Tuesday, June 15, 2010

The South Country, Part 3

Starting in this post, we begin to dig a little deeper into what might be happening in Kyrgyzstan. I shall attempt to develop the story chronologically.

Please note that there are different ways of spelling the name of the deposed Kyrgyz president; in my previous post on the subject, I had it "Bakiev" and here it is "Bakiyev".

On April 6, an opposition protest against government corruption and the high cost of living turned violent. The next day, Kyrgyz President Kurmanbek Bakiyev declared a state of emergency. As the situation worsened, Russia was accused of being behind the unrest - a charge Moscow denied. On April 15, President Bakiyev fled the country with his family.

Please note that in Part 2, Bakiyev was said to be allied to Washington, and his replacement, interim President Otunbayeva, was said to be allied to Moscow.

Meanwhile, President Bakiyev's son, Maxim, by this time facing criminal charges for corruption, was in the United States as this situation developed in Kyrgyzstan.

Now, we first consider excerpts from Kyrgyzstan: Possible Diplomatic Debacle Looms for US Government over Manas Base, dated April 9, 2010, by Deirdre Tynan:

It is unclear if the provisional government led by Roza Otunbayeva has made a formal request to the United States for the return of Maxim Bakiyev. A spokeswoman for the US embassy in Bishkek said on April 10: "It is the US government's long standing position not to comment on extradition matters." The State Department in Washington referred all inquiries back to the embassy.

Beyond the immediate issue of Maxim Bakiyev's status in the United States, Washington's engagement with the Bakiyev family seems to have the potential to develop into a diplomatic disaster for the US government, political analysts say.

The sudden turn of events in Bishkek has created a near-term crisis for US strategic interests in Central Asia and Afghanistan. The United States had cultivated a cozy relationship with Bakiyev and his family, with the apparent aim of ensuring access to the transit center at Manas airport outside Bishkek, an important support hub for military operations in Afghanistan.

The US government's close relationship with the Bakiyevs has quickly emerged as a sore point in US relations with the new Kyrgyz leadership. Maxim Bakiyev's presence in the United States could exacerbate hard feelings in Bishkek, potentially making it more difficult for the United States to hold on to Manas basing rights.

Maxim Bakiyev's presence in the United States also could invite heightened scrutiny of possible inappropriate financial dealings involving the US Defense Department and the Manas base. At the very least, Maxim may well become a lightning rod for criticism of the United States coming from within Kyrgyzstan.

Already, the Central Asian state's provisional government has expressed interest in reviewing US government contracts concerning Manas operations. In addition, EurasiaNet.org has learned that the US Congress is preparing its own probe of Manas contracts.

So, the people were protesting corruption, the protests got out of hand, and Kyrgyz President Bakiyev was deposed and forced to flee the country; meanwhile, his son is in the US, charged back home in Kyrgyzstan with criminal corruption, while the US Congress was about to open its own investigation of the alleged corruption.

Skipping to the end:

It would seem that the Kyrgyz provisional government is intent on following the money.

The corruption surrounding Maxim, it seems, centers on the US Airbase at Manas, a Kyrgyz airport just outside the capital Bishkek, and named for an epic Kyrgyz hero. The Manas Airbase is a main transshipment point for support of US and allied operations in Afghanistan.

We now consider an excerpt from Kyrgyzstan: US Congressional Committee to Probe Manas Deals, by Deirdre Tynan, April 13, 2010 (please see original for links I did not reproduce):

A US congressional subcommittee is opening a wide-ranging investigation into the Defense Department's fuel contracting practices at the Manas Transit Center in Kyrgyzstan.

The investigation, to be conducted by the National Security and Foreign Affairs Subcommittee of the House Committee on Oversight and Government Reform, will seek to determine what relationship, if any, existed between Red Star Enterprises Ltd., its affiliate Mina Corp. and the family of nominal president Kurmanbek Bakiyev, whose administration collapsed amid political violence in Bishkek on April 7.

Mina Corp. currently holds the contract for fuel deliveries to Manas. The contracts previously were held by Red Star. Manas is a key hub for US and NATO troops and materiel going to and from Afghanistan.

The subcommittee will also probe what, if anything, the Pentagon, the State Department and the US Embassy in Bishkek knew about suspected contracting irregularities.


Sources have asserted to EurasiaNet.org that US Embassy personnel in Bishkek were aware of allegations concerning possible links between Maxim Bakiyev and Red Star/Mina Corp.

Now for an excerpt from Bishkek Fuel-Supply Corruption Probe Focusing on Maxim Bakiyev, by Deirdre Tynan, dated May 1, 2010 (again, see original for important links):

Kyrgyzstan's General Prosecutor's Office is focusing its corruption investigation concerning fuel supplies at Manas Transit Center on companies allegedly controlled by Maxim Bakiyev, the son of ousted president Kurmanbek Bakiyev.

Kyrgyz prosecutors are investigating six local suppliers that provided TS-1 jet fuel to Mina Corp and Red Star Enterprises Ltd., two entities that have held fuel supply contracts for Manas operations. Manas is a key logistics hub for US and NATO military operations in Afghanistan.

According to an April 30 statement released by the General Prosecutor's Office, the six Kyrgyz entities are suspected of having engaged in fraudulent practices to evade paying roughly $90 million in excise taxes over the past five years, a period that coincides with former president Bakiyev’s tenure in power.

The six companies under investigation were identified in the General Prosecutor's Office statement as "Manas Fuel Services, Kyrgyz Aviation, Central Asia Fuel, Aviation Fuel Service, Aircraft Petrol Ltd., [and] Central Asia Trade Group."

"It should be noted that all of the above companies belong to Maxim Bakiyev," the statement added. Bakiyev, the former head of the Kyrgyz Central Agency for Development, Investment and Innovation, was in Washington, DC, when unrest erupted in Bishkek in early April, resulting in his father's ouster. Kyrgyzstan's provisional leadership has authorized a warrant for Maxim's arrest. His current whereabouts have not been independently verified.

According to Kyrgyz prosecutors, the elder Bakiyev allegedly engineered parliamentary changes in tax regulations that were purportedly tailored to benefit his son's commercial interests.

So, Daddy Bakiyev was manipulating the government to enrich little Maxie Bakiyev.

Skipping down:

According to the US government's Federal Procurement Data System (FPDS) website, Mina Corp obtained the latest Manas fuel contract worth up to $730.9 million on July 29, 2009, to supply fuel to Manas under a no-bid contract. The justification cited was the "national security" clause of the Federal Acquisition Regulations system.


Under the terms of the Manas Transit Center agreement, both Red Star and Mina Corp are exempt from Kyrgyz customs and taxes. Article 7 of the agreement signed last year states: "purchases of goods and services in the Kyrgyz Republic by the US government or on its behalf to implement this agreement are not subject to any taxes, customs fees and similar payments on the territory of the Kyrgyz Republic."

Wow - no taxes or customs on the proceeds from a no-bid contract. That's a pretty nice deal for a president's son!

Stay tuned for Part 4.

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