A billion for the family. How a deputy’s son became one of the main fuel suppliers to the state

From 2015 to 2020, Akylbek Mamatov, owner of the Red Petroleum gas station network, concluded more than 3,900 government contracts for the supply of fuel, earning more than 1 billion soms from them. Thus, one of the largest oil importers became the country’s second-largest supplier of petroleum products to the state.

And everything would be fine, but there is one detail: the businessman’s father, deputy Abdimuktar Mamatov, has been sitting in the Jogorku Kenesh for a second term, where he is a member of the relevant fuel and energy committee.

Kyrgyzstan’s public procurement law prohibits relatives of officials and deputies from participating in tenders. However, programmers from data department, after comparing the public procurement portal database, the register of legal entities, and the declarations of civil servants and parliamentarians, found that this provision is constantly being violated.

First after SHNOS

Akylbek Mamatov has participated in public procurement since October 2014. From July to December 2015, his company “Biorg Oil” won 60 tenders worth more than 15 million soms.

Then there was a brief lull. In terms of timing, it coincided with the period when the businessman’s father, deputy Abdimuktar Mamatov, was left without a seat in parliament after failing to be elected through the party lists. And only at the beginning of 2016, after the elections, did he enter the VI convocation of the Jogorku Kenesh, replacing fellow party member Joomart Saparbaev, who had relinquished his mandate — and another company belonging to Akylbek Mamatov, “Alfa Oil,” began winning tenders.

“Alfa Oil” had participated in bidding since December 2015, but during the first five months there were only losses, and from April 2016 through the end of August 2020 it concluded more than 3,800 fuel supply contracts worth more than 1 billion soms.

At the same time, in half of the cases the contracts were signed directly: 254 million soms were spent in non-competitive bidding. Thus, Mamatov became second in our ranking of fuel and lubricant suppliers to the state.

Akylbek Mamatov’s success is understandable: his companies “Biorg Oil” and “Alfa Oil” are major importers of petroleum products from Russia for what they themselves call the “only national gas station network,” Red Petroleum, which has more than 100 gas stations throughout the country.

But would Akylbek have been so successful in doing business with the state without his father, Abdimuktar Mamatov — an experienced oilman who has been sitting in the Jogorku Kenesh for nearly 10 years?

Abdimuktar Mamatov has a brilliant biography as a businessman from the nomenklatura. After receiving his school certificate, he worked for three years at a collective farm and a rural school, and then went to Moscow, to the Institute of Petrochemical Industry, where he qualified as a mechanical engineer.

Returning to his native Kyrgyzstan, he worked as chief engineer at the “Oshgaz” enterprise, then became director of the Tash-Kumyr oil depot. In 1991, Mamatov headed the State Committee for Petroleum Products of the Jalal-Abad region, and in 1996 he became general director of the joint Kyrgyz-Canadian enterprise “Kyrgyz Petroleum Company” — it was engaged in oil extraction and refining at an oil refinery built with investors’ money.

In 2006, Mamatov headed the board of directors of the Jalal-Abad CJSC “Munayzat,” which was engaged in importing oil and petroleum products. Ten years later, Mamatov’s former business partner Taabaldy Karataev accused the deputy of a raider takeover.

According to Karataev, “Munayzat” was founded in 1993 by a group of businessmen, including Mamatov’s wife, Turdukhan Abilova. But in 1998, when the enterprise was re-registered, a controlling stake ended up in the hands of Akylbek Mamatov. Later, he allegedly deprived all his partners of their shares, becoming the sole owner of the company, and then sold the enterprise’s oil depot to his relatives at a reduced price.

Representatives of “Petrol Group,” which took control of “Munayzat’s” assets (according to Karataev’s estimate, their value in 2010 amounted to 640 million soms), explained to 24.kg that the purchase of the property was completely legal. According to them, several criminal cases for fraud had been opened in Kyrgyzstan and Russia against Karataev, who had spoken about the “raiding,” and he himself owed the enterprise’s partners about $6 million, which was why he was deprived of his share in the company. Abdimuktar Mamatov himself also confirmed this version in a conversation.

Mamatov was elected several times as a deputy of local keneshes in Jalal-Abad, and in 2010 became a deputy of the V convocation of the Jogorku Kenesh from the “Ata Meken” party.

During his years working in parliament, Mamatov was not noted for active legislative activity. The deputy’s official page lists only four bills initiated by him.

However, he joined the relevant committee on the fuel and energy complex and subsoil use, where, acting as an expert, he opposed the expansion of foreign companies into Kyrgyzstan’s oil market. In particular, he spoke out against the expansion of the monopoly of the subsidiary of the Russian fuel giant, “Gazprom Neft Asia” — his son’s main competitor in public procurement. However, in a conversation, Mamatov emphasized that his statements concerned exclusively the prices of Russian gas, which Kyrgyzstan purchases at a higher price than other republics of the former USSR — Uzbekistan, Tajikistan, and Belarus.

A business that no one hides

Abdimuktar Mamatov is still listed as the founder of the re-registered LLC “Munayzat,” whose main activity is “non-specialized wholesale trade.” In addition, while already serving as a deputy, he was the owner and co-owner of four other companies:

LLC “Pazilat,” engaged in the wholesale trade of food products, beverages, and tobacco products. The deputy owns this company together with Talaybek Aliev;

LLC “Batken Petrol,” which sells aviation and automobile fuel, and the now-liquidated LLC “Batken Petroleum,” which until 2017 he owned together with Taabaldy Karataev, who accused him of taking over and reselling “Munayzat”;

LLC “Dom Byta,” engaged in leasing its own real estate.

The media have repeatedly caught the deputy failing to include his businesses in his annual declaration. Although he does not hide them. For example, in his 2018 declaration, Abdimuktar Mamatov stated that he had earned a rather modest 1 million 162 thousand soms, while his two houses, measuring 256 and 137 square meters, are under trust management by the companies “Pazilat” and “Batken Petrol.” As is the Toyota Land Cruiser 200 vehicle managed by LLC “Munayzat.”

The deputy’s close relatives earned an even more modest 190 thousand soms in 2018. The family owns only one apartment measuring 137 square meters.

However, according to the Ministry of Justice, the Mamatov family owns around two dozen companies. Akylbek Mamatov, in addition to the companies “Alfa Oil” and “Biorg Oil,” which participate in public procurement, has at various times been the founder and director of numerous firms. As of August 2020, his surname appears in the incorporation documents of 15 legal entities, seven of which have ceased operations.

In 2012, when Abdimuktar Mamatov was already a deputy of the Jogorku Kenesh, the State Committee for National Security caught his son Akylbek smuggling fuel. However, he got off with only a scare: he merely compensated the state for damages amounting to 22 million soms. The media also mention a number of scandals surrounding Akylbek Mamatov’s gas stations: the Red Petroleum network was accused of underfilling fuel.

There is a law, but no crime

It is practically impossible to hold Mamatov accountable either for incomplete information about his businesses in his declaration or for lobbying the family’s interests in the oil market. The fact is that the relevant provisions exist in the legislation, but the punishment for violating them is not specified anywhere.

Previously, the Code of Administrative Liability contained a provision allowing an official or deputy to be fined 5,000 soms for incorrectly completing a declaration. But in the new version, which came into force in January 2019, it disappeared. There is a fine for failure to submit a declaration; it is now the same for officials and private individuals — 1,000 soms.

As for government contracts, Kyrgyzstan’s public procurement law contains Article No. 6, “Conflict of Interest,” one of the provisions of which states: “The purchasing organization may not conclude a procurement contract or framework agreement with a supplier (contractor) whose founder and/or participant includes persons holding political state positions, political municipal positions, special state positions, and their close relatives.” A deputy of the Jogorku Kenesh holds a political position.

However, the same provision states that the purchasing organization has the right to require the supplier to provide a written declaration of the absence of affiliation.

And although the position of Kyrgyzstan’s Ministry of Finance is unequivocal: companies falling under the “Conflict of Interest” article should not be allowed to participate in bidding, in practice it is almost impossible to hold purchasing organizations accountable.

“To hold purchasing organizations accountable, it is necessary to document the violation itself and the damage caused to the state or another person whose lawful interests were violated,” explains lawyer Fatima Yakupbaeva. “The state, represented by the purchasing organization or supervisory authorities, is unlikely to claim damages. Therefore, the complainant in such cases should be, for example, one of the competitors.”

However, no complaints regarding the unlawful participation of the company “Alfa Oil” in tenders were submitted to the independent interdepartmental commission.

“In any case, the participation in government bidding of a company owned by the son of a Jogorku Kenesh deputy may be grounds for conducting an investigation. Crimes of this kind fall within the competence of the State Committee for National Security,” the lawyer concludes.

Abdimuktar Mamatov himself insists that he is unaware of his son’s business and does not know that he actively participates in public procurement.

“I have not gone beyond the scope of my [parliamentary] activities,” Mamatov explains. “I am not an affiliated person, I am not a member of the [public procurement] commission, I cannot influence the decision [of the public procurement commission].”

As for the companies in which Mamatov Sr. himself is a founder, according to the deputy, they are under trust management. “The law does not prohibit it,” the parliamentarian asserts.

The head of the family no longer intends to run for the Jogorku Kenesh and may return to business after the 2020 parliamentary elections. “I’ll still see [whether to return to business]. After all, age… If the business is calm, maybe I’ll work some more. I want to take up a small farming operation. Cows, chickens — a little, for the soul,” he says.

Akylbek Mamatov did not respond to questions.