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Transmission

Karimova Sisters Said Down $200 Million

Lola Karimova-Tillyaeva, in her role as Uzbek ambassador to UNESCO, speaks with French actor Alain Delon before attending a 2009 gala dinner for the launch of the charity fund "Uzbekistan 2020" in Paris.
Lola Karimova-Tillyaeva, in her role as Uzbek ambassador to UNESCO, speaks with French actor Alain Delon before attending a 2009 gala dinner for the launch of the charity fund "Uzbekistan 2020" in Paris.
Even princesses aren’t immune to economic downturns.

That’s the word from “Bilan” magazine, a Swiss business publication that publishes an annual list of Switzerland’s 300 wealthiest residents. It’s a list that for the last few years has included one of the world’s most notorious beneficiaries of family influence: Gulnara Karimova, the daughter of Uzbek autocrat and flagrant human rights violator Islam Karimov. This year, the list added Gulnara’s sister Lola, who recently moved into a veritable palace on Lake Geneva (more on that below).

The story of Gulnara’s and Lola’s fabulous wealth is nothing new. But this year’s edition of the rankings, released on December 2, suggests that the Karimova siblings’ finances have taken a big hit over the past year. “Nasha Gazeta,” a Russian-language newspaper based in Lausanne, picked up the story last week, reporting that the sisters’ net worth saw a $200 million decline in 2011, part of a general hiccup in the fortunes of Switzerland’s super-rich, most of whom have suffered losses this year, according to "Bilan."

Gulnara KarimovaGulnara Karimova
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Gulnara Karimova
Gulnara Karimova
The losses don’t exactly leave the Karimovas in a state of poverty. “Der Spiegel” estimated in 2010 that Gulnara Karimova alone was worth in excess of $500 million. By the reckoning of “Bilan” this year, the women still have around a combined $1 billion on hand.

It invites the question: Where has all that money come from? Much of it might be left over from the enormous profits reaped by the Karimov clan as part of their stake in Zeromax, a company which RFE/RL’s Farangis Najibullah reported on in 2010. Zeromax, formerly Uzbekistan’s largest private conglomerate, was widely seen as a vehicle for the personal enrichment of Karimov’s family and close associates. By the time the company’s assets were absorbed by the state in 2010 (for reasons that are still far from clear), it had come to dominate almost every major sector of Uzbekistan’s economy.

According to “The Guardian,” American diplomats in Tashkent, the Uzbek capital, have privately assessed that Gulnara Karimova is "the single most hated person" in Uzbekistan. Through access to documents obtained by WikiLeaks, the British newspaper reported that U.S. diplomats have also written that Karimova is widely seen as a “robber baron” who has used the levers of government to punish businesses unwilling to cooperate with her.

Karimova is also reputed to have close associations with criminal elements; according to “The Guardian,” the U.S. Embassy in Tashkent alleged that Karimova obtained a stake in crude-oil contracts through connections with local mafiosi.

Although the source of the Karimova wealth may be shadowy, its disbursal has tended to be a bit more conspicuous.

Gulnara’s little sister Lola recently made headlines in Britain for an unusual home purchase. "The Daily Mail" reported on December 4 that Karimova and her husband, Timur Tillayev, plunked down over $46 million in 2010 for a house outside Geneva, in Vandoeveres, Switzerland. The deal raised eyebrows in the U.K. because of the seller: Andrew Rosenfeld, a primary financial backer for Britain’s Labour Party who recently moved back to London.

Rosenfeld had originally paid $14 million for the house four years prior, giving him a tidy $30 million profit on the property.

The youngest Karimova’s wealth stems from her ownership of the Abu Sahiy company, which controls imports into Uzbekistan from China. RFE/RL’s own investigative reporting on Abu Sahiy was the first to conclusively demonstrate Karimova’s stake in the company and to corroborate allegations that Abu Sahiy was employing monopolistic practices.

It is unclear why Karimova and her husband would have paid tens of millions of dollars above market price for the house in Vandoeveres. Craig Murray, a former British ambassador to Tashkent who is now a fierce critic of the British government’s relationship with the Karimov regime, notes that “such huge payments in excess of market value are, very often, a spot of money laundering with the extra money being in return for something else.”

Whatever the reason for the sale price, one thing’s clear: Though the Karimova sisters’ personal fortunes may be on the wane this year, they’re working overtime to maintain their very secure place atop Uzbekistan’s most-hated list.

-- Charles Dameron

Tags: Uzbekistan,Gulnara Karimova,Islam Karimov,Lola Karimova

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by: Frank from: London
December 19, 2011 01:17
You've failed to mention the relatively small amounts of money these two sisters raise for charity in comparison with their supposed fortunes. You've also made nothing of why Gulnara might be in the jewellery business. Apart from diamonds being a girl's best friend and all that, jewellery is a great way (combined with the diplomatic bag - ambassador to Spain?) to get the proceeds of monopolistic business practices, business theft and corruption out of the country. There's no point being in the family business of dictatorship if you can't secure your ill gotten gains, surely?

As to the idea of Gulnara having made her fortune from using her Harvard educated business brain selling what is essentially a discretionary product where (in normal circumstances) the gem stones have to be bought in at international prices and sold for a turn - well, you can forget making $500m doing that. Not even Aspreys, Garrards and Mappin & Webb found it easy to make money retailing upmarket jewellery - they had to be rescued by a Syrian businessman if I remember correctly - a Mr Naim Attallah?

I speak as an investor in a productive Uzbek gold mine who has not even had return of capital let alone profits during one of the greatest gold bull markets of all time. The company's profits were presumably siphoned off by dilution (a bogus back tax announcement 20 x mkt. cap was slammed on the company and then removed after the share price fell enough to give Gulnara's vehicle, Zeromax, a low entry price), outright asset confiscation with no compensation (Marakand Minerals), early reneging of tax privileges, revenue deprivation (finished gold dore product worth almost as much as the company's mkt. cap that was in effect held hostage for 9 months)(as a way to force us to invest more?) and denial of inputs through a mineral licensing system as the price of gold rocketed and confiscation of the gold mine became more attractive. And it was nothing personal either - others suffered the same fate, albeit with a slightly different modus operandi: Newmont Mining, Metal-Tech to name but a few - and it wasn't even a particularly anti foreigner thing - many Uzbek businesses have suffered the same fate - it seems it was just normal, regular business theft by the Uzbek elite. I look forward to seeing these two get their comeuppance soon just like that hairdresser woman in Tunisia, Madame La Presidente, the wife of Ben Ali. Now she didn’t make her $0.5bn fortune cutting hair I bet.

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Written by RFE/RL editors and correspondents, Transmission serves up news, comment, and the odd silly dictator story. While our primary concern is with foreign policy, Transmission is also a place for the ideas -- some serious, some irreverent -- that bubble up from our bureaus. The name recognizes RFE/RL's role as a surrogate broadcaster to places without free media. You can write us at transmission+rferl.org

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