To an unassuming reader, a connection between London and Kazakhstan may be looked at sceptically, with the mention of kleptocracy and money laundering evoking further confusion. However after the break-up of the Soviet Union in the 1990s, opportunities for the upper class in independent successor states to individually profit from the newly-transferred Soviet-era assets grew. Such individuals sought a destination perfect for facilitating illicit high-value wealth transfers. London, the world’s finance capital, was considered more than appropriate.
The UK’s Financial Conduct Authority (FCA) indirectly defines kleptocracy as “a political economy dominated by a small number of people/entities with close links to the state”. Throughout the 1990s until the recent Kazakh fallout, this small group of elites have been valuable clients for financial and professional services in the UK. With an influx of illicit assets available to these individuals post-Soviet independence, there was an increased demand for wealth management services in the lightly regulated UK. This was the beginning of the many dubious relationships that now exist between London’s financial centre and the elites from ex-Soviet states.
Throughout the existence of independent Kazakhstan, under the rule of ex-president Nursultan Nazarbayev for 30 years, the opportunity for kleptocracy has been ripe. The abundance of natural resources in the nation combined with the authoritarian nature of the government (following their 1991 declaration for independence) has almost fostered a pipeline from the natural reserves to the pockets of the closely-connected people in power. As of December 2021, offshore accounts of Nazarbayev family members were estimated to hold as much as $10 billion with $785 million of foreign real estate holdings owned by the family. And in a country “where there’s no open political system” as stated by Paul Stronski, former director for Russia and Central Asia and in the U.S. National Security Council, there proves to be very little opportunity for the wider population in the nation to challenge these practises.
Despite this, one cannot solely focus on the intentions of these individuals and their ill-gotten gains. The enabling environment created by the UK has provided the platform for kleptocrats to continue exploiting their behaviour. Some have described this as negligent, whilst others have labelled it blatant corruption.
Kazakhstan’s wealthy elite have acquired property worth hundreds of millions of pounds. Despite David Cameron’s promise at an anti-corruption summit in 2016, the proposed changes to bring an end to property purchasing with illicit funds have not been introduced. The thinktank Chatham House has identified 34 properties purchased by the powerful Kazakh ruling circle from 1998 to 2002, with the value of these purchases sitting at around £530 million. Relationships held with British elites such as former Prime Minister Tony Blair, and shady royal Prince Andrew, have only encouraged such suspicious acquisitions of property. Oliver Bullough, author of Moneyland, succinctly summarised the political and economic state by saying “Kazakhstan’s elite has been able to extract a vast amount of wealth and leave ordinary people with very little. And the primary enabler of that extraction has been the UK”. According to a KPMG report, 162 people control about half of Kazakhstan’s total wealth. By the turn of the year it became increasingly evident that unrest in the nation was reaching fever pitch.
As almost a direct consequence of such political structures, the series of political protests in 2022 - now known as the 2022 Kazakh Unrest - finally addressed the public’s dissatisfaction with the government and the nation’s economic inequality. Beginning as a response to the lifting of a government-enforced price cap on liquefied gas prices, the week-long unrest led to 227 deaths. This was after a ‘shoot to kill’ order by current President Tokayev against the protesters was used to ‘destroy’ the uprising. A positive effect of these tragic events has been that the focus on Kazakhstan and their corrupt practises has directly impacted the fortunes of the few billionaires responsible for the unfair operation of the country. Forbes reported four Kazakh billionaires losing roughly $3 billion during the protests. The direct family of Nazarbayez also lost $200 million, a loss particularly profound as the couple controls the country’s largest bank in terms of assets.
With the loss of fortune among these elite few being celebrated, inevitably pressure has also been placed on the UK government. They are being compelled to further introduce action to curb the influence of the kleptocratic government in the financial centre and to combat money laundering. A UK government spokesperson has stated ‘the government will establish a new beneficial ownership register of overseas entities that own UK property’. Whether such initiatives will decrease illicit activity between Kazakhstan and London’s financial centre is yet to be seen. That being said, it would not be unreasonable to expect that we will see movement towards dispelling the kleptocracy and money laundering activities in the capital.
