Kazakhs Defend Secret $1Bln Fund

ALMATY, Kazakhstan -- Kazakhstan's foreign minister on Tuesday defended a 1996 presidential decision to put $1 billion into a secret foreign bank account, saying this and a spate of recent scandals should not tarnish the country's image.

Last week's revelation that President Nursultan Nazarbayev moved $1 billion abroad without parliament's knowledge after selling a state shareholding in an oil company followed a series of incidents that have raised fears of a wave of repression.

Several opposition newspapers have been closed down in recent weeks and one television station was forced off the air after its main feeder cable was shot by a sniper.

At the end of last month, a prominent opposition leader was arrested and another sought refuge in the French Embassy to avoid the same fate. They were charged with abuse of office while in key positions, but say the charges were political.

Foreign Minister Kasymzhomart Tokayev on Tuesday dismissed the incidents as unimportant, saying the disclosure about the secret fund showed the country was becoming more transparent and democratic.

"We are moving to more transparency in all spheres of our life ... including the financial sphere," he told a news briefing. "So the statement itself ... was a very positive factor in terms of enhancing transparency in our country."

He said Prime Minister Imangali Tasmagambetov, who told parliament about the fund last Thursday, had received special permission from Nazarbayev to do so. He added that it had saved Kazakhstan from bankruptcy in the 1998 financial crisis.

Tokayev said that when he was prime minister from 1999 to 2001, he had known about the fund, but said the government saw no need to publicize it as "there were other perceptions of transparency in this part of the world five years ago."

The government's decision to admit to setting up the fund won limited support Monday from World Bank President James Wolfensohn, in Kazakhstan on a regional tour.

"That is not to justify the taking of a billion dollars. ... But I think you have to say that in a process of confronting issues of corruption, the first thing is dialogue and having it out in public debate," he told journalists.

But opposition figures said Tuesday that democracy was increasingly at risk.

"The paradox in this country is that the more foreign direct investment it gets, the tougher is the official treatment of opposition and democracy," political analyst Bakhytzhamal Bekturganova said.

Parliamentary deputy Tolen Tokhtasunov of Democratic Choice of Kazakhstan, the party of the arrested politicians, said he had been warned that more opposition members face arrest.

"We hope that for Western governments the principles of democracy are more valuable than Kazakh oil and gas," he told a separate news briefing.

Foreign Minister Tokayev said the government and president considered a free press a major achievement of Kazakh independence and that Nazarbayev was committed to democracy.

"So I don't believe these latest incidents, as you have just called them, will put a shadow on the international reputation and image of Kazakhstan," he said.

He also announced where the secret fund has been sitting for the last five years: "It's well known, it's Switzerland, a country where many governments have many accounts in the modern world."