How the Kazakh elite invested their wealth in British real estate | Kazakhstan

The ministers face allegations that they allowed Kazakhstan’s ruling elite to secretly invest large swathes of the country’s wealth in London’s property market after failing to introduce the promised new transparency laws.

Former Prime Minister David Cameron pledged at an anti-corruption summit in London in 2016 that the UK would end covert ownership of offshore properties. More than five years later, a draft register of foreign owners of British real estate has still not been introduced.

The uprisings in Kazakhstan last week reflected widespread anger over the three decades of reign of former President Nursultan Nazarbayev and the immense fortunes amassed by the privileged few.

Goods worth hundreds of millions of pounds in London and southern England have already been identified as purchased by Kazakhstan’s wealthy elite over the past two decades. The government is now under pressure to speed up new laws to introduce the registry promised by Cameron.

David Lammy, shadow foreign minister, said: “The government has failed in any way to bring the UK’s role in money laundering, corruption and illicit financing under control. London is the destination of choice for the world’s kleptocrats looking to store ill-gotten wealth. There is no point in using harsh words against the Putin regime, or criticizing Kazakhstan’s human rights record, while being a soft touch to the elites who support and profit from autocratic regimes.

David Cameron, Prime Minister in 2016. Photograph: Andy Rain / EPA

There are almost 90,000 businesses in England and Wales owned overseas by companies incorporated in secret jurisdictions.

A report titled The UK’s Kleptocracy Problem, published last month by think tank Chatham House, identified 34 properties purchased by the Kazakh ruling elite from 1998 to 2002 at a cost of around £ 530million. John Heathershaw, professor of international relations at the University of Exeter and lead author of the report, said: “Most of the assets are linked to Nazarbayev’s family or to members of the ruling elite close to them. Experts say the portfolio is likely to be “the tip of the iceberg” as many other properties will be owned by offshore shell companies who do not disclose their beneficial owners.

Heathershaw said London was a popular destination for ruling elites with questionable wealth, as it was a cosmopolitan and global financial center; it has provided a range of law firms offering aggressive reputation management services; and he offered the chance to mingle with influential figures in political, royal and business circles.

He said: “London has been very important to Kazakhstan’s political elite and that includes the relationships they have developed with individuals such as Tony Blair and Prince Andrew.” Blair has advised the Kazakh regime and Prince Andrew has been close to some of its wealthier people.

Properties of the Kazakh elite purchased during Nazarbayev’s presidency include Prince Andrew’s marital home, Sunninghill Park in Berkshire, purchased in 2007 for £ 15million by oligarch Timur Kulibayev, the former president’s son-in-law from Kazakhstan.

It also emerged in early 2020 that Nazarbayev’s daughter Dariga Nazarbayeva and grandson Nurali Aliyev owned property in London worth at least £ 80million. The National Crime Agency has issued unexplained wealth orders, which are used to track suspicious funds, against three properties: a mansion on The Bishops Avenue, one of the capital’s most expensive roads; an apartment in Chelsea; and a mansion in Highgate, north London. The orders were overturned by a judge who ruled that the NCA had proven no connection between the purchase of the houses and the criminal funds.

Protesters clash with police at a rally against rising energy prices in Almaty, Kazakhstan, Jan.5, 2022.
Protesters clash with police at a rally against rising energy prices in Almaty, Kazakhstan, Jan.5, 2022. Photograph: Alexander Kuznetsov / EPA

Oliver Bullough, author of Country of money, a book that studies how illicitly acquired wealth can be moved around the world, said the uprisings in Kazakhstan were linked to the uninterrupted flow of wealth from the country to cities like London. According to a KPMG report, 162 people control about half of Kazakhstan’s total wealth.

Bullough said, “Kazakhstan’s elite have been able to extract a great deal of wealth and leave ordinary people with very little. And the main catalyst for this extraction has been the UK. “

Ben Cowdock, head of investigations at Transparency International UK, an independent anti-corruption organization, said the UK should now consider whether it can impose sanctions on any of Kazakhstan’s ruling elites that could have benefited illicit funds.

He said: “Kazakhstan is a kleptocracy and there are high levels of corruption at the highest levels of power. The UK should be looking for evidence to act, but it’s extremely difficult in a country that has essentially legitimized corruption. They took control of all property in the country and divided it among the ruling elite.

It is not known where Nazarbayev is this week and there has been speculation he may have left the country. Nazarbayev, 81, resigned as president in 2019, but until last week he still wielded considerable power and chaired the country’s powerful security council. He has now been removed from this post.

A UK government spokesperson said: “The government will establish a new beneficial ownership register of foreign entities that own property in the UK, in order to combat money laundering and achieve greater transparency on the UK property market. It is essential that the registry strikes the right balance between improving transparency and reducing burdens on legitimate business activities. The government will legislate when parliamentary time permits.

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