Kazakhstan’s wealth won’t go home again

Oliver Bullough


Last year was, let’s face it, a pretty good one for the oligarchs (they always are) but there were at the end some signs of hope on the horizon. There is slow progress towards a minimum global tax rate, and some suggestions that democracies might finally be recognizing they’re up against an existential threat in kleptocracy and need to unite to survive.

I’m not good at predictions, and I am already struggling to keep my New Year’s Resolution of being optimistic, but I think/hope that 2022 will see these two trends continue. 

Vladimir Putin’s cudgel-rattling on the borders of Ukraine is focusing Western minds as they haven’t been focused for some time which, combined with a new government in Berlin that doesn’t put the interests of German exporters ahead of almost everything, may mean his gas-fueled bullying may finally lose some of its heft. (While I’m on the subject, I’m a little confused by the logic behind Putin’s policy of threatening to invade Ukraine to dissuade Eastern European countries from joining NATO. It seems a bit like threatening to shoot someone if they buy body armor. If anyone does get it, please drop me a line.) 

Of course, the energy price spike that is looming may mean Western governments are prepared to do a deal with anyone to keep the lights on, and I’ll be keeping an eye on that.

The fate of the global tax deal rests on the mid-term elections, and it’s yet another occasion when those of us outside the United States would prefer it if both of the parties in the U.S. could be responsible about global issues, rather than just (some members of) one of them. If the Republicans gain control of one or both of the houses of congress, we can presumably wave goodbye to everything Joe Biden’s White House has been trying to achieve (although, to be honest, the Democrats have been doing a pretty good job of that on their own).


The last time I was in Kazakhstan was almost eight years ago. Together with a female radio producer I was working with, I got marooned by a blizzard in a tiny steppe town, where we were at the mercy of a grotesque local mayor (who we nicknamed “the toad”). He would have our hotel rooms searched if we went out; drop in on us at any time to see what we were doing if we didn’t; and try and grope the producer when we were in his company. Fortunately, a break in the weather allowed us to escape because I’m not sure if I could have tolerated being there much longer. When we finally made it to the capital (then called Astana, now called Nur-sultan), we marveled at the huge quantity of money spent on vain follies in this vain folly of a city, including one featuring a golden handprint of the president, rather than on improving life for ordinary residents of places like our little steppe town.

So, in short, I wasn’t surprised to see protests break out against the government last week.

  • “Recent years also laid bare a poorly functioning social safety net, a problem exacerbated by the lack of economic opportunity for most of the country’s young people. This is especially true for ethnic Kazakhs from rural areas and smaller cities who have moved in droves to run-down suburbs of Almaty and Nur-Sultan, the country’s two largest cities. In those booming urban centers, the wealth gap is particularly evident,” noted this analysis from the Carnegie Endowment’s Paul Stronski.

Kazakhstan is not too bad by Central Asian standards, but that isn’t saying much, being as the other states are the “black hole” that is Turkmenistan, the basket cases that are Tajikistan and Kyrgyzstan, and the kleptocratic case study that is Uzbekistan. According to official statistics, wealth inequality is close to U.S. levels, with the top 10% of the country owning around almost two-thirds of everything, and the bottom 50% just one-twentieth.

The real problem may be far more serious since official statistics do not take into account the fortunes of those who hold their assets offshore, which includes many close relatives of the former president. We don’t know how much they own, but we do know they spend a lot of money abroad, on top-end property and luxury goods. Activists and researchers have been digging away at this wealth for years, sparked by this seminal 2015 report from Global Witness. Leaks like the Panama Papers and the Pandora Papers have revealed how they have used offshore companies to disguise their ownership of major assets at home and elsewhere, although local authorities have – surprise! – declined to investigate.

Of course, you can’t move money or assets offshore without help, and an extensive network of enablers have assisted Kazakhstan’s 0.01 percent, including former U.K. Prime Minister Tony Blair, who advocated for the country in the West for years, and gave its government tips on how to spin a massacre of protesters in 2011.

Fortunately, a small but mighty group of academics centered at Britain’s University of Exeter has been working to expose what’s been happening, which has helped keep the issue on the public agenda, including with evidence submitted to the U.K. parliament.

  • “Central Asia offers an example of what academics call an “extreme case” of money laundering.  If Central Asian politically exposed persons (PEPs) are able to launder money in the UK in significant numbers, then it is highly likely that the UK is “open for business” for money laundering originating in all corners of the globe,” noted one submission.

Kazakhs are of course well aware that their leaders have been fleecing the country for decades and – in a speech on Tuesday designed to help improve the country — Nazarbayev’s successor as president said he was revamping a fund to develop Kazakhstan, which will now be free from political oversight. He said he expected people who did well under his predecessor to contribute to it.

There have been precedents for corrupt funds being returned to Kazakhstan, after they were seized in Switzerland, and the BOTA Foundation which oversaw much of the expenditure of the first tranche of money is seen as a model for such operations. Sadly, the second repatriation is significantly less widely praised, and is an example of how hard it is to return corrupt wealth to a country where public institutions are corrupt.

  • “The money found its way into lavish propaganda campaigns, and organizations headed by Zhas Otan officials, the youth wing of the country’s authoritarian Nur Otan party. We also came across quite disarming evidence of fraud,” noted Tom Mayne, author of a report into the scandal (he’s one of that excellent group of Exeter-based researchers and also – full disclosure – an old friend with whom I studied Russian two decades ago).

It seems likely that any new attempt at asset recovery would end up more like this second model than to the first. That means any anti-corruption campaign in Kazakhstan would be essentially more about the new president’s people taking money from the old president’s people, than about actually doing anything to improve the country. This is after all what normally happens when the head of state changes in a kleptocracy (see Russia, Angola, Ukraine, etc.).

This is of course assuming that assets kept offshore could ever be confiscated and returned, which a court case in London 18 months ago suggests is unlikely. Assets held by one of Nazarbayev’s daughters, and his grandson, were targeted by one of the U.K.’s first Unexplained Wealth Orders, which initially looked like a sign Britain was turning away from accepting such politically exposed fortunes, but actually revealed quite how shoddy the U.K.’s law enforcement apparatus is, when the National Crime Agency was humiliatingly defeated.

  • “The NCA and other U.K. law enforcement agencies have been forced to do a re-think after the double whammy of a recent loss in front of the Court of Appeal and a hefty legal bill that could eat up much of the funding meant to go after bad guys,” said one analysis.

If I were a member of the previously ruling family, I would have already shifted my assets to Dubai though, to be on the safe side. After all, what Turkmenistan is for media freedom, Dubai is for financial transparency.


Enthusiasts for bitcoin are, as you may have noticed, really enthusiastic. “Bitcoin is freedom” is one argument you often hear, along with promises that it will shake up the world, liberalize financial transactions and liberate us from financial gatekeepers. The more people use it therefore, the more the world will benefit. Apparently.

I am naturally suspicious of anything people are over-keen on, but I also try to be open-minded. As such, I was very interested to read this analysis, which makes clear that bitcoin has a lot more in common with the rest of the economy than its advocates might like. Production is highly concentrated, as is ownership. About a seventh of all bitcoins belong to just 1,000 people.

  • “This inherent concentration makes Bitcoin susceptible to systemic risk and also implies that the majority of the gains from further adoption are likely to fall disproportionately to a small set of participants.”

And, oh look, there’s offshore obfuscation on cryptocurrencies too.

  • “This measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity.”

The economy of Kazakhstan and bitcoin have more in common than you might think therefore, and oligarchs control both of them. Interestingly, since a crackdown in China last year on bitcoin “mining” (i.e. the pointless expenditure of energy which the cryptocurrency involves in order to generate more of it, so as to maintain the blockchain), Kazakhstan has the second highest share of miners in the world. When the government in Kazakhstan shut down the internet last week, all that capacity vanished, which severely inconvenienced people who were using bitcoin at the time.

It has tended to be believed that bitcoin is used for funding crime or laundering its proceeds, but the analysis from the National Bureau of Economic Research quoted from above, suggests that is not the main use of the cryptocurrency at all. Instead, bitcoin’s primary use is speculating on bitcoin (which slightly reminds me of a survey a few years ago which said the main use of old plastic bags was to hold old plastic bags). 

  • “Our results do not support the idea that the high valuation of cryptocurrencies is based on the demand from illegal transactions. Instead, they suggest that the majority of Bitcoin transactions is linked to speculation,” the report said.

What’s worse? A currency that burns through as much power as Argentina being used by criminals, or by speculators? Neither sound great to me, to be quite honest.


It was fantastic to hear at the end of last year that the court case brought by Roman Abramovich over Catherine Belton’s book Putin’s People has ended, with minimal changes to the book required. Both sides said they were satisfied with the outcome.

  • “In addition to the claim by Mr. Abramovich, Putin’s People and Catherine Belton have been under attack from four other Russian oligarchs and the state-controlled oil giant Rosneft, all with vast resources at their disposal. Each of those claims has been resolved with no damages or costs payable by HarperCollins,” said Belton’s publisher in a statement.
  • “As Mr. Abramovich stated when issuing his claim earlier this year, its sole purpose was to refute the false allegations published regarding his name and have them corrected, including the false statements made about the nature of the purchase and activities of Chelsea Football Club,” said Abramovich.

Another libel case is going ahead, however, and that’s against Carole Cadwalladr, who is being sued by British businessman Arron Banks for comments she made in a TED talk. Several leading free speech organizations have appealed to Banks to drop the case, but he has not done so.

Cadwalladr is crowdfunding to help pay for her defense and, should you think it a cause worthy of your support, the link is here.


In the last week or two, I seem mainly to have been reading my next book Butler to the World. I have been in a studio recording the audiobook, and at my desk reading the proofs. You can read it too, though you’ll to wait till it comes out. Sorry about that, though feel free to pre-order it (it’s out in March in the U.K., and June in the U.S.).