The mineral trade in Turkmenistan epitomizes systemic corruption, thriving under an authoritarian regime that stifles transparency and accountability. Dominated by politically connected elites, this sector operates in the shadows, unchecked by independent oversight or market regulations. Political repression silences dissent and ensures that any efforts to expose wrongdoing are swiftly quashed. Combined with strict media censorship and an absence of judicial independence, this toxic environment allows corruption to flourish, entrenching inequality and perpetuating economic injustice.
Political and economic aspect
Corruption in the mineral trade in Turkmenistan has deep roots in the political system of the country. In this country, where power is concentrated in the hands of the president and his entourage, the mineral trade is often used to legalize shadow funds. For example, in 2020, several cases were uncovered in which high-ranking officials manipulated state contracts for the supply of diamonds, allowing them to actively embezzle money. As of 2023, Turkmenistan scores 18 out of 100 on Transparency International’s Corruption Perceptions Index. This situation has a negative impact on economic growth and infrastructure development in the country. According to the data, the level of corruption in the country in 2023 amounted to 6.6%.
Political aspects of international relations between major developed countries also affect the mineral (and, in particular, diamond) industry of less developed Asian and African countries. This is expressed in embargoes on imports of stones to Western countries due to lobbying of the West for its political interests in military conflicts.
From an economic point of view, corruption in the diamond trade results in significant losses for the country’s budget. corrupt practices can lead to unfair competition, arbitrary regulations, demands for bribes and lack of transparency in business operations.
Scandals and statistics
According to the data, 77 million tons of minerals were mined in Turkmenistan in 2022. This is down from 78 million tons in December 2021.
Mineral extraction in Turkmenistan from 2009 to 2022
There are environmental problems in the mining sector of Turkmenistan, like technogenic desertification. It is connected with industrial development of the territory, including exploration and extraction of hydrocarbon raw materials. Large desertification centres are located around industrial cities (Turkmenbashi, Khazar, Balkanabat) and large oil and gas fields (Goturdepe, Barsagelmez).
The nominal value of the precious metals derivatives market in Turkmenistan is projected to reach USD 508.2 million in 2024.
The compound annual growth rate (CAGR 2024-2029) is expected to be 5.69%, resulting in a projected total value of USD 670.10 million by 2029.
In 2024, the average contract price in the precious metals derivatives market is USD 0.02.hazar, Ekerem, etc.).
According to the data, the loss of revenue from the illicit jewellery trade could have a negative impact on the country’s economy, where the mining and processing sector contributes about 40,58% to GDP[5]. It also raises concerns about law enforcement and anti-corruption, which undermines the confidence of both local citizens and international investors.
Kimberley process
The Kimberley Process, initially designed to combat illegal diamond mining and prevent its use in funding conflicts, often serves as a facade allowing corrupt states like Turkmenistan to manipulate the certification system. Despite Turkmenistan’s participation in the initiative, which ostensibly aims to regulate “grey” diamonds, the reality suggests that the Kimberley Process is being exploited to legitimize dubious operations. Turkmenistan’s involvement in the Kimberley Process appears to be more about evading international scrutiny than ensuring transparency. In a country plagued by systemic corruption and lacking independent oversight, diamond mining and exports remain opaque. Reports of large-scale smuggling, valued at tens of millions of dollars annually, undermine the goals of the Kimberley Process and fuel the shadow economy.
The Kimberley Process operates through a certification system that certifies that exported stones are not conflict. Participants in the process are required to ensure that diamonds that meet Kimberley standards are sold. Despite the mission to make the sale of diamonds transparent, the effectiveness of the process has been questioned by organisations such as Global Witness, which withdrew from the scheme on 5 December 2011, arguing that it was not meeting its objectives and did not provide assurance that diamonds entering the markets were not conflict diamonds. The inefficiency of the process is reflected in the fact that many countries can manipulate the certification system or fail to enforce it. This allows the smuggling trade to continue. In addition, diamond mining in some regions leads to environmental disasters and violations of the rights of local populations, which calls into question the effectiveness of the Kimberley Process.
Some human rights defenders point out that the Kimberley Process has failed to address human rights issues related to diamond mining. For example, the rights of local people in mining areas are often affected, including migration, illegal labour exploitation and violence. These problems have led human rights organisations to call for certification reforms to improve certification and yet, despite its original purpose, the Kimberley Process has not yet achieved full transparency and rigour and is often perceived as an ineffective mechanism for addressing the world’s conflict diamonds.
The Kimberley Process Certification Scheme is chaired by UAE Sheikh Ahmed Bin Sulayem, Chairman of the Ports and Free Zone Corporation. Sheikh Ahmed bin Sulayem has extensive business ties with representatives of business communities in many European and Asian countries, including the owner of Integral Petroleum Murat Seitnepesov, a businessman of Turkmen origin who has businesses in various global jurisdictionsthrough complex opaque schemes involving nominees, shell companies and relatives.
Liaising with businesses in Turkmenistan and business records
Business and politics are increasingly intertwined, creating a network of various partnerships between businessmen and powerful sheikhs representing the wealthy states of the Middle East. These relationships may take the form of joint ventures or simply cultural engagement and mutual assistance.
Murat Seitnepesov has close ties with Sheikh Ahmed Bin Sulayem, the chairman of the Kimberley Process, whom he credits with assisting in establishing the Dubai office of his company. This cooperation raises concerns about the potential misuse of the Kimberley Process certification system to facilitate the export of Turkmen gemstones with questionable origins under the guise of compliance with international standards.Turkmenistan, as a participant in the Kimberley Process, represented by large businesses such as Integral group related to trade and transportation of gemstones, noted the effective work of AhmedBin Sulayem as Chairman of this initiative. In particular, Murat Seitnepesov has not only business ties with Ahmed bin Sulayem, but also friendly ties, calling him his ‘friend’, thanks to his assistance in opening the Dubai office of his company, as well as the cooperation agreement with Ahmed bin Sulayem’s company.
Murat Seitnepesov is expanding his presence in the Middle East, Middle East and more likely Africa, pursuing an interest in precious metals trading and mining: by calling Ahmed Bin Sulayem his friend, Seitnepesov’s connection to the Kimberley Process goes beyond formal business ties – he has publicly described Sheikh Ahmed Bin Sulayem as a partner in facilitating his company’s operations. Given the documented corruption within Turkmenistan’s diamond trade and the inefficiencies of the Kimberley Process in ensuring transparency, these relationships create fertile ground for exploiting certification loopholes. The overlap between Integral Group’s interest in gemstones and the systemic corruption in Turkmenistan raises the possibility that the Kimberley Process may unintentionally enable the legitimization of illicit activities under its framework.
Murat Seitnepesov and Sheikh Ahmed bin Sulayem
Murat Seitnepesov is recognized as a key figure in numerous legal battles, often involving companies connected to the Integral group and associated individuals. To obscure his assets, Seitnepesov employs nominees, which include his family members (his wife and brother), individuals on Integral’s board, and other unrelated third parties. This network of nominees, acting on behalf of Seitnepesov across various nations, forms a shared framework where his direct involvement is limited. This arrangement of capital and asset holdings serves to reduce the likelihood of asset loss during legal confrontations. Nonetheless, this structural setup has a vulnerability due to the numerous links within the decision-making process. Nominees are obliged to act in the best interests of the actual owner, a factor that could be leveraged during negotiations. Furthermore, employing family members as nominees introduces another potential risk, as they might be susceptible to external influence.
In addition, Murat Seitnepesov’s company has systemic debts to the banking structure GPB International with a debt of $24.5 million. The company also has debts to Unicredit Bank in the amount of $25.4 million, such debts arose due to active prepayments on contracts of the Turkmen plant and to this day have not been repaid to the end.
In August 2015, Seitnepesov’s company sued Melars group and Dartex group over its obligations in the form of overdue delivery of gasoil to Melars and failure to return the full value of the deposit by dartex group. In addition, Melars alleged that Integral and Dartex were in fact connected through the managing director of Integral, Mr Seitnepesov. ‘Melars alleged that Dartex was in fact a shell company of Integral’s managing director, who, according to Melars, used Dartex to defraud Melars for the benefit of Integral (and himself).
Conclusion
As we reflect on the corruption inherent in Turkmenistan’s mineral trade and the challenges within the Kimberley Process, it is crucial to question the integrity of the key figures involved. Sheikh Ahmed Bin Sulayem, the Chairman of the Kimberley Process, is positioned at the forefront of an initiative that claims to combat illicit diamond trade and ensure transparency. However, his close business ties with figures such as Murat Seitnepesov, a businessman linked to Turkmenistan’s shadowy gemstone industry, prompt us to examine the stark contrast between his public statements and the reality of his associations.
What does it say about his commitment to integrity when he publicly claims to lead efforts for a transparent diamond trade, yet his personal and professional relationships intertwine with individuals connected to corruption and illicit business practices? Does Sheikh Sulayem’s extensive involvement with dubious business entities undermine the credibility of the Kimberley Process itself? Furthermore, how do the actions of Murat Seitnepesov, who uses opaque networks to obscure his financial dealings and engages in questionable business practices, align with the values he espouses in public?
The question must be asked: are these leaders truly dedicated to the values they promote, or do they merely use their positions to further their own financial interests? What does this say about the morality and ethical standards of those at the helm of global initiatives aimed at promoting transparency? As corruption continues to flourish in Turkmenistan and the broader region, it becomes clear that significant reforms are needed — not just in the mining industry but also in the leadership that claims to regulate it.
By scrutinizing the conduct of figures like Sheikh Ahmed Bin Sulayem and Murat Seitnepesov, we are compelled to reconsider the effectiveness of systems like the Kimberley Process in addressing the root causes of corruption. The disparity between their proclaimed values and demonstrated actions underscores the need for a more rigorous and accountable framework to combat corruption in the mineral trade. Only through genuine commitment to transparency, ethical practices, and real change can the cycle of corruption in the global trade of precious metals and gems be broken.
Special thanks to the team at Assettracing.com for their valuable input in research capacities, advice, and support with resources in preparing this research.
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