2007. The
company gained access to the Turkmen president during
meetings in New York in 2007, and reportedly gave him a
Cadillac Escalade some time in 2008 (Ref H). The company was
able to open offices and become registered in 2008, and is
now operating in Turkmenistan -- a pace of progress almost
unheard of here.

BENEFITS BURIED IN CONTRACTS


9. (C) Bribes in the form of gifts are frequently written
into contracts, according to numerous foreign commercial
contacts, and can be a signing bonus for an individual
signatory, or the value of an element of a large contract
proposal, such as Polimeks' gift of the architectural plan
for an Olympic village (Ref I). Others include Polimeks'
gift of one of the world's tallest flagpoles (Ref J) or its
free renovation of the building for the Supreme Council for
Science and Technology (Ref K). The French construction
company Bouygues reportedly sponsored two race cars decorated
with the Turkmen flag and state symbols, as well as
advertising for the Avaza tourist zone. European drivers
werehired to drive one of them in the spring 2008 Monte
Carlo auto rally, according to local press. Alternatively,
some companies are offering more low key development-oriented
contributions, such as the construction of a small factory or
other low cost infrastructure project in one of the
provinces, according to several commercial representatives.


10. (C) COMMENT: There are plenty of cases where the
Government has sought out the services of a particular
foreign company with unique capabilities that it knows will
do the job right, making access a non-issue. However, there
are so many foreign companies currently competing for work in
construction and oil and gas development that it certainly
must play a role in intensifying the level of corruption,
just to get the attention of senior officials. If a
company's competitor is willing to pay it would be dificult
to overcome that "advantage." Home government representation
for companies seeking to do business here appears to be the
least costly or risky option for a commercial enterprise
seeking the attention of the Turkmen Government, and various
foreign governments seem to provide this service to differing
degrees. END COMMENT.
MILES