Former president of Nazarbayev University issues warning

The former head of Kazakhstan’s Nazarbayev University (NU), a flagship research university in the Central Asian republic which teaches in English and has many international professors among its staff, has warned that the university’s much lauded academic freedom and institutional autonomy are under threat.

Shigeo Katsu was the founding president of the university when it was set up in 2010 with funding from the Kazakh State but under special laws that allowed it to steer its own independent course. He stood down from the post in October last year, he says under political pressure, though he still sits on the university’s governing board.

In particular, in an interview with University World News he highlighted the erosion of international oversight of the university coupled with the appointment of “government-aligned administrators” and the dilution of the university’s financial independence, as areas that are causing alarm within NU.

In addition, he believes this has “geopolitical dimensions”, referring to Kazakhstan’s strengthening ties with Russia, which has its sights on Kazakh universities.

Katsu, who is Japanese and a former World Bank official, said that when the university was set up under Kazakhstan’s former president Nursultan Nazarbayev it was a courageous move because Nazarbayev agreed to set up the university outside the mainstream, under the so-called Nazarbayev University Law approved in 2010.

“For the first time in post-Soviet days [in former Soviet countries], with the exception of the three Baltic countries that joined the EU, academic freedom and institutional autonomy was legally enshrined,” Katsu told University World News.

An endowment fund, the Nazarbayev Fund (NF), was also created – a first for a university in Kazakhstan. And later in 2019 an international endowment fund was set up to attract international donors.

“It was pretty far-reaching,” said Katsu. It meant that, unlike other Kazakh universities, NU did not have to report to the Minister of Education.

During the 2022 violent unrest in Kazakhstan, which was sparked by an internal power struggle, the former chairman of the NU Board, Karim Masimov, a former prime minister “was scapegoated”, in Katsu’s words, and charged with treason. Masimov is now in prison.

With the change in the Kazakh government, the university bearing Nazarbayev’s name, along with other organisations set up by the former president, have come under attack. Katsu alleges that “paid bloggers” started to criticise the university and Katsu personally. He believes he was targeted because “it was inconvenient for them to have me with a clear, immaculate reputation”.

Such smear tactics, he noted, are “straight out of the Russian playbook”.

And people took note. “Suddenly the Kazakh parliament started to come up with a lot of queries,” said Katsu. Now, he is concerned about increasing state inference and a possible end to the university’s merit-based appointments if the state tries to assert more control.

Reduction of international board members

Already political influence is evident in the restructuring of the university’s governing board, he maintained. The university has a two-tier governance system – a Board of Trustees and a Supreme Board above it. The Supreme Board was previously chaired by then president Nazarbayev, and it “signed off on overall strategies.”

“I would go and see him [Nazarbayev] maybe twice or three times a year, to report on what we were doing and get his overall sense, are we on track or not, but he never interfered in any of it,” according to Katsu.

Officials ‘wanted curbs on autonomy’

Although he always had cordial relations with respective ministers, “the rank and file of the Ministries, the bureaucrats, were not so happy with NU because we had too much autonomy and they could not decide what we should teach. Other [Kazakh universities] are on a tight leash”, he said.

In June 2022 the university had 14 members of the Board of Trustees, seven were international. Of the current nine Board members, international members including himself, were reduced to a minority, while In December, a Kazakh national was appointed executive vice president. Katsu alleges that others were “parachuted in to sign agreements”.

Nazarbayev University this week confirmed in a statement to University World News there are currently nine Board members, four of them international, including Katsu. The others from Kazakhstan include Sayasat Nurbek, Minister of Science and Higher Education, and Bagdat Mussin, Minister of Digital Development, Innovation and Aerospace Industry. Others are from the presidential administration including Chairman of the Board of Trustees Aset Irgaliyev, a presidential aide on Economic Affairs.

Katsu expects further reductions in international members, who he noted tend to be the more outspoken trustees. “It is clear that [some] people they sent in (to be) on our board”, behave as if our university ought to be just another state university,” he said.

But he added that the authorities also have to be careful. “Kazakhstan still needs Western investors and Western support, so they don't want to openly change things too drastically. They will change more indirectly,” he said, noting that publicly government officials still say they support the university.

He points to the importance of the university’s international collaborations which could be undermined if it loses independence. For example, each academic department at NU partners with one abroad – the NU Graduate School of Business with Duke University in the US, the NU School of Medicine with the American University of Pittsburgh, and the NU Graduate School of Education with Cambridge University in the UK as well as Penn University in the US, among others.

“These institutions were not just lending their names to NU. The relationship was much deeper. They helped us attract international faculty members and develop the syllabus, and much more,” he said.

University law amended

In October last year, the Nazarbayev University law was amended, in part due to references to the past president, which were being removed from a lot of public entities. And while there were no official alterations to NU’s academic freedom and autonomy clauses, Katsu believes it is only a matter of time before they change the status of the university’s charter.

While Katsu stepped down as NU president last October, which he said occurred “under pressure”, at the same time he was asked to stay on as an advisor to the current acting president as well as help in the search for his successor, a way of instilling trust in the search process.

Katsu said the search results were not taken up.

Last December, Nurbek said NU needed to be preserved and developed as the country’s “leading research university” and that there were no plans to change NU’s special status, which would mean abolishing or changing the special law that governs its operation, Kazakh media reported.

“We cannot and will not abolish or change the law, I can tell you at once,” he was quoted as saying. He added, however, that “certainly, some adjustments will be made”.

Nazarbayev University’s management said in a statement to University World News: “Mr Shigeo Katsu officially assumed the role of NU President in 2011 following his appointment by the University Supreme Board of Trustees. Subsequently, in 2023, he retired while maintaining his membership on the Board of Trustees. Given his continued affiliation, he possesses the avenue to voice his opinion directly within the Board’s framework eliminating the need for public appeals through the media.

“NU is committed and adheres to, among others, the principles of academic freedom, meritocracy, research ethics, and transparency. NU has and will continue to operate under the principles of autonomy, as NU’s autonomy is specifically secured by a separate law outlining its status as an autonomous organisation of education.”

Increased Russian influence

Katsu also maintained that NU’s independence is “a thorn in the sides of our neighbour to the North”, meaning Russia. In 2022, after the invasion of Ukraine, the influence of Russia on Kazakhstan more generally “is tangible, it's much stronger than before”, he said.

Sirke Mäkinen, a lecturer at the University of Helsinki and an expert on Russia’s international university collaborations, told University World News that “after the full-scale invasion of Ukraine, Russia has to focus more and more on those regions and countries that it can still have some kind of influence on”.

She added that as all EU institutional collaboration with Russian partners were frozen, it turned to collaboration with the other parts of the world, including Central Asia.

With Kazakhstan “it’s not only about education as such, but it’s also about trying to get these countries under Russian influence”, she said, noting that Russia does not want Kazakhstan to “reach out to the liberal democracies.”

Katsu believes it goes further and that Russia increasingly has a say on university appointments in Kazakhstan. “They put a lot of pressure,” Katsu said.

But he also acknowledges that NU does not want to have “all the eggs in the Russian basket” and wants to maintain good relations with European countries and the US.

According to Mäkinen: “NU still remains the flagship university from the point of view of the Kazakh government, so I don’t know that they would want to get rid of it or anything like that. It might be that they are just rethinking about allocation of funding, for example.”

Other Kazakh universities have long been envious of the generous funding received by NU, compared to their own funds, she pointed out.

Budget share ‘raised concerns’

Saltanat Janenova, a lecturer on public policy at the University of Bristol, UK and a former assistant professor of Nazarbayev University, told University World News: “One-third of the entire budget of the state for higher education, till 2023 went to Nazarbayev University and it is still receiving huge funding, so the public, including parliamentarians and public figures, started to raise concerns” after the collapse of the Nazarbayev regime.

“Previously they could not express concern because of the political environment in the country but now as there is a change of government and the presidential leadership, there is increased public pressure and demands for more accountability of NU,” she said, pointing out that the university still receives 100% of its funding from the state budget.

Large payments made by NU to international partner universities likewise are not transparent, she said. “The contracts with international universities have not been scrutinised by independent audit. And the financial reports have never been published for open access,” she noted.

“In the beginning, the rationale was that partnering with international universities would help NU to get international legitimacy and to develop capacity. But over time, over 12 years later, gradually NU has developed its own capacity. Many Kazakhstan scholars have joined the University who have been educated abroad,” she added.

“Katsu has talked about different measures for (achieving) financial sustainability, but they're not working effectively, the university is not sustainable. The alternative financing models do not produce visible results,” she said, adding that “autonomy has been abused” for the benefit of certain interests.

She believes the current government’s plan is to gradually reduce NU’s funding “to give the university time to find ways to develop sources of income”, she said and argued that one source would be fee-paying students.

Endowments and bank settlement

Katsu believes a key reason that NU attracted government attention was its wealthy endowment funds and commercial operations set up to ensure the university’s financial sustainability.

Others note that current President Kassym-Jomart Tokayev has launched a global effort to reclaim Kazakhstan’s stolen wealth, much of it squirrelled abroad and is on an avowed mission to root out the crony capitalism of the Nazarbayev era. Foundations set up by Nazarbayev including the Nazarbayev Foundation which benefits NU, have often been described as “opaque”, allegedly issuing no annual reports.

NU is an obvious target because of its financial holdings, as well as its strong links to Nazarbayev. This has led to a series of financial disputes over its endowment funds and other investments, of which the university was supposed to be the beneficiary.

The foundations, however, have said in legal documents that they have no affiliation with Nazarbayev or members of his family, and the university and Nazarbayev Intellectual Schools (NIS), which are primary and secondary schools, are the sole beneficiaries of the funds.

Two endowment funds were established, the Nazarbayev Fund (NF) from the beginning of NU’s existence and a US-based endowment fund set up in 2019 for international investments and which was supported by donations as well as some transfers from the NF.

NU also set up an investment fund to invest in technology and businesses, with the aim of having a long-term income source independent of government, in line with the model of many prominent US universities.

“Somewhat unusually for a university, we invested…in a commercial operation, a bank, which we were asked [by the then government] to take over in 2019,” Katsu explained. And then a second bank, ATF, a year later.

NU was asked to do this, in part as it was seen as a non-corrupt institution, and because of Katsu’s own reputation and integrity.

Before heading to NU, in a 30-year career at the World Bank, he had held various positions including as the bank’s vice-president for Europe and Central Asia, which at the time included “everything east of Germany”, as well as being responsible for liaison with the EU.

He has also been an advisor to international and bilateral development institutions, including the Asian Development Bank.

Ownership of the first bank which was facing insolvency at the time, now named Jusan Bank, was transferred to NU’s US-based endowment fund. In 2022 the fund was valued at US$1.6 billion. Katsu was also chairman of Jusan Bank, ultimately owned by the NU fund.

“We invested in, and turned around banks that were going bankrupt. We consolidated these banks, digitalised them, and succeeded in making them profitable,” Katsu said.

Attempts to ‘grab assets’

“In 2022, because of the political situation, certain elements in government wanted to grab the bank,” according to Katsu, who alleges that because he opposed some of these deals which were to go through the bank, he was removed as chairman of the bank.

The US-based endowment fund’s assets, including Jusan Bank were handed to a Kazakh oligarch, after it merged with the oligarch-owned ATF bank, according to media reports at the time, in circumstances that are still murky, and that have been subject to legal challenges. The legal disputes led to a settlement via arbitration between the oligarch, the Kazakh Government and the holding company of the bank.

This settlement resulted in assets worth US$1.6 billion being transferred to the oligarch for a nominal sum. According to a report in July last year by Bloomberg, it was conditional on the money ending up with NU and the Nazarbayev Intellectual Schools (NIS) that were both intended beneficiaries of the US-based endowment fund.

“In spring 2022 a person representing US shareholders cut a deal with the owner of the second bank, the smaller bank, ATF bank, through arbitration,” Katsu explained. “It was such a lopsided, really bad deal, especially for the university and NIS as the intended beneficiaries. I opposed this deal, so of course I became very ‘inconvenient’.”

In the end, the amount for NU and NIS was only around 5% of proceeds after others such as shareholders and governments were paid. “Whereas we were thinking about almost half,” he said.

Unusual arrangement

Katsu acknowledges that being head of the bank while also being head of the university was unusual but argues that as a former World Bank official he had experience and contacts at a time when the Kazakh financial system was “fragile and weak and quite corrupt,” and NU was seen as being able to create a corruption free institution.

Having a bank reporting to NU, he acknowledged, was “a bit of an innovation, but the idea of investing commercially and trying to get returns through dividends so we can build up funding for the university, and independent funding streams separate from depending on government scholarships, that is not new as a concept.”

In the end: “We suffered the loss of the bank and on top of it, we were counting on dividends from the bank to start flowing to the University and schools,” he says. But “sadly, it ended up in the hands of others.” And crucially this has left NU needing to continue to depend on the government for support, jeopardising its independence.

“Increasingly, if we end up being included in the normal state university system, it means we will lose autonomy as well as academic freedom. The next thing [will be that] our funding will be restricted, the university will be told what to do, maybe even what to do research on,” he maintains.

In a statement, Nazarbayev University said: “Shigeo Katsu’s views are his personal views only and cannot and do not represent, in any way, the views of the University, nor do they align with the University’s views. His views as to the current state of the University are uninformed, wrong, and highly misleading.”

Referring to Katsu’s stance in general, rather than specifically what he told University World News, NU said it is taking legal advice and will take all necessary legal measures to protect its reputation from the “perpetuation” of “false and baseless statements”.