Oil giants ignored purple flags, enriched elite for Kazakhstan pipe dream

Western oil giants had a money bonanza of their sights once they gathered within the small city of Farnborough, southwest of London, in October 2012. They have been dashing to take advantage of one of many world’s richest and deepest oil fields: the 156-square-mile Tengiz reservoir in western Kazakhstan, greater than 4 instances the scale of Paris and a mile deep, underneath a desert on the distant north coast of the Caspian Sea.

Time was slipping by on the oil executives’ unique 40-year rights to develop the sphere. That they had 21 years left to each extract the oil and construct the infrastructure to move it from Tengiz to the 939-mile Caspian pipeline, the place the oil can be exported by way of Russia and on to world markets.

However the riches lay beneath probably the most politically and environmentally delicate spots on Earth, the place temperatures soar to 130 levels in summer season and sink to 30 beneath zero in winter. A rustic settled by nomadic tribes, the place visitors are nonetheless welcomed with camel’s milk, Kazakhstan has a inhabitants that features a giant minority of Slavs who migrated south throughout the 4,500-mile Russian-Kazakh border, and Russia has been a dominant affect there for the reason that tsars. The oil itself is deep underneath the delicate space often called the Caspian Despair, dwelling to an ecosystem of migratory birds, sturgeon, herring and different uncommon fauna.

The oil firms listened as representatives of a little-known Kazakh agency referred to as TenizService pitched an concept to construct a transportation route and offloading facility to hurry removing of the oil by practically doubling the quantity that may very well be shipped by pipeline to the closest navigable seaport in Russia. Again in 2009, Chevron and its companions had rejected the same concept due to security and environmental dangers.

The large infrastructure challenge appeared not possible: The Caspian Sea is landlocked and impassable in winter, and the oil reservoir was about 1,000 miles from the closest usable seaport. Floating docks would must be constructed. Asphalt roads would must be paved. A 43-mile marine channel, capable of accommodate vessels from tugs to barges, would must be dredged.

The approval course of was vastly complicated, requiring sign-off from a minimum of 170 officers throughout 46 Kazakh entities, from native water officers to the Ministry of Transport.

These intimidating obstacles didn’t faze TenizService, which bought the contract because the lone bidder. In a 52-slide presentation of photographs, maps and schematic drawings, the corporate proposed a technique to win a development allow in a matter of months, citing its “good relations” with the federal government.

Regardless of huge regulatory hurdles, the challenge to construct the offloading facility — with a price ticket of $1.06 billion — moved ahead with preliminary work inside a month. Chevron, ExxonMobil Corp. and two different companions authorized a deal that may finally pay TenizService $1.5 billion past the unique price of the no-bid contract, for a complete of $2.5 billion.

TenizService, the Kazakh agency navigating the hurdles that had stymied Western oil giants for years, had been partly owned till 2010 by the “oil prince”: Timur Kulibayev, the billionaire son-in-law of Kazakhstan’s president on the time. It was within the palms of a enterprise affiliate when the contract was awarded, and would quickly obtain a monetary lifeline from a financial institution by which Kulibayev held a big stake.

Via his father-in-law Nursultan Nazarbayev, who dominated petroleum-rich Kazakhstan for practically 30 years, Kulibayev had prepared entry to the levers of oil energy — energy which may assist oil firms, Nazarbayev and, finally, Russian President Vladimir Putin.

Regardless of inner warnings that the contracts may very well be seen as together with improper funds to politically influential actors, Chevron, Exxon and three different Western oil giants authorized monetary dealings with firms linked to Kulibayev. The offers with these corporations have been a part of a broader push by Western oil firms to court docket politically related contractors and safe a path to export oil from Kazakhstan, by way of Russia, to world markets.

Kulibayev’s connections to TenizService are a part of Caspian Cabals, an investigation led by the Worldwide Consortium of Investigative Journalists and 26 media companions into the rise of a important pipeline within the Caspian Sea area and Kazakh oil fields that feed it. The 2-year investigation is predicated on tens of 1000’s of pages of confidential emails, firm shows and different oil business data, audits, court docket paperwork and regulatory filings,in addition to a whole lot of interviews, together with with former firm workers and insiders. Caspian Cabals reveals how Western oil firm cash has empowered anti-democratic actors in Kazakhstan, bolstered Putin’s regime and enriched regional elites.

Western customers and oil firms are more and more depending on the Caspian area. For many years, U.S. international coverage and high-powered lobbyists promoted the concept that resource-rich Kazakhstan would assist to wean the U.S. from dependence on Center Japanese oil — whereas wresting the Central Asian nation from Russia’s affect and increasing democracy within the area.

As an alternative, the Caspian tasks emboldened Russia and have come at grave environmental price to Kazakhstan — producing discontent, anger and disappointment amongst a few of its residents.

“Fossil gas improvement in western Kazakhstan has been devastating to native communities, each when it comes to environmental well being impacts and destruction of the pure world,” stated Kate Watters, government director of Crude Accountability, an advocacy group specializing in environmental safety of the Caspian Sea. “Kids have grown up within the shadow of oil and fuel improvement, and have paid the worth with their well being, regardless of claims by firms and worldwide monetary establishments that environmental and social requirements are upheld.”

Leila Nazgul Seiitbek, founding father of Freedom for Eurasia, positioned among the blame on Kulibayev.  Her advocacy group investigated him and requested the U.S. to use sanctions to punish him for alleged corruption. “Not often does anybody bear any accountability in tasks the place there are pursuits of the political kleptocratic elite,” she stated. “In fact to the extent that Kulibayev has an curiosity in any challenge, that performs a task in guaranteeing impunity. Tasks together with his participation are usually not out there for civilian or regulation enforcement management.”

Kulibayev declined ICIJ’s requests for an interview.

His U.Okay. regulation and communications agency, Schillings, stated Kulibayev is an independently rich businessman and investor, together with his personal enterprise pursuits and a confirmed industrial monitor document.

In a 39-page letter to ICIJ’s attorneys, Schillings acknowledged Kulibayev had an oblique, minority stake in TenizService till 2010 however little interest in the corporate when the large infrastructure contract was awarded two years later.

“Mr. Kulibayev has by no means had a monopoly over the oil business in Kazakhstan,’’ the regulation agency stated. “He was influential as a consequence of his outstanding roles within the sector, however he in no way managed it.”

Schillings credited the huge wealth of Kulibayev and his spouse Dinara Kulibayeva to their enterprise acumen, to not their distinctive entry to her father, the previous president of Kazakhstan, or the very best reaches of presidency and business.

“They made their cash with none assist from the state,” Schillings stated. “Mr. Kulibayev has by no means engaged in bribery or corruption or engaged nominees to behave on his behalf in reference to the oil and fuel business in Kazakhstan or in any other case.’’

At present the 58-year-old Kulibayev sits atop an empire of greater than 220 firms and trusts in 22 international locations, together with 10 secrecy havens. He and his spouse lead the checklist of the richest Kazakhs, with a mixed fortune of $10 billion, in response to Forbes.

As Caspian Cabals reveals, he and his household poured cash into mansions throughout Europe, paintings, a non-public jet, million-dollar events and entities registered in a number of international locations.The businesses registered within the offshore secrecy havens have purchased a dizzying array of companies — farming firms, a medical clinic, actual property outfits, oil and fuel service corporations, a high-end merchandiser and golf resorts.

In a 2017 Italian corruption case, a businessman named Agostino Bianchi pleaded responsible to bribing three Kazakh officers, together with Kulibayev, to get public contracts that netted Bianchi a $7 million revenue, in response to paperwork shared by ICIJ companion L’Espresso. A choose in Monza, close to Milan, confiscated these illicit proceeds. The businessman bought a 16-month sentence with suspended jail time. Kulibayev was not charged. His attorneys stated he was unaware of the case.

With entry to Kazakhstan’s oil fields, Western leaders hoped to cut back their reliance on Center East oil and forge relationships that would convey democracy to Kazakhstan. As Caspian Cabals reveals, nevertheless, the Western oil offers helped enhance a kleptocracy and Putin’s Russia.

The making of an ‘oil prince’

Kulibayev was well-groomed to navigate politics. He was born into energy, the son of a Soviet-era Communist Social gathering boss, Askar Kulibayev. His mom, a schoolteacher named Raisa,  was educated as a biologist. His father held the highest occasion job within the western Kazakh oil area of Atyrau. Within the Nineteen Seventies, his father’s place meant that as Timur grew up he loved items and providers in brief provide — and will summon a automotive anytime from the Central Committee storage.

After attending an elite highschool, Kulibayev studied economics in Moscow at one of many nation’s most prestigious universities. He moved in the identical social circles as Dinara Nazarbayeva, the center daughter of the longer term Kazakh president, who was additionally learning in Moscow. They married across the time the Kazakh Supreme Soviet elected her father the nation’s first president in 1990, a put up he would maintain for the subsequent 29 years.

The autumn of the Soviet Union in 1991 introduced alternatives for each Western oil firms and Kulibayev. Western governments have been selling commerce in newly unbiased international locations, and Kazakhstan’s huge petroleum reserves supplied an irresistible possibility away from their fraught dependence on Center Japanese oil. Chevron would change into the primary international vitality firm to enter Kazakhstan.

Kulibayev, 25 in 1991, plunged into a company profession, honing his finance abilities at an funding agency.

Comfortable-spoken and savvy, the entrepreneur assembled an elaborate and enduring community of buddies and enterprise companions. Alongside together with his front-row entry to authorities leverage, this community would ultimately assist him purchase stakes within the nation’s banking and gold companies, telecom, oil fields, pipeline development and different industries.

By 1997, Timur and Dinara, now mother and father to a son, lived in a prestigious condo constructing in Almaty, the nation’s most populous metropolis. In response to a neighbor, exiled opposition determine and former banker Mukhtar Ablyazov, the four-story constructing was occupied largely by state officers who usually paid nothing or beneath market worth for his or her models.. “It was the costliest and finest property in Almaty,” Ablyazov, who later turned an enemy of Kulibayev after publicly accusing the president’s son-in-law of accepting bribes, instructed ICIJ. After he helped discovered an opposition motion, a Kazakh court docket convicted Ablyazov in 2017 of embezzlement and associated offenses, and a UK court docket discovered him responsible of prison contempt. Ablyazov, who denies the allegations, is needed in Russia, Kazakhstan and the UK.

Nazarbayev, in the meantime, struck offers with Western oil firms. He signed agreements with Chevron and others for the event of the Caspian pipeline and rights to the large fields that may feed it. The primary contract was for Tengiz, signed in 1993 for a time period of 40 years. It established a three way partnership firm referred to as Tengizchevroil to function the Tengiz oil subject. Chevron turned the dominant Western shareholder with its 50% stake. Exxon, with a 25% share, would change into the second largest proprietor. Nazarbayev deliberate to herald traders to assemble the pipeline to ship the oil — not solely from Tengiz but additionally from different large Kazakhstan fields referred to as Kashagan and Karachaganak.

The pipeline’s working firm was named the Caspian Pipeline Consortium. Chevron owned 15% of the consortium, Exxon 7.5%; Shell about 3.7%, Eni 2% and BG Group 2%. The Russian authorities would ultimately change into the most important shareholder within the Caspian Pipeline with an preliminary 24% stake.

With these offers, Nazarbayev started to create Kazakhstan’s oil and fuel paperwork. In the meantime, his son-in-law joined the federal government, working underneath Nurlan Balgimbayev, a one-time Chevron guide, in numerous high Kazakh oil posts.

In time, Kulibayev would come to personal stakes in privately held corporations that when have been state-owned, together with Halyk Financial institution, which might ultimately change into Kazakhstan’s largest financial institution. His stake within the financial institution and different former state property have been acquired as he moved out and in of high-ranking authorities jobs, together with vp of KazakhOil and president of KazTransOil, each state-owned. Then, by way of presidential decree, he turned vice chairman of the brand new state holding firm KazMunayGas, or KMG.

Schillings stated in its response to questions from ICIJ that though Kulibayev was a part of KMG’s senior administration staff accountable for general technique, he “had no unilateral affect on KMG’s decision-making course of.”

The attorneys acknowledged that Kulibayev held authorities positions and pursued personal enterprise pursuits “in parallel for a time frame.”

“Kazakh regulation allowed public officers to have exterior enterprise pursuits, so there was nothing improper or illegal about Mr. Kulibayev’s actions,” Schillings stated.

His personal empire grew: A small circle of associates and allied businessmen helped handle an online of working and shell firms that regularly looped again to Kulibayev, Caspian Cabals paperwork present.

Whereas he by no means met Kulibayev, legal professional Ruslan Tsarni stated that in his work in Kazakhstan he acted for representatives of “an organized band of people headed by Timur Kulibayev,” which Tsarni referred to as “The Group,” in response to a 2010 assertion to Ablyazov’s U.Okay. attorneys in a fraud case introduced by BTA Financial institution towards Ablyazov, its former chairman, within the London Excessive Courtroom.

One alleged member of the so-called Group was Arvind Tiku, 54, who was “subordinate and ‘junior companion’ of Kulibayev in some tasks,” Tsarni stated in a written assertion to ICIJ. An Indian-born billionaire, Tiku helped Kulibayev purchase Prince Andrews’ Sunninghill nation property in 2007, in response to press experiences. The home stood empty for years.

Of their emailed response, the attorneys for Kulibayev stated he bought Sunninghill Park in a “industrial, arm’s size transaction” and as a part of a aggressive bidding course of.“ Kulibayev didn’t use Tiku to masks Kulibayev’s involvement in industrial transactions, they stated, including that the 2 males “have been occasional, clear enterprise companions.”

In a 2021 video interview with the Swiss newspaper NZZ (Neue Zürcher Zeitung) Tiku stated he had prior enterprise pursuits with Kulibayev however denied he had carried out something mistaken. “Do I do know Kulibayev? Little doubt I do know him,” Tiku stated. “Have I carried out enterprise with him? Sure. Do I nonetheless do enterprise with him? No.”

In a press release to ICIJ, Carter-Ruck, a U.Okay. regulation agency representing Tiku, stated the businessman had no present enterprise relationship with Kulibayev and by no means took orders from him. The regulation agency stated Tiku offered Kulibayev’s firm with $16 million (£8 million) to amass the Sunninghill Park property and that the mortgage and curiosity have been repaid in full in 2010.

One other member of Kulibayev’s circle, Aidan Karibzhanov, based an funding agency referred to as Visor Funding Options. He helped design a course of to denationalise state property as a member of Kulibayev’s government staff at KazMunayGas. In a 2021 affidavit filed in federal court docket in New York, Karibzhanov’s former spouse, Makhpal Karibzhanova, stated her ex-husband used nominees, or proxies as homeowners, and pursued oil and fuel privatization offers whose income have been channeled by way of offshore entities.

“Mr. Kulibayev and Mr. Karibzhanov have crossed paths to a restricted extent of their skilled careers,” Schillings stated in its assertion. “These connections are clear.”

Karibzhanov didn’t reply to a number of requests for remark from ICIJ, however he  stated in an affidavit filed in his former spouse’s New York case that he had “no materials monetary connection” to the privatization of oil and fuel fields in Kazakhstan. He additionally  denied gaining possession of property by way of nominees or straw males.

In a 2013 Fb put up republished in Forbes, Karibzhanov stated that whereas “usually Visor is counted as belonging to Timur Kulibayev,” they have been companions in solely two early tasks. He denied Kulibayev was a Visor shareholder.

Schillings stated Kulibayev had solely a distant, oblique connection to Visor and had no management over the agency or its funding actions. He had been an oblique shareholder in an organization that Visor invested in, the regulation agency stated, and a Visor affiliate had bought a Halyk Financial institution subsidiary earlier this yr.

“Mr. Kulibayev doesn’t personal Visor, both straight or not directly,” Michael McNicholas, basic counsel for the Visor Group, wrote in an e-mail response to inquiries by ICIJ.  Referring particularly to Visor Worldwide DMCC, he stated it was owned by six people “who’ve by no means held, nor at the moment maintain” an fairness curiosity on behalf of Kulibayev. He declined to supply the names of the homeowners.

In 2003, U.S. prosecutors indicted a guide to Nazarbayev in an enormous bribery case. They accused the American businessman James H. Giffen and his service provider financial institution, Mercator, of passing $78 million in bribes — and thousands and thousands of {dollars} in jewellery, furs, speedboats and snowmobiles, tuition and holidays — from U.S. oil firms to 2 unnamed, unindicted co-conspirators who’ve been publicly recognized as Nazarbayev and his high lieutenant Balgimbayev.

“Kazakhgate,” because the case turned recognized, centered on transactions between Mercator and Mobil Oil Corp., which turned a part of Exxon. Neither Exxon nor another oil firm was charged. Kulibayev wasn’t implicated; Giffen pleaded responsible to a  tax-related misdemeanor. The choose declined to condemn Giffen to jail after he testified that he acted with assist from the U.S. Central Intelligence Company and the White Home to assist advance American pursuits within the area.

In the meantime, State Division cables revealed by WikiLeaks would reveal that Kulibayev was in common contact with U.S. authorities officers, offering info on matters starting from the significance of the Caspian pipeline enlargement and potential oil routes by way of Iran and China to Western firms’ bids for an oil block — a delegated space for oil and fuel exploration and manufacturing — and China’s rising significance within the area. Diplomats gushed over him, praising his “grace of a statesman,” in response to a WikiLeaks cable.

In distinction to the glowing views of some diplomats, oil business insiders complained bitterly in regards to the perils of doing enterprise underneath the Nazarbayev regime, in response to diplomatic cables obtained by WikiLeaks. At a March 2005 focus group of oilmen with the U.S. ambassador in Almaty, one government criticized “elite corruption” and referred to as out allegations in regards to the president’s son-in-law. “Kulibayev and his ilk prey on foreigners and locals alike,” he stated.

One other diplomatic cable, despatched to quite a few U.S. authorities companies, revealed a Kazakh oilman’s extra colourful description: “Like a Buddha with a Paris manicure,” he stated of Kulibayev, with an “avarice for big bribes.”

On behalf of Kulibayev, Schillings flatly denied the remark, including that the oilman had a grievance towards Kulibayev.

Underneath a veil

By 2007, Kulibayev had joined the ranks of the ultra-rich, showing on the Forbes billionaires checklist for the primary time. The Sunninghill Park property in Berkshire that Arvind Tiku helped Kulibayev receive was considered one of six properties totaling round $184 million that Kulibayev’s community of firms bought within the U.Okay. that yr, ICIJ’s investigation has discovered. Three of those have been in Mayfair — the glamorous London neighborhood dotted with five-star inns and Michelin-starred eating places.

Kulibayev bought two different London properties in an space of Kensington often called “Millionaire’s Row” in 2007 for $54.5 million. These property have been positioned in a Cayman Islands belief.

Across the identical time, in response to Caspian Cabals paperwork, Kulibayev and his associates purchased actual property by way of firms registered in secrecy jurisdictions — together with the Bahamas and the British Virgin Islands. He and members of his inside circle additionally created firms in the UK, the Netherlands, Spain, Luxembourg and different European international locations to purchase actual property and handle Kulibayev’s company holdings.

Throughout this quick and livid shopping for spree, authorities officers in Switzerland and Kazakhstan reportedly investigated attainable wrongdoing by Kulibayev and oil business gamers — though neither went ahead as a result of, Kulibayev’s attorneys stated, they may discover no proof towards him. Even underneath scrutiny, Kulibayev’s affect inside Kazakhstan grew, serving to flip the nation right into a world vitality energy.

In 2008, President Nazarbayev appointed Kulibayev to a different outstanding authorities put up: deputy chairman of the nation’s newly created $80 billion nationwide wealth fund, Samruk-Kazyna, named after a chook in a Kazakh people story that lays golden eggs and brings luck.

In the meantime, the federal government demanded oil firms pay up — in strain campaigns that took the type of what business executives described in personal discussions with U.S. diplomats as spurious tax fees, calls for for reductions on uncooked supplies for native refineries, environmental fines, elevated tariffs and reimbursement for what the federal government stated have been unlawful revenues from overproduction.

Two Chevron executives instructed the American ambassador to Kazakhstan in 2008 that the corporate was going through outrageous payment calls for. “Chevron views as unacceptable new charges,” reads a leaked State Division cable. Nonetheless, the cable made clear, the corporate would proceed to spend money on the oil fields as a result of “they affirmed that Tenghiz continues to be extraordinarily productive (and worthwhile).”

Executives at Chevron-led Tengizchevroil, Exxon and different vitality firms hosted occasions for KazEnergy, the commerce group led by Kulibayev that pushed for environmental, tax and different guidelines in Kazakhstan favorable to the business. One of many Chevron executives socialized with Kulibayev, too, a Kazakhstan oilman instructed U.S. diplomats in 2008, in response to a WikiLeaks cable, in areas starting from a golf course in Astana, Kazakhstan’s capital, to a seashore in Spain.

No Chevron government ever offered Kulibayev with “something of worth (bribes, favours or the rest),” his regulation agency wrote, questioning the accuracy of the Wikileaks cables.

In U.S. authorities circles, diplomats circulated unconfirmed experiences that Kulibayev might have obtained kickbacks over vitality offers involving China – an allegation his attorneys denied. Within the phrases of one other cable, he was “behind” merchants charging oil firms exorbitant costs to ship oil. His 2011 appointment to the board of the Russian state oil firm Gazprom — as the one non-Russian — was seen as an indication of his rising political stature.

Regardless of the purple flags, Chevron and its companions awarded oil contracts to companies linked to Kulibayev, ICIJ has discovered. Among the many offers: a 2011 contract from the Caspian Pipeline Consortium, whose shareholders embrace Chevron and Exxon, to construct two pumping stations in Kazakhstan.

The profitable contractor to construct the pumping stations was KazStroyService. Public data present that the personal fairness agency Kulibayev controls, Singapore-based Steppe Capital, listed KazStroyService amongst its holdings as early as 2010. Additionally, a 2012 Steppe Capital annual report filed within the Netherlands listed Kulibayev as KazStroyService’s “sole shareholder.”

KazStroyService didn’t reply to repeated requests for remark, nor did the Caspian Pipeline Consortium or Exxon. Chevron didn’t reply to questions in regards to the KazStroyService contract.

Kulibayev’s attorneys stated Kulibayev acquired a 50% stake in KazStroyService in June 2007, however was not concerned within the firm’s administration or contract discussions. And Kulibayev “was by no means concerned within the administration of CPC”, the attorneys stated, including that neither Kulibayev nor Steppe Capital performed a task within the pumping stations challenge or CPC’s awarding of the pipeline contract to KazStroyService.

“He has by no means sought to cover his industrial undertakings or improperly profit from them,” Schillings stated.

In actual fact, the attorneys stated, Kulibayev offered “complete documentation on the request of a number of KasStroyService traders and different companions” to keep away from any potential battle of curiosity as he partly owned the corporate and had roles at state-owned entities.

The payments for the pumping stations job KazStroyService gained skyrocketed over time. The projected price to construct the 2 pumping stations had been $276.5 million, nevertheless it ballooned to $486 million, excluding tax, paperwork present.

Because the challenge’s price ticket rose, the Caspian Pipeline Consortium issued 15 change orders.  However paperwork for these amendments reviewed by ICIJ offered solely perfunctory justification for the will increase; many merely cited the necessity for “extra” work. Among the welding work was faulty and wanted to be redone, in response to an inner Caspian pipeline publication and an inner contractor’s progress report.

The work dragged on. The pipeline consortium initially stated the job would take 2½ years. It was completed 6½ years later, in 2017 — 4 years delayed.

Kulibayev’s attorneys blamed the delays on quite a few design modifications by CPC and different difficulties not the fault of KazStroyService. Modifications and value overruns are frequent on such megaprojects, they stated, including that neither Kulibayev nor Steppe Capital was concerned in any discussions about welding work, change orders, or another a part of the contract discussions.

Whereas each the challenge’s timeline and value swelled, Kulibayev and his community continued to bankroll their lavish life. Kulibayev spent practically $1.6 million on simply among the bills for summer season holidays and his spouse Dinara’s birthday celebration on the couple’s dwelling in Lloret de Mar, Spain, referred to as Can Juncadella. A Kulibayev-owned jewellery firm, Viled, hosted an exhibition in Barcelona attended by rich vacationers and household buddies of the Kulibayevs. In response to paperwork reviewed by ICIJ that checklist the jewellery alongside the names of purchasers taken with shopping for them, Kulibayev’s spouse expressed curiosity in shopping for greater than $6.7 million value of knickknack, together with heart-shaped diamond earrings and a pink sapphire pendant surrounded by spherical and pear-shaped diamonds.

In the meantime, Nazarbayev was rebuilding Astana as a completely new capital metropolis, full with a golden imprint of his hand on the high of the 318-foot tall Bayterek (“tree of life”) Tower — a testomony to a despot tightening his grip on energy. He severely restricted press freedom, cracked down on political opponents and signed an modification to the structure giving him the precise to run for president in perpetuity.

The rising wealth of elites created a pointy distinction to the lives of the working class, which struggled with low wages, poor advantages and harmful working circumstances. Efforts to kind commerce unions failed. Activists and journalists have been attacked or jailed.

Saulesh Yessenova, an anthropologist on the College of Calgary in Canada who investigated working circumstances on the Tengiz subject, instructed ICIJ that the 1993 settlement between Chevron and the federal government of Kazakhstan granting the American firm rights to develop the large subject was one reason behind employee discontent. The contract granted the federal government bonuses, taxes, royalties and financial improvement tasks, however the phrases have been secret.

In response to Yessenova’s analysis, the federal government would obtain 80% of the income and a $450 million “signature” bonus. However $420 million can be withheld till after the Caspian pipeline was constructed. Maybe extra essential, the federal government was forbidden from revealing details about the contract. The secrecy of the provisions “critically hinder[ed] democratic processes” in Kazakhstan, Yessenova stated.

Home unrest led to mass protests. In December 2011, authorities safety forces within the oil city of Zhanaozen sprayed bullets on unarmed residents and putting oil employees protesting poor wages and dealing circumstances, killing 17.

At a public discussion board two months earlier, attended by oilmen, politicians and others, Kulibayev blamed years of unrest on an overpopulation of migrant employees. “Zhanaozen ought to have been closed for migrants way back as a result of the city’s social infrastructure shouldn’t be able to accommodating so many individuals,” he stated.

Complaining that subordinates had stored him in the dead of night, President Nazarbayev fired his son-in-law as head of the sovereign wealth fund for allegedly bungling the oil employee strike. Afterward, Kulibayev stored a low public profile. Behind the scenes he continued to behave as a gatekeeper for the oil business by way of his management of the commerce group KazEnergy, made up of each main oil firm within the nation. In diplomatic circles Kulibayev had been dubbed “the Hydrocarbon Richelieu,” a reference to the famed Seventeenth-century French cardinal and energy behind the monarchy.

As members of the Chevron-led Tengiz consortium looked for a path to maximise their Kazakhstan funding, they’d quickly look to an organization acquainted to Kulibayev: TenizService.

‘All roads result in TK’

With the enlargement of the Caspian pipeline underway, Chevron and its companions sought to dramatically improve the quantity of oil they may feed the pipeline by kickstarting manufacturing on the Tengiz subject — resulting in the October 2012 assembly exterior London. TenizService representatives offered their plan to hurry up the allowing course of by counting on what they referred to as the agency’s “good relations” with the federal government. “TS expertise will assure getting approval for Mission Execution of state authorities in time,” the presentation stated.

To get the oil out, Chevron and its companions would undertake a pricey challenge plagued by questionable funds, potential conflicts of curiosity and offshore firms that obscured the homeowners’ identities, in response to Caspian Cabals paperwork.

A type of opaque firms was TenizService. Partly privatized by the federal government in 2003 — with the assistance of Kulibayev’s one-time enterprise affiliate and former KazMunayGas colleague, Aidan Karibzhanov, whose personal fairness agency Visor partly owned TenizService — TenizService developed rock-loading, waste administration, fireplace response and marine fueling amenities and offered logistics providers to Western firms.

Karibzhanov didn’t reply to a number of requests for feedback. Schillings stated Kulibayev performed no position within the partial privatization of TenizService.

An organizational chart included as an exhibit within the Ablyazov civil fraud case in London places “TK” atop a construction of firms, together with one enterprise the chart says is “held in title of Visor Investments.”

“It’s well-known within the Kazakhstan enterprise neighborhood that Visor was and is owned and managed by Kulibayev by way of entrance males, together with Karibzhanov,” in response to legal professional and former insider Ruslan Tsarni’s 2010 assertion within the London case.

Requested in regards to the assertion, Tsarni instructed ICIJ that he didn’t know Karibzhanov, by no means labored for Visor and had no first hand information however “it was broadly recognized then that Karibzhanov is ‘Kulibayev ‘s man.’”

Schillings disputed Tsarni’s accounts, claiming he can’t be thought-about credible or an unbiased witness due to his connections with the case of Ablyazov, the convicted banker, whom the regulation agency claimed was spreading false info and was a part of a  “sustained marketing campaign” towards Kulibayev.

The London court docket rejected Ablyazov’s case and awarded a $4.9 billion judgment towards him, Schillings stated. The court docket discovered Ablyazov responsible of contempt of court docket for concealing illicit property and issued a 22-month jail sentence.  France granted Ablyazov political asylum, then later revoked it however has but to implement the revocation.

Kulibayev “has by no means owned, managed or managed any Visor funds,” Schillings stated, nor did he have any direct or oblique curiosity or management in another Visor entity.

A confidential suppliers’ questionnaire ready by Tengizchevroil and obtained by ICIJ’s media companion Der Spiegel describes TenizService as 49% owned by KazMunayGas, the Kazakh nationwide oil firm, and majority owned by an organization referred to as Waterford Worldwide Holdings Ltd. Waterford, in flip, was owned by offshore firms, together with one with Visor shareholders.

Schillings stated that it appeared Karibzhanov owned shares in TenizService by way of Waterford.

Oil business executives tried to untangle the convoluted possession of the businesses working throughout the giant oil fields. “It’s powerful to say who owns what,” stated Dan Houser, then a vp of the U.S. oil providers agency J. Ray McDermott, in response to a 2010 State Division cable.

Behind the possession constructions, he stated, “all roads result in TK” — Kulibayev – a remark Kulibayev attorneys referred to as “pure hyperbole.”

Atradius DSB, the credit score insurer of the Dutch state, which coated the challenge for dredging contractor Van Oord, requested TenizService to reveal its helpful homeowners and didn’t get a solution, in response to sources and paperwork obtained by ICIJ’s Dutch media companion NRC. TenizService, in response to Atradius, is nothing greater than a “car.”

Inner paperwork, together with emails from oil firm compliance and audit managers, obtained by Der Spiegel, reveal considerations in regards to the challenge — akin to TenizService’s comparatively small dimension, environmental points, questionable funds, questionable vetting and “potential oblique connection” to an unnamed authorities official.

Lower than two weeks after TenizService’s pitch to construct the offloading facility, Jon Clements, a Tengizchevroil supervisor, urged fast approval for TenizService to start out survey work earlier than the Caspian Sea froze. “We’re going to lose potential to have [TenizService] carry out survey work earlier than freeze up except we launch them ASAP,” he wrote.

Three days later, Tengizchevroil challenge director Paul Benoit confirmed that “as a consequence of pressing challenge wants,” TenizService may transfer ahead with the deal — though neither a contract nor anti-corruption assessment had been accomplished.

Compliance officers warned the TenizService deal raised considerations that the Kazakh agency could be engaged in questionable funds to win the permits. Exxon initially opposed the challenge over such considerations, former Chevron lawyer Mark Egan stated in a leaked memo.

Chevron supervisor Joseph “Al” Ducote wrote simply 9 days earlier than the deal went by way of: “The compliance and due diligence points round this TenizService contract for Prorva port work could be very brilliant on lots of radars.”

Requested if Kulibayev’s authorities connections helped fast-track the challenge, Kulibayev’s attorneys stated he was not concerned in Tengizchevroil’s administration or board. Nor was he concerned within the awarding of the TenizService contract, they stated.

The Tengizchevroil companions quickly realized that TenizService couldn’t finance the challenge with out vital assist, in response to an e-mail trade between contract officers, obtained as a part of Caspian Cabals. So TenizService turned to Halyk — the financial institution majority owned by Kulibayev — for a $100 million line of credit score.

Kulibayev’s attorneys stated that as of December 2018, TenizService had an impressive mortgage from Halyk Financial institution, however they have been unaware of any line of credit score.

By 2014, Tengizchevroil had revised the contract and brought on a lot of TenizService’s work. It assigned its personal individuals to most of the jobs and restricted the Kazakh agency’s position largely to licensing, authorizations and allowing — and paid TenizService practically $800 million further.

Three years into the challenge, Tengizchevroil inner audit supervisor Katerina Vardashko raised questions on sure invoices and costs, together with some that have been described in Russian as fee charges for acquiring permits from native authorities. “We have to get any documentation that explains” the charges, she wrote, including that the Russian description appeared to make them “much more questionable.”

In August 2016, an inner Tengizchevroil e-mail obtained by Der Spiegel with the sender’s id redacted arrived within the inbox of challenge managers: “Please, learn that lots of unclear issues are taking place relating to the Marine Channel challenge,” it stated. ”Quantities are very extremely raised a number of instances. Costs are very excessive … they set simply ‘loopy’ quantities of cash. Please, take it underneath advisement.”

And the advantages stored coming. On the finish of the challenge, Tengizchevroil handed over all the $2.5 billion delivery facility to TenizService.

Haymish Paulse, a spokesman for Tengizchevroil, stated the consortium is reviewing ICIJ’s findings however declined to reply questions in regards to the contracts or whether or not Kulibayev performed any position.

“[Tengizchevroil] is a law-abiding firm and implements stringent insurance policies and procedures relating to compliance and enterprise ethics,” Paulse stated.

TenizService didn’t reply to questions on its helpful homeowners, connections to Kulibayev or Halyk Financial institution, challenge permits or large challenge price will increase. Exxon, KMG and Lukoil additionally didn’t reply, nor did a spokesman for the Kazakh Vitality Ministry.

In a written assertion, Chevron senior media adviser Sally Jones stated the corporate has strong compliance procedures. “Chevron is dedicated to moral enterprise practices, working responsibly, conducting its enterprise with integrity and in accordance with the legal guidelines and laws” the place it operates, she stated.

Egan, the previous Chevron lawyer assigned to Tengizchevroil and the TenizService contract, instructed ICIJ in a written assertion: “I can state categorically that I’m conscious of no unlawful or unethical conduct or wrongdoing in any respect by Chevron or TCO in reference to TCO’s contract with TenizService.”

Cashing in

After practically 30 years as president of Kazakhstan, Nazarbayev abruptly resigned in March 2019. His handpicked successor, Kassym-Jomart Tokayev, vowed to clamp down on the theft of state property, face down oligarchs and redistribute the nation’s wealth extra evenly.

Native media reported that the brand new authorities moved to carry the lid on Kulibayev’s property and demanded an organization managed by Kulibayev return gas depots that courts dominated his firm had illegally privatized in 2001, together with a number of land plots in sought-after components of Almaty. In a separate case, prosecutors demanded that an organization belonging to his 87-year-old father, the onetime Communist Social gathering boss who had served as minister of development, housing and improvement, return a $66 million oil terminal on about 330 acres.

Legal professionals for the elder Kulibayev stated he was not personally implicated. His son wasn’t accused of any wrongdoing and has not needed to return something, Schillings stated.

The federal government of Kazakhstan filed arbitration claims for greater than $150 billion towards 4 oil firms — Eni S.p.A., Shell PLC, Exxon and TotalEnergies SE — for allegedly failing to ship on billions of {dollars} in promised income on the Kashagan subject. In response to media experiences, the nation alleged corruption tainted some contracts.

Exxon didn’t touch upon the arbitration claims, nor did Shell. TotalEnergies referred questions in regards to the arbitration claims to Kashagan’s working firm, which didn’t remark aside from to say it operates responsibly and complies with the regulation. Eni stated it’s reviewing the arbitration claims however they “seem neither credible nor substantiated.”

None of those repercussions has affected Kulibayev’s immense wealth. His web value — not together with his spouse’s fortune — has reached $5 billion, in response to Forbes’ newest annual billionaires rating.

He owns properties within the Czech Republic and within the German spa city of Baden-Baden; a medical clinic for “regenerative medication” in Barcelona with a number of parking areas; and a sprawling property alongside Spain’s Mediterranean coast, an ICIJ assessment of company and land data discovered. Kulibayev’s 100-foot yacht, Sonny II, which he purchased in 2014 for about $14 million, is moored in Barcelona.

Emails, invoices and different paperwork analyzed by ICIJ present that Kulibayev’s firms’ property over time have additionally included a $74.4 million Airbus A320 and a $55 million Gulfstream G650. Representatives for Kulibayev confirmed to ICIJ that his firm “owns one personal jet and has one other on order”and that “as soon as that jet is prepared, he might promote the present one”.

In March 2020, APH Property Belief Ltd., the place Kulibayev is listed as a “settlor” (the occasion who transfers property into the belief), held residential property in the UK, in response to paperwork that got here from a trove of 100,000 leaked information from Genesis Belief, a Cayman Islands-based monetary providers supplier.

The paperwork present that Kulibayev’s lavishly funded belief listed Gaukhar Ashkenazi, Kulibayev’s former companion, as its protector, or a form of overseer.

A second belief, referred to as Continuum Belief Ltd 2, held securities, personal fairness investments and paintings valued at greater than $99 million in 2020, together with a clay copy of Auguste Rodin’s “The Kiss.”

ICIJ couldn’t confirm if the trusts are nonetheless energetic, as details about Cayman Islands-based trusts shouldn’t be made public.

Farrer & Co, a London-based regulation agency representing Ashkenazi, stated she is an independently profitable businesswoman. The regulation agency asserted that the property held by the APH belief have been valued at about $49.6 million in March 2020.  The attorneys acknowledged that the APH Belief listed a pair of properties in London’s Kensington space, bought in 2007.

In contrast with that immense wealth, many Kazakh residents have continued to wrestle with financial hardship. In January 2022, a pointy spike in gas costs in Kazakhstan sparked protests and riots as residents rebelled towards corruption, poverty and inequality. At the least 238 individuals died within the violence.

That very same month, Kulibayev’s charitable basis donated $4.2 million to well being, schooling and different applications, in response to his attorneys. That was a part of $103 million they stated his Halyk Charitable Basis contributed to humanitarian causes since 2016, together with $65 million to flood victims in Kazakhstan’s Atyrau area, the place the Tengiz subject is situated.

His father-in-law, Nazarbayev, has disappeared from politics. However his title could be discovered throughout Kazakhstan: the airport, a college and a avenue in Almaty are named after him.

In the meantime, Chevron has raised the price of its large Tengiz infrastructure challenge to $48.5 billion — up from $36.8 billion in 2016, a rise of 32% — fueling concern amongst traders.

The corporate says the partnership has “change into a catalyst for reinforcing economies, creating jobs, supporting companies, constructing communities, empowering individuals and advancing important sustainable improvement objectives.”

Within the final 30 years, Chevron, Exxon and the opposite Tengizchevroil companions have paid greater than $190 billion to Kazakh entities — for workers’ salaries, items and providers, and tariffs and costs paid to state-owned firms — in response to a truth sheet revealed by the consortium final yr. This additionally included greater than $100 billion to the federal government over the previous decade. That’s a median of $10.8 billion a yr, making Tengizchevroil considered one of Kazakhstan’s largest taxpayers.

Reformist lawmakers say Kazakhstan suffers from the “oil curse” — which produces a mountain of money however no democracy and little to carry the poor — because it signed the primary contracts with Western oil firms. They’ve demanded audits, investigations and disclosure of all of the contracts however the oil firms and the federal government of Kazakhstan have refused to make the contracts public.

“Nazarbayev’s circle, his family members, sons-in-law, daughters turned wealthy because of the truth that they’ve such a patron-father. There are lots of such succesful children who may change into billionaires if they’d a father like Nazarbayev,” Yermurat Bapi, a member of Kazakhstan’s parliament and former newspaper proprietor, stated in an interview with an ICIJ reporter in an Astana coffeehouse. “In our nation, solely Nazarbayev’s circle is engaged in oil and fuel — others are usually not allowed,” added Bapi, who has a historical past of criticizing the federal government on corruption.

In the meantime, Dutch media reported that prosecutors within the Netherlands  are trying into whether or not Dutch dredging firm Van Oord had an improper monetary relationship by way of an middleman with the daddy of a son-in-law of Nazarbayev. They didn’t title the son-in-law.

Schillings stated the elder Kulibayev has not been notified or questioned about that investigation. “So far as he’s conscious, he’s unconnected to it,’ Schillings stated.

A coalition of advocacy teams has tried unsuccessfully to get the Biden administration to sanction Kulibayev and others within the Central Asian nation.

They are saying human rights abuses go hand in hand with corruption in a rustic the place “the ruling elite makes use of its energy to acceptable the wealth of their nation by embezzling authorities funds and controlling money-making enterprises,” a confidential report submitted in 2021 to the U.S. State and Treasury departments says, calling for Kulibayev to be sanctioned for alleged corruption. “The road between private and non-private in Kazakhstan is thus nearly non-existent,’’says this report, submitted by Freedom for Eurasia and Kazakh NGO Liberty. “A small group of households dominate the enterprise sphere, households who’re on the identical time concerned within the nation’s political system.”

Throughout a sanctions debate within the U.Okay. Home of Commons on the eve of the Russian invasion of Ukraine in February 2022, U.Okay. lawmaker Margaret Hodge referred to as for investigations into Kulibayev and different Kazakh oligarchs with an eye fixed towards imposing sanctions. “Proof means that Kulibayev abused his place to accrue huge wealth,” she stated.

The State Division didn’t touch upon the advocacy teams’ report and the Treasury Division didn’t reply to a number of requests for remark. An officer on the U.Okay.’s Nationwide Crime Company instructed ICIJ in Could they didn’t examine. The NCA spokesman declined to remark in November.

[The U.S.] has pressured Kazakhstan to not take any actions towards the oil firms’ large failures … It’s a cushty association for the oil firms, nevertheless it has price the residents of Kazakhstan dearly. — businessman James H. Giffen

In Washington, one other name for a assessment of corruption in Kazakhstan got here from U.S. Rep. Bennie Thompson of Mississippi, rating Democrat on the Home Homeland Safety Committee. Thompson cited Kulibayev in Home flooring remarks about why the U.S. must improve its anti-corruption efforts to focus on kleptocrats. “Combating corruption is an crucial for the USA,” Thompson stated in 2021, urging his colleagues to move a invoice to beef up enforcement towards kleptocracies and graft. “As a beacon of liberty and the rule of regulation, it’s our obligation.”

The invoice, which might have created a fund from firms discovered liable underneath the International Corrupt Practices Act, went nowhere.

In an interview with Columbia College’s Harriman Institute three years earlier than his demise in 2022, Giffen, the intermediary who had helped negotiate among the authentic offers with Western oil firms, stated that Kazakhgate had as a lot to do with U.S. politics as with corruption.

“The U.S. authorities, underneath each Republican and Democratic administrations, has pressured Kazakhstan to not take any actions towards the oil firms’ large failures on Kazakhstan’s oil tasks,” Giffen stated. “It’s a cushty association for the oil firms, nevertheless it has price the residents of Kazakhstan dearly.”

Contributors: Will Dahlgreen, James Oliver (BBC); Marcel Rosenbach (Der Spiegel); Carina Huppertz, Hannes Munzinger (Der Spiegel/Commonplace/Paper Path Media); Pelin Unker (DW Turkey); Ritu Sarin, Sukalp Sharma (Indian Specific); Paolo Biondani, Leo Sisti (L’Espresso); Carola Houtekamer, Karlijn Kuijpers (NRC); Anuška Delić (Oštro); Roman Badanin, Mikhail Rubin (Proekt); Stefan Melichar (Profil); Manas Qaiyrtaiuly, Reid Standish (RFE/RL); Luc Caregari (Reporter.lu); Sylvain Besson (Tamedia); Vyacheslav Abramov (Vlast.kz/OCCRP); Olga Loginova, Paolo Sorbello (Vlast.kz); Naubet Bisenov, Nicole Sadek, Thomas Rowley, Peter Stone (ICIJ)