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A criminal case has been opened against Rakhat Aliyev on abduction charges, the Interior Ministry said Wednesday.
"Investigators believe that he was the leader of an organized crime group," a ministry spokesman said, adding that the group engaged in extortion and illegal acquisition of land and property.
He said Aliyev is presently in Vienna, while a special delegation, led by a deputy prosecutor general and a member of Interpol's Kazakhstan office, has left for Austria, RIA Novosti informs.
Rakhat Aliyev was both ambassador to Austria and leader of Kazakhstan's campaign to chair the Vienna-based Organisation for Security and Co-operation in Europe (OSCE), the human rights watchdog, in 2009. He said the kidnap allegations were fabricated after he confided to his father-in-law earlier this year that he planned to run for president in 2012.
Mr Aliyev, who is married to Mr Nazarbayev's daughter Dariga – sometimes seen as a future president herself – vowed to stay in politics and do everything in his power to prevent Kazakhstan from "sliding back into its Soviet, totalitarian past."
An opposition leader said Mr Nazarbayev's "unrivalled instinct for power" would help him see off any challenge from Mr Aliyev.
The Kazakh leader also remains popular as his country has benefited from the fruits of an oil boom. For his part, Mr Aliyev gained many enemies during a spell as chief of the security services in the 1990s.
However, opposition leaders fear the clash with Mr Aliyev will strengthen the president's determination to cling to power at the expense of democratic reform. Oraz Jandosov, co-chairman of the Nagyz Akzhol (True Way) party, said: "This is all the inevitable result of the autocratic and corrupt system we have in Kazakhstan, where all real power rests with the president."
A clause allowing Mr Nazarbayev to serve as president for an unlimited number of terms was tacked at the last minute on to a package of constitutional amendments flagged by the authorities as reformist.
Kazakh political analysts said the bill had also complicated the procedures under which the president can be impeached. A western diplomat said: “"Certainly, recent political events have set back, and possibly derailed altogether, Kazakhstan’s chances of being awarded the OSCE chair in 2009."
Mr Nazarbayev's quarrel with his son-in-law emerged last week when he told the interior ministry to execute "the most thorough investigation ... without regard to position or privileges" of the alleged kidnapping last January of two former managers of Nurbank, a bank controlled by Mr Aliyev.
At the same time, the state media publicised part of a statement by Abilzhan Gilimov, the former chairman of Nurbank, claiming Mr Aliyev had intimidated him and Zholdas Timraliyev, his former deputy, into surrendering various assets during a violent incident at a bathhouse in Almaty, Kazakhstan's financial capital.
Mr Gilimov is on trial for ordering a police raid on Nurbank offices. Mr Timraliyev disappeared in late January after a fraud investigation started at Nurbank.
Shortly after the kidnapping, Mr Nazarbayev made Mr Aliyev ambassador to Austria in a move that appeared designed to brush the affair under the carpet.
But now, according to Evgeny Zhovtis, the head of Kazakhstan’s International Bureau for Human Rights and the Rule of Law, "it looks as if all the branches of power in Kazakhstan have been given free rein to go after Mr Aliyev."
Mr Aliyev told The Financial Times he would not risk returning home for interrogation but wanted to clear his name.