The life of Bulat Utemuratov can be seen as several major stages. It is difficult to cover Utemuratov’s entire biography in one article. Therefore, we will start, if not from childhood, then at least from his early years. In the first article of our biographical series about Bulat Zhamitovich, we will describe his journey from a butcher and director of the “Yubileyniy” grocery store to the sale of ATFBank, paying sufficient attention to the latter. In the following articles, we will talk about how Bulat Utemuratov lived after the sale of the bank, his involvement in sports and hotels, KazZinck, and other notable projects. But for now, here’s the first part of our series about Bulat Utemuratov, an outstanding billionaire of Kazakhstan, who has never had his own business.
Bulat Utemuratov Origin and Early Years
The times of socialism and the “unity of the Soviet people” did not change an important characteristic of Kazakh society – the division into large and small tribal formations. The Utemuratovs do not belong to the zhuzes [Kazakh tribal unions] but, according to legends, are descendants of Arab preachers of Islam. Conditionally, such clans are called “khodzha”. In addition to Bulat Utemuratov, Mukhtar Ablyazov and Nurlan Nigmatulin also belong to such clans in modern Kazakh politics. If you think that these individuals have few Arab features, you are correct.
Let’s leave the antiquity behind and focus on meat. Bulat Utemuratov is very embarrassed that an American diplomat wrote the truth about him: in his youth, Bulat Utemuratov was a butcher. This amused and became the subject of many jokes due to the Americans’ lack of understanding of Soviet reality: a butcher was almost a god. The director of a grocery store was the actual god. And Bulat Utemuratov worked his way up to this position, acquiring the necessary connections and meeting the independence of Kazakhstan as a very wealthy person with ties to the party elite, becoming a star of the highest gastronomic magnitude.
Formally, Bulat Utemuratov graduated from a local economic college. So he is not a butcher, he is an ‘economist’. Since 1991, his career as a gastronomy economist has been on the rise.
Climbing to the heights
Bulat Utemuratov was the director of the ‘Yubileyniy’ grocery store, to be precise. His immediate boss was Syzdyk Abishev. The late uncle of the wife of the first President of Kazakhstan was the ‘father’ of many careers, and it was he who promoted Nursultan Nazarbayev’s apparatus, Bulat Utemuratov, and Bulat Abilov.
The path to the nation’s heart went through the stomach, so Abishev placed Utemuratov in the most promising positions, in the district food supply department, and later as the head of the Auezov District Executive Committee in charge of trade.
At the time of Kazakhstan’s independence, the country experienced a severe shortage of personnel. Non-Kazakh population was fleeing the country intensively. The state could rely only on its own party (CPSU) and economic nomenclature, which was formed from national cadres. The social elevators worked with a strained roar, sending yesterday’s directors of water pumps to become ministers, and such delicate experts in cutting half-carcasses into portioned pieces, like Bulat Utemuratov, into responsible international work.
Syzdyk Abishev pulls Bulat into the management of the State Committee for External Economic Relations. From there, he becomes the CEO of the Kazakh Trading House in Austria, the trade representation. Here, he becomes friends with someone who cannot be mentioned now — Rakhat Aliyev, who at that time supervised Kazakhstan-Austrian business cooperation. This is a very important point in Bulat Utemuratov’s career. Based on the State Committee for External Economic Relations, a new ministry is formed — the Ministry of Foreign Economic Relations, which is still headed by Syzdyk Abishev. Utemuratov is listed there, gradually building necessary connections. By the way, at that time, Syzdyk Abishev was the treasurer of Nursultan Nazarbayev. Utemuratov inherits this position.
Kazakhstan inherited a lot after the dissolution of the USSR. Oil fields, gas fields, valuable metal mines, a large-scale livestock and grain complex, excellent industrial enterprises. The father of the nation faced a pressing need to somehow turn all of this into money to support the people and enrich his own clan. At that moment, people who knew how the Western financial system worked, how loans were taken and repaid, what offshore accounts were, and how foreign jurisdictions were structured, were worth their weight in gold. Bulat Utemuratov became a mule for moving money abroad and has since been regarded as Nursultan Nazarbayev’s personal wallet. And to avoid keeping money in sacks, it was necessary to open a bank.
The bank of the ex-CPSU bureaucracy: Bulat Utemuratov establishes the Almaty Trade and Finance Bank
In 1995, with the assistance of consultants from MeesPierson, Bulat Utemuratov founded the Almaty Trade and Finance Bank, better known as ATFBank. Before delving into Utemuratov’s activities as a banker, let’s talk about Mees Pierson. The choice of MeesPierson appears very interesting to professionals.
MeesPierson is an ancient Dutch private bank. The word ‘private’ has a special meaning here. The bank decides for itself who will be its client: you can’t just walk in from the street and apply for a loan for your iPhone there. Its clients are only wealthy families that have been with the bank for generations. In particular, MeesPierson serves the Dutch royal family. An equivalent would be the English Coutts & Company, but MeesPierson is less selective with clients. It is not the bank that specializes in consulting regional networks in distant countries. It is a bank that simply keeps and hides the money of very wealthy clients. To say ‘hello’ to them, you have to pay 10 million euros — the security guards won’t talk to you for less.
Timur Kulibayev became the chairman of the board of directors and credit committee, while Bulat Utemuratov was not directly involved in the bank’s affairs. In 1996, the bank seemingly came under the ownership of Timur Kulibayev. However, in 2000, Utemuratov repurchased the controlling stake of the bank, but through dummy companies. Being the titular owner didn’t suit a government official, ambassador, and advisor to Nazarbayev.
ATFBank in Kazakhstan’s corruption system
Rakhat Aliyev, after becoming a prominent opposition figure and before becoming a lamp in an Austrian prison, wrote about ATFBank as one of the pillars of corruption in Kazakhstan. In the eighth point of his manifesto, ‘Ten Blows against Corruption,’ he mentioned the need for nationalizing the bank:
Rakhat Aliyev knew what he was writing about because he was involved in the entire scheme. ATFBank operated as a gateway for foreign trade, primarily oil and gas, and raw material transactions. However, the funds left the country irreversibly and settled somewhere within private banks. Those were the times of naive theft by the ‘elite’ of Kazakhstan. The top echelons had no orientation other than the opportunity to quickly transfer money out of the country, money that had been extracted in the form of oil.
ATF received and accumulated funds derived from the export of raw materials and products of state-owned companies, as well as money from entities like ‘Kazakhintorg’ and ‘Kazakhvneshmash.’ The money did not go into the budget but into ATF Bank, effectively owned by Bulat Utemuratov, as Aliyev wrote. ‘Owned’ is somewhat incorrect; it is more accurate to say that he controlled them, without causing himself any losses. The bank was a priority, and all income generated was channeled towards servicing Almaty Trade and Finance Bank.
However, Bulat Utemuratov did not rest on his laurels. While fluttering through government positions, he was thinking about the future. ATF expanded its reach, absorbing smaller comrades such as ‘Apogee,’ ‘Kazprombank,’ ‘EnergoBank,’ ‘Sibir,’ a key outpost in Moscow, a private pension fund, an insurance company, and numerous branches across the country. Utemuratov and his bank companions’ task was to present it in the right light, not solely as a means of laundering state funds. Why? It will become clear later.
Sale of ATF Bank to UniCredit Group
ATF Bank needed to be sold. A new owner would come, freeing the old one from all obligations and history. The cabinet is sold along with the skeletons. That’s why the bank, which thrived as a tool for looting Kazakhstan, needed to appear retail-oriented—issuing loans, accepting deposits from the population, operating according to the regulations set by the national bank, and so on. Additionally, Bulat Utemuratov knew that his old acquaintances from Austria-Creditanstalt AG were eager to buy a bank in Central Asia to continue their grand campaign in the East. All that remained was to carefully put ATF Bank up for sale. The bank strengthened its presence in retail, doing everything possible to present itself favorably to potential buyers. Within a year, its assets grew fourfold, which seemed unreal for a large bank.
At that time, Rakhat Aliyev was the Ambassador of Kazakhstan to Austria. Since Austria-Creditanstalt AG was the formal buyer, the Austrians inquired about the bank from the ambassador. Dr. Eric Hampel, the President of Creditanstalt, held discussions with Aliyev. At that time, Aliyev was not yet a threat to the regime and spoke positively about the bank, to which he had a direct, though unpublicized, connection.
The parties gradually approached each other, with no competition involved, but rumors of competition were intentionally spread in the information space. Matchmaker consultants appeared, responsible for guaranteeing the quality of the product and the buyer. American bank JP Morgan and Swiss bank Credit Suisse assumed these roles. Additionally, UniCredit had its own division called UniCredit Markets and Investment Banking, which dealt with the purchase of regional banks in Eastern Europe and the CIS. JP Morgan represented the interests of ATF Bank, while Credit Suisse represented the Italian banking group UniCredit.
During that time – 2006-2007 – there was euphoria dominating the financial markets. Money was abundant. Insignificant enterprises managed to attract millions and billions at cheap interest rates. The movement of money was practically unrestricted. Real estate was growing rapidly, and unique conditions were formed. The only criterion for success was endless expansion, and UniCredit was the absolute winner in this competition, acquiring all the regional banks that were struggling in the vast expanses of the East. Something similar to 2019.
The Italian-Austrian group was very pleased with the bank. The buyers didn’t see the forest for the trees. Rumor has it that the consultants could have been bribed by Utemuratov. Indeed, Gouram Levanovich Andronikashvili from JP Morgan held brilliant positions and prospects in his own bank, but after the deal, he exchanged JPM for some clearly disproportionate positions under Bulat Utemuratov. Even Credit Suisse is not entirely free from suspicion, as Utemuratov was an ambassador to Switzerland and could have established informal connections with them. Commercial bribery is not such a rare thing.
All parties gave their approval. UniCredit reported their victory, on cloud nine with happiness. With a paltry sum of 2.1 billion dollars plus expenses and commissions, the Italian group surpassed its competitors! The largest deal to purchase a bank in the former USSR territory. The Kazakhstani press echoed: yes, yes, this is a sign of great respect from Great Europe for our achievements!
Not many people believe that the Italian banking group, which had considerable experience in purchasing banks, simply turned out to be unprofessional. Therefore, in the heroic failure that followed the acquisition of ATF Bank, some saw either cunning that allowed writing off a couple of billion or political intricacies. It cannot be stated with certainty, but with some probability, it can be said that for UniCredit, it was a complete disaster ‘driven by enthusiasm’.
In his staged articles, Bulat Utemuratov claims that under the guidance of the Italians, ATF Bank caused the financial crisis of 2007-2009. It’s not entirely true. He certainly knew that the bank was inflated.
What did Utemuratov and UniCredit gain from the deal?
UniCredit and Austria-Creditanstalt AG received ATF Bank, laden with accolades and achievements, with significant local and foreign assets and a suitable loan portfolio, in exchange for the transfer of $2.1 billion. That’s how it seemed.
Minor problems with far-reaching consequences began immediately. Minority shareholders of the bank, such as QVT Fund LP and Artradis Fund Management, won a lawsuit that cast doubt on the entire deal and hindered the life of the new owner in every way. They obtained a separate court order prohibiting the renaming and any use of the UniCredit name in the new bank. Heavy PR campaigns were launched. In particular, rumors spread that the Berlin-based grant-receiving agency Transparency International would investigate the murky deal involving the purchase of a regional bank. Later, they withdrew from the investigation, but there was still unease. Moreover, the Italians had already started to suspect foul play, but they were forced to reiterate: they voluntarily bought the bank, in a sober mind and sound memory.
Those were minor problems. There were two major problems: a complete rot in the loan portfolio and the fleeing of what always kept ATF Bank afloat—the schemes of Bulat Utemuratov using the bank as a piggy bank for oligarchs on their way to the West. The crisis only helped ATF Bank sink merrily and swiftly. Here’s what the UniCredit group essentially received: recognition of $1.2 billion in hopeless debts, expenses for maintaining the bank without profits, and fierce and costly attempts to litigate with the minority shareholders. The bank was eventually sold at a 66% discount, but more on that later. UniCredit entered Kazakhstan like a wedding train and left like a fugitive tenant with communal debts.
Bulat Utemuratov, of course, made a lot of money. His personal income from the deal is estimated at over $700 million. He ranked first on the Forbes Kazakhstan list, soon yielding that position to Timur Kulibayev out of politeness. Being the Head of Presidential Affairs of the Republic of Kazakhstan at the time of the deal, he received money through a network of dummy investment firms and was formally clean of any accusations. UniCredit never made any claims against him.