In the circle of relatives. How the Mamatov oil magnate family circumvents the public procurement law

In the previous convocation of the Jogorku Kenesh, there was a deputy named Abdimuktar Mamatov. A typical post-Soviet businessman from the nomenklatura: under the USSR — a working-class career, afterward — a career in state-owned enterprises and in the petroleum products supply business, and then — politics.

His son Akylbek inherited his father’s interest in oil. He is the owner of Red Petroleum, one of the largest and the “first national” network of gas stations in Kyrgyzstan. He is engaged in importing oil from Russia and, since 2015, has participated in public procurement.

From 2015 to 2020, his companies “Biorg Oil” and “Alfa Oil” earned one billion soms from tenders and direct supplies to the state. Interestingly, Akylbek’s successes in public procurement began precisely when his father was elected to the Jogorku Kenesh and joined its fuel committee. By law, relatives of officials are not allowed to participate in public procurement, but everyone turns a blind eye to this. “Kloop” has already written about this in detail.

But it turned out that Mamatov Jr. is not the only one bringing billions into the family from supplying petroleum products to the state. Several months before the parliamentary re-elections in October 2020, when Abdimuktar Mamatov lost his seat in the Jogorku Kenesh, another company connected to the family — “Kyrgyz Nafta” — began participating in tenders. According to the documents, this company is engaged in brown coal mining, and its founder and director is young businessman Sanzhar Abilov — the nephew of former deputy Mamatov’s wife, Turdukhan Abilova.

“Kyrgyz Nafta’s” business immediately took off: over the past years, it has concluded more than 2,300 government contracts totaling 647 million soms.

Mamatov’s son’s “Alfa Oil” did not waste any time either. From 2019 to 2022, the company signed more than 1,800 contracts totaling 685 million soms. Moreover, one fifth of this money went to the company without bidding — under contracts concluded directly with purchasing organizations.

But even where bidding formally took place, the competition was often not genuine. Frequently, two companies belonging to the Mamatov family participate simultaneously in the same tenders, and one of them always wins. “Kloop” found that since August 2020, “Alfa Oil” and “Kyrgyz Nafta” participated at least 145 times in tenders with only the two of them, without competitors. The total amount of the contracts concluded as a result was 25.7 million soms.

Compared with the companies’ total revenue from public procurement, this amount does not seem particularly large. But it is precisely in these tenders that the benefit of using “corruption rings” can be clearly seen — a scheme in which two interconnected companies jointly bid for a tender in order to imitate competition and circumvent the public procurement law.

How does the scheme work?

A tender is the process of government procurement of a good or service in which the purchasing organization announces exactly what it wants to buy and at what maximum price. The tender participants then offer the prices at which they are prepared to sell the goods — but not above the maximum. The one who names the lowest price wins.

Under conditions of real competition, each tender participant tries to win and offers the maximum discount. But if the bidders know in advance who will offer what and how much, the discount does not have to be very large.

Thus, in tenders in which companies belonging to the Mamatov family participated, the prices they offered often differed from each other by tenths or even hundredths of a percent. And sometimes both bids were exactly equal to the maximum contract price.

Surprisingly, neither company hides their connections. In “Alfa Oil,” the founder is still listed as former deputy Akylbek Mamatov’s son. His cousin Sanzhar Abilov works as a director at another of Akylbek’s firms — the construction company “OKS.” At the same time, Abilov also heads another family company, “TORU,” where the founder is Akylbek Mamatov’s mother, Tukhdükhan Abilova. The young man also managed to work as a manager at the Red Petroleum gas station network owned by Mamatov, according to his social media accounts.

At “Kyrgyz Nafta,” they promised to put the “Kloop” journalist in touch with the commercial director, but complained that they themselves could not reach him by phone. “Alfa Oil” does not have a telephone number listed in the Ministry of Justice database, while the Red Petroleum network’s contact center was unable to find the number of the company’s PR department (it is not listed on its website either). Abdimuktar Mamatov himself previously told “Kloop” that he had nothing to do with his children’s business.

To sum up: one family has two companies that jointly participate in public procurement. Often with no competition at all — they either conclude contracts with purchasing organizations directly, without bidding, or participate in tenders together, merely imitating bidding. Thus, in terms of the total value of tenders won, both companies became the fourth-largest suppliers of petroleum products to the state in the country.

By law, companies connected to people holding the highest political positions in the state (which includes members of parliament) should not be allowed to participate in tenders. However, both companies — “Alfa Oil” and “Kyrgyz Nafta” — participated in bidding at a time when Abdimuktar Mamatov was not only sitting in parliament, but was also a member of the relevant fuel committee.

But even after Mamatov left office, his relatives continue to violate the law — under it, companies whose founders and management are connected to each other through business interests cannot participate in tenders. Their tender applications must be rejected.