White Collar Crime in Central Asia: The Case of Uzbekistan

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Editor's note: This is the third part of a series of four articles on white collar crime in Central Asian countries. The first article, on Kyrgyzstan, can be read here. The second article, on Tajikistan, can be read here.

By Charles van der Leeuw, The Times of Central Asia

BISHKEK (TCA) — In Kazakhstan, a crooked private entrepreneurial sector emerged in the early years of independence and "poisoned" the state-run part of the economy. In Kyrgyzstan and Tajikistan, the opposite happened as corrupt regimes entangled the private sector, forcing entrepreneurs to comply with white collar crime in state echelons and thus become involved in it themselves. The case of Uzbekistan is more complicated, since it appears to involve international fraud chains along with local culprits.a

Uzbekistan deserved the honorary title of "champion thieves within the law" already in Soviet times, when theft of public property was equal to treason and perpetrators were shot without mercy. Even under Gorbachev's perestroika a number of officials bearing end-responsibility in the multi-billion cotton fraud affair were to meet their death in the end. Today, "occupational crime" can mean coming to a bad end as well – though not necessarily by the hands of the authorities.

Gulnara's Enrichment Scheme

The "living legend" of Uzbekistan's white collar crime is no one less than Gulnara Karimova, the daughter of the head of state Islam Karimov, who recently died. Gulnara has not been seen in public for more than a year and reports say she is under house arrest in Tashkent.

Gulnara's targets were the Scandinavian and Russian telecom companies TeliaSonera and VimpelCom which she "facilitated" to operate in Uzbekistan, along with at least six telecom-related groups of companies, including those that ran fiber optic lines and provided WiFi and WiMAX services – a high-speed, long-range version of WiFi, according to a recent report by the Organized Crime and Corruption Reporting Project (OCCRP) that summarized Gulnara's enrichment scheme. "Her audacious schemes may have cost the people of Uzbekistan money that could have paid for pensions or healthcare but instead went into banks, an offshore hedge fund and luxurious real estate around the world including a castle in France and a penthouse in Hong Kong. Even the US $1 billion figure likely underestimates the true magnitude of the alleged extortion and bribery she received because most records of her business records have not been released," the report reads.

Retroactive Rather than Proactive

Uzbekistan is also prominently featured in the files concerning Unaoil and its owners, the Ahsani family. Unaoil called itself an oil company but in reality it was a smearing facility to pocket contracts, which "… used multi-million dollar commissions to bribe corrupt government officials in oil-rich countries to win contracts for companies" in the words of a report posted in April this year by Australia's Fairfax Media and the Huffington Post. "Bankers in New York and London helped launder Unaoil's money while the company's owners also built a major property investment firm in central London. […] Officials in Iraq, Iran, Libya, Syria, Yemen, Kuwait, the United Arab Emirates, Kazakhstan, Azerbaijan, Turkmenistan and Uzbekistan were involved in the corrupt dealings by Unaoil." On the paying end of the line were major European and U.S. companies executives of which "not only actively supported bribery but were offered or pocketed their own kickbacks" in the report's words.

The main friction between the dynamics of white collar crime and its prosecution is limited jurisdiction. This does not mean, however, that prosecutors and investigators are entirely powerless. Western prosecutors tend to be retroactive rather than proactive where it comes to chasing after the end of the line within their jurisdictions. The western attitude towards white collar crime – too big to fail, too rich to jail – is sending the wrong message to former Soviet republics and other states dubbed "corrupt".

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