Qazaq Banki’s Collapse: What It Cost KazAgro

In 2018, the now-bankrupt Qazaq Banki attempted to partially repay its debt to KazAgro by handing over 13 luxury apartments in Almaty, valued at a total of 900 million tenge, a mere drop in the ocean. By placing its trust in the wrong financial institution, the national agricultural holding lost approximately 21 billion tenge.

Orda.kz explains how it happened.

Before the bank’s collapse, KazAgro deposited around 20 billion tenge in its accounts. When financial troubles hit, the funds were lost along with the bank’s assets. In an attempt to settle the debt, Qazaq Banki offered KazAgro a selection of real estate, including several high-end apartments in Almaty.

This property transfer was outlined in a compensation agreement signed by three parties: KazAgro, Qazaq Banki, and IBC Taimas, the construction company that owned the real estate. The deal included not just apartments, but also an administrative building, a business center, a dormitory, and a house, all of which had been sitting unsold on the electronic auction platform for quite some time.

This is evident from the attached documents available with each lot.

Someone also attempted to conceal key information in the contracts.

In all the PDF documents, the financial figures were covered up using graphic editing tools. However, the person who did this seemingly didn’t realize that text in most PDF files remains selectable, even if it is visually obscured.

Since PDF text is stored as characters rather than images, the amounts could still be copied and pasted.

Which is exactly what we did, and learned that the bank had 25 billion tenge in its accounts:

... Qazaq Banki Joint Stock Company, hereinafter referred to as ‘the bank,’ hereinafter jointly referred to as the "parties", and individually as indicated above, or a "party", taking into account the bank’s total debt under accounts 1 and 2, which amounts to 21,368,887,718.48 tenge (twenty-one billion three hundred sixty-eight million eight hundred eighty-seven thousand seven hundred eighteen) tenge 48 tiyn (hereinafter referred to as the debt) hereby enter into this compensation agreement...the document says.

The bank couldn’t repay this money, so it transferred partial compensation in the form of real estate.

All 13 apartments were located in the Samal-2 micro-district, building 33A, ranging in size from 147 to 178 square meters. Each apartment was valued between 62.9 million and 76 million tenge, totaling around 900 million tenge.

The agreement included a clause requiring Taimas to ensure the properties were free of liens or third-party claims. If not, the transaction would be voided and the debt reinstated.

As of 2021, only two of the apartments had been sold at auction.

Other assets up for sale included:

• Business center – 2.8 billion tenge
• Dormitory – 3.6 billion tenge
• Administrative building – 1 billion tenge
• Private house in Astana – 500 million tenge

Billions in Deposits, Years of Mismanagement

Concerns over KazAgro’s financial practices have been raised for years, even by international investigative organizations like OCCRP. The issue of questionable investments first surfaced publicly in 2020.

At that time, a probe was launched into Agrarian Credit Corporation, a KazAgro subsidiary. It was revealed that the corporation had deposited 11 billion tenge — funds for subsidized loans to rural entrepreneurs — into Qazaq Banki.

This was disclosed by then-head of the Anti-Corruption Agency, Alik Shpekbayev.

By late 2019, KazAgro’s managing director was suspected of large-scale fraud. In 2018, the deputy chair of the corporation’s board was under investigation for allegedly taking bribes from subordinates. That same year, the branch head in East Kazakhstan was also named in a criminal case.

Notably, the state allocated 450 billion tenge from the Unified Accumulative Pension Fund (ENPF) to KazAgro in 2018, intended to bring affordable food across the country. But instead of results, there were losses.

According to Informburo.kz, KazAgro has operated at a loss for many years. President Qasym-Jomart Toqayev himself has criticized the holding’s performance, calling its financial condition a reflection of poor management.

The Fall of Qazaq Banki

Qazaq Banki had been operating since 1993 and, for many years, maintained the reputation of a reliable mid-level financial institution. But in 2013, it was acquired by a group of entrepreneurs closely tied to the construction and development sector. Following the takeover, the bank drastically shifted its business model: it began issuing large loans to affiliated companies, often backed by weak or insufficient collateral.

By 2017, the cracks began to show. The bank faced serious issues with loan repayments and liquidity. Halyk Bank even filed a lawsuit against Qazaq Banki over unpaid debts.

Around the same time, the National Bank of Kazakhstan launched an inspection, and in 2018, it declared Qazaq Banki insolvent. The bank’s license was officially revoked in August of that year.

Ultimately, Qazaq Banki went bankrupt. Regular depositors received compensation through the Deposit Insurance Fund, but large corporate clients faced greater challenges. KazAgro, one of the bank’s biggest depositors, attempted to recover part of its losses by accepting real estate instead of a portion of the unpaid debt.

Original Author: Ilya Astakhov