26.06.2006

Turkish Entrepreneur Seeks Way To Sue Turkmenbashi

A Turkish entrepreneur who spent 18 months in custody in Turkmenistan for supposed tax evasion is searching for a way to sue the country’s mercurial leader Saparmurat Niyazov, seeking unspecified damages in a breach-of-contract case.

The businessman’s experience sheds light on the Turkmen government’s treatment of foreign entrepreneurs.

Faruk Bozbey, who specializes in agricultural ventures, is trying to find an international court that could claim jurisdiction over the would-be lawsuit against the Saparmurat Turkmenbashi Foundation. "We have to call the Turkmenbashi to account ... because he is the head of the foundation," Bozbey said in a telephone interview with EurasiaNet.

Bozbey’s intended suit is tied to his company’s $4 million investment in an "agro-industrial project" that was jointly operated with the presidential foundation. The company, Turkish Bozbey Co. Ltd, began operating in Turkmenistan in 1998 after receiving a 21-year tax exemption under a special presidential decree.

In setting up the venture, Bozbey had several face-to-face meetings with Niyazov, who is notorious for establishing one of the world’s most authoritarian political systems, featuring an all-encompassing cult of personality. [For background see the Eurasia Insight archive]. Despite his reputation as a despot, Bozbey said that Niyazov could be congenial during those early encounters. The president strongly encouraged Bozbey to invest in Turkmenistan. "Work freely, work in comfort,’" Bozbey recounted Niyazov telling him. "He [Niyazov] discussed his desire to build a market economy."

A report published in April by Global Witness, an international watchdog organization, details how Niyazov engages in systematically corrupt behavior. The report, titled Funny Business in the Turkmen-Ukraine Gas Trade, asserted that the Turkmen leader maintains a multi-billion dollar slush fund to indulge his personal fancies. The money appears to be drawn from earnings from the state’s exports of natural gas.

Niyazov has been the subject of international ridicule for various schemes, such as the gold-plated statue of himself in central Ashgabat that rotates to always face the sun. But Bozbey said Niyazov in person showed no signs of eccentricity. "He laughs and jokes," Bozbey said.

Bozbey’s story adds a personal dimension to the broader story of Niyazov’s arbitrary governing style. During its first three years of its operation, Bozbey’s presidential farm and cotton processing plant turned a decent profit, with Niyazov’s foundation receiving a 30 percent share and the Turkish company taking the rest. The trouble for Bozbey began in 2002, when Niyazov survived an alleged assassination attempt in Ashgabat. Bozbey maintains that the assassination attempt was staged, designed to give Niyazov an excuse to launch a far-reaching clampdown against anything and anyone perceived to threaten his personal authority. Beyond the last vestiges of internal political opposition, a particular target of Niyazov’s wrath was foreign investors, especially Turks, Bozbey alleged.

"He changed in 2002," Bozbey said of Niyazov. "Foreigners were all of a sudden considered to be dangerous, capable of teaching the Turkmen people about the concepts of liberty and democracy."

In 2003, a top-level Turkmen official demanded that Bozbey build a guesthouse with a helicopter landing pad, as well as a paved link to a nearby highway, on the farm’s territory. The new construction projects needed to be completed within six months, the official added. The facilities, Bozbey was led to believe, were for Niyazov’s personal benefit. Bozbey refused to comply with the request. Shortly thereafter, Turkmen tax inspectors showed up at his door, demanding $1.3 million in back taxes for five years dating to 1998. Bozbey pointed out that the venture enjoyed tax-free status under several presidential decrees and existing legislation, but the authorities paid no attention. In addition, Turkmen authorities demanded that not only would the farm continue to give the presidential foundation a 30 percent share of revenue, it would additionally have to send 64 percent of revenue to the state, upping the effective taxation rate to 94 percent. "They said; ‘if you don’t pay you’ll go to jail.’ I didn’t believe them, but they did exactly what they threatened to do," Bozbey said.

He spent the next six months in a tiny cell, followed by a full year of solitary confinement. During this period, he was subjected to frequent interrogations and pressured to sign a confession. Officials said that if he admitted his guilt, he would be released. But Bozbey resisted the temptation. "My lawyers warned that it would be worse for me if I signed," he said.

Under a January 2005 presidential decree, the Turkmen government unilaterally liquidated the venture’s assets. Finally in October of the same year, following an extensive lobbying effort by the Turkish government, Bozbey was released under the guise of a general amnesty. Four security service agents "took me directly from prison to the airport, where they put me on an airplane without any money, without anything," Bozbey said. "Even at the last moment, they tried to get me to sign a confession. I refused." Signing such a document would have complicated his effort to sue Turkmenbashi.

Bozbey emphasized that his case is not an isolated example of a business venture gone awry in Turkmenistan. "I met other entrepreneurs – Turks, some Arabs and Afghans – and they all had similar problems," Bozbey said. "It should not be the logic of any government to cheat people and confiscate private property or liquidate investments."