A Broken Compass: How a British Corporation Deprived Kazakhstan of Billions

Billions of investments, millions of profits, hundreds of thousands of barrels of oil, tens of thousands of jobs. Quite the list.
Contracts for extravagant sums, suspicious top managers, bribery of government officials, schemes with KMG assets, and no comments are also a cause for curiosity.
This all concerns Tengiz, the heart of Kazakhstan's oil industry.
The company, which worked in Tengiz under the extensive British Compass Group, could have brought billions in revenue for Kazakhstan.
Instead, it ushered in money siphoning, reputational risks for Tengizchevroil, and a potential corruption controversy.
Orda.kz learned where the moral compass points.
Right Then, I'm Off!
At the end of November 2024, rumors overtook Tengizchevroil — significant changes were on the horizon for the Tengiz oil field.
The British Compass Group International B.V, which provides social infrastructure management services in Tengiz, may leave Kazakhstan's market.
As reported by PetroCouncil.kz, citing sources, the foreign contractor intends to sell the local ESS LLP subsidiary.
However, this company recently received another seven-year contract to service Tengizchevroil (TCO).
The amount – almost a billion dollars.
Our sources claim that Compass Group is considering selling all its subsidiaries in Kazakhstan, including its main one, Compass Kazakhstan LLP.

By the end of 2023, Compass Group was ranked 12th among Kazakhstan's largest oilfield service organizations.
The British corporation is second among the companies providing facility management (social infrastructure management) in the oil fields.
Last year, the company, which provides TCO employees with food and housing, received 56.3 billion tenge.
What could make a company servicing Tengiz for over twenty years hastily close up shop, especially considering the field's expansion project? Indeed, it is a promising opportunity for greater profits.
Orda.kz has learned that the supervisory authorities may have hardball questions for Compass Group.
They concern operations in Kazakhstan and beyond and how the company received contracts to service Tengiz.
A Glutton for Millions
For Compass Group, Kazakhstan is one of fifty markets. The corporation has been around for 83 years, with over half a million employees worldwide.

When the British came to Tengiz, TCO managers had high hopes; it was assumed that foreign specialists would share their experience with local personnel so Kazakhstan's future generations would serve the oil heart of the country, ensuring revenues would stay.
To this end, a Kazakh-British company, KazMunaiGas–Compass Service, was founded in 2007.
Murat Turysbekov, the deputy CEO of the joint venture at the time, recalls the truly epic scale of the operations.
KMG-Compass Service provided housing and meals for thousands working at Tengiz, creating around 4.5 thousand jobs.
I was working at KazMunayGas-Service then, and we saw that at Tengizchevroil, all services – accommodation, meals, and so on – were provided by foreigners. So, we have created a joint venture with the KMG subsidiary and a British partner. 60% belonged to the English Compass Group, registered in the Netherlands, and the remaining 40% belonged to KazMunayGas. I was the deputy CEO of this company on the Kazakh side. The joint company received a tender from TCO, says Murat Turysbekov.
The contracts from Tengizchevroil were highly profitable.
Tengizchevroil announces tenders for facility management for seven years at once.
It also pays well: the contractor is entitled to 700 million dollars, 100 million each year.
Murat Turisbekov says the Compass subsidiary, Eurest Support Services (ESS), serviced Tengiz from 2007 to 2015.
It, in turn, subcontracted to a joint venture with a Kazakh stake.
The goal was for ESS to serve TCO directly, and we were subcontractors – we brought in local personnel, trained Kazakhs. There was a fixed arrangement that the next tender would be held in 2015, and a joint venture with a 40% stake in KMG would participate directly in it. We wanted to move towards completely switching to Kazakh staff and management, says Turysbekov.
It was in KMG's interest to develop a joint venture.
After all, ESS profits went abroad, and KazMunayGas-Compass Service LLP was supposed to transfer dividends to the state.
In other words, as of 2015, Kazakhstan should have received several million dollars annually from revenues from servicing Tengiz through KazMunayGas.
This never happened.
The Turkish Gambit
In 2014, Caglar Çapa, a Turkish citizen, became the new CEO of KazMunayGas-Compass Service LLP.
Top managers from the Compass Group made the appointment.
Mr. Çapa may have received his position illegally.
Kazakhstan's Labor Code, in force at that time, stipulated that an employee combining senior positions in two companies must obtain the approval of both founders (stakeholders) before being appointed.
Caglar Çapa simultaneously worked as deputy head of ESS, the Compass subsidiary, and should have formally asked KMG permission.
This was overlooked, although KazMunayGas knew Çapa was working at ESS.
If appointed this way, every contract and document he signed may be invalidated.
Something worth remembering.
I was not even invited to the meeting where Caglar Çapa was appointed CEO. He was made the head with KMG's tacit approval. Also, they carved out a nominal salary of 500 thousand tenge for him, although at ESS he received about seven to eight million tenge per month, not counting bonuses and dividends, says Murat Turysbekov.

The former deputy CEO suspects Çapa was appointed head for a specific tender.
Tenders were to be held in October 2015 to select a TCO maintenance contractor for the next seven years. According to the procurement procedure results, the contract should have gone to the joint venture.
Instead, millions of dollars again fell into the hands of foreigners from ESS.
A $700 million contract was just taken and given to ESS based on the CEO's signature. I see two violations here. Firstly, the founding agreement and the articles of association of the company state that the CEO can sign contracts for amounts up to 100 thousand dollars. Any higher – only with the founders' approval, that is, KazMunayGas and Compass. The ESS contract was handed over on the same day we won the tender – without KMG's approval. Secondly, it was necessary to first find out from KazMunayGas whether the national company agreed to transfer such a volume of profit to someone else, says Murat Turysbekov.
Transferring a $700 million contract from one contractor to another looks all the more surprising since Chevron Corporation is famous for its strict procurement compliance.
Before the tender was announced, TCO had to select potential suppliers for two years. Any grounds for renegotiating the contract would undoubtedly have been revealed.

Murat Turysbekov fought for the lucrative contract.
They went to the Compass Group regional office in Dubai and asked the management to transfer the TCO project maintenance to a joint venture. Compass promised to hold a general meeting in January 2016.
But it went nowhere: the $700 million tender remained with the foreign company. Everything was hushed up, and Turysbekov was fired.
I contacted all the authorities: the KNB, the prosecutor's office, the Atyrau region PD, the Akimat, and the Ministry of Energy. Nothing! Everyone pointed their finger up and said: there is an instruction from Astana: we do not meddle in this matter, and we do not advise you to. Then, in 2018, I wrote to Compass's internal security service in London. Shortly after that, Caglar Çapu was removed as CEO, and about five more foreigners were fired from the management. But essentially nothing has changed, says Murat Turysbekov.
According to various estimates, when foreigners serviced Tengizchevroil, Kazakhstan did not receive from 30 to 50 billion tenge in tax payments and dividends. This money could have been used for the republican budget if the tender had been given to a KazMunayGas subsidiary.
Tengizchevroil responded kindly but unequivocally to our inquiry:
TCO is a law-abiding company and carries out its activities under all applicable laws of the Republic of Kazakhstan. Per the company's internal policy and the legislation of the Republic of Kazakhstan, TCO does not comment on the details of its contracts and specific details of its production activities, Tengizchevroil's press service said.
Inexpensive National Interests
In 2017, KazMunayGas unexpectedly sold its 40% stake in the KazMunayGas-Compass Service joint venture. Compass Group owned the remaining 60% and was the priority buyer.
In 2016, legislation included a clause stating that shares owned by national companies should be sold only through a tender. Privatization was carried out "automatically." KMG's share was sold for only two billion tenge.
Foreigners were given all the company's key positions, which Compass took over. For example, a Greek citizen became the financial director, who was only formally listed as on staff but worked at ESS.
KazMunayGas had to know they were transferring the share of the national company to a foreign company with a tarnished reputation. By then, Eurest Support Services had "made a name" for itself.
In 2006, the company paid a fine of about 40 million pounds after being accused of bribing Russian UN official Alexander Yakovlev.
For the bribe, the diplomat had to guarantee that ESS would receive a contract to service the peacekeeping contingent ("blue Helmets") in Liberia.
The contract value was $62 million. And the second high-profile ESS corruption case was directly related to Kazakhstan.

In 2013, a British citizen, Karim Pabani, who worked at ESS as a financial director, said the company bribed government officials in Kazakhstan to obtain lucrative contracts.
He claimed the management of Eurest Support Services caused the company 5.4 million pounds in damage.
Pabani was also swiftly dismissed by the UK big-wigs.
Pabani says that between 2011 and 2013, profits at a related Compass Kazakh subsidiary were inflated and that he was asked to “falsify accounting records.” He also claims that a Kazakhstan government official and his family enjoyed a $19,000 (£12,000) holiday in Dubai at the expense of a Compass venture in Kazakhstan called Kaz Munay Gaz Services Compass (KMGSC); another official is said to have had his son’s US university fees paid by the firm, while the business also stands accused of “circumvent[ing] government procedures to supply luxury vehicles to KMG, a related government entity, The Guardian wrote.
KazMunayGas still transferred its asset Eurest Support Services.
A Looping Investigation
In December 2022, the Aq Zhol faction deputies, headed by Azat Peruashev, requested Prosecutor General Berik Asylov and the Financial Monitoring Agency Chair Zhanat Elimanov to conduct an audit.
The aim was to learn how the joint venture's Kazakh share passed into foreigners' hands.
The parliamentarians suggested that the country could lose at least 30-40 billion tenge due to the actions of the KMG-Compass Service management.
In 2017, the share of KMG-Service was sold for two billion tenge. This price did not consider three extremely profitable long-term contracts of KazMunayGas-Compass Service with TCO for field services. The Accounts Committee has repeatedly pointed out the systematic privatization of state assets at an undervalued cost, and there is information that the privatization of a stake in KazMunayGas-Compass Service is just one of them, said Majilis deputy, Ghani Khamzin.
Zhanat Yelimanov replied that the 2016-2020 comprehensive privatization plan provided for the sale of 40% of KazMunayGas-Service's share.
The market value was estimated at only 1.2 billion tenge.
When selling shared ownership, another company co-owner had priority on its buyback, so Compass Group International B.V. received the first offer. The deal for two billion (+60% of the estimated value) was approved by the KMG board of directors in September 2017 and October - by the state commission for economic modernization.
The deal was closed in December.
Kazakhstan's Financial Monitoring Agency and Anti-corruption Service found no law violations.
They replied to the received requests that they were awaiting the audit results conducted by the Samruk-Kazyna Foundation. Samruk-Kazyna, however, stated that they did not have the right to conduct such an audit.
A perfect circle.
Murat Turysbekov also conducted a parallel audit. For six years, he has been seeking compensation for unfair dismissal.
And at the same time to prove that the KMG Compass Service was transferred to the British in violation of the law.
In 2022, I filed with the Prosecutor General's Office. They gave me two answers there. Firstly, they admitted that in 2015, Caglar Capa illegally transferred the contract, thereby harming the interests of the national company. But they did not start an investigation – they wrote that this was a dispute between business entities. Secondly, the Prosecutor General's Office admitted that the sale of a 40% stake was carried out illegally, says Murat Turysbekov.
The Prosecutor General's Office has requested copies of all documents related to this transaction and the sale of KMG assets.
The Astana Department of Economic Investigations has sent letters to the Samruk-Kazyna Foundation and the Department of Internal State Audit.
As often happens, the investigation "looped around": The documents were sent to KMG, and there has been no news about the audit status since.
At the end of October 2024, the Asset Recovery Committee under the Prosecutor General's Office accepted a new request concerning possible violations during the sale of a 40% stake in KazMunayGas-Service LLP.
Not An Epilogue
In the spring of 2024, the former joint company KazMunaiGas-Compass Service suddenly changed its founder.
A newly created company, which became an AIFC resident, joined the founders in Compass Group's place.
Perhaps the former joint venture is being prepared to be sold.
An Orda source, well acquainted with the oil and gas sector's ins and outs, claims one potential buyer is another major player in the catering market in Kazakhstan – Caspian Food LLP.
Meanwhile, Caglar Çapa again received a senior position in structures related to the oil industry.
Since July 2024, he has been heading KazGlobalSolution LLP, registered in Atyrau.
The company is engaged in constructing oil pipelines and "providing services that contribute to the production of oil and natural gas."
We contacted Caglar Çapa on LinkedIn with questions about the situation surrounding the sale of the KMG-Compass Service stake and Tengiz service contracts.
Shortly after, our Journalist's account on LinkedIn was restricted over "suspicious activity."
We invite Mr. Çapa to contact the editorial office through other channels to state his position, and we will publish his comment if it arrives.
Will the compass point toward Tengiz?
Maybe 2025 will show us.
Original Author: Nikita Drobny
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