In 2021, News Price published an investigation into JSC «SPK Shymkent» under the leadership of the then-chairman Baurzhan Kankin. Journalists revealed how state-owned Social Entrepreneurship Corporations, instead of developing regions, increase Kazakhstan's external debt and enrich management through schemes involving budget funds, land, and the parallel growth of family businesses.
The editorial board of FBRK publishes the material in its original form; the authors' spelling and punctuation have been preserved.
In every regional centre or city of republican significance in Kazakhstan, there is a joint-stock company whose sole founder is the local executive body – the akimat of the region or city. These organisations are called "Social Entrepreneurship Corporation" and bear corresponding names – JSC «SPK «Astana», JSC «SPK «Shymkent», etc.
Initially, when these organisations were created, their mission was intended to be helping to develop social entrepreneurship in the region and stabilise food prices during periods of seasonal growth. However, as usually happens in Kazakhstan, a good idea was spoiled by traditional implementation, and today the SECs have managed to get involved in everything, even participating in the formation of external debt.
Thus, at the beginning of 2020, JSC «SPK Shymkent» had its own share in the structure of Kazakhstan's external debt amounting to 11.5 billion tenge, of which 2 billion was just interest that could have been avoided if the then-acting city mayor Gabidulla Abdrakhimov had not been a spendthrift and treated the budget as his own pocket.
As for stabilising food prices during periods of increase, the mechanism created by the SEC for forming a stabilisation fund and "releasing" products onto shelves at dumping prices proved effective only in enriching its management and those involved in forming the stabilisation fund.
To be convinced of this, one need only type "SEC stabilisation fund criminal case" into Google and get over 6,000 results, in which one can also discern the amounts for which those responsible for the stabilisation fund were convicted – an ordinary citizen could not earn such money in two lifetimes.
JSC «SPK «SHYMKENT»
The leader among the SECs in forming Kazakhstan's external debt is JSC «SPK «Shymkent». In 2019, the Accounts Committee for Control over the Execution of the Republican Budget found colossal violations in the work of the akimat, including 2 billion tenge in financial violations and over 10 billion in inefficient planning.
At that time, JSC «SPK Shymkent», under the guarantees of the akimat, issued bonds to implement the state housing construction programme "7-20-25" for the amount of 10 billion tenge (about $23.5 million). Moreover, they did this without notifying the Ministry of Finance and placed the bonds at 9.75% per annum, instead of the 0.25% traditionally prescribed for the state programme. Thus, the residents of Shymkent ended up owing the budget 2 billion tenge (about $4.7 million).
The then-acting (as of 2021 - editor's note FBRK) Chairman of the Board of JSC «SPK «Shymkent», Baurzhan Kankin, promised that the company he managed would be a leader in financial reporting among other SECs.
And that is understandable; Kankin himself is a bachelor of economics, a master of business administration "Master of Business Administration" and is perfectly capable of manipulating figures in financial reporting. For example, in the SEC's financial report for 2019, it is stated that the company received 3.7 billion tenge during the year from the sale of fixed assets (assets directly involved in production activities and used for more than 1 year), although, in the same report, in the "Balance Sheet" section, it is evident that at the beginning of the year the JSC had fixed assets totalling only 11 million tenge.
The company, neither by law nor by accounting standards and rules, had the right to sell assets for an amount significantly exceeding the balances at the beginning of the reporting period, and even if these assets appeared during the reporting period and were recognised as fixed assets, they needed to be used in production activities for more than 1 year. A classic case of "having your cake and eating it".
JSC «SPK «Shymkent» and its head Baurzhan Kankin constantly try to bluster, put on a brave face when things are going badly, and talk about how effective they are, but the numbers usually speak to the contrary. For example, to obtain 1 billion 467 million tenge (almost $3.5 million) from the budget without competition, the SEC only needs to announce a share issue, and then the city akimat, by decision of the sole shareholder, will direct these funds from the city budget directly to the JSC's accounts.
On the website of JSC «SPK «Shymkent», it says: "The Social Entrepreneurship Corporation 'Shymkent' is a regional development institution, stimulating economic activity in the region, including through attracting investment, and acting as a catalyst for the formation of competitive sustainable industries". However, what competitiveness can be spoken of if the SEC does not hide its schemes, whereby for projects it takes land at cadastral value and sells it at market value?
Moreover, the SEC takes land for itself in ways that are not at all competitive, but using the same old scheme of paying for its own issued shares. Thus, by a decision of the sole shareholder in the person of the mayor of Shymkent, property – the buildings and structures of the hippodrome, worth 70.5 million tenge (approximately $167 thousand), held on the balance sheet of the State Municipal Institution "Comprehensive Sports Club for National and Equestrian Sports of the City of Shymkent" – was transferred as payment for shares of JSC «SPK «Shymkent» in their favour.
Disputes had already flared up around this plot at the beginning of the year, and local residents were against the decision to build an elite residential complex on the site of the hippodrome. The city mayor, Murat Aitenov, assured at the time: "We negotiated. We negotiated hard. They wanted the hippodrome for free. The negotiation was tough." However, the head of the country's third-largest city never confirmed who would benefit from this negotiation, but judging by the SEC's schemes, it is far from the people.
Every scheme, to paraphrase a well-known saying, has a name. And in our case, it is:
Kankin Baurzhan Tokbolatovich – born 23 June 1987 in Pavlodar region, studied in Pavlodar city and at Suleyman Demirel University. Currently (as of 2021 - editor's note FBRK) Chairman of the Board of JSC NC SEC «Shymkent», President of the Triathlon Federation of Shymkent, and first head of the branch of the Cycling Sports Federation in Shymkent.
He has worked in various positions at LLP «Deloitte», JSC «Temirbank», JSC «Arcelor Mittal Temirtau», JSC «Development Bank of Kazakhstan», as a consultant at «Union Bancaire Privee» (Geneva, Switzerland), and as deputy director of the department for the development of the asset management services market at JSC «Administration of the International Financial Centre Astana».
From November 2016 to January 2019, he was the first deputy chairman of the board of JSC NC SEC «Astana».
Kankin often liked to mention in his stories that when hiring, he gives priority to local candidates, but even so, a trace of "team migration" is noticeable:
- Rasul Ilimbayev – Deputy Chairman of the Board of JSC «SPK «Shymkent» (as of 2021 - editor's note FBRK), who coincidentally worked in Astana during the same period as the Chairman of the Board, Kankin himself. Here he is on Facebook.
- Bekbolat Kairbekov – Deputy Chairman of the Board of JSC «SPK «Shymkent» (as of 2021 - editor's note FBRK), by a strange coincidence of circumstances born and raised in Pavlodar. And since 2017, like Ilimbayev, he worked at «Astana Convention Bureau» – an organisation accountable to the city akimat and actively cooperating with JSC «SPK «Astana». For those who want a closer look: here is his Facebook and VK.
- Rinat Salmenov – Advisor to the Chairman (as of 2021 - editor's note FBRK). Also, by a strange coincidence, born in Ekibastuz, just like the Chairman himself. And here are his Facebook, Odnoklassniki and Twitter.
FAMILY BUSINESS
Along with Baurzhan Kankin's career growth and change in geographic activity, certain changes also occur in his family business. And if these changes are not particularly noticeable at the only LLP of his younger brother, called "TOKAY GROUP", then Baurzhan's wife – Kankina Asel Mukhtarovna, can boast of a clear increase in the turnover of her business.
Besides being the head of the aforementioned LLP «TOKAY GROUP», the top manager's life partner is also the head and founder of:
- LLP «ALMEUS-BUSINESS», registered in 2012, located in Kokshetau, main activity – electrical and installation works for laying telecommunication, computer, and television networks. The company paid 0 tenge in taxes.
- LLP «Super Family» – the company has been operating for over 6 years, registered in Astana, type of activity – web portal activity, taxes paid over the entire period just over 1 million tenge.
- LLP «SILICON STEPPE» – a capital city LLP with NACE code "web portal activity" and zero tax contributions. Besides Kankina, the LLP's members include Umarov Ruslan Mirgaliyevich and Nigmatov Timur Yergaliyevich.
- LLP «FINMENTOR.KZ», a capital city company with the type of activity "other information technology service activities". This LLP paid less than 100 thousand tenge in taxes for 2019 and 2020. Besides Kankina Asel, the founders of LLP «FINMENTOR.KZ» include the director of this company, Batayev Arman Amankeldiuly, who also has a stake in LLP «ATYRAU INVEST PARTNERS» and the non-profit organisation «QAZAQ ASSOCIATION OF MINORITY SHAREHOLDERS (QAMS)».
- LLP «STROY TECH IC» – a construction company with 17 years of experience, registered in Kokshetau, director Yesenov Mukhtar Zhanibekovich (also founder of the Akmola regional branch of the RLE "Union of Builders of Kazakhstan" and the PA "Karaté-do (WKF) wado-kai goju-ryu shotokan shito-ryu Federation of Akmola region").
Besides Kankina, the founders of «STROY TECH IC» included Kurmanbayev Nariman Rakhmetullovich (also a founder of LLP «Nariman Kuryls»), but he left the membership in December 2020.
«STROY TECH IC» is a company that secured large volumes of government procurement in the Akmola region, precisely during the period when Baurzhan Kankin came into leadership positions in the region, first at IFCA, and then at JSC «SPK «Astana» (2016-2019).
The enterprise received its first contracts in 2016 from a single source from the State Institution "Construction Department of Kokshetau city", for amounts of 280 million tenge and 449 million tenge.
And then, up to the present day, the LLP becomes a contractor, either winning competitions from the construction department of Kokshetau city or receiving orders from a single source, for various amounts: about 700 million tenge in 2021 and over 1 billion tenge in 2020.
The company has an active litigation history (as of 2021 - editor's note FBRK): about 30 cases, 8 Quality Management System certificates, and 4 unpaid fines totalling over 2.5 million tenge.
Some of the LLP's contracts are unfulfilled, for example, the very first tender in Kokshetau – construction of an annexe for 420 places to secondary school No. 18 in Kokshetau, Akmola region, for 449.6 million tenge.
Also unfulfilled is the contract for the construction of a 35-apartment 9-storey building in Kokshetau for 216 million tenge in 2017, under which the total actual contract amount was only 89 million tenge.
In 2019, the company went to court, filing for rehabilitation proceedings, arguing that the enterprise was insolvent and seeking a way to restore solvency.
But the Specialised Inter-District Economic Court of Akmola region refused, explaining that besides debts of 150 million tenge, the company also had debtors – 30 million tenge in accounts receivable, as well as property (inventories and assets) worth 1.55 billion tenge.
In the most recent of the proceedings – an attempt to charge a penalty for missing the deadlines for putting into operation the construction of a 45-apartment 9-storey building – the company won.
«STROY TECH IC» has many processes related to challenging actions or inactions of state bodies, procurement decisions, etc.
But there is one process that was very revealing and gives us an understanding of how our protagonist involved an LLP directly connected to his wife in his schemes.
In 2014, LLP «STROY TECH IC» sued the PA «Karaté-do (WKF) wado-kai goju-ryu shotokan shito-ryu Federation of Akmola region», whose current founders include the head of «STROY TECH IC», Yesenov Mukhtar Zhanibekovich, while the federation is headed by a certain Yesenov Alibek Mukhtarovich.
But at that time, the "president" of the federation was a certain Rakhimzhanov S.B., who agreed to transfer to «STROY TECH IC» a plot belonging to the public association for the construction of a building, and in return receive the basement and first floors, while the LLP took the premises on the second to fifth floors.
However, the cunning Rakhimzhanov S.B., when it came time to hand over the project, decided to screw his partners over and arranged for the transfer of the land plot from the LLP's name into the ownership of his wife, Rakhimzhanova S.K., allegedly for debts of 8.5 million tenge from 2010, which he himself had signed off on.
The court, of course, obliged Rakhimzhanov S.B. to return the land under the building, but the situation turned out to be not only quite amusing but also shows that Kankin, at least since 2014, understands land scams and knows how to build an apartment block without buying land at market value.
As they say, there's a spanner in the works for every clever scheme.
There are a few more points characterising the hero of our investigation, but they are debatable and ambiguous.
For example, why is Baurzhan Kankin's number hidden by privacy settings on the GetContact service, while bots remember that previously in the database, this number had all sorts of labels: Damir, Traffic Cop, Handsome Daniyar Client from Aikon, Damir Normal 20k and others.
Perhaps this is somehow related to the fact that priestesses of love in Kazakhstan use GetContact as a cloud-based system for exchanging client data, but it is impossible to prove this.
It is rumoured that the hero of our investigation himself likes to indulge, either in mephedrone or cocaine, and even employees say that he sometimes holds meetings in such a state, but we do not believe these rumours. After all, the creator of the company «Super Family», a caring father and honourable manager of an entire JSC «SPK «Shymkent», could not possibly be so depraved. Especially with such a successful wife…