Kazakhstani prime minister admits to existence of secret government fund
Aldar Kusainov

Seeking to defuse a looming financial scandal allegedly involving top government officials in Kazakhstan, Prime Minister Imangali Tasmagambetov disclosed to members of parliament that authorities used revenue from the Tengiz oil field tender to establish a secret fund. He also admitted April 4 the possible existence of foreign bank accounts in President Nursultan Nazarbayev's name, but denied the head of state had a role in opening them.

Tasmagambetov claimed the secret fund had twice been tapped to prevent a financial crisis from destabilizing Kazakhstan. In addition he sought to shift blame for any potential wrongdoing to former government members, citing in particular ex-prime minister Akezhan Kazhegeldin. The incumbent prime minister implied that Kazhegeldin, a major political rival of Nazarbayev's who now lives abroad, was responsible for establishing the secret government fund.

"That secret decree has been issued exactly in his [Kazhegeldin's] time [in office], with his consent and under his own signature," Tasmagambetov stated.

Swiss and US officials have been conducting an ongoing investigation into alleged bribery and the use of secret bank accounts, involving US corporations and Kazakhstani officials. Investigative reports by the Washington Post and the New Yorker magazine have asserted that Western oil conglomerates allegedly paid tens of millions of dollars in oil commissions to top Kazakhstani officials, including Nazarbayev. Swiss authorities have frozen bank accounts supposedly held by Nazarbayev, who has insisted that he possesses no foreign bank accounts.

In his April 4 comments to legislators, Tasmagambetov put a different twist on events. He admitted that foreign accounts might exist in the name of Nazarbayev and his relatives. But he claimed that if such accounts existed, they had been opened without the president's knowledge with the express intent of "compromising" the administration.

"Our president, as any other citizen of Kazakhstan, has a right to open accounts abroad after [receiving] corresponding permission," the prime minister said, adding that Nazarbayev had ordered any money found in supposedly bogus accounts to be diverted into a special fund being used to refurbish the Kazakhstani capital, Astana.

Tasmagambetov did not answer questions during his appearance in parliament. Government critics say the timing of Tasmagambetov's appearance was designed to cast the president's administration in better light amid recent revelations about the ongoing investigation. After a lull, attention is refocusing on the Swiss-US investigation, and some Nazarbayev opponents suggest that officials are engaging in "spin control."

On April 3, the Russian Sobesednik journal published an interview with the chief prosecutor for Geneva Canton in Switzerland, who said: "There is one president who for me figures in [criminal] investigations - Nazarbayev."

In March, two Kazakhstani opposition MPs sent a letter of inquiry to Tasmagambetov, seeking explanations for unanswered questions surrounding the Swiss bank accounts in the names of Nazarbayev, family members and associates. [For background information see the Eurasia Insight archives]. Tasmagambetov's comments served as the government's response to the letter of inquiry.

Tasmagambetov maintained that Nazarbayev was innocent of any wrongdoing. He said the source of controversy surrounding alleged official financial misdeeds was the secret fund, established to help maintain stable economic and social conditions in the country. He said the fund, which totaled as much as $1 billion, was opened after the state sold a stake in the Tengiz oil field in 1996.

Though the account was considered a state secret, those government officials responsible for the money acted solely in the state's best interests, Tasmagambetov asserted. He added that the money was kept at an unspecified foreign bank and was used exclusively to bolster the state's finances. "No one could spend a cent from this fund for any other purpose than for the needs of the state," Tasmagambetov insisted.

Officials tapped into the fund on two occasions, the prime minister said. In both cases, the money from the secret account helped the government avert a financial crisis. The first instance came in 1997, when a budget gap left the government unable to meet $480 million in state pension obligations. Officials drew on funds in the secret account to pay pensions and avoid social unrest. The following year, the government tapped into secret account funds again to cover a $400 million deficit.

Tasmagambetov's explanation appeared to raise more questions than they answered for government critics. "Why did the president conceal this decision [about the fund] from the deputies?" asked Tatiana Kviatkovskaya. She pointed out that in 1997, officials stated that pension debts were paid using money from the International Monetary Fund. "It means that executive authorities deceived the deputies who are the elected representatives of the people," Kviatkovskaya added.

Other political observers noted an apparent contradiction concerning the bank accounts in Nazarbayev's name. If the president continues to disavow any connection to the accounts, they say, why is the Kazakhstani leader pressing to have the Swiss government lift the freeze on the money?

http://www.eurasianet.org/departments/insight/articles/eav040502a.shtml