Foreign Policy Blogs

Trial delay for telecom exec Mark Seidenfeld

Without Transmission-No news.A universal picture of human rights treats each profession equally in the call for due process of law.  Yet human rights organizations focus upon the treatment of journalists in repressive regimes for good reasons.  First, the treatment of journalists reflects our own belief in the importance of steady, trustworthy information.  Second, examining the treatment of journalists also provides a focus and indicator of human rights‚ if a regime treats those who can speak out in such a way, how much worse can it be for the voiceless?  In another way, speaking out for journalists reflects our entry point into a culture.  These journalists often bridge the gap between local communities that we do not know and the wider world.  They are more than reporters: they serve as our interpreters, bringing unfamiliar cultures forward in order that we may compare and contrast them with our own.

Everybody's voiceA still more sophisticated approach to securing media freedom considers all aspects of media: not just those who manufacture its content, but those who provide for its distribution.  This would include business employees and entrepreneurs, particularly those who operate or facilitate the work of publishing houses and telecommunications.  Journalists provide the content: media outlets provide the means that make the content available.

Today, Mark Seidenfeld's trial was delayed another week.

The frame-up
Mr. Seidenfeld is a 39-year old telecommunications executive who has been arrested for stealing USD40,000 worth of assets from his firm, the Kazakhstan branch of Golden Telecom, Incorporated.  The equipment he has been charged with stealing has been found, by independent auditors, to be on the property of Golden Telecom, and presumably, still in use.  The independent auditor is Pricewaterhouse Cooper (PwC): with an office in Kazakhstan staffed by both expatriate and local Kazakhstan executives.  As independent auditors, PwC is not covering up for expat Seidenfeld.

For what reason would Mr. Seidenfeld be charged?  Ilan Greenberg at the New York Times suggests that Mr. Seidenfeld was arrested for insisting upon free-market sale rather than forced sale of assets.  The resulting free-market auction cost the Kazakhstan businessman who purchased it an added USD five million.

Looks like: privatization.  Feels like: expropriation.
In 2002, the biggest telecommunications provider in Kazakhstan was Kaztelecom (KT), which was built upon the existing Soviet infrastructure, and incorporated in 1996.  60% of KT was owned by the government; another 30% was owned by Kazkommertsbank; and 10% was split between European and U.S. investors.  Its market share, while clearly the largest, was largely based on fixed telephony.  It did not provide the newest infrastructure in mobile telephony, data transmission (internet services) and fiber-optic technologies.  Since the 1990's, new technology provision created a niche for other operators such as Golden Telecom, and other joint ventures between Turkish and Kazakhstani firms.

KazTelecom officeIn 2003, Kazakhstan announced that it would sell 50% of its ownership in KT, so that it might "blossom in the hands of private operators."  By January 2004, independent telecommunications executives were viewing the liberalization with dread.  A new media law insisted than any foreign investment in telecommunications be limited to 10%, or that investor would have to be vetted by the government.  Furthermore, market access was limited to "backbone companies,"‚ which have turned out to be affiliates of state-owned companies such as the national railway company, and Kaztranscom, which is owned by Kazakhoil. 

Mr. Seidenfeld is one businessman who spoke up:  "If these changes go through," he remarked in 2004, "it will kill any innovation in the telecom market."  He noted that the new media law on liberalization increased the probability of monopoly in Kazakhstan. 

The motives for restricting foreign telecommunications ownership by law are titularly those of national security.  Nevertheless, the true reason is in profitability: Kazakhstan's telephony and internet market is considered to be seriously underserved.  The number of potential customers is therefore enormous.  Telecommunications networks, built up by Golden Telecom and others, in some cases financed by the European Bank of Reconstruction and Development (and for a time, part owned by the EBRD until loans were secured), are in much better shape to access a largely untapped market for cellular phones. 
In the third quarter of 2004, after the redistribution of telecommunications ownership, the communications market grew by one-third.

The bottom line
Seidenfeld's incarceration and trial points to another, more fundamental legal problem in Kazakhstan: a failure of the rule of law.  For Mr. Seidenfeld, as for many others, partisanship within the legal system means that a fair trial cannot be obtained.

Just as human rights watchers note the harassment of independent journalists, they should take note of the harassment of other aspects of media service provision‚ and this includes the harassment of businessmen and entrepreneurs in telecommunications, publishing, and electronics.  Recently, has noted the way that Uzbekistan has silenced opposition by shutting down distribution/transmission avenues, especially electronic ones: the Web sites for opposition parties Erk and Berlik, the broadcasts of news agency, and others.  Kazakhstan's media law controls access and broadcast of foreign outlets and foreign content, limiting its percentage of ownership and percentage of play, respectively.

If it is still difficult to feel outrage over the failed telecoms in Kazakhstan, and the plight of those megabuck suits who developed it:

Imagine that your journalists have their phones and internet cut off.  They are still walking the street; no operative has a hand over their lips; but they are gagged all the same. 
Imagine how they must feel, unable to complete their work, unable to tell someone what is going on. 
Imagine them looking over their shoulder, wondering what comes next.

Additional information from the European Commission Market Access Database.  Photos:;;