Scandal with MMA Federation

Kazakhstan United MMA Federation’s employees recently declared their president Alik Aidarbayev “a wanted man”. He has purportedly left the country and has not been in touch since the beginning of 2023. Several founders close to Aidarbayev also left the organization in February. The association must pay 100 million tenge in taxes to the state from "unnecessary" transactions for the right to hold two international competitions. 750 thousand dollars have already been irretrievably spent.

Orda.kz conducted its own investigation and found out how, with the arrival of a new manager in 2019, the federation accrued a tax debt of 100 million tenge. Founders/athletes still in the federation may be liable for the debt. At the same time, the 750 thousand dollars paid for the right to hold two international competitions will not be returned. The contract was terminated at the federation’s fault.

Alik Aidarbayev was once the most influential person in the oil and gas sector of Kazakhstan. He was also close to the former Prime Minister of the country and the KNB's ex-head, Karim Massimov. As a member of the Shaprashty clan, he surrounded himself only trusted persons. The Federation was no exception.

The MMA federation has existed since 2010 and has 19 operating branches. Since 2015, the republican public association has paid 100.9 million tenge in taxes. 76.8 million in 2019 – the year of cardinal changes.

The founders' council spoke about the events in chronological order and immediately answered a reasonable question: why were they silent about the problems for so long? It turned out that before declaring such an authoritative person as “wanted”, it was necessary to attempt utilizing every peaceful way to mediate the conflict.

"We cannot accuse Aidarbayev directly that he and his deputy are involved in the result. This act is rather a request for dialogue. If former employees of the oil and gas sector have money, then we are ordinary athletes. Each of us works, pays taxes. And for us, 100 million tenge is a huge amount,”  the founders' council said.

The Debt

Conflicts in the MMA Federation are not uncommon. The claims against former President Anatoly Kim began back in 2016. Two years later he left the post. The former KNB chairman and concurrently the head of the Association of Martial Arts of the Republic of Kazakhstan, Karim Massimov, knew the score. He was instructed to give the MMA federation to a "neutral party".  The new leadership was to draw out the directive.

The organization was transferred to the current major shareholder of Jysan Bank, Galimzhan Yesenov. In 2019, he signed an agreement with the International MMA Federation for the right to host the Asian MMA Championship in the amount of 250 thousand dollars.

 

"Any international events are concluded for two purposes: to raise the image of the state or the personal level of athletes. We did not need this agreement – Kazakh MMA has been ranked first in Asia for 10 years and is in third place in the world out of 140 countries. It was his private matter. However, in 2020, Yesenov actually transfers the federation to KazMunayGas via Alik Aidarbayev. It was a long process involving the KNB. As a result, we tacitly agreed that the founders do not interfere in the politics of the federation. Instead, athletes calmly continue to perform. Former Ministers of Culture and Sports Arystanbek Mukhamediuly and Aktoty Raimkulova also participated in this. And this was the only time we saw Aidarbayev in person," the founders' council told an Orda correspondent.

Having received his position in 2020, Aidarbayev assigned trusted people to manage the organization and also signed another contract for the right to host the MMA World Championship in the amount of $2.5 million.

 

"The legislation specifies that royalty tax (non–resident income received from sources in the Republic of Kazakhstan, which is subject to corporate income tax at the source of payment at the rate of 15% - Ed.) must be paid for each such currency transaction. Since the beginning of 2019, no one has paid it, besides, penalties have run up, and the percentage has also been increased. CEO Kurman Tileubayev tried to quit in April 2023. And he told us that "there is no money, solve (this - Ed.) yourself or let the state help." stated in the founders' council.

Tileubayev Kurman is the first head of JSC "AstanaGaz KMG”. The first vice-president of the MMA Federation is Berlibayev Daniyar, who headed the Board of Directors of KazTransOil, and was also an adviser and deputy chairman of KazMunayGas’s Management Board.

Tileubayev told the founders that we wouldn't do anything to him. He said he wouldn't give anything back until he was removed from the federation. Even in court he tried to bargain for the right to leave the organization, but he was refused, the interlocutors added.

  

Legal Snag

All financial obligations will fall on the one who will take CEO Tileubayev’s place. And if the federation does not pay 100 million tenge in taxes by the end of September, then according to the law, the amount will be divided among all founders in equally.

We can no longer fulfill contracts with the international MMA Federation. In December 2022 , a letter came from them: KazMunayGas had to be informed that there are contractual obligations that need to be fulfilled. In May 2023, a notification came that the contract for the Asian Championship was terminated at the fault of the Kazakh federation due to the lack of feedback,  the founders' council noted.

   

 

The last notification says that the funds paid by the federation will not be returned.

It turns out that the management just gave someone 750 thousand dollars. And now the founders must find 100 million tenge to pay taxes on this unnecessary transaction. By the way, the championships could have been postponed or abandoned due to the pandemic. The International Federation and our Ministry of Culture agreed with this, but President Aidarbayev refused, said the state MMA coach of the Republic of Kazakhstan Zhanna Kim, who is the acting Director General during the internal financial audit.

 

At the same time, the organization received money to pay for international competitions from the accounts of KazMunayGas subsidiaries, according to the founders.

It is clarified that an important person for Aidarbayev was also among the founders: Marat Ormanov, ex–director of KazMunayGaz’s Department of Transportation and Logistics. He and Berlibayev legally withdrew from the founders, but without other founders’ approval. But "his people”, Eldos Babayev and Malik Saulebay, remained.

We did not agree with their withdrawal before the financial statements were submitted. We knew something was going on, but there was nothing we could do. We are not a court and cannot accuse. Someone would like to take their place, but they don't have that kind of money. We also cannot attract sponsors, as any money received will be used to pay taxes. The way we were eventually "helped to develop the direction of MMA.".. yes, there is no need for such enemies as supposed allies,  the federation added.

Zhanna Kim noted that due to tax arrears, the association cannot attract sponsors to go to junior competitions.

Our federation ranks third in the world among 140 countries — this was achieved thanks to the long-term work of our athletes. During the financial audit, in February 2023, Aidarbayev tried to withdraw from the founders without providing financial statements, and since then he has stopped contacting the federation, the state coach said.

Request for Help

In April of this year, the members of the association filed statements with Antikor and the Financial Monitoring Agency.

We are appealing in connection with the withdrawal of money from subsidiaries of JSC NC KazMunayGas in 2020-2022, as well as unjustified cashing out of funds in 2019 under the guise of providing sponsorship to sports activities for the development of MMA sports. In 2019-2020, the Executive Committee of the Federation signed an agreement with the international organization IMMAF to host the Asian and World Championships in 2020 without the approval of government agencies, local executive bodies and the founders of the federation. They were transferred several times, in fact, to date they have not been carried out, while the money was paid. The money was withdrawn abroad from the federation's bank account, but it was not utilized. The relevant taxes have not been paid to the state treasury, while financial resources have been received by the federation from the budget of quasi-state organizations. We believe that the leaders responsible for this are President Alik Aidarbayev and CEO Kurman Tileubayev, reads the text of the letter available to Orda.kz .

  

The first president and founder of the MMA Federation Anatoly Kim also shared his opinion.

I remember our conversation with the General of the KNB, who promised me that under Massimov's leadership they would strengthen funding and ideological work on the education of young people. As a result, we saw what they have strengthened and where they are sitting now. I left the post of president of the Federation in 2019, it had no debts, a budget was formed, the salary fund of employees, there were sponsors and advertisers. All this was achieved through many years of hard work, and not by calls from above and money from oligarchs. And then came the people who had their own money and power. Instead of strengthening the federation, it was simply looted, it turns out, Kim believes.

Kim added that initially Alik Aidarbayev gave the team the impression that he is a decent and honest person.

I don't know what happened. Perhaps he was let down by the same people who are also now running like rats from a sinking ship. Only athletes, coaches, founders and employees of the Federation who are dedicated to their work and continue to win medals for their country, no matter what, do not go anywhere.

The federation had bought the rights to host the Asian MMA Championship 2020 and the World MMA Championship 2020. The cost of the former ($250 thousand) was paid in full, and of the total amount of the latter ($2.5 million), only 500 thousand dollars were paid. In total, the founders estimate the organization’s approximate losses, together with taxes for the transaction, at 454 million tenge (taking into account exchange rate fluctuations).

The federation’s founders have sent requests to the executive committee several times so that the department's employees would conduct an audit. The organization has not received a response.

At the same time, Antikor and the Prosecutor General's Office were asked to take measures to disclose a possible state budget embezzlement scheme. However, so far there has been no response.

The Other Side

An Orda correspondent has also talked to the other side of the conflict – the general director of the federation, Kurman Tileubayev, who responded all the accusations.

Tileubayev mmediately explained that the president of the KF MMA, Alik Aidarbayev, was elected by the founders at the general meeting in February 2020. As for the funds spent on competitions, which are the reason for the conflict, Tileubayev noted that the position of IMMAF (International MMA Federation) itself is illegal.

The KF and IMMAF signed an additional agreement No. 2 dated July 01, 2022 on the postponement of the World Cup to 2024. At the same time, for the Asian Championship, we sent letters about the refund of the advance, which corresponds to the terms of the agreement. In this regard, the refund of advance payments lies in the plane of arbitration, on which the federation members should concentrate their efforts instead of absurd accusations. Contracts are enforceable, you just need to do it. Instead, the founders, in addition to those who have already left the association, exaggerate non-existent problems and form social tension among athletes and coaches, he said.

Tileubayev also believes that the problem with holding the Asian Championship in 2023 largely is the founders themselves, who "did not bother to settle the issue in any way."

The most important thing is that the federation members had a lot of time to resolve issues, given that Aidarbayev resigned as president at the beginning of 2023.

Tileubayev also referred to the charter, pointing to several statements of the founders:

Yesenov could not have "handed over" the federation, as its members themselves chose Alik Aidarbayev. He, being the first head of KazMunayGas, of course, had the activities of the oil and gas company. But, despite this, he was constantly interested in the performances and affairs of MMA athletes. At the same time, none of the founders made any attempts to meet with him. I remember how in 2021, senior coach Bayan Zhangalov was awarded the title of honored coach, and also rewarded with a prize. Aidarbayev personally participated in this, so the founders could not help but to have seen him. 

The founders' council previously claimed that Aidarbayev, having come to power in 2020, put proxies to manage the organization, and also signed another contract for the right to host the MMA World Championship. Tileubaev put forth his rebuttal for that, too.

Given the general context of the cast of the sentence, this may cause readers to feel that there is an abuse of authority. It should be noted here that the founders themselves, when adopting the charter, obliged the president to appoint officials. Secondly, as president, Aidarbayev did not sign a contract for holding the World Cup as an official of MMA. The agreement was signed by the former director General, who was appointed under Yesenov.

Taxes?

Tileubayev could not unequivocally comment on the problem concerning the taxes owed (100 million tenge). He did explain, however, that so far there have been no notices from the tax authorities.

It is necessary to understand, whether there are any unpaid taxes at all. This still needs to be sorted out, and not to speak unfoundedly. In any case, if the federation has committed violations of tax legislation since 2019, then I note that this happened even before President Aidarbayev and I, as general director, took office. If you go to the website of the SRC of the Ministry of Finance of the Republic of Kazakhstan, you can make sure that the federation does not have unpaid taxes. Therefore, the statement of the founders that, due to tax arrears, the association cannot attract sponsors to go to juniors competitions, does not correspond to reality.

As the founders previously reported, Kurman Tileubayev tried to leave in April 2023. Answering a question about what should be done, he allegedly replied at the time: ”there is no money, (solve this - Ed.) yourself or let the state help." Tileubayev explained that on February 23, 2023, he submitted a notice of resignation to the founders, using his legal right accordingly under the Labor Code of the Republic of Kazakhstan and the Federation charter.

The notification is legal – it was confirmed to me in labor protection on July 12. Then I understood that the federation was coming to a crisis situation in terms of funding, as during my tenure only Aidarbayev, Berlibayev, Ormanov and Saulebay (those who left the founders – Ed.) assisted in the implementation of the federation’s statutory tasks. I understood that I would not be able to help and develop this sport. At the same time, the other founders disengaged from solving financing issues. Therefore, he suggested that they look for sponsorship sources, including by contacting state bodies, and not "let the state help. 

Lawsuit against Ministry of Justice?

Tileubayev wanted the authority to be obliged to make changes to the database because of his official notice of dismissal.

The court made the decision to refuse, based purely on the technical features of maintaining the database of the Ministry of Justice, and did not establish the legality or illegality of this notification. (...) It seems that certain persons are deliberately manipulating and distorting reality. Perhaps their goal is to intimidate any of the federation members with the prospect of paying, in fact, non-existing debts. In addition, Article 11 of the law "On Non-Profit Organizations" states that the members of the association are not liable for the obligations of their members. And I would like to understand what this arbitrary figure of 100 million is? Do those who voice it have any calculations? Tileubayev said.

Kurman Tileubayev added that they work and participate in public associations on a voluntary basis, whereas the president — on a voluntary basis without concluding an employment contract and payment:

According to the charter, the president can leave his post by submitting a written statement, which Aidarbayev did on February 22. At the general meeting of the participants, a new candidate was even proposed. However, the members of the federation, apparently forgetting about the Constitution of the Republic of Kazakhstan, decided that they had the right to determine who and what was obliged to do at their whim – they turned Aidarbayev down.

According to him, the founders themselves did not take effective measures for the sake of the federation.

In other words, there is a complete infantilism from some of the federation’s members, acting on the principle of "neither to themselves nor to people"." They do not appoint others and at the same time believe that they have the right to keep people in the federation at their whim.

Now Kurman Tileubayev is challenging in court the decision on the issue of his dismissal. The preliminary meeting was scheduled for September 26. Orda.kz will continue to monitor developments.

Original Author: Alexander Smolin

DISCLAIMER: This is a translated piece. It consists of two separate articles. The text has been modified, the content is the same. Please refer to the original articles in Russian for accuracy. Article 1, 2.