Samruk Kazyna, Kazakhstan’s sovereign wealth fund, has filed a criminal complaint against a financial analyst who accused the $68 billion fund of being an “ineffective investor”.
The legal action was initiated by Akhmetzhan Yessimov, the former politician who now runs Samruk on behalf of the Kazakh Government.
It is unusual for an investment fund to take legal action against an analyst as their views are generally regarded as profession opinion. However, Yessimov has been under mounting pressure over Samruk’s poor performance and speculation has grown that he could be removed from his position.
Murat Temirkhanov, a former analyst at Halyk Bank, has written a number of reports critical of Samruk’s performance. Last year, he published an analysis of Tau-Ken Samruk (TS), a Samruk subsidiary that holds the fund’s mining assets.
According to Temirkhanov, TS would have been loss making in recent years if it had not been bailed out by large dividends from its 29% stake in Kazzinc, a copper miner that is controlled by Glencore.
The analyst also pointed out that Samruk’s dividend payments to the state, which are used by the government to fund services, were disappointing low. In 2018, the year Yessimov took over running Samruk, the fund paid the government just 12.7 billion tenge ($30m) on group revenues of 10 trillion tenge. In the first nine months of 2019, Samruk paid the Government nothing.
In response to Temirkhanov’s work, TS filed a lawsuit against the analyst under article 130 of the criminal code for “publishing false information and undermining the reputation of the company and Samruk-Kazyna.”
Murat Temirkhanov wrote on his Facebook page: “I will not comment on the complaint so that I don’t get accused of putting pressure on the court. I will only say that the article is purely analytical. All initial information for the analysis was taken from official sources, primarily from audited financial statements published by the company itself. Based on this information, I made a financial analysis that Tau-Ken Samruk did not like much”.
Temirkhano has received support from a Kazakh economist, Zharas Akhmetov, who published a report backing the analyst’s findings. According to Akhmetov, between 2009 (when TS was established) and 2019 the mining group’s free cash flow was consistently negative. This meant that Samruk, the parent fund, was supporting TS and continued to do so for 11 years.
Akhmetov noted that it was hard to imagine that a private investor would have put up with such poor performance for so long.
Criticism of Samruk’s performance under Yessimov’s leadership has also come from the Kazakh Parliament. A report by the finance committee last year said that while Samruk had claimed profits of 1,141 billion tenge ($2.6 billion) in 2018, the underlying performance of the fund was substantially worse. Excluding accounting changes, an increase in oil prices and positive exchange rate movements, the committee said that Samruk was actually loss-making.
In addition, the committee found that Samruk’s profit margin was also falling, down to 16.5% from 25.3% five years earlier.
The committee also raised concerns that Yessimov had permitted Samruk to deposit more than $350 million at ATF Bank despite the fund’s rules barring such holdings. ATF was at the time owned by Yessimov’s son-in-law Galimzhan Yessenov.