(C) KAZAKHSTAN: OUSTED BTA BANK HEAD ABLYAZOV

C O N F I D E N T I A L LONDON 000712


E.O. 12958: DECL: 03/20/2019
TAGS: PGOV ECON EFIN EINV KDEM KZ UK
SUBJECT: (C) KAZAKHSTAN: OUSTED BTA BANK HEAD ABLYAZOV
SEEKS REGIME CHANGE FROM LONDON

REF: A. ASTANA 204

B. ASTANA 250

C. ASTANA 286

D. ASTANA 386

Classified By: Political Minister Counselor Greg Berry, reasons 1.4 (b/
d).


1. (C) Summary. After what he labeled a "political ouster"
from the Chairmanship of BTA Bank at the behest of President
Nazarbayev, Mukhtar Ablyazov maintained to London Poloff that
BTA Bank was Kazakhstan's "healthiest bank." Dismissing the
recent Kazakh legal case against him as unfounded, Ablyazov
is seeking legal immigration status in the UK as the base for
his self-imposed exile. From London, Ablyazov plans to
continue supporting political groups opposing Nazarbayev and
to actively seek regime change in Kazakhstan, supposedly in
favor of democracy. Ablyazov contends Nazarbayev remains
focused on his arrest and censure because Nazarbayev knows
that Ablyazov is one of the few individuals with the
resources and influence to hinder the President's eventual
transfer of power to a chosen successor, likely someone from
the President's family. End summary.

BTA: The Chairman, The President, and The Bank
-------------- -


2. (C) In a March 20 meeting with Embassy London Poloff,
former BTA Bank Chairman Mukhtar Ablyazov explained the
circumstances around his "political ouster" from the bank,
the bank's health relative to other Kazakh financial
institutions, and his plans to support other political
opponents to Kazakh President Nazarbayev from London.


3. (C) Ablyazov said the Kazakhstani Government's February 2
decision to nationalize BTA Bank, which prompted Ablyazov's
ouster as BTA Chairman, was "obviously politically motivated"
because the President -- not the State -- wanted to
personally control the country's financial sector. Ablyazov
estimated that the President either directly or indirectly
controls over 80 percent of the Kazakh financial sector, with
many assets cloaked under family members' names. He quipped
that just as the President's political party controls 90
percent of the seats in Parliament, the President controls 90
percent of all the crucial sectors of the economy and every
part of Kazakh life.


4. (C) Ablyazov rebuffed independent financial analysts'
suggestions that BTA was over-extended, saying that BTA was
the "healthiest bank in Kazakhstan." Claiming that BTA had a
risk portfolio diversified in various sectors and countries,
he noted that the bank's balance sheets reflected reduced
levels of assets commiserate with the recent decreased global
economic activity. He said other Kazakh banks generally held
between 60 and 90 percent of their assets in state-owned
companies, which are the worst performing assets, but that
BTA never held more than 12 percent of such assets. He said
BTA continued to grow in 2008, even after the financial
crisis began, and that the bank had the trust of foreign
investors, whereas other Kazakh banks began to contract as
soon as the crisis hit.


5. (C) Turning to his relationship with President Nazarbayev,
Ablyazov said that Nazarbayev had personally asked him to
return from Moscow in 2005 to take charge of BTA Bank.
Ablyazov was charged with consolidating BTA's shares and
increasing the bank's performance as long as Ablyazov
promised to remain politically inactive. Ablyazov said he
left Kazakhstan in 2003 after an apparent mistake by the
Kazakh Secret Service, which had been ordered to prevent his
travel out Kazakhstan, permitted Ablyazov to leave the
country. While in Russia he had supported several opposition
movements and was head of the Democratic Choice of Kazakhstan
(DVK). When he returned to Kazakhstan in 2005, he decided to
continue his political activities covertly. He explained
that the President received conflicting information as to
whether Ablyazov was involved in political opposition
movements. The President's daughter said Ablyazov had been,
but the Head of the Secret Service told the President he had
not. The intelligence head, according to Ablyazov, told the
President that Ablyazov did not have opposition links because
the intelligence chief knew that the Secret Service had
"messed up" by allowing Ablyazov to leave the country in 2003
and did not want to compound the impact of the error by
admitting Ablyazov had become engaged in opposition politics.


6. (C) Ablyazov said that although he had never publicly
supported the unregistered opposition political movement
Alga, he had always privately supported them. He said he has
also provided direct assistance to the United Social Democrat
Party and communist parties -- "to anyone who is against the
President."

The New Case Against Ablyazov
--------------


7. (C) Ablyazov told Poloff the recent money laundering case
the Government has announced against him is unfounded. He
quipped that even the Government's announcement of the case
through the Prosecutor General's website had violated several
privacy laws. He noted that neither he nor his lawyers have
received any formal notification of the charges and that the
Government had not followed due process procedures. He said
that the Government is likely trying to build its case on the
personal assets that Ablyazov sold in 2007, around the time
the so-called "financial sources" legislation was enacted.
He said that these transactions were completely legal and in
the open, as evidenced by the Government's issuance in
November 2008 of a license to allow Ablyazov to export the
money as part of his official income.

Ablyazov's Future Plans:
A London Base for Political Opposition
--------------


8. (C) Ablyazov said he plans to stay in London indefinitely,
and his lawyers are pursing an application for legal status
in the UK (NFI). He said he plans "to support all opposition
movements" and will try "to change the regime in Kazakhstan,"
as he views it as a "criminal" government that should be
forced from power. First on his agenda is to increase the
amount of opposition reporting on his satellite television
station "K Plus," which will transmit to all of Central Asia
from April 2009 when the station will be available through
three satellite networks. He said K Plus will also stream
over the internet and has several offices throughout central
Asia. He also plans to work with his in-country political
network to mobilize change.


9. (C) Ablyazov said President Nazarbayev has sent several
people to speak to him, asking that he return to Kazakhstan
to "advise" the President on the banking sector. Ablyazov
views these overtures as a ruse to bring him into custody
and/or control his political activities. In Ablyazov's
estimation, Nazarbayev remains focused on his arrest and
censure because Nazarbayev knows that Ablyazov is one of the
few individuals with the resources and influence to hinder
the President's eventual transfer of power to a chosen
successor, likely someone from the President's family.
Ablyazov claimed that Russian contacts have already told him
that the Russian security services have agreed to monitor
Ablyazov's Russia-based assets and provide information to the
Kazakh Government that may lead to his detention or political
atrophy.

Visit London's Classified Website:
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LEBARON