Kazakhstan's landmark law targets ill-gotten riches and restores justice
What is the law about?
President Kassym-Jomart Tokayev's signing of the law on the repatriation of illegally appropriated assets marks a turning point in the country's effort to pursue those who stole the country’s wealth. This bold legislation targets the subjects of large-scale corruption and oligopoly groups entwined with those who wield administrative and power resources.
At the heart of this groundbreaking law lies the mechanism that seeks to reclaim assets obtained through illegal means. Notably, the law extends its reach to individuals who have held or currently hold responsible public office, positions in state legal entities, quasi-public sector entities, and their affiliated entities. The law demonstrates a commitment to hold individuals accountable for their actions by encompassing current and former public officials.
One crucial element of the law is the imposition of a substantial asset threshold—13 million MCI (monthly calculation index), equivalent to a staggering 44 billion 850 million tenge or approximately $100 million. This provision ensures that those who have amassed significant sums through corruption or related activities fall within the purview of the legislation. It signifies a strong message that the era of rampant embezzlement of wealth at the expense of the nation's welfare should be in the past.
Who is in charge of the process?
An authorized body has been designated to effectively execute the recovery of unlawfully acquired assets. This body is entrusted with the responsibility of monitoring and analyzing information derived from various sources, including government agencies and legally permissible channels. Through surveillance and analysis, a comprehensive profile of those involved in illegal asset appropriation will be developed. This will include identifying key figures participating in the illicit scheme, their affiliations, the overall value of the assets in question, and crucial details surrounding their unlawful acquisition and subsequent transfer abroad.
«Based on the results of the analysis, if the authorized body has reasonable doubts about the legality of the acquired assets, it will submit proposals to the Commission on Asset Recovery, formed by the Prime Minister from members of Parliament, public figures, members of the government, first heads of state bodies and other persons to include such entities and their affiliates in the relevant register,» reads the statement from the Akorda presidential office.
The authorized body can have concerns about the legality of assets if there are discrepancies between the value of assets and the individual's legitimate income or other means of funding asset acquisition. It also includes instances where a person or their affiliates acquire assets surpassing the prescribed threshold and other grounds specified by the law.
Once entities are included in the register by the commission, the authorized body informs them about this development. Subsequently, these entities have the option to submit an asset declaration within one month or within three months if they require additional time to gather and prepare the necessary documents.
The declaration must provide information on income, assets, ownership shares in legal entities, domestic and international loans, and other details regarding the source of the assets.
If a person fails to provide sufficient evidence confirming the legality of their asset acquisition, those assets will be deemed of unexplained origin.
In cases where there is a risk of asset withdrawal from the country or its disposal, the authorized body will seek preliminary interim measures through the court.
How can assets be returned?
The restitution of unlawfully acquired assets can occur voluntarily or through compulsory means based on judicial rulings within Kazakhstan or foreign jurisdictions or decisions made by competent authorities of foreign states.
The specific conditions for the return of assets may involve various actions, such as monetary payments, transferring a portion or all of the assets back to the state, reimbursing the state for unpaid taxes, compensating for damages incurred, or repaying excess income received by the person during their possession of the assets. These conditions are designed to ensure the return of assets is fair and proportionate.
In cases where compulsory asset return is necessary, the authorized body initiates the process by submitting an application to the court, following the general principles and procedures outlined in civil procedural legislation.
How much has been returned?
According to the General Prosecutor's Office of Kazakhstan, as of May 2023, the government has recouped up to 760 billion tenge ($1.7 billion) in illegally appropriated assets. Of this amount, around $575 million was returned to Kazakhstan from abroad.
More than 100 requests for legal assistance have been sent to other states. Property worth over $100 million was arrested.
To identify assets abroad, the government is working with international organizations. Notably, in April this year, the General Prosecutor's Office of Kazakhstan signed an agreement on cooperation with the Basel Institute on Governance, whose International Centre for Asset Recovery (ICAR) is one of the largest in the world.
Where will the returned money direct?
According to Akorda statement, assets will be transferred to the Special State Fund, which operates as a controlled account under the Ministry of Finance. The funds will be allocated to finance social and economic projects.
The return of illegally withdrawn capital is one of the first steps for the nation to change the rules and principles of functioning of the economy, said President Tokayev addressing the joint session of the Parliament on March 29.
«These funds should be used exclusively for the development of the country. This applies, among other things, to budget expenditures,» he said back then.
Why is this law important for Kazakhstan?
Mazhilis deputy Nikita Shatalov believes the political meaning of this law is that it is returning the stolen future. «The kleptocrats stole billions of dollars from us, which should have been invested in quality education, sustainable infrastructure, and a diversified economy. Unfortunately, it is not easy to get back what was stolen. But now the state has enough tools to make the process effective,» said Shatalov, commenting the law.
Member of the Parliament Snezhana Imasheva echoed Shatalov’s remarks that the law seeks to bridge the existing social injustice.
«This injustice is that a very small group of people have significant wealth, have influence on the country's economy and, sometimes, determine policy in some sectors, while the majority of Kazakhstan’s citizens have low incomes and experience difficulties in accessing the basic economic and social benefits. There are still people in the country who do not have access to drinking water, a paved road, a health center or a school nearby,» she said.
This law represents a shift in Kazakhstan's commitment to eradicating corruption and dismantling powerful oligopolies. Stringent measures signal its determination to break the cycle of graft and hold influential individuals accountable, irrespective of their political or economic standing. The law shall serve as a deterrent to those who abuse their positions of power, reminding them that the country's resources are meant to benefit all its citizens, not just a privileged few. Yet, for law to truly generate positive changes, a strong rule of law shall be omnipresent, which cannot yet be said about the country.
It is still too early to say how effective these measures will be in returning illegally acquired assets to Kazakhstan. However, the government's commitment to this issue is a positive sign.