U.K. lender Barclays extended a loan to a pair of Caribbean legal entities used by the grandson of Kazakhstan’s former ruler to hide his ownership of a £39 million mansion in North London that is now the target of an unexplained wealth order, public documents indicate.
Details of the case surfaced Tuesday, when attorneys representing the relatives of Nursultan Nazarbayev, who stepped down last year after 28 years in power, petitioned the High Court in London to cancel the unexplained wealth orders, or UWOs, against the mansion and two other luxury residences in London that are also owned through offshore entities.
The National Crime Agency obtained the UWOs in May after persuading a judge that the funds behind the purchases probably originated from crimes committed by Nazarbayev’s son-in-law, Rakhat Aliyev, who died in an Austrian prison five years ago while awaiting trial for murder.
“He was part of a corrupt inner circle in the Kazakh regime who enriched himself at public expense,” Anita Kelly, an NCA investigator, claimed in written testimony. “The complexity and deliberate obscurity of the way in which the Aliyev assets were handled … indicates they had a criminal origin.”
Nurali Aliyev, Rakhat’s son and the grandson of Nazarbayev, and his mother Dariga Nazarbayeva—the former autocrat’s eldest daughter and Rakhat’s ex-wife—were named in court as the ultimate beneficial owners of the three luxury homes. They must now show proof of legitimate income to avoid having the properties permanently seized.
British authorities first used the UWO two years ago to take custody of two U.K. properties worth a combined £22 million from Zamira Hajiyeva, the wife of an Azerbaijani banker who by that point was already in jail in his home country for embezzling from the state-owned bank he ran for more than a decade.
Similar to the case against Hajiyeva, the government’s pursuit of the Aliyevs in open court promises to shine a light on the banks, attorneys and wealth managers that served the family.
The High Court heard Tuesday that Nurali Aliyev, Nazarbayev’s grandson, owns the £39 million mansion in North London through a pair of legal entities that he beneficially owns: Manrick Private Foundation and Alderton Investments Limited, which were formed in Curacao and Anguilla respectively.
Documents obtained by advocacy group Transparency International and shared with ACAMS moneylaundering.com show that Barclays approved a mortgage for both companies on Jan. 3, 2014. The documents identify Aliyev and his wife, Aida, as the occupants of the mansion.
The documents do not state the value of the loan, nor show whether the Aliyev family simply remortgaged the property or used it as collateral for an unrelated advance.
The case marks the first use of a UWO against a family that still wields considerable political power at home, and the second time that U.K. lender Barclays has been linked to someone targeted by the measure.
Barclays’ Swiss affiliate approved a mortgage in November 2009 for a British Virgin Islands-formed entity that Hajiyeva, the target of the NCA’s initial UWOs in 2018, used to conceal her ownership of an £11.5 million property in Knightsbridge.
The bank’s links to the Aliyevs carry reputational risks but do not necessarily suggest due-diligence failures or anti-money laundering violations.
U.K. banks have the option of filing a special type of suspicious activity report, a defense against money laundering request, or DAML SAR, to proceed with a potentially illicit transaction, and major lenders tend to work closely with the NCA in money-laundering investigations.
Barclays declined to comment, citing the ongoing legal proceedings.
An ‘accomplished businesswoman’
The second property targeted by the NCA, a £32 million apartment in the upmarket West London district of Chelsea, is owned by Tropicana Assets Foundation, a private interest foundation domiciled in Panama.
A British Virgin Islands legal entity, Twingold Holding Ltd, acquired the third property—a mansion in the wealthy North London district of Highgate—for £9.3 million in April 2008, and transferred ownership to a second Panamanian entity, Villa Magna Foundation, five years later.
A fifth UWO targets Andrew Baker, a U.K. attorney whom court documents identify as the president of Villa Magna and Tropicana. But both firms are beneficially owned by Nazarbayeva, who began chairing the Senate of Kazakhstan last year after her father stepped down from the presidency.
Clare Montgomery, an attorney representing the two Panamanian companies and Baker, told the High Court on Tuesday that the funds used to purchase the properties came from Nazarbayeva’s own legitimate income as an “accomplished businesswoman” in banking, real estate and media.
“She has had an entirely active economic life, has herself pursued a career in commerce, well before any suggestion could be made she was benefitting from her position,” Montgomery said, noting that her client divorced Aliyev a year before the first property was acquired. “The NCA’s case is tissue-thin on the claim that there was a link to Rakhat Aliyev.”
In August 2019, three months after the NCA obtained the UWOs, Nazarbayeva and her son, Nurali Aliyev, filed 268 pages of records to the agency through their law firm, Mishcon de Reya, to show that the money for the Highgate and Chelsea properties came from sales of legitimate “stockholdings” and accounts that Nazarbayeva held in her own name, Montgomery said.
The family claimed that funds for the £39 million mansion acquired in August 2008 and owned by Aliyev Jr. derived from the sale of his interest in a media company, Shahar LLP, and a $65 million loan from Nurbank, a Kazakhstani lender in which he and his mother held a 6 percent and 40 percent stake respectively.
Those funds passed through a web of legal entities beneficially owned by Nurali Aliyev before landing in Hellenic Bank in Cyprus. On the same day, Aug. 29, 2008, he transferred £37.5 million to an account held by Herbert Smith Freehills in London to buy the property, according to the documents.
Court filings do not indicate when or whether Aliyev was required to pay back the Nurbank loan, nor identify the origin of the other £2 million used to buy the mansion.
The NCA rejected the Aliyevs’ explanations on the basis that their voluntary submissions fell significantly short of complying with the UWOs.
“The NCA’s use of UWOs may prove to be more productive than they’ve hoped, in not just scaring regulated firms into more scrutiny of their current relationships with PEPs, but also causing considerable nervousness about past dealings that may come back to haunt them,” said Anna Bradshaw, a partner with Peters & Peters in London.
Justice Beverley Lang has yet to rule on the case, which concluded on Wednesday.
Contact Koos Couvée at email@example.com
|Topics :||Anti-money laundering , Asset Forfeiture|
|Document Date:||March 12, 2020|