40 Million KZT for Praising Nazarbayev: What Does Khabar JSC Spend Public Money on?

Billions are spent on government information policy every year. But how effectively they are spent is unknown. Orda.kz has received a Supreme Audit Chamber document. According to it, Khabar Holding's representatives signed multimillion-dollar contracts with their brothers' firms and made films that did not align with their synopsizes. Orda has looked into the matter.

Share

In Kazakhstan, a special form of "support" for domestic media, known as the "state information policy", is codified at the legislative level. As part of it, government agencies allocate targeted subsidies from the budget and through the public procurement portal to certain media.

The distribution takes place without competitive procedures. This is intriguing considering the significant amounts involved. For example, from 2019 to 2021, about 153 billion tenge was allocated for the implementation of the state information policy. At the same time, 12 billion of them were spent inefficiently.

The Accounts Committee of the Republic of Kazakhstan (Supreme Audit Chamber) has reached such a conclusion. It is noteworthy that the auditors' report is classified and is "for official use".

Diana Okremova published the report. She is the head of the Legal Media Center. According to the document that we received, almost 80% of the amount allocated for state information policy fell into the hands of three organizations subordinate to the Ministry of Information:

• JSC "Kazakhstan" — 69 billion tenge (42.4%),
• Khabar JSC — 51 billion (31.4%),
• Kazteleradio JSC — 9 billion tenge (5.6%).

There are, however, more than 3,600 media outlets registered in the country.

Orda.kz has previously analyzed the expenses of JSC "Kazakhstan". 4 billion tenge of the amount allocated for state information policy was spent on Russian content.

The second major winner of the tenders is Khabar JSC. The media management explained to Orda.kz that the allocated funds were a billion more. The holding spent 52 billion tenge as follows:

• KZT 17.7 billion — to pay for the services of Kazteleradio JSC, Kazmedia Ortalygy Management Company LLP and utilities
• KZT 16.6 billion — for labor remuneration, tax, and other budget obligations
• 17.7 billion tenge — for content purchase 

The auditors note that the amount allocated from the state budget to Khabar JSC has been growing every year, but the ratings of the channel have not improved.

According to the results of a study by TNS Central Asia LLP, among all measured channels in the territory of the Republic of Kazakhstan, according to the indicator "audience share" from 2019 to 2021, it is in 10th place, while QAZAQSTAN TV channel improved its position from eighth (in 2018) to fourth place, the auditors write.

Oh, Brother.

Khabar JSC made its debut in 1995. In 28 years, the agency has turned into a large television household with four channels: Khabar, Kazakh TV, Khabar 24, and EL ARNA.

According to the text on the holding's official website, the latter channel is responsible for the entertainment and educational elements. That is why, in 2020-2021, the Ministry of Education and Science, later reorganized into the Ministry of Education and the Ministry of Science and Higher Education in 2022 , signed an agreement with EL ARNA to create teleworks for schoolchildren during COVID-19.

The holding, in turn, signed KZT 613.8 contracts million with two subcontractors who were supposed to produce materials for schoolchildren.

Khabar JSC has concluded contracts with the following companies:

• Zhana apramediagroup LLP - 252.3 million tenge
• IP "Altyn-Bek" -  361.5 million tenge

The auditors highlight that before the agreement's conclusion, IP Altyn-Bek had no experience in the production of audio and video content.

This creates corruption risks. For example, Khabar JSC made an unjustified 166.4 million tenge payment for the services of teachers, experts, creative staff, and a film crew who participated in the production of TV shows provided there is a turnkey contract for these services with IP Altyn-Bek, the text of the report says.

Meanwhile, the holding assures that the conclusion of the auditors regarding the sole proprietor's obligations is untrue.

The obligations of IP Altyn-Bek provide for the provision of creative and production and technical personnel, material equipment for the production of television lessons, and the obligations of JSC Khabar include the provision of teachers, experts, editors, the holding responded to Orda's official request.

But they did not deny Baymeshov and Altynbekuly's relationship. They have also claimed that they no longer work with the Altynbekovich brothers.

Representatives of Khabar also assured that Baymeshov, despite his post, is not an executive officer and does not make decisions on budget allocation.

During the period of performing his work duties, Baymeshov was not an executive officer. The officers are the members of the Board of Directors and the Management Board of the company. The duties of the director of the Department of Strategic Development and Media Planning do not include the performance of managerial functions that affect decision-making by company officials, the holding replied.

But on the public procurement website, you can see that Bolatbek Baymeshov appears as a member of the competition commission, who directly decides who will receive public money to complete certain tasks.

Nazarbayev

IP "Altyn-Bek" came up in the auditors' report more than once. The auditors revealed another violation during the production of a film about former President Nursultan Nazarbayev.

According to the agreement with Khabar JSC, 40 million tenge was spent from the budget to create the film as follows:

• KZT 17.4 million — professional fees
• 3.2 tenge — equipment rental
• 11 million tenge — production costs
• 8.4 million tenge — travel expenses of the 9-person film crew to foreign countries

The estimate, especially after watching the film, raises two reasonable questions: why was such an amount allocated, and where did the film crew go for 8.4 million tenge? Indeed, the film consists of archival footage and seven comments by Kazakhstani public figures.

JSC "Khabar" did not question this. They signed a certificate of completion and released the film on July 6, 2020. Only 6 thousand people watched the multimillion-dollar project on Khabar's YouTube channel.

The 8.4 million tenge caught The Accounts Committee auditors' attention only in 2022. JSC Khabar had to sue IP Altyn-Bek.

They were supposed to illustrate the main achievements of Kazakhstan and Nazarbayev's role in this process. None of this is in the movie.

In court, IP "Altyn-Bek" explained that at the time of filming, WHO had declared a pandemic, and they were unable to travel abroad. But this answer did not satisfy Astana's Specialized Inter-district Economic Court.

The defendant did not provide the court with supporting documents on the targeted expenditure of these funds. The defendant's arguments that restrictions related to the pandemic were imposed cannot be accepted by the court as evidence to the contrary, the decision reads.

As a result, IP "Altyn-Bek" returned 8.4 million tenge to JSC "Khabar" and the cost of paying the 252,000 tenge state fee.

Administrators in Need

If the previous violations concerned Bolatbek Baymeshov's brother, who, in the opinion of Khabar JSC, is not an official, then the following fact described by the auditors directly concerns the former chairman of the board of the holding, Alan Azhibayev.

It turned out that during the years of Azhibayev's leadership (2018-2019), Khabar JSC registered two employees as those in need of housing on lease terms with a subsequent future purchase option. Not just anyone, but Alan Azhibayev himself and Deputy director of the department Robert Muradyan.

This was done without supporting documents on the lack of housing. But only one of the managers lucked out.

Alan Azhibayev became the proud owner of an apartment under a preferential program. According to the report, at the time of receiving housing, Azhibayev was no longer working in Khabar but was Chairman of the Housing Commission.

In 2019, based on the decision of the Housing Commission, an apartment worth 24.4 million tenge was sold to Chairman of the Board Azhibayev, who was chairman of the Housing Commission and voted for this decision, where a conflict of interest is seen, the report says.

The current management of Khabar JSC does not deny these facts but believes that everything was done according to the law, as the apartment that Azhibayev got was official housing.

Office residential premises can be sold to an employee of the JSC at a price determined by an independent appraiser in accordance with the procedure established by the law "On Appraisal Activities in the Republic of Kazakhstan". As a result of the vote of the members of the Housing Commission, the decision was made by a majority vote, the holding replied. 

All of the aforementioned facts allow one to assume that the policy of subsidizing the media is opaque and grants privileges to state media in the advertising market, doing little to benefit private media. The Ministry of Information and Public Development has also never conducted an assessment of the effectiveness of the Board of Directors, while the Accounting Committees's audit results are inaccessible.

Original Author: Silam Aqbota

DISCLAIMER: This is a translated piece. The text has been modified, the content is the same. Please refer to the original piece in Russian for accuracy.