description
Deutsche Bank is holding several accounts for the Central Bank of Turkmenistan, in which some of the billions of dollars from Turkmenistan's gas sales are held. Turkmenistan possesses one of the largest natural gas reserves in the world, which will earn the country $5 billion a year from 2007. But its citizens have no information about where the money is going because the money is managed in a completely opaque way. Until the death of the president Saparmurat Niyazov in December 2006, Turkmenistan was one of the world’s most oppressive dictatorships and the regime’s disastrous policies on health and education saw social indicators falling, despite the country’s vast natural gas reserves.
Reports from international financial institutions indicated that the accounts in Deutsche Bank were under the personal control of the president. Following pressure from NGOs and after the German financial regulator BAFIN investigated the situation, Deutsche Bank, has admitted holding an account, which BAFIN says is in compliance with the law.
Deutsche Bank says this is an account for the Central Bank of Turkmenistan. However, Niyazov repeatedly fired Central Bank governors, and thus had de facto control over the Central Bank. Deutsche Bank has not answered calls to make public information about Turkmenistan's other accounts, in particular the foreign exchange reserve fund, which is believed to have contained $2 billion of gas proceeds and to have been under the President's personal control.
Reports from international financial institutions indicated that the accounts in Deutsche Bank were under the personal control of the president. Following pressure from NGOs and after the German financial regulator BAFIN investigated the situation, Deutsche Bank, has admitted holding an account, which BAFIN says is in compliance with the law.
Deutsche Bank says this is an account for the Central Bank of Turkmenistan. However, Niyazov repeatedly fired Central Bank governors, and thus had de facto control over the Central Bank. Deutsche Bank has not answered calls to make public information about Turkmenistan's other accounts, in particular the foreign exchange reserve fund, which is believed to have contained $2 billion of gas proceeds and to have been under the President's personal control.
what must happen
Deutsche Bank should clarify what due diligence it performed, and what proof it obtained, to ensure that Niyazov did not have sole control of Turkmen state funds held there. Deutsche Bank should also clarify how holding accounts for Niyazov's Turkmenistan fitted with its voluntary human rights commitments under the UN Global Compact.
The new Turkmen government should institute regular independent audits of spending of government budgets, and should commission a full independent inquiry into Niyazov's assets and where they have been/are being held.
BaFin, the German regulator, should perform a full investigation of the Turkmen accounts at Deutsche Bank, rather than just a random probe, to answer outstanding questions about the accounts.
The new Turkmen government should institute regular independent audits of spending of government budgets, and should commission a full independent inquiry into Niyazov's assets and where they have been/are being held.
BaFin, the German regulator, should perform a full investigation of the Turkmen accounts at Deutsche Bank, rather than just a random probe, to answer outstanding questions about the accounts.
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