Home Market Analysis ‘Uzbek Princess’ Jail Term For $1.5 Billion In Financial Crimes Still Awaits Swiss, U.S. Agreement

‘Uzbek Princess’ Jail Term For $1.5 Billion In Financial Crimes Still Awaits Swiss, U.S. Agreement

by WOOWinvest
0 comment
‘Uzbek Princess’ Jail Term For $1.5 Billion In Financial Crimes Still Awaits Swiss, U.S. Agreement

It’s been a long year already for “Googoosha”. But it has been an even longer decade, held up in a women’s prison in Tashkent, where she used to run around as Uzbekistan’s glamorous First Daughter. Those were the good ole days. She was a pop star. She had her own jewelry line. She was loaded. Too bad the money was mostly stolen or paid in bribes.

If you had never heard of Gulnara Karimova, and saw her in her heyday in the mid-2000s, “Googoosha” was the Paris Hilton of Uzbekistan. A striking, alluring woman in a country that does not exude much in the way of glitz, her father, Islam Karimov, was the country’s president. That’s where the similarities with Paris Hilton end.

Before Karimov died in 2016, he sent her to her room, literally, at around 41 years old. She was put under house arrest in 2014 because her theft of public funds was too much to go unpunished.

The US was involved. US Immigration and Customs filed criminal charges against her under the Foreign Corrupt Practices Act. They said bribery schemes involving telecom firms, including Russia’s Mobile Telesystems (MTS), which, until last year, traded on the NYSE, led to bribe payments of more than $865 million. She was allegedly approaching billionaire status, thanks to her financial crimes.

In March 2019, she went to jail for violating the terms of house arrest. She has been in a Tashkent prison for the past four years. She has about 10 years left in her sentence.

There might be a way out for Uzbekistan’s forgotten “princess,” if she was often referred to back home.

Last year, Switzerland and Uzbekistan said they would create a fund that the United Nations Development Program would run. This fund would be capitalized with $131 million of Gulnara cash stashed in European bank accounts. Those funds are frozen. This so-called Framework Agreement was created in 2020. Two years later, an agreement was signed to return that money to Uzbekistan in mid-August.

The fund was the new Uzbek government’s idea. Switzerland agreed to it. It’s in limbo. It is unclear why the funds have not landed in Uzbekistan yet. Sources say, “red tape”, adding that there is “no reason” to deny Uzbekistan repatriation of Gulnara’s ill-gotten funds.

“The issue is important for the Uzbek government because its President, Shavkat Mirziyoyev, and his key advisors fully realize that to progress as a modern society and to interact positively with law-based societies elsewhere, they must take a hard line on corruption. They must handle any money coming from this arrangement responsibly and openly,” says S. Frederick Starr, a Distinguished Fellow specializing in Eurasia at the American Foreign Policy Council and founding chairman of the Central Asia Caucasus Institute. “This action will send a signal to many within the country who are deciding whether or not to break with the bad habits of the previous government.”

Gulnara: Almost a Billionaire

Gulnara was found guilty of extortion, money laundering and numerous other financial crimes by Uzbekistan’s Supreme Court in 2020. Switzerland is the first mover to unfreeze her assets. The US might follow. Uzbekistan wants this to happen sooner; after the pandemic and sanctions against their most significant trading partner, Russia, the country is looking to free up money. To Tashkent, Gulnara got rich by gaming state contracts. That’s public wealth that was robbed. They want that money back.

Gulnara’s Swiss attorney Gregoire Mangeat did not respond to written requests for comment about where this stands and whether Gulnara has any say in the matter.

Gulnara was once a prominent figure in Uzbek politics. She was ambassador to Spain and a permanent representative to the United Nations in Geneva. At one point, it was speculated that she would take her father’s place as president.

She is the stereotype of the post-Soviet material girl. She had her own jewelry line called Guli. (It’s been 404’d.) She had her TV channel. (It’s off the air.) She was a pop star that went by the name Googoosha. She lived in a palace on 94 acres with its own winery and nightclub. Her fall from grace is the stuff of movies.

Her actions resulted in some $1.5 billion in arrested assets in Luxembourg, Belgium, Switzerland and offshore tax havens.

The Trump administration sanctioned her under the US Global Magnitsky Act in late 2017. At the same time, the Treasury Department’s Office of Foreign Assets Control froze her assets in the US and dollar accounts worldwide.

The bulk of Gulnara’s “winnings” came from influence peddling, bribes and money laundering schemes garnered from MTS, another Russian telecom called VimpelCom and Swedish telecom Telia Company. The targets were the subsidiaries of Russian and Swedish companies in Uzbekistan. They paid for her assistance in maintaining access to the country’s telecom market.

She purchased state-owned shares in two cement companies at insider prices, sold them to foreigners for a profit, and was accused of threatening local businesses or risking having their real estate taken over by her.

This summer, a Swiss court granted Gulnara access to around 293 million Swiss francs ($303 million) worth of frozen funds, according to her lawyers. It was the first time in years that some good news came her way.

Her lawyer (Mangeat) said on July 22 that the Swiss Federal Criminal Court arrived at its decision after finding that the country’s Attorney General had failed to prove that the funds had been acquired through acts of corruption, Eurasianet news reported at the time.

In 2012, the Swiss Attorney General froze 800 million francs (around $860 million) as a result of its investigations into Gulnara. But it is only around $131 million in total that Switzerland and Uzbekistan have agreed to repatriate as of August 2022.

Tashkent is still waiting for action on the remaining frozen funds.

Gulnara is not the only adult-child of a frontier market president whose storybook life of paparazzi and glitz turned into one of scandal and sanctions.

Hosni Mubarak’s sons Alaa and Gamal Mubarak were part of Egypt’s political and investor A-list. The ‘Arab Spring’ protests led to Gamal’s ouster from his party leadership role. Both men were eventually jailed for embezzling some $14 billion from public funds and insider trading on the stock market. They were released in 2015. The EU had them both sanctioned up until 2021.

Ukraine’s pre-Maidan president Viktor Yanukovych’s son Oleksander hasn’t been jailed for anything yet, but the trained dentist became a huge asset manager, running a firm called MAKO, Management Asset Company, in the Donbas region of East Ukraine, now a war zone . Oleksander is one of Ukraine’s richest men, and he was sanctioned by the EU in August 2022. He is also sanctioned by the US

For Uzbekistan, these are symbols of a shadier past that new leadership is trying to move on from.

Should Gulnara be released thanks to the Switzerland agreement, she is likely to still face prosecution in the US unless she returns all the funds. The Uzbeks want the US and Swiss to work together to unfreeze those remaining assets.

Treasury did not respond to requests for comment.

Uzbekistan wants to move beyond Gulnara, even without full repatriation of the frozen accounts beyond what the Swiss agreed to already in August. The government says they are open to bringing in neutral third parties, namely the UN, to monitor where that money goes. So it doesn’t find its way to a bank account somewhere in Switzerland.

You may also like

Leave a Comment

Our Mission is to help you make better trading decisions by providing actionable investing content, comprehensive tools, educational resources and assist you in making more money in the stock market.

Latest News


Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

@2022 – All Right Reserved. Designed and Developed by WOOW Invest

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy