MARCH 3 2016 (The Conway Bulletin) – Uzbek president Islam Karimov has created the position of deputy khokim across the countries regions in a move apparently aimed at reducing the power of the main khokims, RFE/RL reported. Khokims are powerful regional governors who are centrally appointed. They control swathes of the country.
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(News report from Issue No. 270, published on March 4 2016)
ALMATY, FEB. 26 2016, (The Conway Bulletin) — Turkcell, Turkey’s largest telecoms operator, said it had submitted a formal offer for TeliaSonera’s share in Fintur, a holding company that owns several stakes in telecoms operators across Central Asia and the South Caucasus.
TeliaSonera owns a 58.55% stake in Fintur. Turkcell owns the rest of the Netherlands-based company. Fintur, in turn, owns stakes in Azerbaijan Azercell, Georgia’s Geocell, Kazakhstan’s Kcell, Uzbekistan Ucell and Tajikistan’s Tcell.
If the sale goes through, the deal will reduce TeliaSonera’s exposure to the region. TeliaSonera will not, though, be able to walk away completely as the Swedish-Finnish company owns, directly and indirectly, 38% of Turkcell.
Other major Turkcell shareholders include Alfa Group and Cukurova Holding.
Many TeliaSonera shareholders had wanted the company to quit the region entirely after being accused of bribing senior officials in Uzbekistan for 3G licences nine years ago. The corruption investigation is ongoing.
In its statement, Turkcell also said it had submitted another offer for TeliaSonera’s directly owned 24% share in Kcell. If the two companies agree on the sale, Turkcell will own 75% in Kcell.
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(News report from Issue No. 270, published on March 4 2016)
FEB. 25 2016 (The Conway Bulletin) – Uzbek officials said that work on a $1.63b railway section in the Fergana Valley had been completed, meaning that trains can now travel from Tashkent without having to pass through Tajikistan.
Although the cost of the 123km track is high, driven up by kilometres of tunnels and bridges that were needed to breach the mountainous terrain, for Uzbekistan cutting out the irritation of having to deal with Tajikistan makes it worth it.
Uzbekistan and Tajikistan have been at loggerheads since the breakup of the Soviet Union in 1991.
At its core, Uzbekistan worried about Tajik plans to build hydropower dams across rivers that feed Uzbekistan’s cotton crops. Tajikistan doesn’t like Uzbekistan’s unilateral stance.
This impacted rail traffic, which steadily dropped off.
The World Bank estimated the route will transport 600,000 people and 5 tonnes of freight every year. The project also underlines the financial might of China in the region. It paid $350m of the cost of the project, the World Bank paid $190m and the Uzbek government covered the rest.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 26 2016 (The Conway Bulletin) – At 19.2km, the Kamchik Pass railway tunnel may be the longest in Central Asia and might also be a great engineering achievement, but it is also a sign of Uzbekistan’s further isolation from world politics and markets.
Uzbekistan said it completed a World Bank and China-backed railway bypass in the Ferghana Valley that will allow its trains to run to the east of the country without having to transit through Tajikistan.
The World Bank support is important because it shows international endorsement for a mega project that Uzbekistan was eager to achieve despite the economic downturn rolling through Central Asia.
Chinese money and workers were key to the success of the project, as China has growing interest in building infrastructure in Central Asia to support its ambitious project to connect with Europe via rail and road.
Tajikistan is the main loser in this game. It will no longer receive the in- kind payment of $25m worth of gas shipments from Uzbekistan in exchange for the railway transit. And it also lost an important diplomatic chip in its endless row with Tashkent.
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(Editorial from Issue No. 269, published on Feb. 26 2016)
FEB. 19 2016 (The Conway Bulletin) – A court in eastern Uzbekistan sentenced five men to jail for between 5-1/2 and 12 years for various charges linked to religious extremism, media reported. Uzbek officials have said that the threat from radical extremists has intensified although Western human rights groups have said that Uzbek officials are more interested in suppressing dissent than fighting terrorism.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 19 2016 (The Conway Bulletin) – Companies in Uzbekistan are failing to pay staff their full salaries, eurasianet.org reported quoting figures from a state agency that showed fines totalling $500m being handed out for failing to pay salaries on time. This could be, eurasianet.org reported, a sign that worsening economic conditions are hitting Uzbekistan.
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(News report from Issue No. 269, published on Feb. 26 2016)
FEB. 16 2016 (The Conway Bulletin) – Uzbekistan’s Central Bank said it had suspended commercial lender Khamkorbank’s licence to trade in foreign currencies for six months due to unspecified violations of banking rules. The World Bank’s IFC and the Netherlands’ state-owned FMO both own stakes in Khamkorbank, 14.5% and 15% respectively.
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(News report from Issue No. 268, published on Feb. 19 2016)
FEB. 19 2016 (The Conway Bulletin) – Russian telecoms operator VimpelCom said it would pay a $795m settlement to resolve US and Dutch lawsuits focused on bribes it paid to top Uzbek officials in the late 2000s, a deal that highlights corruption by foreign telecoms companies in Uzbekistan.
The court settlement against VimpelCom is one of the largest settlements linked to bribery in US corporate history.
VimpelCom is majority owned by Russian billionaire Mikhail Fridman but is headquatered in Amsterdam and is also listed on the New York Stock Exchange. Telenor, the Norwegian telecoms company, also owns a 33% stake in VimpelCom.
Officials in the US and the Netherlands opened investigations against VimpelCom in 2014 for bribing Uzbek public officials to obtain a licence. The description of the corrupt official in the US court’s proceedings fits the profile of Gulnara Karimova, the president’s daughter, although her name is not explicitly mentioned.
The court said that, between 2006 and 2012, Unitel, VimpelCom’s subsidiary in Uzbekistan, paid $114m in bribes to operate in the country and to obtain 3G and 4G licences.
Two days before the settlement, VimpelCom released a report where it effectively admitted its guilt.
VimpelCom said it “would, among other things, acknowledge certain violations of the US Foreign Corrupt Practices Act and relevant Dutch laws and pay fines.”
Following the settlement Jean Yves Charlier, the VipelCom CEO, said: “The wrongdoing, which we deeply regret, is unacceptable.”
VimpelCom uses the Beeline brand. In Central Asia, Beeline also operates in Kazakhstan and Kyrgyzstan.
But VimpelCom is not alone in bribing its way into Uzbekistan’s mobile network. Swedish-Finnish telecoms company TeliaSonera has also admitted bribe paying in 2008 for access to Uzbekistan’s market.
For Uzbekistan, the telecoms corruption cases have confirmed widely perceived views that bribe paying is rampant and that, previously, major companies wanting to do business there had to deal with Ms Karimova. She was once thought of as a future president but has been under house arrest in Tashkent for two years.
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(News report from Issue No. 268, published on Feb. 19 2016)
FEB. 17 2016 (The Conway Bulletin) – Uzbekistan’s government published a list of 89 state-owned companies that it said will sell at least 15% of their shares to foreign investors this year. Last December, the government approved a law that aimed to attract foreign investors. The long list of companies open for investment includes cotton industry giant O’zbekyengilsanoat, telecoms operator Uzbektelekom and Uzbekistan’s postal service.
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(News report from Issue No. 268, published on Feb. 19 2016)
FEB. 16 2016 (The Conway Bulletin) – Swedish high street retailer H&M said that it has banned its suppliers since December from using cotton sourced from Turkmenistan in any of their products after allegations that the Turkmen authorities use child labour to pick the harvests. H&M, and other retailers, have previously banned suppliers from sourcing cotton from Uzbekistan for similar reasons. Campaigners accused IKEA of using cotton from Turkmenistan in its various products
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(News report from Issue No. 268, published on Feb. 19 2016)
