How Kyrgyzstan killed AsiaUniversalBank

In Kyrgyzstan every day appears new juicy detail, describing how officials destroyed the biggest commercial financial organization of the country – AsiaUniversalBank (AUB). Every economic expert and client of the bank understands now that the bank was purposely destroyed. All the more, official representatives of National Bank of the Kyrgyz Republic and Prosecutor Generals’ Office did not announce amount of money, withdrawn from AUB by unknown people during April events of year 2010.

Bank as cash common fund

AsiaUniversalBank was transfer site for money-laundering for Kurmanbek Bakiyev and his close backers (including son of ex-president Maxim). After April events it became known that illegally earned money of family syndicate was stored in safe-deposit boxes and private accounts of AUB.

After April events everybody disemboweled the AUB: Bakiyevs’ backers, allegedly transferring money from the bank during the revolution, and members of interim government of the Kyrgyz Republic, withdrawing and dividing the rest of the money.

It is still mystery how much money was in deposit boxes of AUB. Officials’ Information about the withdrawal process is very contradicting. Ex-Minister of Finance of interim government Temir Sariev presented documents under signatures of investigators of Prosecutor General’s Office together with report about spending by interim government of $7 million. According to one of the documents, on May 12, 2010 $1.999 million was found in one of the safe-deposit boxes. On the same day 500-hundred piece of money was found in another VIP-box. Above mentioned money was transferred to Central treasurer's office of Ministry of Finance for storage. Now it is the only document presented to public and related to withdrawn funds. Members of interim government presented other information to mass media only as oral statements.

There is resolution on imposition of arrest on property of AsiaUniversalBank, dated as of July 12, 2010. Senior investigator for particularly important cases under Prosecutor General reported in the resolution that on April 7, $240 million was transferred (KGS10.8 billion) to other banks, later on April 8, 2010 – KGS3 billion.

If it so then why in October 2010 new Head of National Bank of the Kyrgyz Republic Baktygul Zheenbaeva almost disproved the data, saying that only $40-45 million was withdrawn from the bank on April 6-7? Other $200 million, according to her, was withdrawn in the end of 2009 and at the beginning of 2010.

Does it mean that Prosecutor General’s Office lied in their resolution on imposition of arrest on property telling that “the most part of money was transferred by internet-banking, by-passing currency control, in particular automated program Bank++?” the same document tells: “Department of programming and application aids could not tell the reasons why there was money transfer, by-passing bank filters.” So, it turns out that computer system recorded the “transfer” of $240 million. Then why Baktygul Zheenbaeva told other information?

Chronicle of one murder

Observers told 24.kg news agency their analysis about situation with AsiaUniversalBank. According their analyses there is regularity: till the end of June 2010 Kyrgyzstan tried to save AUB. But on June 23, 2010 situation changed. What did happen at that day? The answer is simple: Baktygul Zheenbaeva was appointed as Head of National Bank of the Kyrgyz Republic.

According to events chronology, on April 8, 2010 regime of temporary management was introduced into AUB. During that period they started calculating bank assets and amounts of its capital. When it became clear that company’s obligations exceeded its repay ability, they introduced temporary closedown regime on June 4, 2010. After three days, on June 7, interim government nationalized stocks of AUD. On June 20 interim government approved AUB rehabilitation plan, providing financial support to the bank from the state, in particular National Bank.

But, there were south events in Kyrgyzstan in June 2010. It seems that new authorities did not bother to rehabilitate AsiaUniveralBank anymore, as huge amounts of money were transferred to interethnic conflict zone. There were no positive changes in operation of AUB and its financial situation in July. Ministry of Finance made hints to interim government about necessary of bankruptcy of the bank. At the same time Prosecutor General’s Office submitted a protest to National Bank about introduction of conservation regime. While member of a board of directors of National Bank visited investigators, the fate of AUB was already defined. On June 23, 2010 Baktygul Zheenbaeva was appointed as Head of National Bank. At the same time National Bank asked representatives of AUB to cancel appointed meeting with depositors, who were going to discuss introduction of conservation regime. It was the last day of hope for new birth of AsiaUniversalBank. In the point of fact it was killed.

Black stripe in the life of AUB

Referendum on Kyrgyz Constitution concurred with another collision of AUB. On August 3, 2010 new, so called technical, government assumed rehabilitation plan of AUB. It recommended providing restructuring procedure in AUB. But at that time it was unclear what they were going to restructure – bank assets or its debts.

On August 5, 2010 National Bank, at special night session of board, announced AUB as bankrupt. On August 6, National Bank revoked a license of AUB and bank suspended all operations. On the same day Baktygul Zheenbaeva visited the bank and said that bankruptcy of AUB was the only way out of the situation. She also underlined that court would approve that decision of National Bank.

On October 24, 2010 court announced AUB as bankrupt and started official bankruptcy process. Assets of AUB were divided into “bad” and “good”. National Bank started preparing the grounds for new financial institution. It had to obtain all “goods” from destroyed predecessor. On December 14, new bank Zalkar was established in the country.

What they fought for?

Experts cannot understand: why did the plans about AUB change in July 2010, after all it almost belonged to state and it could be rehabilitated? Is it was such difficult task for interim government? There is another question: why withdrawn from AsiaUniversalBank money of Bakiyev was not spent on bank recovery? Maybe official amount of withdrawn money is so big, only $21 million, but it could help the bank. Why did government destroy already existing structure and cloned it into another one?

There are a lot of questions. But consequences of AUB collapse are obvious. Even authorities cannot deny that situation with AUB negatively affected on financial system of cuntry. So what did Kyrgyzstan received instead of AUB? Is it another soap bubble?

Who and why needed to kill AsiaUniversalBank? Who can answer these questions? Maybe legitimate power can?