The Loutchansky phenomenon
New fragments from the book "The Nazarbayevs: Sources of Prosperity"

Sagyndyk MENDYBAYEV, Nikolai FOMIN, Victor SHELGUNOV

If Giffen was Nazarbayev's principle consultant in oil deals, businessman Grigori Loutchansky performed the role of the in-between in the metallurgical industry. However, at first he was less successful: Loutchansky's notoriety prevented him from entering the "closest circle" and establishing stable business relationships with the president's family.

Different sort of legends are told about Giffen, and the same goes for Loutchansky, though he doesn't belong to the "world government" because of the scale of his affairs. He is not on the secret listings of western service agents either, because unlike Giffen, the West hardly bears him. At a time German secret services accused him of making money for…KGB. TIME called him the most smart not caught criminal in the world. A rather original nickname has been given him in the press " Lucky Loutchano". He is suspected of money laundering, links with the Mob and illegal trade deals with rogue states. But not a thing has been proved yet.

At the same time Loutchansky has a positive record too. For instance, he is listed in the Guinness Book of Records as the person making money faster than anyone else in Europe. His prosperity grows quite impressively indeed: he made some hundred million dollars just in two years on supplies of raw materials from the CIS. Grigori Emmanuilovich Loutchansky went through worse days when in the mid 80's he served a sentence in jail, but even in Perm Region he was not at a loss: he arranged fur items production there and managed to sell them abroad. So to say, did his best to pave the way for the "perestroika".

"Grigori Loutchansky has got a difficult past. In 1983, he was jailed for 7 years for a large-scale embezzlement, fraud and abuse of office. He was paroled due to sincere repentance and good conduct. When released from the colony Loutchansky found himself in the center of Gorbachev's perestroika and immediately realized where the money was made. He began to trade in mineral resources of his native land - heavy and rare-earth metals, and even urea. For some time he worked as deputy director of Latvian agricultural plant Adazhi. On December 14, 1989, when working for Adazhi he went to Vienna to establish a company - Nordex GmbH, which later became the in-between in funneling raw resources from the east to the west".

More details on the Loutchansky's "offspring" can be found in the information collected by the MOST Group security department in 1994 - such source is given by the press investigation agency FLB, that posted this document on the Internet:

"Nordex GmbH was registered on 26.02.90 with the trade court of Vienna, Austria. Re-registered on 01.12.93 with the trade court of Vienna, Austria. Complete name of organization: Nordex Chemische Produktions, Handels und Marketing Service Gesellschaft. Legal form: a limited company. Authorized fund: 3.000.000 Austrian shillings.

Initial founders:

1. IFT-Industrial Financial and Trading SA, Zurich, Switzerland.

2. Dalmex, Switzerland.

3. Agricultural company Adazhi, Latvia.

Current company participants (as of 26.01.94):

1. Nordex Group Holding AG.

2. Grigori Loutchansky.

3. Victor Brod, date of birth 29.04.46.

4. Veniamin Solomonovich Levin, date of birth 09.09.46, born in the town of Kurgan".

The indisputable advantage of Loutchansky is his brilliant reaction: earlier than anyone else he realized how and through which channels financial and trading operations could be carried out, thus helping the inexperienced domestic nouveau riches to orient on the vast global market.

"He began to export petroleum and metals from CIS countries, and the International Privatization and Foreign Investment Promotion Fund headed by Vladimir Shcherbakov. The latter helped Loutchansky to establish contacts with local authorities. Loutchansky was lucky: the yearly turnover of the company in 1991 made as much as $900 mln. Western competitors and pressmen were amazed by the fast growth of Nordex. In 1992, Austrian journal Wirtschaft Woche published the article entitled "Viennese Russians of Riga" accusing Nordex of money laundering and connections with the organized crime.

It should be mentioned that it was Vladimir Shcherbakov who consulted President Nazarbayev on economic issues in 1991-1993. Probably, Shcherbakov recommended a reliable person - businessman Loutchansky - to the Kazakh political elite. There is another version, which, however, does not rule out the first one: Loutchansky and the Austrian firm proved to be extremely useful for the Kazakstani-Austrian trade house, created by Sazdyk Abishev and for which worked Bulat Utermuratov, the future foreign trade adviser to Nazarbayev. It was there that Nazarbayev's young son-in-law Rakhat Aliyev, oligarch- and general-to-be was taught his first lessons in big business.

Several years passed, and Utermuratov was begun to be referred to as the main cashier of the Nazarbayevs. Let's put aside the subject of Loutchansky for a while to have a brief look at the basic landmarks in the biography of his diligent pupil. Generally speaking, Utermuratov was not anything out of the ordinary at all, but he was noticed by Abishev - the professional who came out of the Soviet trade system with its shortages and special distribution centers. Abishev headed city trade centers, bases and stores. Utermuratov followed his footsteps - in late 80's he worked for the Alma-Ati food store "Jubeleiny" as its director. It was there that they met. Soon after that Utermuratov was appointed to the post in the Ministry of Foreign Trade of Kazakhstan - the ministry, which observers said was most dominated by Mafia among Kazakh authority of those years.

But the true peak in the career of the 35-years old trader began in 1992, when he became director general of Kazakh Trade House in Austria. Those days, Utermuratov's right hand was Rakhat Aliyev. They struck many highly profitable deals together. For example, in 1992, within the framework of the Austrian line of credit Kazakhstan received $3,5 mln. The money was transferred to the account of Kazakh Trade House and was used to purchase consumer goods and drugs. However, later the check showed that the procurement prices were several times higher that those on the market.

Abishev and his crew deposited the assets mainly in Switzerland. Not by chance Bulat Utermuratov, the man who never had anything in common with diplomatic service and practically spoke no foreign language, was appointed the ambassador of Kazakhstan to Switzerland in 1996. They needed not a polyglot, but an absolutely reliable person on this post. Utermuratov coped with all the tasks and was further promoted - in January 1999, he was appointed the adviser to the president on foreign trade policy.

In half a year his status slightly changed, he was officially made "assistant to the president ". This seemingly minor nuance actually was filled with deep sense: in Kazakh bureaucratic slang the "assistant" is a person much closer to the president than the adviser. The adviser would not meet with the head of state for months and limit his service to just regular notes, while the assistant meets with the president almost every day and performs most delicate tasks. The assistant is entitled to a personal office and staff, including the confidants, who in their turn perform his delicate tasks.

As seen from the above, a very favorable role was in store for Loutchansky - the role of the navigator and instructor for the most promising staff in Kazakhstan. He provided advice on the first operations aimed to accumulate currency resources on foreign accounts. Rossiiskaya Gazeta (Russian newspaper) has told us in detail about Loutchansky's connections with Utermuratov.

"The deputy minister mastered the art of foreign trade in 1993 when he headed Kazakhstan trade delegation in Austria. The established ties proved to be so strong that later he was approached to settle deals with various Austrian firms. The office of the trade delegation was located in the building of Nordex Company, headed by the notoriously known "Russian mobster" Grigori Loutchansky. Mr. Loutchansky was a frequent visitor to Kazakhstan, and our hero actively lobbied for his meeting with the top officials, and special contracts that have brought no benefit to the state itself. Thir mutual liking for each other could not remain unnoticed. The companies involved in Loutchansky's projects are sure that Kazakh trade delegation's former chief still remains a puppet in the hands of the experienced international representative of swell mob".

Business ties of the Russian-Austrian businessman were not limited to Kazakhstan at all. Loutchansky has close contacts in the Russian business circles too. He knows quite well the main gas oligarchs - Chernomyrdin and Vyakhirev. Experts say that the protection of the "gas bosses " helped Loutchansky get good credits. He even did not have to explain for which projects the money was intended. And again let's quote the information published by FLB agency:

" In July 1994, Nordex company was granted the credit of $5 mln. The credit was granted without any collateral, purposes of the credit were not defined either. In 1995, re-crediting was made. As a result, the credit was not repaid. Nordex company is known to be the founder of the joint-stock company Notra that received the credit in the commercial bank MOST-BANK to buy grain in Stavropol Krai through the Ross concern.

We do not know how successfully Loutchansky used Russian credits, but his profit in Kazakhstan was rather cool. The mechanism of trade operations was traditional and simple: Loutchansky acted as an intermediate in the sales of metals and oil. The tricks including playing with prices, funneling of foreign exchange earnings, transfer of money to off-shore companies were made behind the scene. On the surface there was the invariably warm, almost paternal attitude of Kazakh authorities to their Austrian partner.

For example, in April 1993, prime minister Tershchenko signed a Cabinet Decree No. 305 of 14.04.93 that exempted Nordex from customs duties in his export operations with Kazakh copper. As a result, the republican budget lost (while Loutchansky together with his patrons and associates accordingly acquired) quite a cool sum of money - 2 million 125 thousand dollars - thanks to several deals closed between Nordex and the production amalgamation Zhezkazgantsvetmet. This is the official data provided by the Control Chamber of the Supreme Soviet of Kazakhstan made public in October 1993 at parliamentary hearings.