Wednesday, June 16, 2010

Wall Street Journal: US-Connected Bank Implicated in Kyrgyzstan Crisis

By the Kyrgyz government, according to today's article by Alan Cullison and Kadyr Toktogulov:
Kyrgyz prosecutors want to try Maksim Bakiyev for abuse of office, misuse of government funds and money laundering, a prosecutor's spokesman said Tuesday.

While details of the charges are sketchy, one involves the younger Mr. Bakiyev's relationship with Asia Universal Bank, a Kyrgyz bank that was advised by U.S. consultants APCO Worldwide and Kroll Associates and whose board members included three former U.S. senators. Prosecutors allege that the younger Mr. Bakiyev steered to AUB part of a $300 million Russian state loan to Kyrgyzstan, and personally benefitted from it, the spokesman said.

Critics of the Kyrgyz government were suspicious of Maksim Bakiyev's relationship with AUB, which under his father's rule grew from a little-known bank to the country's most influential financial institution. AUB shuffled a large amount of money out of the country when the government collapsed. On the night of the coup, April 7, officials at AUB approved international wire transfers that they say were requested by AUB clients totalling about $170 million, or more than 10% of the country's banking assets, according to central bank officials.

Kyrgyzstan's new leaders say they suspect a chunk of that money was the plundered wealth of President Bakiyev and his inner circle. They have asked for the U.S. to help recover those funds. The U.S. Embassy in Bishkek said the U.S. is "looking into" the request. The Kyrgyz government has now nationalized AUB and is dividing it into two banks because of what the government calls an illegal acquisition.

The new government has also accused the U.S. of enriching Maksim Bakiyev through fuel supply deals. It says a fuel-supply contractor, Mina Corp., a privately-owned company based in Gibraltar, had lucrative U.S. government contracts to supply fuel to the U.S. base. The government says Mina, which is operated by a former U.S. military attaché, used smaller delivery companies, that were allegedly controlled by Maksim Bakiyev, and funneled as much as $70 million a year to them.
According to the article, the former US senators associated with the bank are Bob Dole (R., Kan.) (resigned), J. Bennett Johnston (D., La.), and Donald W. Riegle, Jr. (D.,Mich.).