Unraveling Grand Corruption in Uzbekistan

The problem with unraveling grand corruption is that once you begin to tug on a string — a specific individual, perhaps — the whole tapestry could come off the wall. Every thread is tied to another in a nigh-impossible mess of personal and business connections, shell companies with hidden owners, international actors with conflicting interests, and somewhere crushed beneath this writhing mass: the people whose small businesses are stolen, whose relatives are tortured, whose government institutions have been subverted from the inside to serve only a small cadre at the top.

In Uzbekistan, few are as associated with corruption as Gulnara Karimova, the eldest daughter of the country’s first president, the late Islam Karimov. But as a new report released last month demonstrates, Karimova was simply one thread in a teeming tapestry. In A Dance With the Cobra: Confronting Grand Corruption in Uzbekistan, researchers detailed how the government of Uzbekistan acted as an organized crime network. The 100-page report, published by the International State Crime Initiative, based at Queen Mary University of London (QMUL), aimed to systematically document corruption in Uzbekistan and critically examine the role of state agencies in facilitating the illegitimate parts of Karimova’s business empire. The report also aimed to draw out the international infrastructure used by what the authors deem the Karimova Syndicate as well as the connection between human rights abuses and corruption.

Ultimately, the report is clearly directed at influencing those who are to decide what happens to more than $850 million in financial assets frozen through the course of legal proceedings regarding a massive telecommunications bribery scandal, which began breaking in 2012 and precipitated Karimova’s fall from grace. The $850 million frozen by the United States is currently subject to negotiations between the U.S. Department of Justice and Uzbekistan, with Tashkent claiming the funds ought to be returned to the state, and the state’s critics arguing a more cautious return ought to be pursued, ensuring the millions benefit the real victims: the people of Uzbekistan.

In the report, the authors systematically examined documentary sources like case files, judicial and arbitration decisions, plea deals, audit reports, and corporate registry records as part of constructing and making sense of the network which stemmed out from Karimova. Importantly, the authors took advantage of modern digital technology to examine social networks and map transactions. When the tapestry begins unraveling, it’s easy to lose track of the pieces. And the Karimova Syndicate had ties around the world.

The report not only offers a comprehensive analysis of the criminal network operating out of Tashkent, but includes eight in-depth cases studies and a concentrated look at who the victims are. Furthermore, the report examines the principles of transitional justice and transformative justice and how they may be applied to the Uzbekistan case.

Three themes emerged from the report. First, it is not all about Gulnara. The authors make clear up front that focusing on Gulnara has, to a great extent, allowed the rest of the network to remain obscured. Inordinate focus on the “Uzbek princess” has allowed “the extensive supporting cast of offshore banks, foreign advisers, and secrecy jurisdictions, implicated in her activities” and “the systematic forms of state violence and institutionalized racketeering” to avoid the spotlight. Gulnara did not, alone, rob the Uzbek people and their business partners of hundreds of millions of dollars. The entire state apparatus was birthed at independence from an already deeply corrupt Soviet system, and manned by a dictator who brooked no dissent. A system like that does not form overnight, nor can it be reformed in short order.

Second, it is not Uzbekistan alone which ought to be criticized; and Tashkent is not the only capital in desperate need of reform. The report’s main author, Kristian Lasslett, explained the phenomenon of Western fingerprints on Uzbek corruption previously for The Diplomat. Karimova’s network was grafted onto, and could not operate without, permissive international financial networks. Grand corruption, the report notes, “thrives on a permissive international framework of shell companies, banks, asset warehouses, and professional/corporate collaborators, which allow the looted funds to be extracted, laundered, anonymised and invested in offshore locations.”

Just as Alexander Cooley and John Heathershaw detail in their regional study — Dictators Without Borders: Power and Money in Central Asia — Central Asia is no isolated backwater. Instead its elites are intimately familiar with the dark ways of international finance. From corporate services provided in Switzerland and China, to bribes paid by companies in the Netherlands and Russia, to American professional services and British financial services, the Karimova Syndicate had truly global connections. Key offshore companies were established in the UAE, Switzerland, Gibraltar, the British Virgin Islands, the United Kingdom, and Hong Kong; and banks allegedly employed by Karimova include British banks (HSBC in Jersey, Standard Chartered in Hong Kong) and a U.S. bank (the Dubai branch of Citibank), among others in Switzerland and Latvia. Companies accused in court of baying bribes to Karimova include Coca Cola, Vimpelcom, TeliaSonera, and MTS, among others.

Lastly, the entire report drives toward the issues of justice and recompense. In the short term, the report recommends against directly returning frozen assets to the Uzbek government. Instead, the authors urge for a trust-like solution “underpinned by robust oversight mechanisms, a representative board from civil society, and transparent reporting requirements.” The authors also point out that because the state has persecuted individuals so heavily and for so long, a great number of the “victims” have left the country. These exiles, spread around the world, ought to be included in the conversation. This process should not, the authors say, exclude state officials. “It is important,” they write, “where possible, that the conversations and actions facilitated through the trust, take into account state initiated reform efforts, through constructive dialogue.”

The crimes of the Karimova Syndicate were aided and abetted by the state, and the state must take an active role in reforming the systems and practices which allowed grand corruption to flourish. The new Uzbek government, which has made efforts to position itself as distinct from that which came before, has high hurdles of trust to surmount in this pursuit.  It is simple enough to talk the talk of reform; but can Tashkent walk the walk?