Previously we discussed how GSBEP closed investigations into our case and did not provide detailed reasons. We asked Prime Minister’s office for assistance. They twice wrote to GSBEP asking for detailed reasons, but they did not receive it. What can be done in this situation? Who can help us?

I knew of other foreigner investors facing problems. They needed assistance. Some tried using the legal process but it did not work. However, Government continued to try and attract foreign investors. There were investment missions to many countries. Meetings with investors and business associations. Presentations mentioned laws that are there to protect foreign investors.

From our own experience, the laws were not protecting us. To solve our case and help other investors, we identified an approach that could work in the existing environment, an environment where there is corruption and weak legal system. We came up with an idea and presented it to Anticorruption Business Council. It was accepted and SME Investor Attractiveness (SIA) was established as part of Anticorruption Business Council.

The SIA approach takes lessons from what already works in Kyrgyzstan and adopts it to for foreign investors. For example:

• Generally speaking, in developed markets, the legal system provides protection to businesses. A small percentage of the businesses, such as those involved in illegal activities, are unprotected. They find their own method of protection. In Kyrgyzstan, it seems to be the opposite. Most businesses are unprotected due to the weak legal system. A small percentage of businesses, such as those owned or connected with ‘influential persons’, are protected. Such businesses do not face ‘day to day’ corruption related problems such as demand for bribes and harassment.
• Mid- and ground-level officials are more likely to have direct contact with SMEs, and engage in corrupt activities. In theory, it is less likely that senior officials have an interest in SMEs.
• In Kyrgyzstan it seems the legal system is not the preferred means for resolving problems. Instead, personal contacts in the government and/or corruption is relied upon to resolve problems. This can place foreign investors at a disadvantage. They may not have contacts, or may be reluctant to engage in corruption.

SIA secured high level support, including support from the leading 5 political parties. SIA’s board comprised of senior public and private sector representatives, including Chairman of the Parliamentary Committee responsible for Anticorruption, Chairman of GSBEP (Financial Police), senior representatives from the customs and tax agencies and private sector representatives. Since SIA board members were high level officials, they were less likely to have direct interests in SME’s. Hence they were more likely to support SIA since they have nothing to lose financially, but benefit from reputation and patriotism (contributing to economic development).

SMEs with foreign investment, and other organisations, could become members of SIA. They would be part of an organisation that has high level support. This could act as a deterrence for potential corrupt activities. Persons demanding bribes will know that it can be reported to SIA and hence become known by senior government officials, other stakeholders and the media.

Procedures were put in place for members to follow if they faced problems. For example, members could refer the case to SIA, this would be discussed by the SIA board and referred to the appropriate investigating body.

SIA secured financial supported from the Swiss Federal Department of Foreign Affairs. Few large global law firms, including the two largest law firms in the world, provided pro bono advise to SIA. SIA was shortlisted for a Thomson Reuters Foundation sponsored TrustLaw Impact Award. SIA is one of only three projects that was shortlisted.

There was potential to make a difference. SIA will work on actual cases, assisting investors. Case studies would distributed, locally and internationally. This would show what was actually being done to protect investors. Government makes promises to protect investors but this is not convincing. Actual case examples are more convincing. SIA already established an international network. Case studies could have been disseminated through the contact network.

In April 2013, while SIA was being established, we met with the advisor to the chairman of GSBEP.  I will never forget that meeting. The advisor had a large well equipped office, with a flashy suit and watch to match the interior. When we presented the case, he said that GSBEP does not investigate cases involving private sector, they only deal with cases involving state bodies. I explained that a country needs a body that investigates financial cases involving private sector. He agreed, promised to open the case and personally supervise it. This never happened. I learnt later that he was removed from GSBEP.

In January 2014, when SIA was already established, the Trilight case was discussed by the SIA Board and referred to GSBEP. Deputy Chairman of GSBEP reviewed the file. At a seminar held at Jogorku Kenesh (Parliament), he concluded that the reason for closing the case was weak. GSBEP wrote to General Prosecutor, asking for permission to reopen the case.

Letter from GSBEP to Prosecutor_!!!

Permission was granted and the case reopened. SIA seemed to be working, but if you read previous articles, things never go to plan. Whilst the case was being investigated, significant changes were made to the personnel at GSBEP. The Chairman and Deputy Chairman were no longer there. The investigations were no longer being overseen by them. The new Chairman and Deputy Chairman were not involved in SIA from the start. They were not familiar with it. Our case was closed about a year after it was opened. On a positive note, the fact that we managed to get the case reopened shows that there are people in Government who wants to do things right. This is promising.

But we never gave up. We managed to get a case reopened again. More details in the next article.

Note: A criminal case is currently open. These are two most recent letters I received from the prosecutor.

уведомление

Opening of Criminal Case March 2018

Next article: Financial Police Investigation Number 4: The Last One

Follow us on Facebook to keep updated: https://www.facebook.com/trilightcase