Bulat Utemuratov’s path: from butcher to kleptocrat banker

Bulat Utemuratov’s life can be divided into several significant stages, each encompassing remarkable achievements and experiences. Given the breadth of his biography, it is challenging to encapsulate it entirely within a single article. Therefore, we will commence with his early years, if not directly from his childhood.

During the era of socialism and the notion of the «unity of the Soviet people,» Kazakhstan’s societal structure remained influenced by a notable characteristic—an inherent division between large and small tribal formations. Although the Utemuratovs did not belong to the traditional zhuzes (Kazakh tribal unions), legends suggest that they are descendants of Arab preachers of Islam. These particular clans are informally referred to as «khodzha.» It is worth mentioning that contemporary Kazakh politics also includes other influential figures such as Mukhtar Ablyazov and Nurlan Nigmatulin, who hail from similar lineages. It is pertinent to note that their Arab lineage may not be readily discernible, as appearances can be deceiving.

Bulat Utemuratov.
Bulat Utemuratov.

Bulat Utemuratov’s early career

Leaving behind the realm of antiquity, let us shift our focus to the early career of Bulat Utemuratov, with an intriguing connection to the meat industry. Interestingly, Bulat Utemuratov finds himself somewhat uncomfortable with the truth revealed by an American diplomat: in his youth, he worked as a butcher. This revelation amused many and became the subject of numerous jokes due to the American diplomat’s lack of understanding of Soviet society. In that context, being a butcher held considerable significance, almost akin to a revered figure. However, reaching the position of a director of a grocery store was an even greater accomplishment—one that bestowed godlike status. Bulat Utemuratov, through hard work, established valuable connections and ascended to this esteemed position, positioning himself as a wealthy individual with ties to the party elite. His achievements in the culinary domain elevated him to the status of a culinary superstar, a luminary of the highest gastronomic caliber.

In subsequent articles of our biographical series about Bulat Utemuratov, we will delve into various other chapters of his life. We will explore his endeavors following the sale of ATFBank, shedding light on his involvement in sports, hotels, KazZinck, and other noteworthy projects. However, for now, we have embarked on the initial part of our series, uncovering the journey of Bulat Utemuratov—an exceptional billionaire from Kazakhstan who, despite never having his own business, has made an indelible mark on the world.

Bulat Utemuratov.
Bulat Utemuratov.

Contrary to the notion of Bulat Utemuratov being a butcher, his formal education led him down a different path. He actually graduated from a local economic college, earning the title of an «economist.» Thus, his professional identity is not that of a butcher but rather that of an individual well-versed in the field of economics, of well.. butchery. From 1991 onward, his career as a gastronomy economist began to soar, marking the start of his remarkable journey.

In his early years, Bulat Utemuratov assumed the role of director at the esteemed ‘Yubileyniy’ grocery store. It is worth noting that his immediate superior was Syzdyk Abishev, a significant figure in the career development of many individuals. Syzdyk Abishev, who happened to be the late uncle of the first President of Kazakhstan’s wife, played a pivotal role in nurturing the careers of prominent figures such as Nursultan Nazarbayev’s inner circle, Bulat Utemuratov, and Bulat Abilov. Under the guidance of such influential mentors, Utemuratov’s professional trajectory experienced an upward trajectory, propelling him towards greater achievements and opportunities.

Syzdyk Abishev: a godfather of Kazakhstan’s kleptocracy

The nurturing environment provided by individuals like Syzdyk Abishev and their support within Nursultan Nazarbayev’s apparatus laid the foundation for Bulat Utemuratov’s ascent to prominence. These connections and mentorship played a vital role in shaping his career, opening doors to new possibilities and enabling him to leave a lasting impact in the realms of business and beyond.

The path to the nation’s heart went through the stomach, so Abishev placed Utemuratov in the most promising positions, in the district food supply department, and later as the head of the Auezov District Executive Committee in charge of trade.»

Recognizing the significance of the culinary domain as a pathway to winning the hearts of the nation, Syzdyk Abishev strategically positioned Bulat Utemuratov in key roles that held immense promise. Utemuratov’s journey began within the district food supply department, a position that allowed him to directly influence the nourishment of the local population. Demonstrating his capabilities and aptitude, he swiftly progressed to become the head of the Auezov District Executive Committee, responsible for overseeing trade operations.

By entrusting Utemuratov with these pivotal positions, Syzdyk Abishev paved the way for him to make a profound impact on the lives of the people within the district. Utemuratov’s role in the food supply department allowed him to contribute significantly to the provision of essential sustenance, addressing a fundamental aspect of people’s well-being. And his own, most of all. Subsequently, his promotion to the head of the Auezov District Executive Committee expanded his influence, enabling him to shape trade policies and initiatives that directly affected the local economy and business landscape.

Through these strategic appointments, Utemuratov had the opportunity to not only demonstrate his competence but also to gain valuable experience and insight into the intricacies of the trade sector. These formative years played a vital role in honing his skills and nurturing his understanding of the complex dynamics involved in managing trade operations.

As Utemuratov embarked on this path, his dedication, expertise, and ability to navigate the intricacies of the culinary and trade sectors would lay the foundation for his future endeavors. These early experiences served as stepping stones toward his remarkable journey and positioned him to become a prominent figure in Kazakhstan’s business landscape.

Independence: former butcher Bulat Utemuratov catches the wind of changes

Bulat Utemuratov.
Bulat Utemuratov and the wings of change.

During Kazakhstan’s transition to independence, the nation faced a significant shortage of skilled personnel as the non-Kazakh population was leaving the country in large numbers. In such a challenging context, the state relied heavily on its own party, the Communist Party of the Soviet Union (CPSU), and the economic nomenclature composed of national cadres. The social mobility mechanisms operated at full throttle, propelling individuals who were directors of water pumps one day to ministerial positions the next. This dynamic also facilitated the ascent of individuals with specialized expertise, such as Bulat Utemuratov, who excelled in the precise art of cutting half-carcasses into portioned pieces, into responsible roles involving international affairs.

Syzdyk Abishev played a pivotal role in Utemuratov’s trajectory by drawing him into the management of the State Committee for External Economic Relations. From there, Utemuratov went on to become the CEO of the Kazakh Trading House in Austria, the country’s trade representation in that region. It was during his tenure there that he formed a friendship with someone whose name cannot be mentioned presently—Rakhat Aliyev. At that time, Aliyev was overseeing Kazakhstan-Austrian business cooperation, making this connection a crucial juncture in Utemuratov’s career.

As the State Committee for External Economic Relations evolved, it eventually transformed into a new ministry—the Ministry of Foreign Economic Relations—led by Syzdyk Abishev. Utemuratov was included in this ministry, gradually establishing the necessary connections to further his professional endeavors. Notably, during this period, Syzdyk Abishev served as the treasurer for Nursultan Nazarbayev, solidifying his influential role within the Kazakh leadership. Utemuratov eventually inherited this position, further cementing his close ties to the president.

Following the dissolution of the USSR, Kazakhstan inherited a vast array of valuable assets, including oil fields, gas fields, precious metal mines, a substantial livestock and grain complex, as well as robust industrial enterprises. However, the pressing challenge faced by the country’s leadership, including Nursultan Nazarbayev, was to transform these resources into financial wealth that could benefit the people and enrich their own circles. This necessitated individuals well-versed in the workings of the Western financial system, adept at securing loans, managing offshore accounts, and navigating foreign jurisdictions. Such individuals were invaluable assets. Bulat Utemuratov, known for his expertise in financial matters, became instrumental in facilitating the movement of funds abroad and was regarded as Nursultan Nazarbayev’s personal financier. To ensure the safekeeping of these funds, establishing a bank became imperative.

In this context, the groundwork was laid for Utemuratov’s future involvement in the banking sector, setting the stage for his role as a key player in Kazakhstan’s financial landscape. His deep understanding of international finance and his network of connections positioned him as a trusted agent in managing and leveraging the country’s resources for its economic growth and development, allowing him to effectively funnel money stolen by Nazarbayev.

During the year 1995, with the support and guidance of consultants from MeesPierson, Bulat Utemuratov embarked on establishing the Almaty Trade and Finance Bank, commonly known as ATFBank. Before delving into Utemuratov’s endeavors in the banking sector, it is crucial to shed light on the significance of MeesPierson and its selection as a consultant.

MeesPierson, an esteemed Dutch private bank, holds a distinct connotation with the term «private.» The bank has the autonomy to select its clientele, meaning that individuals cannot simply walk in from the street and apply for a loan for personal purposes. MeesPierson exclusively serves affluent families who have maintained a long-standing relationship with the bank, including prestigious clients like the Dutch royal family. In comparison, it can be likened to the renowned English institution Coutts & Company, although MeesPierson is relatively less selective with its clients. The bank’s primary focus is not on advising regional networks in distant countries, but rather on safeguarding and managing the substantial wealth of its affluent clientele. To even engage with the bank, one must be willing to pay a considerable sum of 10 million euros—a prerequisite for catching the attention of their security personnel.

ATFBank, the root of evil, was planted by Bulat Utemuratov

In the context of ATFBank’s establishment, Timur Kulibayev assumed the role of Chairman of the Board of Directors and Credit Committee, while Bulat Utemuratov maintained a more indirect involvement in the bank’s affairs. In 1996, it appeared that the bank had come under the ownership of Timur Kulibayev. However, in 2000, Utemuratov repurchased a controlling stake in the bank through intermediary companies. This arrangement allowed him to maintain ownership discreetly, as being the overt owner would not align well with his positions as a government official, ambassador, and advisor to Nursultan Nazarbayev.

The intricate maneuvers involving ownership transfers and the utilization of dummy companies served the purpose of maintaining a delicate balance between Utemuratov’s prominent roles in the government and his banking endeavors. By maintaining a certain level of separation, Utemuratov could navigate the complexities of his various positions while simultaneously exerting significant influence over ATFBank’s operations and future trajectory.

ATFBank, according to Rakhat Aliyev, emerged as a significant player within Kazakhstan’s corruption system. Aliyev, who later became a prominent opposition figure before his imprisonment in Austria, highlighted ATFBank as one of the pillars supporting corruption in the country. In his manifesto titled «Ten Blows against Corruption,» he specifically emphasized the necessity of nationalizing the bank and advocated for the return of funds generated from its sale back to the state treasury. Aliyev argued that the bank’s authorized capital was formed from the proceeds of selling export raw materials from state foreign trade enterprises, but these funds never made their way back to Kazakhstan.

Aliyev’s intimate knowledge of the situation stemmed from his involvement in the entire scheme. ATFBank operated as a conduit for foreign trade transactions, particularly in the realms of oil, gas, and other raw materials. However, the funds generated through these transactions flowed out of the country irreversibly, finding their destination within private banks abroad. This era was characterized by a brazen looting of national resources by the Kazakh «elite.» The primary focus of the top echelons seemed to be swiftly transferring money out of the country, capitalizing on the wealth extracted from the nation’s oil reserves.

The revelations made by Rakhat Aliyev shed light on the systemic corruption that permeated Kazakhstan during that period. ATFBank played a central role in facilitating the illicit movement of funds, representing a part of a larger framework of embezzlement and capital flight orchestrated by the country’s ruling elite.

ATF Bank, under Bulat Utemuratov’s effective control, accumulated funds derived from the export of raw materials and products from state-owned companies, as well as money from entities such as ‘Kazakhintorg’ and ‘Kazakhvneshmash.’ As described by Aliyev, these funds did not flow into the national budget but instead found their way into ATF Bank, effectively owned and controlled by Utemuratov. It is more accurate to say that Utemuratov had full control over the bank without incurring any personal losses. ATF Bank was a top priority, and all its generated income was directed towards serving its interests.

Nevertheless, Utemuratov was not content with maintaining the status quo. While maneuvering through various government positions, he had his sights set on the future. ATF Bank expanded its influence by absorbing smaller entities such as ‘Apogee,’ ‘Kazprombank,’ ‘EnergoBank,’ ‘Sibir’ (a significant outpost in Moscow), a private pension fund, an insurance company, and numerous branches across the country. Utemuratov and his banking associates aimed to present the bank in a favorable light, not merely as a means of laundering state funds. The reasons for this strategic positioning will become apparent later.

The time came when ATF Bank needed to be sold. A new owner would arrive, relieving the previous one of all obligations and historical baggage. It was akin to selling a house along with its skeletons. Hence, ATF Bank, which had thrived as a tool for looting Kazakhstan, needed to project a retail-oriented image—issuing loans, accepting deposits from the general public, operating in accordance with regulations set by the national bank, and more. Moreover, Utemuratov was aware that his former acquaintances from Austria, particularly Creditanstalt AG, were keen to acquire a bank in Central Asia to further their grand campaign in the East. The only remaining task was to meticulously orchestrate the sale of ATF Bank. The bank focused on strengthening its presence in the retail sector, doing everything possible to present itself favorably to potential buyers. Within a year, its assets grew exponentially, a seemingly unbelievable feat for a large-scale bank.

During this time, Rakhat Aliyev held the position of Kazakhstan’s Ambassador to Austria. Given that Creditanstalt AG was the formal buyer, the Austrians sought information about the bank from the ambassador. Discussions took place between Dr. Eric Hampel, the President of Creditanstalt, and Aliyev. At that point, Aliyev was not yet perceived as a threat to the regime and spoke positively about the bank, leveraging his undisclosed connection to it.

Gradually, the parties involved approached each other, without any actual competition but with intentionally spread rumors of competition in the public sphere. Matchmaking consultants emerged, responsible for ensuring the quality of the product and buyer. JP Morgan, an American bank, and Credit Suisse, a Swiss bank, assumed these roles. Additionally, UniCredit, an Italian banking group, had its own division called UniCredit Markets and Investment Banking, which specialized in acquiring regional banks in Eastern Europe and the CIS. JP Morgan represented the interests of ATF Bank, while Credit Suisse represented UniCredit.

During the period of 2006-2007, a sense of euphoria prevailed in the financial markets. Money was abundant, and even small enterprises managed to attract millions and billions of dollars at low interest rates. The flow of money was virtually unrestricted, and the real estate sector was experiencing rapid growth, creating unique conditions. The sole measure of success was relentless expansion, and UniCredit emerged as the undisputed winner in this competitive landscape, acquiring struggling regional banks across the vast territories of the East. This scenario bore resemblance to what transpired in 2019.

The Italian-Austrian banking group was highly satisfied with its acquisition of ATF Bank. The buyers seemed to overlook the bigger picture. Speculation arose that consultants involved in the deal might have been influenced by bribes from Utemuratov. It is worth noting that Gouram Levanovich Andronikashvili from JP Morgan held prestigious positions and promising prospects within his own bank, but after the deal, he transitioned to significantly less proportionate positions under Bulat Utemuratov. Even Credit Suisse was not entirely free from suspicion, considering Utemuratov’s past role as an ambassador to Switzerland and the potential establishment of informal connections. Commercial bribery is not an uncommon occurrence.

All parties involved gave their approval, and UniCredit proudly announced its victory, reveling in their happiness. With a meager sum of 2.1 billion dollars plus expenses and commissions, the Italian group surpassed its competitors, completing the largest-ever deal to acquire a bank within the former USSR territory. The Kazakhstani press echoed the sentiment, considering it a sign of great respect from «Great Europe» for their accomplishments.

However, not many people believed that the highly experienced Italian banking group could be so unprofessional. Consequently, some viewed the subsequent disastrous outcome of the ATF Bank acquisition as either a calculated move to write off a couple of billion dollars or a result of intricate political maneuvering. While it cannot be definitively stated, there is a probability that UniCredit’s involvement was a complete disaster driven by their unchecked enthusiasm.

In his contrived articles, Bulat Utemuratov asserts that ATF Bank, under the guidance of the Italians, was responsible for causing the financial crisis of 2007-2009. However, this claim is not entirely accurate. Utemuratov certainly knew that the bank was inflated and vulnerable to the unfolding crisis, but it cannot be solely attributed to the actions taken under the Italians’ supervision.

What were the gains for Utemuratov and UniCredit from the deal?

UniCredit and Austria-Creditanstalt AG acquired ATF Bank, a bank adorned with accolades, substantial local and foreign assets, and a desirable loan portfolio, in exchange for a payment of $2.1 billion. That was the apparent outcome.

However, immediate problems with far-reaching consequences arose. Minority shareholders of the bank, including QVT Fund LP and Artradis Fund Management, won a lawsuit that cast doubt on the entire deal and hindered the new owner at every turn. They obtained a court order that prohibited the renaming of the bank and the use of the UniCredit name in the new entity. Extensive PR campaigns were launched, and rumors circulated, suggesting that Berlin-based grant-receiving agency Transparency International would investigate the dubious nature of the regional bank purchase. Although they eventually withdrew from the investigation, a sense of unease remained. Additionally, the Italians themselves began to suspect foul play, but they reiterated their voluntary purchase of the bank, claiming it was made with clear judgment and sound memory.

These were minor problems compared to the two major challenges: a significant deterioration in the loan portfolio and the departure of what had always buoyed ATF Bank—Bulat Utemuratov’s schemes of using the bank as a personal piggy bank for oligarchs seeking to move their funds to the West. The crisis only hastened ATF Bank’s descent. In essence, what the UniCredit group received were $1.2 billion in irrecoverable debts, ongoing expenses to sustain the bank without profits, and costly and intense legal battles with minority shareholders. Eventually, the bank was sold at a 66% discount, but we will delve into that later. UniCredit entered Kazakhstan like a grand procession but left like a tenant fleeing with outstanding communal debts.

Bulat Utemuratov, on the other hand, profited substantially from the deal. His personal income from the transaction is estimated to exceed $700 million. He initially topped the Forbes Kazakhstan list but graciously relinquished that position to Timur Kulibayev. As the Head of Presidential Affairs of the Republic of Kazakhstan at the time of the deal, Utemuratov received money through a network of dummy investment firms, ensuring he was formally untainted by any accusations. UniCredit never made any claims against him.

---- Надир Хамитов

Надир Хамитов - журналист-любитель из города Бирск. Он начал свою карьеру в журналистике в свободное время, работая корреспондентом для местной газеты. Вскоре он стал известен своими яркими и оригинальными материалами, которые привлекали внимание читателей. Он является примером того, как любовь к журналистике и настойчивость могут привести к успеху в этой области.

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