Viktor Khrapunov: squandering natural treasures for the wealth (y) of nations/I

by Charles van der Leeuw, KZW senior contributor

After General Gennady Kolpakovsky became governor-general of the district of Semirechye (Land of Seven Streams) with Verniy, future Alma-Ata (Almaty) as its administrative centre back in 1867 on behalf of His Imperial Majesty, he ordered to develop what had been mainly a military garisson into a full-fledged “city in a forest”. It is mainly thanks to him that Almaty still looks wonderfully green. He imposed heavy fines on felling trees in and around the town, including a round of flogging in public for recidivists. If his rules would still be in vigour, the backside of Almaty’s former mayor Viktor Khrapunov would definitely look all colours of the rainbow. Vast areas of woodland and orchyards, leading to the near-extinction of Almaty’s renowned apple breeds, have been razed under Khrapunov’s administration — including parts of natural reserves. The purpose: building dream palaces for Kazakhstan’s nouveaux-riches — for a price, of course.

Viktor Khrapunov: squandering natural treasures for the wealth (y) of nations/IResults of judicial investigations concerning former Almaty mayor Viktor Khrapunov funneled into the public domain so far give the perfect impression of a case of white collar crime: the story of people of outstanding education, who enter the highest echelons of society and subsequently fall into a trap known as greed. Communal interests thereby sacrificed for the sake of influential individuals are damage enough in themselves. They distort the business climate, cause capital flight and asset value stripping.

But in the case of Khrapunov, the damage, not to speak of the potential damage that it could trigger, has much larger proportions than just a number of lavish bank accounts. In particular, illegal construction under the shadows of Mount Talgar which dominates the southern skyline of Almaty has cleared entire areas of woodlands and orchyards crucial to keep the soil together. And there is more to this than just tearing down pieces of natural beauty and clean air to breathe. Without this vegetation, the southern neighbourhoods of Almaty are exposed to the eventuality of avalanches and mudflows pouring straight into them, causing mass destruction and threatening the lives of many thousands. Did he ever mean to do so? Given the man’s outstanding erudition, it is indeed hard to believe he would. Nevertheless, he did — wittingly or not.

Viktor Vyacheslavovich Khrapunov was born in 1948 in the village of Pryedgornoye, in the district of Glubokovsky in the northeast of Kazakhstan. During the years following the Second World War, as the USSR had lost substantial ranks of its engineers, doctors and other academic specialist needed to rebuilt the country which had been ravaged by the German invasion, every effort was made to educate the new generation to the highest possible levels. But work forces in the field had also dwindled, and it was thus that young Viktor, after finishing the College of Industry and Technology in Ust-Kamenogorsk, started to work first as a repair mechanic, then as a foreman, and later as senior engineer at the Almaty Thermal Power Station during the day, while studying at the Almaty Institute of Electric Technology in the evening.

Next to his professional career, Viktor Vyacheslavovich made sure to get well-established in party echelons — indispensable in those days to secure any longer-term career to speak of. He first won the position of chairman of the Almaty Lenin district Communist Party Committee, to be promoted little later to the post of first deputy chair of the Almaty City Council. From there, he move on to the position of chairman of the Executive Committee of the City Soviet of People’s Deputies, which stood under the direct authority of the all-Union Supreme Soviet. After a term in office as minister of energy and coal, and later minister of energy and natural resources following Kazakhstan’s independence as of 1991, he obtained the reward he had always seen as the crown on his career: mayor of the city and the city-province of Almaty, which he achieved in 1997 — the same year Almaty lost its position as capital of Kazakhstan to Astana, but with the explicit task to establish Almaty as a dynamic regional centre of business and education.

On arrival, Khrapunov entered a situation in which private initiative was the key word to every solution to every problem. Kazakhstan had only started to recover from a four-year-long economic depression through drastic economic reforms which flung all doors wide open to private enterprise to which virtually no restrictions were imposed. This, as in many other parts of the former Soviet Union, led to state assets put on sale for next to nothing to anyone who even remotely pretended to redevelop them into viable commercial assets. Khrapunov found himself virtually in charge of that process, and clearly decided that just supervising it would be little beneficial, whereas participating in it at the same time looked extremely attractive. Moreover, at that stage, there was little taboo for such conflicts of interest.

Khrapunov’s main instrument to stash his gains was, and still is, a company called VILED International Unlimited. Numerous sites around town were bought by it that had no building permits and therefore looked of little value. He then ordered to issue building permits for them, which overnight multiplied their property value, and subsequently started offering them to the fortunate classes of Almaty, many of which had gathered their fortunes in pretty much similarly dodgy manners. Among Khrapunov’s clients were names such as Rakhat Aliyev, banker, President’s son-in-law and head of the National Security Council, using methods reminding one of the sweet old days of Lavrentiy Beria and thereby hard to say no to. As for Viktor Khrapunov, he promoted his business by withholding almost all outdoor advertising on strategic locations in and around Almaty to anyone but an advertising agency affiliated with VILED, the parent company president of which was Khrapunov’s wife Leila Kalybekovna. In all, at least 16 prime sites have been allocated in closed procedures circumventing all open bidding requirements in this manner.

Some of these larger objects appropriated by the Khrapunovs included a plaza on the corner of Gogolya and Panfilova Streets, apartment and shopping space blocks on Furmanova Street Dostyk Avenue, both on the edges of the uppity business neighbourhood of Samal-2. For all 12 blocks identified as falling under VILED’s umbrella, together no more than the equivalent of 60 million US dollar was allegedly paid — at least this is what Khrapunov was to claim later — but in any case never found back in any budget in the city administration where the sums for the purchases should have been registered.

Further uphill, property, including parts of protected natural zones, were bought up by VILED and affiliated firms for even more hilarious sums. Thus, a forest site named Wood Fairy Tale and another one known as Oak Grove were purchased by a company called Gulmira Ltd., run by one of the Krapunov pair’s associates by the name of Shebityevov and believed to be financially dependent on VILED, for the negligible amounts of 1.8 and 2.1 million tenge respectively. Public property has also been sold illegally to another one among Khrapunov’s shell firms called Phoenix Unlimited, run by a certain G. Mukashev, who in particular obtained blue-chip locations with permission to demolish the kindergardens, pensioners’ homes and other social facilities located on them, with the aim to build commercial glamour objects on them.

What made Viktor Khrapunov look more common than special at the time was that the former Soviet Union was awash with such practices. Some of them, operating on larger scales, pursued their goals even more ruthlessly judging by the trail of blood that many an oligarch has left behind him. In Russia and Ukraine, they by and large acted on their own — though with a string of cronies within official institutions some of whom were rewarded with careers but most of whom ended up with no more than a handsome bribe. The difference with Kazakhstan is that oligarch schemes have often been heavily embedded in family relations, and that influential clans play a key role in post-Soviet business empires’ development. This also at least in part could explain the fact that whereas Russia’s oligarchs work in “mute solidarity” and try to avoid confrontations between each other, quite some leading business clans in Kazakhstan seem to be at each other’s throats.

As for Khrapunov and family, the Almaty venture which had started shortly after his appointment in 2002, was to end rather abruptly in early 2007 as Viktor Vyacheslavovich was appointed minister of emergencies and called to Astana. He held the post for less than a year, when he was put in place as governor of the Pavlodar province in the northeast of the country. Some have suggested the fact that he was an ethnic Russian, though considered loyalist for a long time, who was likely to maintain tense relations with the upper circles in Almaty while in the northeast, where ethnic Russians form a majority, he would function better. This “smooth theory”, however, was to be belied two years later, with the family flying head-over-heels to a new home and a new life in Switzerland. (to be continued)