In 2021, News Price published an investigation into JSC "SPK Shymkent", then under the chairmanship of Baurzhan Kankin. Journalists revealed how state-owned Socio-Entrepreneurial Corporations, instead of developing regions, increase Kazakhstan's external debt and enrich their 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, preserving the authors' spelling and punctuation.
In every regional centre or city of republican significance in Kazakhstan, there is a joint-stock company, 100% of which is owned by the local executive body – the akimat of the region or city. These organisations are called "Socio-Entrepreneurial Corporation" and bear the corresponding name – JSC "SPK 'Astana'", JSC "SPK 'Shymkent'", etc.
Initially, when these organisations were created, their mission was intended to be helping the development of social entrepreneurship in the region and stabilising food prices during periods of seasonal growth. However, as is usually the case in Kazakhstan, a good idea was spoiled by traditional implementation and, today, the SECs have managed to get their fingers into everything, even contributing to the formation of the external debt.
Thus, at the beginning of 2020, JSC "SPK Shymkent" had its own share in the structure of the Republic 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 mayor of the city, Gabidulla Abdrakhimov, had not been a spendthrift and treated the budget like 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 terms of enriching its management and those involved in forming the stabilisation fund.
To verify this, you only need to search Google for "SEC stabilisation fund criminal case" and get over 6,000 results, in which you can quite clearly see the amounts for which those responsible for the stabilisation fund were convicted – sums an ordinary citizen couldn't earn even in two lifetimes.
JSC "SPK 'SHYMKENT'"
The leader among the SECs in forming the Republic of 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.
Back then, JSC "SPK Shymkent", under the guarantees of the akimat, placed 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 stipulated for state programmes. Thus, the residents of Shymkent ended up owing the budget 2 billion tenge (about $4.7 million).
The then-acting (in 2021 - ed. note FBRK) Chairman of the Board of JSC "SPK 'Shymkent'", Baurzhan Kankin, promised that the company he managed would be the leader in financial reporting among other SECs.
And understandably so, as Kankin himself holds a Bachelor's degree in Economics and a Master of Business Administration, "Master of Business Administration", and knows perfectly well how to manipulate figures in financial reports. For example, the SEC's 2019 financial report states 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, the "Balance Sheet" section shows that at the beginning of the year, the JSC had total fixed assets of 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 balance 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 example of trying to have it both ways.
JSC "SPK 'Shymkent'" and its head, Baurzhan Kankin, constantly try to bluster, put a brave face on a bad situation, and talk about how effective they are, but the figures, as a rule, suggest otherwise. For example, to get 1 billion 467 million tenge (almost $3.5 million) from the budget without competition, it is enough for the SEC to announce a share issue, and then the city akimat, by a decision of the sole shareholder, directs these funds from the city budget directly to the JSC's accounts.
The website of JSC "SPK 'Shymkent'" states: "The Socio-Entrepreneurial Corporation 'Shymkent' is a regional development institute, stimulating economic activity in the region, including through attracting investments, and acts 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 it takes land at cadastral value for projects and sells it at market value?
Moreover, the SEC takes land for itself through methods that are far from competitive, using the same old scheme of paying with its own issued shares. Thus, by a decision of the sole shareholder, represented by the akim of Shymkent city, property – the buildings and structures of the hippodrome, valued at 70.5 million tenge (approximately $167 thousand), which was on the balance sheet of the Municipal State Institution "Complex Sports Club for National and Equestrian Sports of Shymkent City" – was transferred in payment for shares of JSC "SPK 'Shymkent'".
Around this plot, disputes flared up 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 akim, Murat Aitenov, assured them then: "We bargained. We bargained hard. They wanted the hippodrome for free. The bargaining was tough." However, the head of the country's third-largest city never actually assured who would benefit from this bargaining, but judging by the SEC's schemes, it is far from the people.
All schemes, to paraphrase a well-known saying, have 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 (in 2021 - ed. note FBRK) Chairman of the Board of JSC NC SEC "Shymkent", President of the Triathlon Federation of Shymkent, and the first head of the branch of the Cycling Federation in Shymkent.
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 also as Deputy Director of the Department for Development of the Asset Management Services Market at JSC "Administration of the International Financial Centre Astana".
From November 2016 to January 2019, he was 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, the trace of "team migration" is noticeable:
- Rasul Ilimbayev – Deputy Chairman of the Board of JSC "SPK 'Shymkent'" (in 2021 - ed. note FBRK), who happened to work 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'" (in 2021 - ed. note FBRK), by a strange coincidence 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 (in 2021 - ed. 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
Alongside Baurzhan Kankin's career growth and changing geographical area of activity, certain changes are also occurring in his family business. And if these changes are hardly noticeable in the only LLP of his younger brother, called "TOKAI GROUP", then Baurzhan's wife – Kankina Assel Mukhtarovna, can boast a clear increase in the turnover of her own business.
Besides being the manager in the aforementioned LLP "TOKAI GROUP", the top manager's better half is also the manager and founder of:
- LLP "ALMEUS-BUSINESS", registered in 2012, located in Kokshetau, main activity – electrical and installation works for laying telecommunications, 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 activities, paid a total of just over 1 million tenge in taxes over its entire existence.
- LLP "SILICON STEPPE" – a capital-based little LLP with NACE code "web portal activities" and zero tax contributions. Besides Kankina, the LLP's membership includes Umarov Ruslan Mirgaliyevich and Nigmetov Timur Yergaliyevich.
- LLP "FINMENTOR.KZ", a capital-based 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 Assel, the founders of LLP "FINMENTOR.KZ" include the director of this company, Batayev Arman Amankeldiuly, who also holds a stake in LLP "ATYRAU INVEST PARTNERS" and the non-profit organisation "QAZAQ ASSOCIATION OF MINORITY SHAREHOLDERS (QAMS)".
- LLP "STROY TEKH IC" – a construction company with 17 years of experience, registered in Kokshetau, headed by Yesenov Mukhtar Zhanibekovich (also a founder of the Akmola branch of the Republican Association of Legal Entities "Union of Builders of Kazakhstan" and the Public Association "Karate-do Federation (WKF) Wado-kai Goju-ryu Shotokan Shito-ryu of Akmola Region").
Besides Kankina, the founders of "STROY TEKH IC" also included Kurmanbayev Nariman Rakhmetullovich (also a founder of LLP "Nariman Kurylys"), but he left the membership in December 2020.
"STROY TEKH IC" – a company that secured good volumes of public procurement in 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).