Evidence suggests U.S. Bribed President Of Kyrgyzstan

Akaev, agreed to let the Pentagon open an air base in his country for operations in Afghanistan.

A crooked alliance in the war on terror?
FBI report ties former Kyrgyzstan leader, and U.S. ally, to organized crime

By Aram Roston
Producer - NBC News Investigative Unit

10/30/06 "MSNBC" -- -- WASHINGTON - An FBI report obtained by NBC News suggests that the ruling family of the remote and mountainous Central Asian nation of Kyrgyzstan oversaw a vast international criminal network that stretched all the way to a series of shell companies in the United States.

Still, it was Kyrgyz then-President Askar Akaev’s alliance with the U.S. government, and his role in the war on terror, that may raise the most disturbing questions. Akaev, who was deposed in a revolution last year, agreed to let the Pentagon open an air base in his country for operations in Afghanistan.

After that agreement, the U.S. military steered more than $100 million in sub-contracts to the Akaev family’s fuel monopoly, according to U.S. contractors who oversaw the payments and transactions. That windfall to the Akaev family businesses equaled about 5 percent of Kyrgyzstan’s annual gross national product, according to the contractors.

After Akaev fled the country, that air base, called the Manas, or “Ganci” airbase, was at the heart of an immense diplomatic struggle as relations between the U.S. and Kyrgyzstan soured. Kyrgyz officials alleged the U.S. funds going to Akaev’s family should have been going to the state treasury instead.

This summer, after months of wrangling, the U.S. finally announced a deal to pay $150 million over the next year to various Kyrgyz projects, and the Kyrgyz government has agreed to keep the base open.

The “Ganci” air base has its roots post-9/11. Named after Peter Ganci, a New York City firefighter who lost his life in the World Trade Center attacks, the base hosts tankers and other planes, and operates as a transfer facility for troops. The United States needs it because last year the Uzbekistan government closed the American base in its country.

Even before the base opened, Akaev was a complex figure, seen alternatively as a reformer and as a dictator. He became president in 1990, in the former Soviet Republic, and was reelected in 2000 in a landslide vote that the State Department said was “marred by serious irregularities.”

But after 9/11, and after he permitted the air base to open, he became a close U.S. ally.

‘A brilliant man’
He was invited to the White House and photographed with President Bush on Sept. 23, 2002. The two leaders sealed their partnership during the meeting, calling for transparent open government, democracy, as well as “reducing corruption, and enhancing the Kyrgyz Republic's strong record on economic reform.”

Three years later, Akaev’s family was accused of siphoning massive amounts of money out of Kyrgyzstan. The FBI report obtained by NBC News says that “an international law enforcement investigation is underway targeting as many as 175 entities associated with the Akaev organization.” The report cites allegations of a “vast amount of potential criminal activities.” The trail, according to the FBI, even led to the U.S., where the Akaev family was connected to one American “known to have formed over 6,000 U.S. shell companies for organized crime factions, weapons and drug traffickers and cyber criminals.”

American attorney Scott Horton was in Kyrgyzstan during the base negotiations, and knew Akaev.

“He was an academic, a brilliant man,” says Horton. “But we began to see a dark side about Askar Akaev. He and his family and his extended clan mates decided to take advantage of their position of power for personal financial gain.”

Dollar figures
Noted economist Anders Aslund knew President Akaev personally, and prepared annual economic reviews of Kyrgyzstan for the United Nations Development Program. He says the scale of corruption by Akaev’s family was massive.

“One can say that half a billion to $1 billion was probably what the family amassed," says Aslund.

But if the family businesses were making money off the state, they truly encountered a bonanza when the U.S. air base opened in 2002, according to sources involved in Kyrgyzstan and the negotiations, and records obtained by NBC News.

Fuel subcontracts draw attention
Two companies owned by the president’s relatives received $120 million in military fuel subcontracts, according to the prime contractor. The two companies were Aalam Services, which was controlled by President Akaev 's son-in-law, according to the FBI records, and Manas International, which was widely known to belong to Akaev's son, Aider Akaev.

“Tens of millions of dollars were paid by our Pentagon into businesses that were controlled by the President of Kyrgyzstan and his family,” says Horton.

Aslund says ownership of Manas and Aalam was common knowledge. Neither company could be reached for comment.

The first contractor that the Pentagon hired to provide fuel in Kyrgyzstan says it notified military officials of the link between the president's family and Aalam and Manas.

Later, in 2002, when the Pentagon had a competitive bidding selection to choose a new contractor, a company named Red Star Enterprises won. It received a total of more than $240 million over the next several years, and tells NBC News it paid $120 million to the two firms.

In an e-mail to NBC News, a company official said: “These companies were used because DESC [the defense agency handling fuel contracts] directed all bidders to use them since they were the only registered companies to provide services.”

‘Tulip Revolution’
In March 2005, Akaev was ousted from power in an uprising now known as the “Tulip Revolution.” And that is when all the alleged corruption started to unravel. The new Kyrgyz government argued that the state treasury received little if any direct benefit from U.S. funds. A Pentagon spokesman says that the U.S. paid a yearly total of $2.7 million in fees at the airport.

The Pentagon says any corruption was not its fault.

“We are aware of the allegations of the current Kyrgyz government,” said Lt. Col. Joe Carpenter in a statement to NBC News referring to the allegations, “that former Kyrgyz regime leadership may have misappropriated funds from U.S. payments for goods or services,” and added any “misappropriation of funds is an internal Kyrgyz matter. All DoD contracts for goods and services in Kyrgyzstan were negotiated in accordance with U.S. laws and DoD contracting regulations.”

The Pentagon says it is helping the Kyrgyz government investigate, by providing U.S. documents.

The Kyrgyz could use the help, because in a strange twist, there were several U.S. connections to both Manas and Aalam. Both firms had bank accounts in the U.S., according to the FBI, and the banks reported that “Manas and Aalam are tied to transactions with arms traffickers, Politically Exposed Persons (PEPs) and a myriad of suspicious U.S. shell companies associated with the Akaev Organization.”

The FBI refused to confirm whether there is an ongoing investigation into the Akaev matter, citing a policy of not confirming or denying investigations.

Akaev is living in Moscow, and refused to comment for this story, or answer questions. Asked for comment, Galina Scripkina, who identified herself as Akaev's attorney, said she could not answer questions concerning him.

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