Sat. Jan 22nd, 2022

Unrest in Kazakhstan shows why its elite favor London as a place for assets, business transactions and second homes. The UK offers hard currencies, foreign banking and the rule of law with few questions asked. The bloody suppression of civil unrest will thus renew British unrest over the City’s lucrative ties with the mineral-rich Central Asian nation.

The security forces of the authoritarian Kazakh regime killed 164 people and arrested 6,000 in a turn off on public demonstrations, assisted by the Russian army. President Kassym-Jomart Tokayev manages Kazakhstan with the approval of his predecessor Nursultan Nazarbayev. The oligarchs who control Kazakhstan’s vast mineral wealth typically did the same with Nazarbayev’s blessing.

Kazakhstan’s top-profile paid British adviser was Tony Blair Associates, a consultation set up by the former prime minister that is no longer in place. Banks like Deutsche, Credit Suisse and JPMorgan in turn brought two major miners, ENRC and Kazakhmys, to the London market in the noughties.

ENRC was delisted in 2013. ENRC Ltd is now a UK-based private holding company as part of the Luxembourg-registered Eurasian Resources Group. Kazakhstan’s richest man, Vladimir Kim, still controls Kazakhmys’ successor business. It was delisted last year in a buyout of £ 4.1 billion advised by Citigroup. Nova Resources, which is based in the Netherlands, now owns the private British company.

Kazakhstan maintains an indirect foothold in the FTSE 100 index via constituent Glencore. The Swiss miner and trader owns 70 percent of Kazzinc, a mineral producer responsible for nearly a fifth of its metals and minerals ebitda by 2020.

Kazakh fintech Kaspi has driven deposit evidence in 2020. It fell 30 percent last Wednesday, but the group is still capitalized at $ 19 billion. Nazarbayev’s family member and former Kaspi shareholder Kairat Satybaldy apparently transferred or sold his stake before the listing.

The extended Nazarbayev family has links with £ 330 million of London property, two-thirds of British property linked to Kazakh elite, according to a recent report by the Chatham House think tank.

Violence in Kazakhstan underscores the difficult balancing act required of the City of London as a foreign business hub. Moral relativism is easier when life is superficially peaceful in the authoritarian nations whose monetary elite you advise. When soldiers crush revolts against them, reputational and regulatory risks extend to Western bankers, accountants, and lawyers.

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