Loan Loophole Saved Central Bank Head From Kazakh Debt Claim

The new chief of Kazakhstan’s central bank dodged a debt claim in 2014 thanks to a legal system that’s failed to protect lenders from rampant defaults and repeated crises, Bloomberg News reported. In 2014, Yerbolat Dossayev and three business partners were given a reprieve on repaying 1.9 billion tenge, then worth $13 million, that they’d personally guaranteed to the central Asian country’s biggest bank at the time. It’s not clear whether the debt was ever repaid. Within three years, the lender, Kazkommertsbank, was buckling under the weight of a currency devaluation and numerous bad loans. It required a 2.6 trillion tenge ($6.9 billion) rescue, in part from the regulator that Dossayev was appointed to head up last month, and was taken over by a smaller bank. That Dossayev, one of Kazakhstan’s richest men and its economy minister at the time, was able to avoid repaying the lender is emblematic of the problems facing the banking system he’s now in charge of reviving. Read more