Last year, openDemocracy published research by Ulster University pointing to the award of significant state benefits to businesses tied to the mayor of Tashkent, Uzbek businessman Jahongir Artikhodjaev.
These benefits included the awarding of construction contracts, and investment opportunities, for a major Tashkent property development to businesses in Uzbekistan’s Akfa-Artel group, founded by Artikhodjaev. At the time, Artikhodjaev denied any conflict of interest, and claimed he took no part in the management of the group. According to Uzbekistan’s corporate register, the mayor retains significant shareholdings in the Akfa-Artel group.
Now, a new public controversy has emerged after the Uzbek government published a draft regulation which, if implemented, will grant a new private higher education institution, Akfa university, 30 hectares of prime land in the Tashkent region, as well as significant tax exemptions. This comes as the capital city’s ailing public health infrastructure buckles under the weight of COVID-19.
According to Akfa university’s Rector (equivalent to Vice-Chancellor in the UK), the university was “founded by Akfa Group of Companies in 2019”. There is notably little information on the university’s website relating to staff, regulations or governance.
The award of significant acreage and other concessions to a private for-profit medical university, operated by a group closely tied to the mayor of Tashkent, is a controversial proposal, especially in light of president Mirziyoyev’s stinging criticism of the mayor’s COVID-19 response.
This is set against a wider backdrop of a public growing increasingly tired of concessions and public assets being gifted opaquely to private interests, particularly when those interests appear to have ties to senior regime figures.
The proposed 30-hectare site for Akfa university is currently occupied by a company owned by the Tashkent city administration. The city administration, headed by Artikhodjaev, will relocate the business, and the existing premises will be demolished at taxpayer’s expense. This will pave the way for the development of the new Akfa university campus.
In an unusual twist, Uzbekistan’s state asset management agency and state anti-monopoly committee have both criticised the draft regulation. The anti-monopoly committee has declared that certain provisions granting Akfa University substantive privileges, such as the 30 hectare site and a range of tax exemptions, are an unfair advantage which violate Uzbekistan’s competition legislation. The state asset management agency has argued that the land ought to be distributed through open and competitive tender.
The draft decree has also faced significant rebuke from the public on social media, angered over the largesse being provided to a private company which will charge local students considerable fees (US$5,700 per annum, which is approximately double the average annual wage in Uzbekistan).
Akfa University has rejected the criticism, arguing that the proposed state benefits are similar to those offered to international universities prepared to establish a private higher education facility in Uzbekistan.
The Shavkat Mirziyoyev government is subsidising the establishment of private universities in a bid to rapidly expand higher education provision, yet the size of the aid in the case of Akfa University, including a three-year tax exemption, and a large grant of land, stand out in scale compared to other recent deals, such as those offered to the British University of Management and TEAM University.
But this is only half the story.
According to a 2019 government decree, Akfa University is being established by the private company Akfa Medline, which is majority owned by the wife of the Tashkent mayor. Furthermore, rights to the Akfa brand are reportedly owned by J-United Group. This company remains 100% owned by mayor Jahongir Artikhodjaev.
When asked by the author about this in 2019, Akfa Medline denied a conflict of interest existed. The author’s request for access to the Akfa university business case submitted to government was denied by Akfa Medline. Instead, the company stated via email: “Based on the results of the study of consumer demand and the high demand for highly qualified medical personnel, Akfa Medline launched an initiative to create a modern University. The Ministry of Health supported this initiative”.
After the author asked Tashkent mayor’s office about the decree establishing Akfa University, which allocates the Tashkent Administration responsibility for supporting construction efforts, the mayor’s office denied any conflict of interest existed.
With Akfa university potentially now set to move on to a prime 30-hectare site with the aid of the city administration, the potential for significant conflicts of interest is hard to overlook. This comes against a wider backdrop where the Akfa-Artel group is seen to receive preferential treatment by the Uzbek government.
In 2019, the author reported that the Akfa-Artel group was a key beneficiary of the US$1.3 billion Tashkent City property development. This project enjoys significant state privileges, such as tax exemptions. A request for information on the processes used to select investors and contractors and provide privileges has been denied by the Uzbek government.
That year, media outlet Kun.uz claimed Artikhodjaev threatened several of their journalists. An audio recording of the purported conversation was subsequently leaked - in which a man, allegedly the mayor, issues a death threat and other insults in reaction to negative reporting on the government and Artel, a company founded by the mayor. Two of the Kun.uz reporters resigned in response.
The Uzbek government has previously backed down in the face of public outcry. It may happen again. However, at a time when the Mirziyoyev government is spending significant taxpayer funds to convince international investors a level playing field exists in Uzbekistan, allegations that politically exposed entities are receiving unfair advantages threatens to unravel the government’s declaration that Uzbekistan is open for international business.
This case also points to ongoing problems associated with the Mirziyoyev government’s drive to privatise the Uzbek economy and significantly expand business activity. This is largely being done through the opaque provision of state aid, including tax holidays, discounted loans and zero-cost award of state assets.
As the Uzbek public endure the COVID-19 pandemic without an adequate public health and welfare safety net, government handouts to the country’s richest individuals and organisations will become increasingly incendiary.