Olimp case

The Olimp case is a criminal case initiated in 2019 by the National Security Committee of Kazakhstan against the activities of bookmaker companies OLIMP KZ, Alpha-bet and Onlybet on charges of illegal gambling, tax evasion, property legalization and participation in a criminal group.

Olimp's case arose two weeks after the all-Kazakhstan press conference held by Olimp as the leader of the Association of Bookmakers of Kazakhstan, during which Olimp publicly accused the officials of the relevant ministry of creating (for the benefit of their own business interests) a private monopoly - a single betting operator named as "Betting Accounting Center". Following Olimp, criminal cases were also initiated against other bookmakers in Kazakhstan: Profit betting, StavkaBet, PariMatch.kz, Finbet, Triumph, Favorit have been in criminal proceedings since 2020. After liquidation of Olimp through criminal cases, the private monopoly "Betting Accounting Center", the creation of which Olimp fought against for about two years, was legalized in just a few months. In 2021, Saken Mussaibekov, Vice Minister of Tourism and Sports of Kazakhstan, was brought to criminal responsibility for a bribe from the "Betting Accounting Center"

The charges brought against Olimp were refuted by the experts' opinions of (including PricewaterhouseCoopers ), the Business Ombudsman of Kazakhstan, the results of nonpublic investigative actions, testimony of numerous witnesses and other case materials. The imputed taxes were additionally assessed on activities recognized as illegal gambling, while taxation of illegal activities is inadmissible.

Nevertheless, as a result of the Olimp's case, company employees (including women who had minor children, including infants) were sentenced to various prison terms.

Without waiting for a trial, all property was confiscated from the other participants in the case and turned into the property of the state, which meant that they were found guilty of all charges, and violated the presumption of innocence.

In March 2024, relatives of those convicted made an open video appeal to the President of Kazakhstan Kasym-Jomart Tokayev with a request to review the Olimp's case, which appeared in the times of "Old Kazakhstan", and to instruct law enforcers to stop ignoring the violations committed.

Background of Criminal Prosecution
Olimp had been operating in Kazakhstan since 2007 and was the largest bookmaker company in the country.

In the summer of 2018, Kazakhstan's Ministry of Tourism and Sports, led by now-convicted Arystanbek Mukhamediuly and Saken Mussaibekov, decided to create a monopoly betting operator in Kazakhstan.

But the Government of Kazakhstan, the Ministry of National Economy and other organizations did not approve such an initiative.

Despite this, lobbying for the creation of a monopoly betting operator continued. In 2019, a new amendment to the Law "On Gambling Business" was initiated, providing for the creation of a monopoly betting operator called "Betting Accounting Center" - a private organization with a private owner.

The amendment stipulated that bookmaker's offices in Kazakhstan were obliged to conduct all their bets through a spacer - server of the private monopolist "Betting Accounting Center", which, in turn, received the right to charge bookmakers a commission in the amount at its discretion. The private owner of the "Betting Accounting Center", accordingly, was to become an instant billionaire.

According to mass media calculations, the private monopoly "Betting Accounting Center" was to earn about 20-25 billion tenge per year by receiving 4% commission for each bet in the country.

In October 2019, Olimp and other Kazakhstan bookmakers from the Association of Bookmakers of Kazakhstan held a Kazakhstan-wide press conference where they publicly made accusations that the "Betting Accounting Center" was being created to serve someone else's business interests.

Two weeks after the press conference, a criminal case was initiated against Olimp, after which special operations forces of the National Security Committee of Kazakhstan (NSC), which at that time was headed by the now convicted Karim Massimov and Daulet Yergozhin, stormed Olimp's office.

The NSC did everything to stop Olimp's operation immediately: it ripped out the server, paralyzed the office, put the usual employees face down on the floor, seized bank accounts, and finally suspended the bookmaker's license.

After liquidation of Olimp through criminal cases, the officials' plans were quickly implemented - the private monopoly "Betting Accounting Center", against the creation of which Olimp fought for about two years, was legalized in just a few months.

Criminal Case for Illegal Gambling Business
The grounds for appearance of NSC special operations forces in Olimp's office was a criminal case of illegal gambling under Article 307 of the Criminal Code of Kazakhstan, initiated by the regional office of the NSC in Almaty, which at that time was headed by the now convicted Nurlan Mazhilov.

The criminal case was initiated immediately on the qualifying features of especially large size as part of a criminal group (part 3, subparagraphs 1,2, Article 307 of the Criminal Code of Kazakhstan), while on the day of initiation of the criminal case there was no evidence of both especially large damage and a criminal group.

In addition, the initiation of this criminal case by the National Security Committee violated the rules of jurisdiction established by Kazakhstan law - cases of illegal gambling were the competence of economic investigation authorities, not the NSC, and the consent of the prosecutor's office for the NSC to pursue the case was obtained only after the case had been initiated.

The NSC classified as illegal gambling the BetGames products, legally operating in many countries of the world, which were called "online casinos" by the investigation, although in fact they were live broadcasts of gambling events conducted by the Zaidimai company in Europe and did not belong to online casinos.

Olimp, like other bookmakers in Kazakhstan, had openly been working with Betgames for many years. The acceptance of bets on the Betgames events results was no different from the acceptance of bets on the world sporting events results, and took place publicly through tax-registered cash desks and Olimp's website on the Internet. Over the many years of use, Betgames has never received any complaints about the product.

However, the NSC suddenly labeled this activity as online casino and outlawed it.

Criminal Case for Tax Evasion
In a criminal case involving illegal gambling, the NSC additionally ordered a tax audit. In the acts on the tax audit results, Nurlan Kozhageldiyev, a tax inspector of the Almaty Internal Revenue Department, indicated that Olimp was engaged in illegal gambling business in the form of BetGames online casino, and then additionally charged over 90 billion tenge of "gambling tax" and "individual income tax at source" (income tax of Olimp's clients, for whom Olimp was required to remit this tax to the budget) for these illegal activities.

At the same time, according to the opinion of the same tax inspector Nurlan Kozhageldiyev, illegal gambling business is not subject to taxation. Nevertheless, this did not stop him from imposing additional taxes.

Nevertheless, tax inspector Nurlan Kozhageldiyev excluded from the tax audit all of Olimp's accounting documents for a 5-year period that confirmed cash payments to customers made at Olimp's cash offices operating in all regions of Kazakhstan.

Olimp's primary accounting documents seized during the search, which tax inspector Nurlan Kozhageldiyev personally participated in the seizure of, were also not taken into account during the audit and were returned as "No investigative interest".

These actions of the tax inspector led to the fact that according to the acts of tax audit the amount of cash paid to clients for 5 years amounted to 0 tenge.

The exclusion of cash paid to clients, which were the company's expenses, increased Olimp's revenue part to 80% of turnover, while according to the international research of Dentons, the income of bookmaker offices in Kazakhstan is 5-15% of turnover.

All cash that Olimp delivered from Almaty over a 5-year period to its more than 300 cash offices in all regions of Kazakhstan, which was then paid out to the Olimp's clients, was referred by the NSC as "cash taken abroad", in complete disregard of the numerous identical testimonies of different Olimp's employees among the regional cashiers.

As a result, the NSC initiated a new criminal case against Olimp for tax evasion under Article 245 of the Criminal Code of Kazakhstan.

PricewaterhouseCoopers, the Business Ombudsman of Kazakhstan, as well as leading Kazakhstan tax experts 4142 confirmed the illegality of both the additional taxes and accusations of non-payment of taxes. In the opinions of these persons the fact of unjustified additional taxation of BetGames activity, declared as illegal gambling business, was fixed, in connection with which the charges in non-payment of taxes under Article 245 of the Criminal Code of Kazakhstan were marked as overly imputed. The additional taxation of the illegal gambling business is equivalent, for example, to taxation of the activity of selling drugs.

License Suspension
The NSC also initiated additional proceedings to suspend Olimp's license on the grounds that Olimp did not have a server in Kazakhstan. The investigation recognized the server in Olimp's office as not real.

On November 29, 2019, the Specialized Interdistrict Administrative Court of Almaty issued a ruling to suspend Olimp's license.

The investigation and the court ignored both the fact that the server had been fiscalized in accordance with Kazakh legislation and that the control rate for this server had actually been received. In addition, the same server had already been checked in 2016 by an IT specialist engaged by the tax authority, who confirmed its authenticity, its existence in Kazakhstan and the relevance of the data it contained.

Despite the fact that the decision of the administrative court was subject to appeal to the appeal instance and did not enter into legal force, the judge on the day of its issuance put a mark on its entry into force. With the help of complaints against the judge's actions, Olimp's advocates managed to get the illegal marking of the entry into force removed.

In 2021, during the trial of the defendants in the Olimp's case, the fact of forgery of the opinion that Olimp did not have a server in Kazakhstan was revealed - two versions of opinion with different content were found. The court ignored this fact.

Court Trial
The trial of the defendants in the Olimp's case began in 2021, during which Nurlan Kozhageldiyev, a tax inspector of the Almaty State Revenue Department, confirmed that he had failed to separate the turnovers of BetGames products recognized as illegal gambling from the total turnover of Olimp and made an additional charge of over 90 billion tenge in taxes on BetGames' activities.

When asked by the defense about the reasons for failure to separate the turnover of BetGames, the tax inspector Nurlan Kozhageldiyev replied that the turnover of BetGames allegedly did not affect the calculation of taxes, which forced the defense to declare a contradiction by reading the opinion of the same tax inspector on the inadmissibility of taxation of illegal gambling business.

This contradiction was ignored by the court.

In the court hearing, tax inspector Nurlan Kozhageldiyev also confirmed that he had in his office the primary accounting documentation of Olimp on the winnings paid in cash and made at the cash desks in the regions. But this documentation was not examined by him, and those primary accounting documents seized during the search in the Olimp's office, in the seizure of which tax inspector Nurlan Kozhageldiyev personally participated.

During the trial the fact of forgery of opinion on absence of Olimp's server in Kazakhstan was also revealed - two versions of opinion with different content were found. The court ignored this fact.

During the trial, many different witnesses – Olimp's employees, including cashiers from the regional cash offices - gave identical testimony. All of these witnesses testified that the regional cash offices regularly paid cash to Olimp's clients as betting winnings. And the cash for payments to clients was delivered to the cash offices from Olimp's head office in Almaty.

On June 28, 2021, the Almaly District Court of Almaty sentenced the defendants to various prison terms ranging from 5.5 to 8.5 years with confiscation of property. The prison sentences were imposed on women who had minor children, including infants.

The court found all defendants guilty of taking cash out of Kazakhstan, finding them guilty of "taking" cash on hand "from Almaty to Nur-Sultan," although these actions were not illegal.

The court also found all defendants to have been members of the criminal group since January 2014, although many defendants began their employment with Olimp after 2016.

In addition, under the civil lawsuit, each of the convicted persons jointly and severally recovered additional taxes of more than 90 billion tenge from Olimp.

Disregard by the Court of Prejudice in a Similar Criminal Case
In the judicial practice of Kazakhstan there was a prejudice in an absolutely similar criminal case - the verdict of Almaly District Court of Almaty dated August 11, 2020 against the director of PariMatch.KZ.

The PariMatch.KZ case and the Olimp case started almost simultaneously and were initiated on the fact that the same BetGames product was used. However, despite the identical start of both cases, they were investigated and concluded in very different ways.

PariMatch.KZ was not charged with non-payment of taxes and participation in a criminal group after the initiation of a case on illegal gambling.

At the same time, in the Olimp's case, the activities of BetGames, suddenly declared as illegal gambling business, were taxed and Olimp was wrongfully charged simultaneously under mutually exclusive Articles 245 and 307 of the Criminal Code of Kazakhstan, although the case of Olimp was no different from the case of PariMatch.KZ.

While in the case of PariMatch.KZ the convicted person was sentenced to a monetary fine and the employees of PariMatch.KZ (who were no different from the Olimp's employees) were not declared participants of the criminal group, in the Olimp's case the convicted persons received severe sentences of 5.5 to 8.5 years' imprisonment with confiscation of property, with a civil claim of over 90 billion tenge jointly and severally, without the right to early parole or commutation.

The Decision of the General Prosecutor's Office of Kazakhstan to Review the Case and Local Resistance to its Review
In summer 2023, relatives of those convicted in the Olimp's case united to seek a review of the criminal case and its consideration according to the law, about which they filed a collective petition to the General Prosecutor's Office of Kazakhstan.

On September 13, 2023, the General Prosecutor's Office of Kazakhstan saw the existence of grounds for reviewing the criminal case of Olimp on newly discovered circumstances, in connection with which it instructed the Almaty Prosecutor's Office to conduct a corresponding examination.

In turn, the Almaty Prosecutor's Office delegated the examination to the Almaty Department of the National Security Committee, i.e. the decision on review of the Olimp's case was given to the body whose actions were appealed by the families of the convicts.

In February 2024, the NSC sent a material to the Almaty Prosecutor's Office stating that there were no newly discovered circumstances to review the Olimp's case, thus directly contradicting the decision of the General Prosecutor's Office that such circumstances existed.

On February 27, 2024, the Prosecutor's Office of Almaty returned the materials to the Department of the NSC in Almaty for additional verification, stating that "the examination was completed without taking into account all the circumstances, in particular, no investigative action was carried out".

On March 19, 2024, the Almaty Prosecutor's Office sent an instruction to the Almaty Department of the NSC to interrogate a number of specialists.

On March 25, 2024, relatives of those convicted in the Olimp's case appealed with an open video message to the President of Kazakhstan, Kasym-Jomart Tokayev, with a request to instruct law enforcement officials to stop ignoring the violations committed in the case and to reconsider the criminal case.

The video message of the relatives also contained a 5-minute investigation, with information about the signs of ordered nature of the case on the part of the Old Kazakhstan officials because of the struggle of Olimp with the creation of a private monopoly - a single betting operator "Betting Accounting Center".

On April 19, 2024, a meeting was held at the Almaty Prosecutor's Office as part of the reexamination of the Olimp's case with participation of a representative of the General Prosecutor's Office of Kazakhstan, the Almaty Prosecutor's Office and the Almaty Department of the NSC.

Nurlan Kozhageldiyev, a tax inspector of the Almaty Internal Revenue Department, who additionally levied the tax of more than 90 billion tenge was also present at the meeting and said that there was no provision in the Tax Code that illegal gambling business cannot be taxed. At the same time, the case file contained the opinion of the same tax inspector Nurlan Kozhageldiyev, in which he directly asserted that illegal gambling business is not taxable.

In this regard, relatives of those convicted in the Olimp's case appealed to the General Prosecutor's Office of Kazakhstan to take action on the fact of misleading the representative of the General Prosecutor's Office.

On May 3, 2024, the NSC sent to the Almaty Prosecutor's Office a repeated material on the absence of newly discovered circumstances to review the Olimp's case. The experts who were directly ordered to be questioned by the Almaty Prosecutor's Office were not questioned.

Currently, all materials of the Olimp case have been requested by the General Prosecutor's Office of Kazakhstan.

In May 2024, a collective of relatives of those convicted in the Olimp's case submitted a collective petition to the General Prosecutor's Office of Kazakhstan to bring a protest by way of cassation to the Supreme Court of Kazakhstan to review the case.