Donald Trump owes much of his success as a real estate developer to an easy relationship with the anti-money laundering laws, and he continues to profit from his investments while President thanks to an even easier relationship with conflict of interest norms. Reports out of Uzbekistan suggest Jahongir Artykhodjaev, mayor of the capital city Tashkent, has followed a Trumpian-like path to wealth and power. Like Trump, Artykhodjaev has looked past how investors in his real estate projects came into their money; like Trump, while in public office he has steered government contracts to companies he owns, and like Trump, when called on his dual role as businessman and government officials, he claims to have distanced himself from his business empire upon taking office.
The main difference (besides hair color) between Trump and Artykhodjaev is that independent prosecutors are examining whether Trump broke rather than simply bent anti-money laundering and conflict of interest laws. By contrast, after accounts in the international press (here and here) exposed Artykhodjaev’s Trumpian proclivities, senior Uzbek officials called a press conference where they leapt to his defense, going so far as to deny there is any Uzbekistan law that Artykhodjaev could have broken.
The story arises from the efforts of Uzbekistan President Shavkat Mirziyoyev to portray the Central Asian dictatorship he runs as a modern, progressive state open to foreign investment. The cornerstone of that effort is the development of a $1.3 billion high-tech business hub in Tashkent. To kick-off the project, Mirziyoyev named his pal Artykhodjaev head of the public agency overseeing it. After Artykhodjaev succeeded in lining up significant domestic and foreign investment for the project, Mirziyoyev promoted him to mayor.
Artykhodjaev’s success in finding investors for the somewhat dubious venture of turning Uzbekistan into a second Silicon Valley is due at least in part to following the Trump playbook. The main contractor for the project is Discover Net, a company financed by soft loans from state-owned banks and which is part of Artykhodjaev’s family of companies – although after assuming public office the family ties have been obscured. Trump turned to Russian money of questionable origin to fund his property development schemes; by contrast, Artykhodjaev found dodgy money close by. Hyper Partners GmbH, a German firm, is developing the shopping center and the two 30-story towers that are the heart of the project. While the public record lists 19-year old Mustafa Palvan as the company’s sole owner, a December 21 Open Democracy story reports the company’s beneficial owners appear to be a Kazakh business man facing fraud charges along with a shadowy group of Uighur-Kazaks.
Where Trump has good cause to envy Artykhodjaev is the Uzbek government’s reaction when the press exposed Artykhodjaev’s Trumpian business methods.
Uzbekistan is a member in good standing of the Anti-Corruption Network for Eastern Europe and Central Asia, a group of countries which have joined together to support each other’s fight against corruption. In its reports, the group regularly warns the Uzbek government to tighten conflict of interest laws to prevent public officials from favoring friends and relatives with public contracts. The group advises the government to build on a 1992 rule prohibiting any government employee whose decisions affect business from engaging in entrepreneurial activities.
Uzbekistan also belongs to the Eurasian Group, whose member governments review and critique each other’s anti-money laundering laws with the aim of prompting each other to raise their standards to comply with international norms. The Eurasian Group reports continue to press the government to stiffen its rules requiring firms doing business in the country to disclose who its actual, beneficial owners are. In its Fourth Follow-Up Report of the Republic of Uzbekistan, the group does concede, however, that Uzbekistan does have some strong provisions on beneficial ownership:
“Article 7 of the Law of the Republic of Uzbekistan “On Anti-Money Laundering and Terrorist Financing,” customer due diligence measures undertaken by organizations carrying out transactions with funds or other assets shall include:
- verification of the identity and credentials of the customer and persons on whose behalf it is acting on the basis of the relevant documents;
- identification of the owner of, or the person exercising control over, the corporate customer by studying the ownership and management structure in the constituent documents;
- an ongoing study of the business relationships and transactions with funds or other assets carried out by the customer in order to ensure their consistency with the customer’s profile and its activities” (p. 23; emphasis in original).
With admonitions about conflict of interest and anti-money laundering laws from Uzbekistan’s regional peers, and the current laws on both, Artykhodjaev must have been more than delighted when, at a January 31 press conference called to answer charges about his stewardship of the high-tech project, Uzbekistan’s Deputy Chair of the State Committee for Investment and its First Deputy Minister of Economy and Industry both complemented him. Nor did the two ever mention the 1992 rule that would bar Artykhodjaev from conducting business while running the agency overseeing the project or while mayor. Even better, the Deputy Minister seconded a claim Artykhodjaev’s made at the press conference that no Uzbek law gives the government the right to inquire whether young Mr. Palvan really is the sole owner of Hyper Partners. Or whether, as Open Democracy reported, he might well be fronting for shadier characters.
The real Donald Trump can only marvel the good fortune of the Uzbek version. Unlike Trump, Artykhodjaev lives in a nation where the business practices he shares with the Donald are not investigated by other parts of the government but warmly supported.
GAB | The Global Anticorruption Blog 
Rick, thanks for this interesting post. There’s been a lot of discussion about Uzbekistan’s opening under Mirziyoyev, and while it was never going to be without fits and starts, it’s disappointing to hear that he’s allowing what appears to be such blatant corruption and self-dealing within his political inner circle. Doesn’t bode well for those who thought that he might really usher in a new commitment to good governance and the rule of law in the region.
I wanted to follow up with you briefly regarding your comments about the Anti-Corruption Network for Eastern Europe and Central Asia and the Eurasian Group. I’m not familiar with those organizations, their scope or work, or reputations in the region. Is it your impression that those groups have enough clout that their calling out of the Uzbek government’s failings with respect to ethics and AML laws enforcement might make a meaningful difference on the ground in Uzbekistan? Or did you bring them up merely to show that the Uzbek government is flouting its own international commitments? Curious to hear your thoughts on whether pressure from organizations such as those might produce results in this context. Thanks!
Glad you found the post useful. Although given his background it was to be expected that Mirziyoyev would be unlikely to make a real break with the past, it is still a tragedy, for the people of Uzbekistan, its neighbors, and all those who believe in democracy and the rule of law. It is also sad, if to be expected, that the same group of Western lawyers and advisers that enabled the Karimov regime continues to profit from Mirziyoyev’s wrongdoing by, among other things, claiming his regime has indeed made a break with the past. Trust the fees are high enough to pay for top quality sleeping aids.
The Anticorruption Network is the OECD Antibribery Working Group’s outreach program to governments in Eastern Europe and Central Asia, https://www.oecd.org/corruption/acn/aboutthenetwork/. As its web site explains, it is open to any government willing to submit to peer-led reviews of its anticorruption policies. The periodic reports the network produces are first-rate. How much and how quickly they prompt a government to reform its policies I don’t know. But by providing a marker against which the government, its citizens, and trading partners can measure the government’s progress, the reports serve a valuable purpose. They are a form of “soft law,” and today’s soft law is often tomorrow’s hard law.
Rick, great post. I particularly enjoyed the parallel between the Trump and Artykhodjaev administrations. I am curious how active the Uzbek media is in reporting on this, and whether they have much of a voice. Also, it sounds like foreign investors should be very wary of the conflicts of interest you eloquently point out, although the administrations seems to have attracted enough money short term. How do you see this playing out over a longer time period?