Corporate Raiding, Kazak-Style

Legal and not-so-legal corporate raiding is taking a heavy toll on business and heightening the risk of operating in Kazakstan, NBCentralAsia analysts say. Now the country’s parliament has started talking about how to deal with the problem.



Serik Abdrakhmanov, a member of parliament and head of the country’s Labour Confederation, expressed grave concern at the scale of illegal business acquisitions. To illustrate his point, he gave the press a price-list for the services offered by professional corporate raiders, who can engineer a change of ownership in a business by legal or illegal methods. They will value a firm, check it out, pursue lawsuits, intimidate the owners, and even take over buildings by force.



Abdrakhmanov wants the authorities to launch a war on corporate raiding, which recruits senior lawyers, economists, civil servants and the police.



Rozlana Taukina, political commentator for the weekly Tas Zhargan, shares Abdrakhmanov’s concerns. She argues that corporate raiding is a drag on economic growth, since the owners who acquire companies in this manner are frequently unable to make their new businesses turn a profit.



“Such raids are now common, and ownership changes are brutal,” she said. “The risk is that it will ruin the economy and also destroy confidence in the country’s laws.”



Political commentator Sabit Jusupov believes the authorities will have to respond to parliament’s concerns. “I think it sends a message out to the law-enforcement agencies, above all,” he said.



Corporate raiding has only emerged in Kazakstan recently, as an import from the West. Economists say illegally-conducted hostile takeovers are bad for the economy, heightening business risk, deterring investors, and creating sophisticated systems for corruption.



NBCentralAsia’s economic experts are confident that the government has the clout to take on the illegal corporate raiders, and all that is lacking is the political will to do so.



“The state has the instruments to wage this war,” said Taukina. “Barriers can be created. If officials get punished, they won’t will dare order illegal checks on a business, they won’t issue false certificates, and they won’t take a firm away from its owner. If there are sanctions, it's possible to control this.”



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)