Uzbek Oligarchs Under Pressure

A wave of arrests of powerful businessmen in Uzbekistan may be no more than an attempt to seize control of their assets, say NBCentral Asia experts.



On March 9, media outlets reporting on Central Asia said a series of prominent Uzbek businessmen had been targeted by the authorities. Some had been taken into custody, while others managed to flee the country.



In early March, police went after Dmitriy Lim, an influential businessman who owns the Caravan Bazaar network of markets and is being accused of tax evasion and illegal foreign currency transactions, and Muhiddin Assomitdinov, head of the Alp Jamol Bank. Assomitdinov left the country once investigations into his activities began.



In mid-February, the authorities arrested Botir Rahimov, founder of the Capital holding company and owner of a wolfram mine in Jizak province, and also of Pakhtakor, a famous football club in Tashkent. They also detained Alik Nuritdinov, director of the Bekabad cement plant, and Zahid Hokimov, head of the state tourism company Uzbektourism. Hokimov was picked up as he leaving the country.



The three have been charged with embezzlement, tax evasion and fraud.



Some confusion surrounds the fate of Mirodil Jalolov, who owns the Bunyodkor football club and heads Zeromax GmbH, a company with interests in cotton processing, textile production, gold mining, and oil and gas extraction. While media reports said Jalolov had been arrested, NBCentral Asia was told by Zeromax’s Tashkent office that he was away on a business trip.



Official institutions are remaining tight-lipped on the arrests and the nature of the allegations against this group of high-profile figures.



“The investigation is now under way, and it will be possible to discuss matters of substance once it has reached conclusions,” said Svetlana Artykova, spokesperson for the Uzbek prosecutor’s office.



The campaign is believed to have started after President Islam Karimov gave a speech in December calling for the creation of stronger middle class and “eliminating the obstacles” to this – including the powerful oligarchs.



However, NBCentral Asia observers doubt the anti-oligarch campaign is really about reducing inequalities of wealth or building up a middle class.



Instead of a prospering middle class, the closed, controlled nature of the Uzbek economy has created insider groups - officials with access to funds, and businessmen with corrupt links into state institutions.



According to one analyst in Tashkent, if the authorities are serious about taking on the oligarchs, they should start with top officials who conduct commercial activities on the side, even though this is banned.



This is not happening, said the analyst, saying that the current targeting of major businesses amounted to “the state seizing property”.



In Uzbekistan, which is rich in natural gas, cotton and other resources, all revenue-generating industries are controlled by powerful businessmen close to the state, who have to keep their allies and patrons in state institutions happy.



Some believe these relationships may have frayed as businessmen chafe at the government’s restrictive economic policies.



“It appears that the business community engaged in import-export activities began voicing its unhappiness with the government’s isolationist policies and the extent of corruption.” said Tashpulat Yoldashev, an Uzbek political analyst based in the United States. “So the state pounced on them.”



Thus, prosecuting big businessmen is less about defending state interests and protecting the poor, than about a conflict of interest among elite groups, with the winners grabbing the losers’ property.



Other commentators said what the authorities were doing made sense, citing similar campaigns against oligarchs in places like Russia.



Rafik Saifullin, a political analyst in Tashkent, says, “Uzbekistan has opted for a model that differs from that in other countries in the region, one that is not slanted in favour of the very rich.”



(NBCA is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)