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Bankrupt firm operates in face of court proceedings
By Ubaydulla Babadzhanov, Shakar Saadi and Talib Kurbanov
TASHKENT – Zeromax, a Swiss-based conglomerate, continues to operate in Uzbekistan in the face of a half-billion-dollar debt to the government and a court order to seize its assets.
But the company’s future remains as mysterious and disputed as its ownership.
In its heyday, the company (founded September 2001) ran gasoline stations; explored for oil and gas; operated hydrocarbon pipelines; mined bentonite; raised cotton, wheat and cattle; and manufactured textiles in Uzbekistan.
Zeromax created controversy when critics alleged it was enriching Gulnara Karimova, President Islam Karimov’s daughter. It listed its 2008 operating income as 3.298 billion Swiss francs (US $2.848 billion).
Now, it has been plunged into scandal and court proceedings.
The firm’s troubles began May 5 when an Uzbek court ordered its assets seized and a halt to its operations to satisfy nearly a half-billion-dollar debt to the Uzbek government.
Uzbek political scientist Tashbulat Yuldashev identified the debt as unpaid taxes on oil and gas export revenues that the company was supposed to pay starting in 2006 after a five-year tax holiday.
Unconfirmed reports May 21 said that Uzbekneftegaz and Russia’s Lukoil bought 51% and 49%, respectively, of the firm. But an anonymous Uzbek journalist disputed claims of Lukoil’s participation.
In Uzbekistan, the company shows signs of disarray. Police questioned Zeromax executive director Mirodil Jalalov in May, holding him for some time, economist and former Uzbek diplomat Alisher Taksanov told Central Asia Online.
A source with numerous Zeromax contacts in Karshy, where Zeromax has a number of projects, said Jalalov was questioned before being released. “He might as well return to the company”, the observer added.
Most of the company’s employees are on unpaid furlough, but will return in late July, the Karshy source said. “Most of the employees and some of the management will be back”, the source added.
At a Zeromax construction site, one labourer described the situation. “At the end of April we were placed on indefinite furlough”, he said. “Our foreman said the project would resume soon. I hope so”.
Even Uzbek football might have been affected. Star Brazilian coach Luis Felipe Scolari resigned early from the Zeromax-backed football team, FC Bunyodkor of Tashkent, citing team financial problems.
“We’re all in shock because the club is completely broke”, a Bunyodkor employee recently told Central Asia Online. The Uzbek prosecutor's office has refused to comment on the Zeromax case.
Karimova has denied reports that she fully or partly owned Zeromax.
“Karimova never owned the company”, a Zeromax employee in Switzerland told Central Asia Online, saying Jalalov owned the firm. The Swiss Commercial Register has never listed Karimova as a company partner or officer. Jalalov and his wife, Fatima, are listed as 90% and 10% owners, respectively. The Swiss register previously listed Zeromax Holdings AG and American businessman Harry Eustace as part-owners.
Ikromjon Yokubov, an Uzbek living in Baar, Switzerland, is listed as the firm’s president.
Karimova’s critics, however, remain convinced she is a hidden partner. Her ex-husband, Mansur Maqsudi, identified her as a part-owner, RFE/RL reported.
“Official data won’t tell you anything”, an anonymous Zeromax employee said. “Gulnara owns Zeromax through shadow companies. … She has a share of it, as she does of many things”.
Zeromax even “borrowed from foreign investors (the World Bank and Asian Development Bank [ADB]) under government guarantees”, Taksanov said.
The World Bank and ADB both told Central Asia Online they had no financial involvement with Zeromax.
Some observers have wondered whether Zeromax’s problems mean that Karimova is losing her chance to succeed her father, with some predicting the ascendancy of Prime Minister Shavkat Mirziyaev.
Another school of thought holds that the company's troubles do not affect Karimova, the Uzbek ambassador to Spain.
Karimova and her father both seem, at least publicly, unaffected by Zeromax’s problems. Karimova went to the Cannes Film Festival May 21, while Karimov May 26 toured the Andijan region – site of the May 13, 2005, massacre of demonstrators. He hosted summits of the ADB and the Shanghai Co-operation Organisation in Tashkent in May and June, respectively.
Karimova might not object to Zeromax's disappearance or even want to be president of Uzbekistan, observers suggested to Central Asia Online.
“She knows she doesn't have the administrative experience (to be president). ... She has everything she wants”, Taksanov said.
Agreeing with Taksanov is a former assistant of Karimova's who spoke on condition of anonymity. “Zeromax accomplished its mission. It laundered the money, shipped it to offshore accounts. ... The people at the top of the firm, including Jalalov, made enemies, including her, by smuggling and other such activities. Gulnara didn't need this; she needs to look clean for European society”.
“I suspect that it is repositioning, simply. … Zeromax was attracting jealousy. So it gets jettisoned like a snake shedding an old skin. I don't think you'll find Gulnara has lost a penny”, former British ambassador to Uzbekistan Craig Murray, an outspoken critic of the Karimov regime, told Central Asia Online by email.