Uzbek car boss held on fraud charges
A mosque in Shymkent. The Kazakh city was the alleged destination of GM Uzbekistan’s “exports” for Russia. Source: Wikimedia
Intriguing stories of political infighting, presidential succession and fraud are surrounding news of the arrest of a top executive at an Uzbek car manufacturer.
Tohirjon Jalilov, general director of GM Uzbekistan, jointly owned by Uzavtosanoat (75 per cent) and General Motors (25 per cent), was arrested last last month, according to Radio Free Europe/Radio Liberty (RFE). Jalilov and several of his colleagues have been accused of fraud, money laundering and embezzlement relating to a scheme in which GM Uzbekistan cars destined for Russia only reached Shymkent in Kazakhstan and then were labelled as imports and sold back to Uzbeks at higher prices. The detained executives allegedly kept the difference.
RFE reported: “GM Uzbekistan sells vehicles to Russia at less than half the price the cars and trucks sell for in Uzbekistan, about US$6,400 in Russia but as high as US$18,000 in Uzbekistan.”
During Uzbek President Islam Karimov’s April visit to Russia, he reportedly “discovered there were delays in the shipment of GM Uzbekistan vehicles to Russia”. He apparently ordered the investigation on his return which resulted in the arrest.
In contrast, Yelena Kuznetsova, Russian director of marketing for Ravon, GM Uzbekistan’s Russian-market brand, told Reuters that GM Uzbekistan was being investigated “because the Russian distributor was unable to repay its debt”. Kuznetsova said the Russian distributor was unable to pay for cars shipped in 2015 because of the rouble’s dramatic fall in value.
The allegedly missing funds would therefore be due to non-payment by a Russian distributor, not an embezzlement scandal although this did not explain Jalilov’s arrest.
GM Uzbekistan has announced that Jalilov left the company last month but it refused to comment on the investigation. Other Uzbekistan analysts believe the arrest might be linked to an internal political contest to replace President Islam Karimov.
Strategic Forecasting, or Stratfor, a global intelligence company, reported connections between Jalilov and Deputy Prime Minister Ulugbek Ruzikulov, who RFE said had also been brought in for questioning. Ruzikulov, chairman of an Uzbek auto industry association, is believed to be under house arrest “following his attempt to flee the country”, in an apparent warning to Prime Minister Shavkat Mirziyoyev.
Stratfor said that Mirziyoyev “has been locked in a bitter stand-off with Security Service Chief [Rustam] Inoyatov because both are vying for power ahead of the succession of long-time President Islam Karimov”.
As ever when reporting on Uzbekistan, the secretive nature of the state makes speculation necessary.
As the Russian economy continues to struggle with low fuel prices, GM Uzbekistan saw its sales of vehicles to Russia drop by nearly half between 2014 and last year and sales remain nowhere near the 2012 peaks.
Meanwhile, Tashkent is hailing a new Uzbek-Bulgarian plant for recycling waste industrial oils that has been officially commissioned in Uzbekistan by Deputy Prime Minister Gulomzhon Ibrahimov and Bulgaria’s Prime Minister Boyko Borissov.
The Uz-Prista Recycling commissioned a plant for regeneration of waste motor oils last month with a recycling capacity of 43,000 tonnes per year.
Currently, Uz-Prista produces up to 30 types of synthetic, semi-synthetic, mineral, hydraulic and gear oils, as well as special fluids and anti-freezes. The products supply the wider Central Asian market.