ASTANA – Kazakhstan President Nursultan Nazarbayev lamented the “pervasive theft of the state’s and people’s money” at the Feb. 9 extended government meeting he chaired.
“When are we going to finish this business?” Nazarbayev asked the governor of the National Bank, Daniyar Akishev.
He reminded everyone present of the situation BTA Bank, once Central Asia’s largest lender, found itself in 2009 after its chairman, Mukhtar Ablyazov, fled the country having embezzled more than one trillion tenge (more than US$7.5 billion) from the bank.
“We have now uncovered (Ablyazov’s money laundering schemes) throughout the world and have proven that this was clearly a theft of state money”, Nazarbayev said. He also expressed distinct dissatisfaction with the work of the National Bank, which “sat idly and observed” the capital flight.
“What’s the purpose of an oversight body then?” said Nazarbayev, outraged that a similar situation of siphoning of millions of dollars by bank shareholders is still widespread across the financial services sector.
Nazarbayev ordered the government to quickly develop a bill empowering the National Bank to conduct inspections into banks’ health and capital movements.
Akishev himself admitted that until 2017 the country’s banking sector was slow in solving accumulated problems that had dragged on since the financial crisis of 2008-2009. According to him, the high level of so called bad loans, reaching 33 percent of the total loan portfolio of banks in 2013, required systemic solutions, but banks in most cases took a conservative stance. They did not recognise the root of the problems, but instead went through restructuring, reclassified borrowers and wrote off individual loans. All this prevented the banking system from fiscal consolidation.
In addition, some banks and financial institutions pursued a risky policy by lending to persons affiliated with shareholders and management. Back in 2000s, this would have been financed through outside foreign loans, but in recent years, banks borrowed money directly from the state. According to Akishev, over 7.2 trillion tenge (US$22.1 billion) at second-tier banks’ accounts currently belong to state-owned holdings and quasi-governmental companies.
Citing the example of the Delta Bank, whose banking license has recently been revoked, Akishev reported that almost 100 percent of the bank’s loans went to companies controlled by its shareholder, were not reflected in the bank’s accounts but revealed only after an inspection. “Sixty percent of the bank’s liabilities were accounts of quasi-governmental structures,” Akishev added.
A similar situation was uncovered at the RBK Bank, where 90 percent of loans were issued to four borrowers who were either the bank’s shareholders or persons affiliated with them, said Akishev.
The issue of “reloading” of the financial sector was one of the topics Nazarbayev raised in his Jan. 10 state-of-the-nation address. He specifically pointed out that “the withdrawal of funds from banks by shareholders for the benefit of affiliated companies and individuals should be considered a serious crime.”
Supervision of the activities of financial institutions by the National Bank should be tough, timely and effective, he said back in January, signalling that banks’ bad behaviour could undermine confidence in the country’s financial system and its national economy.