Looming over downtown Kowloon like a giant, orange, lowercase n, The Arch is one of Hong Kong’s swankiest property developments.
In 2008, a penthouse unit sold for $36.5-million to a company linked to Gulnara Karimova, daughter of the late Uzbekistan dictator Islam Karimov. Three months later, the flat was sold again, at a steep discount, to another company. This one was controlled by Ms. Karimova’s boyfriend, the Uzbek pop-star Rustam Madumarov.
Brought to light by criminal investigations in Uzbekistan, Switzerland and the United States, these deals are just one example of how money from dubious sources flows into the Chinese territory. These funds can be stored in some of the most expensive real estate in the world, or laundered through a web of easily set up companies both in Hong Kong and other tax havens.
Even prosecutions in multiple countries don’t seem to have stopped the movement of such wealth. In 2016, the company that owned the penthouse in The Arch – and was ultimately controlled by Mr. Madumarov – sold it for $68.4-million.
This sale, discovered by The Globe and Mail during a review of land registry documents, is being reported for the first time.
Kristian Lasslett, a criminologist and Uzbekistan expert at Ulster University, described that transaction as “quite incredible,” saying it was an example of assets linked to “arguably the most high-profile kleptocracy case in the world … escaping justice.”
At the time of the first sale, Ms. Karimova was flying high. With a clutch of government titles, including that of Uzbekistan’s representative to the United Nations, she was building a business empire both at home and abroad. With the apparent imprimatur of her father, she allegedly leaned on companies to give her kickbacks and secure sweetheart deals for companies she controlled or had paid her off.
This enabled a glamorous, jet-setting lifestyle for Ms. Karimova, even as most Uzbeks saw her as a “greedy, power-hungry individual who uses her father to crush business people or anyone else who stands in her way,” according to a classified U.S. government cable published by Wikileaks.
Other cables from around this period noted that much of Ms. Karimova’s wealth was linked to Zeromax, a vast Uzbek conglomerate registered in Switzerland, with interests in everything from oil and gas to textiles and agriculture. Similar assertions were made in media reports and by Ms. Karimova’s ex husband, Mansur Maqsudi, who in 2006 sued Zeromax in the U.S., accusing the company of gaining control of businesses confiscated from him by the Uzbek state after his relationship with Ms. Karimova ended.
In September, 2008, according to Hong Kong Land Registry documents, the penthouse unit at The Arch was bought by Zeromax, and signed for by a manager called Yokubov Ikromjon. Three months later, it was sold again, to a company called Rudolph Alliance, registered in the British Virgin Islands.
Mr. Ikromjon represented Zeromax again, while signing for Rudolph was its director, Shohrukh Sabirov.
Zeromax collapsed in 2010 in one of Switzerland’s largest-ever bankruptcies, and prosecutors in that country and the U.S. soon began looking into the company, as well as two telecoms linked to Ms. Karimova, MTS and TeliaSonera. They would eventually allege that she received nearly a billion U.S. dollars in bribes, laundered through accounts all over the world and funnelled into properties in Hong Kong, London and Paris.
In 2013, amid a growing international scandal, Ms. Karimova fell dramatically out of her father’s favour. Several of her associates were arrested, including Mr. Madumarov. The following year, she was detained and later charged with running an “organized criminal group.”
Uzbek prosecutors said this group controlled 45 business entities and 16 offshore companies, through which they acquired properties around the world, one of which was “a penthouse in The Arch skyscraper,” in Hong Kong.
Ms. Karimova’s Geneva-based lawyer, Grégoire Mangeat, said his client denied any link to Zeromax. He refuted claims made against her in her home country, “as Uzbek authorities do not respect basic human and procedural rights.”
Mr. Sabirov was named by Uzbek prosecutors as a member of Ms. Karimova’s “criminal group,” and in 2020, he was sentenced to 17 years in prison for corruption and other crimes.
In his position as director of Rudolph Alliance, Mr. Sabirov appears to have acted as a proxy for Mr. Madumarov and his Hong Kong-registered company, Expoline. Documents seen by The Globe show Mr. Sabirov acting on behalf of both Mr. Madumarov and Expoline in other dealings, and Swiss prosecutors described him as Mr. Madumarov’s “secretary” in a court filing.
The fact that almost every person associated with the company appears to have been in jail by 2016 did not stop Rudolph Alliance off-loading the Hong Kong property that year for a respectable 285-per-cent profit. The person who signed for the sale on behalf of Rudolph is given as “Mr. Quan Wei, its sole director.”
Quan Wei’s name does not appear in any other documents associated with this case. He could not be reached for comment and others involved in the deal did not respond to requests from The Globe.
Land registry documents show that one solicitor – Anthony Lam – was a part of every deal involving the penthouse, first representing Zeromax in its 2008 purchase, and then acting on behalf of Rudolph Alliance when it bought the property three months later, and again when it was sold in 2016. Mr. Lam did not respond to multiple requests for comment.
Tom Mayne, an expert in corruption studies and Central Asian politics at Chatham House who has investigated Ms. Karimova for years, said it was possible that the ownership of Rudolph had changed from Expoline and Mr. Madumarov at the time of the 2016 sale, “though it is unlikely the same solicitors would represent the company if the new owners had no link” to the Uzbeks.
Doing so would also be “quite a controversial move anyway, as you’d be in effect changing the ownership of the property but not declaring it.”
Per Hong Kong law, it is a statutory obligation for someone to report any suspicion they have that a property “in whole or in part directly or indirectly represents any person’s proceeds of … an indictable offence.”
There is no suggestion that the current owners of the penthouse flat had, or should have had, any awareness that the people they were purchasing from were alleged criminals. According to the Offshore Leaks Database maintained by the International Consortium of Investigative Journalists, more than 30 apartments in The Arch are linked to companies in tax havens such as the Cayman Islands, Bermuda and the British Virgin Islands.
In 2020, authorities in Uzbekistan outlined plans to seize almost $2-billion worth of Ms. Karimova’s assets around the world. Thanks to the 2016 sale, the Hong Kong apartment will not be part of this, and the money its owners received appears to have vanished into a web of offshore companies, perhaps never to be recovered.
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