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Kazakhstan: Prime Minister Offers Explanation Of President's Alleged Ill-Gotten Gains

For years, Kazakh President Nursultan Nazarbayev has been fighting allegations that he keeps a slush fund of millions of dollars provided by oil companies eager to exploit the country's Caspian oil reserves. This week, the country's prime minister revealed that a special fund does indeed exist, but that its purpose is not to enrich Nazarbayev personally but to help the country get through tough economic times.

Prague, 5 April 2002 (RFE/RL) -- For years, news reports inside and outside Kazakhstan have printed allegations that Kazakh President Nursultan Nazarbayev had siphoned off hundreds of millions of dollars from the public treasury for his personal use.

The reports have said he had accumulated much of the money through shady deals involving international oil firms, all vying for the right to exploit Kazakhstan's vast oil wealth lying below the Caspian Sea.

Such reports -- usually relying on unnamed or incomplete sources -- have been difficult to prove, but they have provided fuel for opposition leaders trying to persuade citizens that the president is corrupt.

This week, for the first time, the country's prime minister confirmed in a speech to parliament the existence of a secret fund containing hundreds of millions of dollars. Prime Minister Imangali Tasmagambetov also confirmed the existence of foreign bank accounts registered under Nazarbayev's name.

But the explanation Tasmagambetov gave had nothing to do with corruption. Tasmagambetov said the purpose of the secret fund was to bail out the country in economic hard times. He said that twice since 1996 Kazakhstan has drawn on the funds to keep itself out of bankruptcy. The first time was in 1997, when the government's debt to pensioners reached some $480 million. The other time was in 1998, following Russia's devaluation of the ruble.

He went so far as to say the fund had saved Kazakh independence. "The head of state was left with no other choice except to take all responsibility upon himself. That was when the appropriate decree was signed on the secret fund as a reserve fund of the government in the event of economic crisis or a threat to the security of the country. I emphasize that the president acted exclusively in the interests of the country and within the framework of the laws of the republic of Kazakhstan."

The source of the secret fund is not entirely clear, but Tasmagambetov said the money came from the government sale in 1996 of a 20-percent share in the Tengiz oil field.

In his speech, Tasmagambetov distinguished between the secret fund and the foreign bank accounts allegedly belonging to Nazarbayev. He said if such accounts exist they were set up by other people -- not the president -- for the purpose of "compromising" Nazarbayev's name. Tasmagambetov told deputies that Nazarbayev has ordered all money from such bank accounts returned to Kazakhstan and used for improving the capital, Astana.

The issue of the secret fund and of Nazarbayev's alleged personal bank accounts has become a hot political topic. Last month, parliamentary deputies allied to the opposition Democratic Choice of Kazakhstan (DVK) movement raised the issue. One DVK leader, Mukhtar Ablyazov, was taken into police custody last week. Another, Ghalymzhan Zhakiyanov, is under house arrest.

Both men now face charges of corruption after insisting on investigating the allegations over foreign bank accounts.

Chris Lockwood, an editor at the Asia desk of the London-based "Economist Intelligence Unit," told RFE/RL that the sudden misfortunes of DVK leaders and this week's admission of the secret fund seem connected. "It is very clear the Kazakh government is quite rattled by Democratic Choice, which has rather a lot of support. We've seen what looks to me like a very unpleasant crackdown on these leaders."

The head of the Communist Party in Kazakhstan and a rival to Nazarbayev, Serykbolsun Abdildin, says he is not totally satisfied with Tasmagambetov's explanation. Abdildin opposed Nazarbayev in the country's last presidential race.

Abdildin was among those parliamentary deputies demanding to know more about the alleged accounts abroad. Speaking from Almaty, Abdildin said he wants Tasmagambetov's words recorded. "I heard [Tasmagambetov] gave an answer to my question on whether Nazarbayev has an account [abroad]. I can't accept an oral answer; I need a written answer."

Baltash Tursunbayev, who also ran against Nazarbayev in the 1999 election, offered a neutral explanation of the situation. "If what Imangali [Tasmagambetov] says is true, he should prove that. And if the other side says Nazarbayev has accounts, they should prove that. We have to find a solution. Personally, I haven't seen anything about this from either side. I only read about it in the newspapers. One way to solve this is to form a commission to check the facts, which would include government members."

Lockwood of the "Economist Intelligence Unit" said he felt the Kazakh government's explanation was only the first part of a story that will continue to develop. He points out, for example, that it would be highly unusual for someone else to open a bank account in Nazarbayev's name. "I think it sounds very strange and I can't imagine anyone in Kazakhstan doing it, considering how completely Mr. Nazarbayev and his family control the country. It seems quite extraordinary to me that anyone would open a bank account in his name without consulting him."

Tasmagambetov's statement to parliament may have convinced some, but it obviously has not allayed everyone's suspicions regarding the president's alleged wrongdoing.

(Edige Magauin of the Kazakh Service contributed to this report.)