Corruption mars nation branding effort
Staff Report, Central Asia Newswire
Wednesday, October 26, 2011 - Over the past couple of years, you might have seen ads extolling the virtues of Kazakhstan on Euronews, or on CNN. Or perhaps you have noticed a series of eight-page color sections on Kazakhstan in London's Daily Telegraph.
If not, did you catch the CNN ad that was played on a Jumbotron in Times Square? It featured Kazakhstan's history as a test site for Soviet nuclear weapons and the country's work to get such weapons banned worldwide.
And if you attended the summit of the Organization of Security and Cooperation in Europe (OSCE) in the shiny new Kazakh capital Astana last December, you will likely have come across a glossy magazine, called Kazakhstan Edge, which combines features about the city with articles on Kazakh fashion and a directory of where to dine and relax.
From print ads in major publications to broadcast ads on international TV stations, to documentaries and publications focused on Kazakhstan, this year has seen an intensification of a major international communications campaign by the Government of Kazakhstan aimed at elevating the image of the former Soviet republic.
The government would like the world to see Kazakhstan as a modern, rapidly-developing independent state that is both a leading nation in Central Asia but also an important player on the world stage, from strategic and economic perspectives.
However, behind the scenes of this marketing effort an ugly story of theft, corruption and a partnership dispute has unfolded this year.
The company behind the media blitz is Cyprus-based Coast to Coast Communications Ltd., owned 100 percent by a Greek Cypriot man, Savvas (or Savas) Hadjikyriacou.
How is it, you might ask, that a small, unknown Cypriot company is the lucky recipient of so much business from Kazakhstan? According to reliable sources, the answer lies in the special relationship between Hadjikyriacou and Roman Vassilenko, chairman of the International Information Committee of Kazakhstan's Foreign Ministry. The IIC has a significant budget to promote Kazakhstan.
Vassilenko is an ethnic Russian who speaks and writes English fluently. For a long time he served as an assistant and translator to the previous foreign minister and current secretary of state, Kanat Saudabayev. Earlier, Saudabayev was ambassador to London and then Washington, posts where Vassilenko assisted him.
Hadjikyriacou and Vassilenko appear to be two happy campers who have joined forces to make money. And lots of it. This year alone the IIC has signed contracts with Coast to Coast worth several million dollars.
There is only one fly in the ointment of this cozy government-private sector 'partnership'. Hadjikyriacou and Vassilenko set up their association at the expense of Hadjikyriacou's business partner, Washington-based Thomas Cromwell.
Cromwell and Hadjikyriacou have been partners for a decade, and they jointly own another Cypriot entity, MC East West Advertising Ltd. (East West). Cromwell says that in the latter part of 2010 he realized that Hadjikyriacou, who had spent half the year in Astana to develop business for East West, was using his proximity to the client to hijack all the Kazakhstan business for himself.
The picture became fully clear to Cromwell when he discovered in late summer 2011 that Hadjikyriacou had secretly established Coast to Coast in 2010, and that as of the beginning of this year, Hadjikyriacou had persuaded the Kazakhs to renew 2010 East West contracts with Coast to Coast, and to sign all new agreements that would have gone to East West with Coast to Coast instead.
East West was never wound up and the contracts signed with it by the IIC in 2010 were never terminated by the Kazakh side, Cromwell says.
But everything appears to be going well for Hadjikyriacou and Vassilenko.
Their close association continues to produce contract after contract for Coast to Coast. The latest is one for an ad campaign on Bloomberg TV for KAZNEX Invest, the government agency tasked with attracting investment to Kazakhstan. The government is holding an investment forum in New York in November.
According to Cromwell, Hadjikyriacou spent a good bit of time last year cultivating Vassilenko's friendship, including wining and dining him in Astana and various European cities where Vassilenko went on official business. Hadjikyriacou then used this friendship to persuade Vassilenko to go along with the Coast to Coast scheme.
And, to seal the deal, in August 2010 Hadjikyriacou and his Russian wife, Marina Ivanova, took Vassilenko and his family on an all-expenses-paid, two-week vacation at a luxury resort in Cyprus.
Other than the principals involved, only flies perched on the walls of bars, restaurants and hotel lounges around Europe and Kazakhstan know what exactly transpired in those intimate conversations between Hadjikyriacou and Vassilenko.
But the results are now evident.
Cromwell tells us that he only got wind of what he calls "the treachery of [his] partner" late in 2010, and that by that time it was too late to protect his own interests in Kazakhstan. Cromwell flew to Astana in November, and then again in December last year to meet Vassilenko and to address the problem that had emerged with Hadjikyriacou and the impact that it was likely to have on East West business with Kazakhstan.
He says that, despite assurances of fair dealing for the East West partners from Vassilenko, no business has been forthcoming for East West and only Coast to Coast has signed contracts with the IIC since the beginning of 2011.
Furthermore, Cromwell complains that Vassilenko has "repeatedly lied to me about the Foreign Ministry and the IIC." For example, Cromwell says, "He told me his budget had been cut forcing him to renege on earlier verbal\ commitments, but right after that he turned around and signed millions of dollars' worth of business with Coast to Coast."
In September this year, Cromwell filed suit against Hadjikyriacou in a Cyprus Court for diverting business from East West to Coast to Coast, after he discovered that Hadjikyriacou had set up this company to do business with the Kazakhs. The court froze all the bank accounts of Coast to Coast and Hadjikyriacou. On appeal, the Supreme Court set a limit on the frozen funds, but the case will force Hadjikyriacou to make public all the contracts Coast to Coast has signed with Kazakhstan.
"He is simply a thief," Cromwell said of Hadjikyriacou's diversion of business to Coast to Coast. "What's more, for most of the years of our partnership I funded our business," Cromwell added. "Without that support, there would be no Kazakhstan projects for him to steal."
The Coast to Coast contracts with Kazakhstan will not specify what Vassilenko stands to gain from them, but they will show the level of business Coast to Coast has done this year. Based on the value of comparable projects last year, Cromwell estimates the total will be several million dollars. "It will not be difficult to figure out the sorts of kick-backs Vassilenko expects," Cromwell says.
He says that he has informed the Kazakh ambassador to Washington, Erlan Idrissov, and very senior officials in Kazakhstan about the corrupt relationship between Hadjikyriacou and Vassilenko. But nothing has been done.
"It seems that Vassilenko and Hadjikyriacou have some powerful protectors of their greed in the Kazakhstan government," Cromwell says. "Either that, or the Government of Kazakhstan considers this business as usual."
Either way, Cromwell considers the failure of the foreign ministry to act on his repeated warnings about a transparently corrupt arrangement with a senior ministry official tantamount to complicity in the corruption.
Thomas Cromwell is the owner of Universal Newswires.