Corruption in Uzbekistan

Former president Islam Karimov

Uzbek artist Vyacheslav Okhunov told Der Spiegel in 2015 that the late Islam Karimov, then Uzbekistan's president, was "a dictator"[3] who exhibited Mafioso tendencies. Karimov has been accused of ruling Uzbekistan with an iron fist for a quarter-century, shaping a culture that "has a greater resemblance to North Korea than China."[3] Critics have sardonically noted that there is almost no televised news broadcast that does not feature Karimov "cutting a ribbon for some new facility somewhere".[3] According to The Heritage Foundation, Karimov's absolute power extended to judicial appointments.[9]

Freedom House has reported that Karimov exercised total power over the legislature, which acts as a "rubber stamp" that approved Karimov's decisions. The group states that Karimov's virtually absolute power allowed him to exploit every sphere of activity in his country for personal economic benefit.[7]

Even after his death in office in September 2016, Karimov's influence remained firm enough to allow his handpicked successor, Prime Minister Shavkat Mirziyoyev, to be acting President pending the December 2016 Presidential by-election in blatant disregard to the Constitution, which places that responsibility at the hands of the President of the Senate.

The president's daughter, Gulnara Karimova, has (like the president himself) been associated with large-scale corruption.[10] A Swiss criminal investigation begun in 2012 was directed at first against four Uzbek citizens who had connections to Karimova. Two of them were arrested that year and released on bail.[11] Also in 2012, a Swedish television documentary stated that a Swedish telecommunications company, TeliaSonera AB, had paid $320 million to Takilant (a Gibraltar-based shell company reportedly linked to Karimova) in exchange for licenses and frequencies in Uzbekistan.[12]

In January 2013, Swedish investigators released new documents apparently showing that TeliaSonera had tried to negotiate directly with Karimova.[7][13] In the same year, U.S. and Dutch authorities began investigating Karimova.[14]

In February 2014, the chief executive of TeliaSonera was forced to resign after serious failures of due diligence were uncovered. In May, the Swedish media made documents public that suggested Karimova had aggressively dictated the terms of the TeliaSonera contract and threatened it with obstructions. Related money-laundering investigations in Switzerland and Sweden continued throughout the year, and hundreds of millions of dollars in accounts connected to the case being frozen by authorities.[7][12]

Gulnara Karimova

In March 2014, Swiss authorities began a money-laundering investigation into Karimova, and prosecutors in Bern said that the evidence had led their investigation into Sweden and France and that they had "seized assets in excess of 800 million Swiss francs ($912 million)."[13] According to Swiss newspaper Le Temps, of the seized funds 500 million francs of the seized funds involved TeliaSonera and the remained "involved Karimova's personal assets."[12][13]

In 2014, the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) investigated TeliaSonera as well as the Amsterdam-based Vimpelcom Ltd. and the Russian firm Mobile TeleSystems PJSC (MTS) on suspicion that these three firms had funneled hundreds of millions of dollars to firms controlled by Karimova. An August 2015 report stated that U.S. prosecutors were asking authorities in Ireland, Belgium, Luxembourg, Sweden, and Switzerland to seize assets of about $1 billion in connection with their investigation.[15] Radio Free Europe/Radio Liberty reported in January 2015 that executives at the Norwegian telecom firm Telenor, which owns one-third of Vimpelcom, had knowledge about millions in bribes.[16]

In March 2015, DOJ asked Sweden to freeze $30 million in funds held by the Stockholm-based Nordea Bank.[17] The DOJ probe discovered that firms had "paid bribes to Uzbek officials to obtain mobile telecommunications business in Uzbekistan."[17] European investigators revealed that Takilant was run by a former Karimova aide.[17]

A July 2015 report stated that U.S. authorities were seeking to seize $300 million in bank accounts in Ireland, Luxembourg and Belgium, alleging that the funds were bribes paid to Karimova.[12][18]

In August 2015, Radio Free Europe/Radio Liberty reported that Uzbek authorities had arrested nine suspects in connection with probes, including two top executives at a Coca-Cola bottling plant in Uzbekistan, which Karimova formerly owned.[19]

"There are no free elections in Uzbekistan," according to Freedom House.[7] In the April 2015 election, Karimov received 90.39% of the vote, winning a fourth term, although the constitution restricts presidents to two terms. Election observers from the Organization for Security and Co-operation in Europe were critical of the conduct of the election, and Steve Swerdlow of Human Rights Watch called it a “sham.”[20]

Corruption is widespread in Uzbekistan's judiciary. The judiciary system is officially independent, but corruption is rampant, and the law actually allows certain kinds of government interference and “equivocation.”[21] Public officials, lawyers, and judges often “interpret local legislation inconsistently and in conflict with each other.”[21] Corruption is a standard feature of legal proceedings, mainly in conflicts between firms.[21] Judges are said to take bribes and kickbacks from individuals and companies in exchange for favorable verdicts. The judiciary is under the control of the executive, is riddled with nepotism, favoritism, and kickbacks, and is characterized by “unreliable and non-transparent”[2] appeals processes. “Bribery, abuse of office and vague interpretation of laws”[2] result in unfair decisions. In commercial cases, courts reportedly favor local companies over foreign firms. Courts are also alleged to address corruption charges against high-level officials only on presidential orders.[2] Although the judicial system is required to uphold “investor rights and the sanctity of contracts,” in practice it is said to regularly favor "state-owned or government-affiliated entities.”[21]

Court procedures in Uzbekistan, The Heritage Foundation says, "fall short of international standards, and powerful figures can expropriate property with impunity".[9] In addition, private property can be confiscated by the government for no reason, with no system for registering liens on chattel in place.[9]

According to Amnesty International, corruption is ingrained in Uzbekistan's justice system. Torture (in the form of "beatings, asphyxiation, rape and sexual assault") is a widely used by law enforcement and the authorities.[8] Torture is used to "extract confessions, to intimidate entire families or to extract bribes."[8] Family members are tortured to extract confessions and "on the basis of these confessions, [torture survivors] have been sentenced to long terms in prison after unfair trials."[8]

The Uzbekistani National Security Service has been reported to have engaged in torture.[8]

Corruption within the Uzbek police force has been described as "pervasive."[2] Extortion is common, and police regularly use false charges to dissuade anyone from reporting their corruption crimes to higher bureaus. A 2014 report stated that police corruption had risen recently owing to the currency exchange market coming under the control of known criminal groups.[2]

Corruption is common in the public-services sector. Civil servants are low-paid and thus included to solicit and extort bribes, according to the Business Anti-Corruption Portal. Officials extort payments from companies in connection with the granting of permits and licenses, and “use arbitrary inspections and punitive sanctions to harass companies, to interfere with their business operations and to reduce market competition.”[2]

Judicial corruption prevents the protection or enforcement of property rights. The Business Anti-Corruption Portal reports that the state routinely expropriates private property, providing opportunities for extortion and corruption.[2]

While over 2-3 million Uzbeks (mostly university students as a full-time workers for over 3 months, teachers, professors, doctors as a part-time for over 3 months) “were forced to work on cotton fields”[22] during the 2014 harvest, according to the Organized Crime and Corruption Reporting Project (OCCRP), officials were alleged to have embezzled substantial funds from the operation. “Impossibly high quotas were reportedly set, with workers forced to pay fines to make up the deficits.”[22] The Uzbek-German Forum for Human Rights called the quotas an 'unprecedented degree of extortion', as workers were made to continue their labor in exchange for food and housing.[22]

Corruption is said to be common in the Uzbek tax administration. The vague and ambiguous tax laws allow for official corruption, often in the form of bribery and extortion at the expense of foreign companies. Firms involved in judicial disputes are subject to the seizure of assets by tax officials, according to the Business Anti-Corruption Portal.[2]

Uzbekistan's customs sector is riddled with corruption. Customs officials and border guards are reported to take bribes from smugglers, as a result of which the amount of smuggling increases annually.[2]

Tashkent customs arrests

Several senior officials of the Tashkent Province State Customs Committee were arrested on bribery charges in October 2014. They were accused of extorting bribes, participating in organized crime, and eliciting favors in exchange for employment at the customs offices. The fees for clearing goods across borders are arbitrary, and foreign firms say that customs restrictions are “among the most severe challenges to doing business in Uzbekistan.”[2]

Corruption is ubiquitous in the public procurement sector, which is characterized by widespread conflicts of interest, a lack of transparency, and bribes being extorted in exchange for government contracts. There is a reported lack of transparency during the bidding for contracts from the government.[2]