In January 2026, an international arbitration tribunal in London upheld Kazakhstan’s core claims against the Karachaganak Petroleum Operating consortium – including Shell, Eni, Chevron, and Lukoil – over unlawfully reimbursed costs under its production-sharing agreement. The compensation figure: between $2 and $4 billion. In its written decision, the tribunal cited Kazakhstan’s own admission that the country had tolerated “corruption and kleptocracy” until 2022. Meanwhile, at The Hague, Kazakhstan is pursuing a $160 billion claim against the Kashagan consortium, alleging that the state received just 2 percent of post-royalty revenue.
These are significant precedents. But behind the figures argued in London and The Hague lies a human cost that was not discussed before the court. Kazakhstani businesses were driven into bankruptcy by predatory subcontracting chains, and oil workers spent years doing some of the most dangerous work in the country’s most profitable industry – and were paid a fraction of what the contracts above them prescribed.
The schemes that defrauded the state and the schemes that defrauded the workers were manifestations of the same system. That raises an uncomfortable question about the arbitration: who are these victories actually for?
Galymbek Mussin is the former director of a small construction company in Atyrau. Between 2016 and 2019, his firm supplied workers to the Tengiz oil field, until it went bankrupt – because the contractor above him, Senimdi Kurylys (SK), collected over $15 per hour from Tengizchevroil (TCO) for each worker and passed on just $5 to Mussin. Despite the Kazakh name, SK is not a Kazakh company but a joint venture between U.S. firm Bechtel (50 percent) and Turkish firm ENKA (50 percent ). The $10 gap – money expressly designated by TCO for Kazakhstani workers’ wages, housing, food, and medical care – evaporated in the contracting chain.
Mussin spent the next seven years writing to every institution of the Kazakhstani state. The Prosecutor’s Office investigated, confirmed violations, and issued a fine of 75 million tenge (around $155,000). However, it ultimately declared the question of where the money went to be “outside its competence.”
The Karachaganak ruling and the Mussin case are not two separate stories. They are two expressions of the same mechanism: opaque contracts and layered subcontracting chains, the capture of state oversight, and the diversion of funds formally designated for others. The difference is only one of scale and of who ended up as the victim: the state’s revenue share, or a worker in a hard hat.
One Scheme, Two Tiers
The structure of the Tengiz scheme is documented in leaked contract materials – Attachment B2 to Master Contractor Services Contract No. 1123955 – which Kazakh outlet Vlast reported on in 2024. TCO’s hourly rates are defined as “all-inclusive,” covering every cost of maintaining a worker on site. SK received them in full. Subcontractors received a third. The Prosecutor’s Office confirmed as much – and stopped looking into the matter.
Structurally, this is a mirror of what was established in the Karachaganak case: contractors submitted inflated invoices and state officials approved them – whether through incompetence or inducement.
The Italian subcontractor cases at Karachaganak and Kashagan went further than that. In 2017, several Italian companies were convicted by an Italian court for fabricating contracts and billing the state for work that was never performed. Documents submitted by Kazakhstan to U.S. courts describe one contract that was amended 11 times, its value ballooning from $88 million to over $490 million. The ICIJ’s Caspian Cabals investigation found that oil majors signed off on inflated budgets and payments to subcontractors who did not perform the work – in one documented case authorizing a $48 million advance for construction that never began.
At Tengiz, none of this has ever reached court. Kazakhstani oil analyst Olzhas Baidildinov has publicly noted the discrepancy: TCO’s budget grew from an initial $12 billion to a final $48.5 billion – a fourfold overrun on an onshore field with existing infrastructure. KazMunayGas, which holds a 20 percent stake in TCO, has asked no questions publicly.
And discrimination is built into the pay structure itself. TCO’s salary table, published in late 2024, divides the workforce into four geographic tiers. A manager from the U.S. or Western Europe earned $192 per hour. A Kazakhstani manager earned $33.93 — less than 18 percent of the pay, for the same role at the same site. The citizens of the country whose subsoil is being extracted occupied the lowest rung in this hierarchy. Academic scholarship identifies this as a reproduction of the colonial compensation model, where pay tracks country of origin rather than skill or experience. In Kazakhstan’s oil sector, it has operated unchanged for two decades.
Bechtel and ENKA – the joint owners of SK – are today building Poland’s first nuclear power plant, constructing motorways in Serbia, and delivering a combined heat and power plant in Hamburg. In Poland and Germany, they must comply with the EU’s Posted Workers Directive, which prohibits precisely the geographic pay gap codified in TCO’s salary tables, and with the Pay Transparency Directive of 2023, which gives workers the right to information about comparative pay – the very disclosure that got Tengiz workers fired.
After the Zhanaozen massacre of December 2011 – in which security forces shot dead at least 16 striking oil workers, drawing formal ILO censure – the authorities’ response was not to restore workers’ rights but to further curtail them. The 2014 Trade Union Law and 2015 Labor Code, documented by Human Rights Watch, eliminated independent trade unionism: the country’s largest independent union confederation was dissolved by court order in 2017. Workers lost both institutional protection and the right to strike. Vlast documented dismissals of those who dared raise the issue publicly. This created the conditions that made the corruption scheme possible.
Arbitration Is Not Reform
There is a temptation to read the Karachaganak ruling and the Hague claim as evidence that Kazakhstan is changing – that President Kassym-Jomart Tokayev is using the law to restore equity. But equity requires consistency. A state that admits to “corruption and kleptocracy” before a London tribunal while simultaneously closing the inquiry into the missing $10 per worker-hour and declining to investigate TCO’s fourfold budget overrun is not fighting corruption. It is deploying corruption selectively as a negotiating instrument.
The awarded compensation will not raise oil workers’ wages. It will not reimburse Mussin for his lost business. It will not restore workers’ right to organize. It will pass through the same opaque structures – like KazMunayGas and state funds – that the Organized Crime and Corruption Reporting Project (OCCRP) and others have documented for two decades.
For foreign investors, this should read as a warning, not a green light. Chevron is in negotiations to extend the Tengiz concession, which expires in 2033, against the backdrop of the Karachaganak precedent. The corruption that oil majors spent decades treating as an acceptable cost of doing business in Kazakhstan has now turned against them in international court.
As Mussin put it: “The people of Kazakhstan, as the owner of its subsurface resources, should not suffer from such investors.”
Kazakhstan has learned to name its corruption when it is profitable to do so. What it has not learned – and shows no sign of learning – is to stop. The corporations facing the bill in London and The Hague knew this. They come from countries where what is happening at Kazakh oil fields would be a crime, where labor rights are enforced, where courts are independent, where transparency is not optional. They invested in Kazakhstan anyway, and not in ignorance. They were too eager for the conditions that only a kleptocracy can offer: no unions to negotiate with, no regulators to satisfy, no workers with the legal standing to complain.
They got what they came for – for a while, at least. Because in a kleptocracy, no one wins permanently. The system that allows you to extract without accountability is the same system that will eventually extract from you.
