KGLI embezzlement case: the makings of a thriller

The Criminal Court in Kuwait last week passed a sentence of 15 years imprisonment with hard labor against two former executives of Kuwait Gulf Link Investment (KGLI), who were accused of embezzling public funds and money laundering.

The former CEO and Vice-Chairperson of KGLI, Marsha Lazareva a Russian national, and her co-defendant Saed Dashti, a Kuwaiti businessman who led Kuwait & Gulf Link Transportation Company were sentenced on two counts of money laundering and were also asked to return to the state around KD2.9 million in a case filed by parliamentarian Abdullah Al-Kandari.

The two were arrested and jailed in 2017 for embezzling nearly half a billion dinars from The Port Fund, an investment portfolio managed by KGLI, in which two government entities, Kuwait Ports Authority and  Kuwait Public Institution for Social Security had together bought a 60 percent stake in 2007.

In May 2018, a court had sentenced the two to 10 years imprisonment and ordered them to pay a fine of KD22 million for their role in the embezzlement. Both former executives have maintained their innocence since their arrest and have repeatedly appealed their sentences. In June of this year, the Court of Appeal overturned the earlier convictions and ordered the release of the two on a bail of KD1 million each, after it was found that the documents used as evidence were forgeries. The latest order from the Criminal Court now rescinds the bail granted in June and sends the duo back to prison.

Interestingly, while the bail amount of KD1 million for 45-year-old Ms. Lazareva was paid by an unnamed Kuwaiti dignitary, and the earlier KD 11 million fine came from her supporters, there was no such relief for her co-defendant Mr. Dashti. Despite being a Kuwaiti citizen there were no compatriots willing to act as benefactors and pay for his bail or fine, so he has continued to languish in jail. Ms. Lazareva will now once again join him in prison to serve her sentence.

The latest sentencing of Ms. Lazareva and her earlier arrest and subsequent release on the charges of embezzlement, raises several interesting questions but very few credible answers.

An international team that has been vociferously campaigning on behalf of Ms. Lazareva since her arrest in 2017, were aghast at the latest verdict. Among the high-profile supporters clamoring for her release are US businessman and investor Neil Bush, the son of former American President George H.W. Bush, British barrister Cherie Blair, the wife of former British Prime Minister Tony Blair, and Tatyana Yumasheva, the youngest daughter of the late former Russian President Boris Yeltsin.

Neil Bush, who claims that he is looking to protect his father’s legacy in helping liberate Kuwait in 1991, has been involved in the Lazareva case early on and has made several trips to Kuwait to campaign for her release. Speaking to media during one of his visits to the region, the younger Bush described the charges against Ms. Lazareva as “totally bogus”. He added, “Kuwait has had countless opportunities to root out corruption within its legal system. Its failure to do so has resulted in the latest false conviction and may leave the United States government no choice but to intervene and hold those responsible to account.”

For her part, Ms.Blair, who has also campaigned for Ms. Lazareva’s release since the beginning said she was “disappointed, but not surprised” by the latest judgment. “It follows a campaign of persecution against Marsha and displays grave flaws in the judicial process which raises serious questions for Kuwait,” she said. In May of this year, Ms. Blair had filed a complaint petition against Kuwait with the United Nations Working Group on Arbitrary Detention (WGAD), requesting an investigation into the detention and treatment of Lazareva.

In addition to Bush, Blair and Yumasheva there have been several other high-profile individuals helping in the case to have Ms. Lazareva released. The matter is also reported to have cropped up during a meeting in March between visiting Russian Foreign Minister Sergei Lavrov and his Kuwaiti counterpart Deputy Prime Minister and Minister of Foreign Affairs, Sheikh Sabah Al Khalid Al Sabah. Incidentally, support for the Russian detainee has now come from an unexpected new quarter. Calls for the release of Ms. Lazareva, who has a 5-year-old son born in the US and hence is a US citizen, has now come from the United States Congress.

Five US Representatives have requested an investigation into the case under the US Global Magnitsky Act. The Act authorizes the United States to impose sanctions against foreign citizens who have been found to have committed human rights violations and engaged in corruption. The sanctions include the freezing of assets in US financial institutions, and prohibition from entering the United States. Luckily, US President Donald Trump has so far not waded into the issue by voicing his weighty thoughts on Twitter.

The Lazareva case certainly has all the ingredients of a suspense thriller. Trouble for the successful Russian business-woman began in 2017 when a former KGLI employee, who was arrested for stealing company funds, filed a complaint accusing Ms. Lazareva of being a spy and gathering information for a foreign country. “I was in Europe when the charges were first levelled against me. If I was guilty I could have remained outside Kuwait, instead, on hearing about the charges, I immediately returned to Kuwait,” said Ms. Lazareva during a media interview back in 2017.

But then, as her British legal team prepared to fly out to Kuwait to defend her against the spying charges, a new case of embezzlement was brought against Ms. Lazareva and she was arrested and later sentenced to ten years hard labor. However, when the court found that the documents used as evidence against her were fakes that had been submitted by a government auditor who had since fled the country, she was released on bail.

Moreover, the funds alleged to have been embezzled were found lying frozen in a Dubai bank since 2017. Over the ten years since the Fund began operating in 2007, it had more than doubled in value from its original investment of $188 million. They have since been returned with interest to the creditors, investors and shareholders of Port Fund. The funds were reportedly in the process of being distributed to investors when it was frozen by the Dubai bank.

Meanwhile, it has now come to light that in the first quarter of 2019 alone, KGLI had spent over US$2.5 million to hire lobbyists in the United States to help secure the release of Ms. Lazareva. A public file submitted by the legal adviser of KGLI in the United States, under the Foreign Agents Registration Act (FARA) of the US Department of Justice, has unveiled a public relations strategy deployed by the law firm Crowell & Moring on behalf of the former KGLI executive.

Crowell & Moring hired Marathon Strategies, a public relations firm in the United States, with an explicit mandate to raise questions about whether Kuwait is a safe place to invest and publicize this in the United States media and elsewhere, as well as to denounce the unjustified actions by the State of Kuwait. According to sources in Kuwait, those actions were a blatant attempt to subvert the course of justice in Kuwait, and to help disgraced former KGLI executives to escape due legal processes in the country.

With such a powerful coterie of executives, dignitaries and US Representatives lobbying for her release, and money being thrown around to besmirch the reputation of Kuwait and its judiciary, it is quite uncharacteristic that Kuwait has so far not bowed to the pressure and released Ms. Lazareva under some face-saving pretext.

The fact that Kuwait has so far refused to kowtow to pressure clearly indicates that there must be much more at stake than Kuwait attempting to uphold its judicial credentials and demonstrate that everyone is equal before Kuwait courts. Kuwait’s obstinacy is also certainly not about retribution and recouping the relatively piddling few millions dinars embezzled that have now been returned to stakeholders in The Port Fund.

No one is exactly sure what lies behind Kuwait’s dogged perseverance of the case. But, as always happens, when something is not clear-cut there is ample opportunity for speculation, which is ultimately in no one’s interest, least of all Kuwait’s.

The Times Report