On September 6, 2005, Italian businessman Giorgio Fiacconi was arrested and put in jail. The financial police accused Fiacconi of embezzlement, on charges leveled three months earlier, and of violating an order not to leave Bishkek. Fiacconi left Kyrgyzstan and was arrested upon his return to the country. Fiacconi has interests in trade: he is a major shareholder of the Aichurek Bishkek mall, a co-owner of the Kyrgyzcredit bank, the founder of the Times of Central Asia Newspaper, as well as Honorary Council of Italy in Kyrgyzstan.

The day before, the construction of a trade and residential center was stopped for a month for investigations launched by the Bishkek council. Authorities stated that the largest Turkish investor in the country had not been approved by inspections and had been constructing the building illegally. From the beginning of construction in May 2005 up to the present time, Turkish businessmen had invested some $10 million, and the building was about to open late this Fall.

Some observers in Bishkek consider that these allegations are veils for attempts by some officials to acquire slices of businesses run by foreign businessmen. This in turn, raised doubts regarding the purposes of the March revolution, when ex-president Askar Akayev was ousted following the fraudulent parliamentary elections. One of the reasons for Akayev\'s fall was the attempts of his family to control most of the successful business ventures in country by pressuring businessmen through the use of administrative resources, including numerous inspections, arrests and inconsistent allegations of various violations.

For businessmen based in Bishkek, the first result of March 24 revolution was the nocturnal looting in the capital with estimated losses of some $100 million. Later, a special commission under the acting government started investigating companies on a list of some 100 enterprises that were allegedly partly owned by Akayev’s family. The investigation under acting deputy prime minister Daniyar Usenov finished its work on June and surprisingly did not found any traces.

Observers say some members of the commission pursued personal goals of property redistribution and succeeded in buying out shares at low value under book.

Further, a group of local activists accused the management of the Naryn-based coal mining company of ties with the Akayevs, seized the mine and finally legitimized their role in acquiring ownership with the assistance of governmental officials.

A survey of companies conducted by the International Business Council (IBC) in June found that most trends in the business environment remained the same – neither better nor worse – but one indicator had dramatically deteriorate: the legal environment. Investors put top priority in their concerns to the safety and security of their businesses. Investor confidence in Kyrgyzstan’s future remains low to the present day. After the takeovers of local companies, suspicion increases that authorities wish to get a slice of international businesses in the country. Fiacconi\'s arrest and the shutdown of the Turkish business center could represent trial balloons for the new leadership to increase investor confidence and recover the economy accordingly.

The International Business Council gathers a wide range of businesses with combined investments of over $1 billion in the Kyrgyz economy. Its director, David Grant, told this author that “essentially people at the top of the government make sure that whatever happens is totally legal, and the process and outcome transparent”. If they don’t, Grant argued, there will be another black mark on investments in the future. If investors do not see that this process or its outcome is transparent and legal, or if they consider the moves as pressure to takeover businesses, investments in the country will decline.

Businessmen will remain in a state of uncertainty and caution until the new government cabinet is set up. It is already three weeks since President Kurmanbek Bakiyev’s inauguration, but the authorities have not been able to staff the cabinet with the right figures. The main question regarding foreign investors today is what kind of companies could do business in Kyrgyzstan.

Grant said they will likely not be western. Considering “the way the country is going, big investments are likely only to come from Russia, Kazakhstan or possibly in the future China, where companies are close to their governments and have political pressure to apply to the Kyrgyz Government. Western investors will be very cautious, because there is big uncertainty regarding what will happen with their investments in the future. Because Russians, Kazakh, and the Chinese have leverage here. If companies are close to their governments, there is more confidence. For European companies it is difficult, because they do not have leverage in Kyrgyzstan”.