Turkmenistan: A Model Kleptocracy Report by Crude Accountability June 2021 1 Published by: Crude Accountability Copyright © 2021 Crude Accountability This report may be quoted from or copied as long as the source/authors are acknowledged. Crude Accountability assumes full responsibility for the contents of the report. While we have made every effort to ensure the accuracy of the information presented in the report, we cannot be held liable for any errors, omissions or inconsistencies. Copies of this report are available on crudeaccountability.org Turkmenistan: A Model Kleptocracy Crude Accountability 2 Table of Contents Foreword 05 Key Findings 06 Introduction 07 Chapter 1. The Hidden Economy of Turkmenistan 11 Chapter 2. The Worst Place in the World to Do Business 40 Chapter 3. Turkmenistan Incorporated: The President’s Family 69 Chapter 4. Imprisoned Government Officials and Their Crimes 102 Conclusion 113 Turkmenistan: A Model Kleptocracy Crude Accountability 3 Crude Accountability is an environmental and human rights Who We nonprofit organization that works with communities in the Caspian and Black Sea regions who battle threats to local Are natural resources and the negative impacts on their health. Crude Accountability works on the local, national, regional, What We and international levels in partnership with active communities and organizations committed to a just and Do environmentally sustainable world. Since 2013, Crude Accountability has been a founding Prove member of the Prove They Are Alive! campaign. The campaign works to protect the rights of a large number of detainees serving long-term sentences in Turkmen Campaign prisons, about whom no information is available since their sentencing. Turkmenistan: A Model Kleptocracy Crude Accountability 4 this page is intentionally left blank Turkmenistan: A Model Kleptocracy Crude Accountability 5 Foreword Crude Accountability is proud to present this report, Turkmenistan: A Model Kleptocracy, which focuses on corruption and kleptocracy in Turkmenistan, one of the world’s most closed and repressive countries. Turkmenistan’s economy is driven by hydrocarbons, individuals are held without access to legal counsel, with natural gas and oil exports comprising 25% proper medical assistance, visitation, or packages and percent of the nation’s GDP. Rather than benefiting the letters, is financed by corrupt monies, revenue from country’s population of 5 million people, these monies hydrocarbons, and other dodgy deals. enrich a small group of elites, including the president, This report explores some of the most important his family, and his closest circle. questions related to these issues in contemporary In addition to increasing the personal wealth of the Turkmenistan. Chapter 1 describes Turkmenistan’s leadership and financing vanity projects that provide hidden economy, asking the questions—where has the no benefit to the nation, these monies finance a money gone? Why doesn’t the economy benefit the closed, brutal, and repressive prison regime, an unjust citizens of the country? Chapter 2 looks at the specific legal system, and other mechanisms to keep the companies that engage in business in Turkmenistan people of Turkmenistan living in fear and destitution. despite the corruption. Chapter 3 provides in-depth information about the presidents’ families. This is the Turkmenistan has had only two presidents during its 30 first time this information has been presented in one years of independence. Both have created cults of report and describes the linkages between family personality; ruled through fear; stifled independent members and corporate and other entities involved in journalism, political opposition, and civil society; and Turkmenistan’s economic and political landscapes. both have amassed significant personal wealth through Chapter 4 looks at some of the human rights abuses, questionable means. particularly the issue of enforced disappearances, and Since 2003, Crude Accountability has been working to connects this heinous crime to the economic and help communities around the Caspian Sea region political elite in the country. impacted by environmentally dangerous projects. This As our research shows, the abuses taking place in has been particularly challenging in Turkmenistan, Turkmenistan are not happening in a vacuum. where there is virtually no civil society. The government International actors—corporations, governments, has abolished independent civic groups, repressed financial institutions, and intergovernmental bodies— activists and scientists, and kept the citizens of the engage regularly with the Turkmen leadership. Whether country, who should be rich from hydrocarbons, in by turning a blind eye or by knowingly participating in overwhelming poverty. the corrupt and kleptocratic practices that enrich and The corrupt and harmful practices of the Turkmen empower the country’s elite, these international bodies government include the illegal human rights violation of are complicit in the continuation and strengthening of enforced disappearances. The Prove They Are Alive! corruption, kleptocracy, human rights abuses, and Campaign, of which Crude Accountability is a founding impoverishment in Turkmenistan. member, has documented over one hundred cases of enforced disappearances. The creation and Kate Watters, Crude Accountability Executive Director maintenance of the brutal prison system in which these Turkmenistan: A Model Kleptocracy Crude Accountability 6 Key Findings Turkmenistan is a model kleptocracy, Berdymukhamedov has restructured the oil and gas where state revenues are embezzled and billions of industry around himself, dollars wasted by President Berdymukhamedov on abolishing the State Agency for Management and Use of vanity projects. His personality cult rivals that of his Hydrocarbons, and creating a shadowy national predecessor, Saparmurat Niyazov, and an all-powerful company called NAPECO, which publishes no security service allows no dissent, no freedom of information on its activities, revenues, expenditure, or speech, no political pluralism. management board. The country is one of the most, if not the most, The president’s family controls the country’s major economically opaque in the world, businesses. and has become even less transparent under President Key to this control are his five sisters, especially his Berdymukhamedov. It releases no reliable information on eldest sister, Durdynabat, her husband Annanazar economic growth, its national budget, oil and gas Rejepov, and their sons Shamurat and Hadjimurat revenues, or currency reserves. Rejepov. Berdymukhamedov’s son, Serdar, is likely being groomed to take over from his father at some point in the future. Information from international financial institutions suggests Turkmenistan possessed around $35 Outside of the president’s family, the most powerful billion in foreign currency reserves in 2015. The person in the country is Viktor Khramov, country’s current severe economic crisis suggests that a presidential advisor who retained his position after they have been misused and mismanaged, although how Niyazov’s death. Berdymukhamedov’s advisor on oil and much remains is unknown. gas issues, Igor Makarov of the company Areti (formerly named Itera), is also believed to be a key associate and Turkmenistan relies on gas exports to China for the aids the president in his financial affairs. majority of its revenue. However, questions remain over China’s future gas Despite this model of corruption and repression, demand, and unless Turkmenistan diversifies its many companies still attempt to do business in economy away from oil and gas exports it will remain in Turkmenistan. deep economic peril. The most successful – Polimeks, Bouygues, Calik Holding, Itera/Areti – do so through close personal The majority of Turkmenistan’s gas export revenues relationships with the president. flow to a state account in Deutsche Bank, Frankfurt. Deutsche Bank has consistently refused to engage with At least 95 people, many of them former state human rights and anti-corruption campaigners about officials, continue to be held in Turkmen prisons with how it acts as the main banker for one of the worst no contact with the outside world, regimes in the world. and no information on whether they are even still alive. Turkmenistan: A Model Kleptocracy Crude Accountability 7 Introduction Turkmenistan: A Model Kleptocracy Crude Accountability 8 Turkmenistan is one of the most secretive and repressive countries in the world. Many people’s knowledge of this Central Asian state is limited only to the eccentric behavior of its president, Gurbanguly Berdymukhamedov, whose exploits (everything from giving musical performances to racing cars and shooting handguns) are relayed by state television. While these viral videos bring at least some attention to this isolated nation, there is a danger that they mask the very real human rights abuses that take place on a daily basis. There are virtually no civil liberties in Turkmenistan, no political plurality, and no freedom of speech. Even freedom of movement is restricted with reports of a ‘blacklist’ of as many as 20,000 people who are prohibited from leaving the country.1 The year 2020 saw Freedom House rank Turkmenistan below even North Korea in terms of civil liberties and political rights, with war-torn Syria the only country receiving a lower score.2 With a relatively small population (around 4.75 million as of the end of 20123 ), Turkmenistan should be economically prosperous from the sale