At least 19 UK-registered companies are suspected of involvement in the laundering of around $20bn in dirty Russian money via banks in Moldova and Latvia, according to an investigation by The Independent newspaper and the Organised Crime and Corruption Reporting Project (OCCRP). One of those Latvian banks implicated by the OCCRP, Trasta Komercbanka, is co-owned by Ukrainian banker Ivan Fursin, who also happens to be chairman of Ukraine's parliamentary anti-money laundering committee.
The money-laundering scandal broke earlier this year, following investigations into bank transfers in Cyprus, after Cypriot banks were hit by the global financial crisis. As bne reported in August, the OCCRP revealed that around $20bn worth of Russian money of dubious origin had been laundered between 2010 and 2014.
“Organized criminals and corrupt politicians in Russia moved $20bn in dirty funds through this laundromat's complex cleanse-and-spin cycle made up of dozens of offshore companies, banks, fake loans, and proxy agents," the OCCRP said in the report. "The process was then certified as clean by judges in the tiny Republic of Moldova. The newly cleaned funds were then spread across Europe."
The OCCRP explained that typically transactions start with two companies, one of them based in the UK. “The companies sign a bogus contract in which one agrees to lend the other large sums, although no money ever actually changes hands. It is likely that both companies are owned by the same owner but that ownership is hidden behind "proxy" figures,” the report said.
One example cited by OCCRP concerns a UK-registered company owned by murky Belize-registered shareholders, with sums of $100m-800m in each transaction. “The contracts in each case stipulated that the debt was guaranteed by companies in the Russian Federation, almost always run by a Moldovan citizen. This Moldovan gave the operation access to the courts in Moldova, which would ultimately permit the movement of the dirty money into the legitimate banking system,” the report said.
"The next step was for the 'borrowing' company to refuse to repay the debt to the 'loaning' company, thereby shifting the debt to the Russian companies who had guaranteed the loan. The 'loaning' company then would take the matter to court in Moldova where a judge would issue an order 'certifying' the debt as real and ordering the Russian company to pay.”
The Russian company would transfer money into an account set up by the "loaning" company with intermediary bank Moldindconbank, then wired to the 'loaning' company's account at Latvia’s Trasta Komercbanka. "And once it is in Latvia, voila! It is in the European Union, backed by a court order and clean and ready to use,” the OCCRP said.
Together with journalists from The Independent, the OCCRP has since been investigating the people behind the British companies, but this has proved difficult given UK laws protecting shareholder privacy. Registered in the UK, many have their shareholders listed in offshore tax haves including Belize, the Bahamas and Panama.
An investigation into the scandal is already underway in Moldova, and charges are being prepared against five local bankers. The head of Moldova’s National Anticorruption Centre (NAC) told Bloomberg in September that the investigation was close to being finalised.
In September, Russian business daily Vedomosti revealed that an investigation has also started in Russia. Russian law enforcement agencies are looking into the withdrawal of almost RUB700bn from Russia through 21 banks. Moldova’s NAC has been in correspondence with the Russian Interior Ministry on the case.
The Latvian bank that provided the crucial final interface between the post-Soviet shadow economy and the international financial system, Trasta Komercbanka, is co-owned by its chairman Igors Buimisters and Ivan Fursin. According to Latvian financial market regulators, Furson controls 20-33% of the bank indirectly.
Fursin is a Ukrainian banker and member of parliament, and chairs Ukraine's parliamentary committee on anti-money laundering and financial monitoring, according to the parliament's website. Fursin was present at a recent meeting of select top Ukrainian oligarchs with President Petro Poroshenko, where the president demanded that the national currency hryvnia be frozen at UAH12.95 to the dollar.
Fursin is a junior partner of Ukraine's gas and chemicals oligarch Dmitry Firtash in the gas trading company Rosukrenergo, which has handled Ukrainian gas imports especially from Turkmenistan since 2005, and has been the subject of many investigations. In a leaked US diplomatic cable, Firtash is alleged to have acknowledged to the US ambassador that he owes his start in the gas business to alleged Ukrainian mafia boss Semen Mogilevich, now resident in Moscow and one of the FBI's most wanted men.
Firtash was arrested in March in Vienna at the request of the FBI on organized crime and bribery charges relating to the acquisition of titanium production facilities in India. He remains under house arrest while extradition hearings proceed in Austria.
Like Fursin and Firtash, Trasta Komercbanka is linked to Ukraine's murky gas sector, owning a 18% stake in a gas production joint venture called Devon, which also includes Ukraine's national energy company Naftogaz, according to the bank's disclosures.
One of Firtash' top managers, UK citizen Charles Treherne, also holds a 9% stake in Trasta Komercbanka, according to the bank's disclosures. Treherne is deputy chairman of the supervisory board of Firtash’s Vienna-registered Centragas. Centragas holds a 50% stake in gas trader Rosukrenergo. Fursin owns a 10% stake in Centragaz, with Firtash owning 90%.
Moody's Investors Service announced on October 15 that it had withdrawn Trasta Komercbanka's credit rating "for its own business reasons”. In response to Moody's move, the bank told Latvia's LSM.LV news portal that, "the bank assesses the report published by the Organized Crime and Corruption Reporting Project as a biased publication, jumble of distorted facts and speculations of journalist against the bank. The Joint Stock Company Trasta komercbanka has never ever received from the competent authorities any whatsoever notice, warning or decision showing that the bank is a participant in the events described in the published report."
Fursin and Firtash also own Ukrainian lenders Nadra Bank and Misto Bank.
Significant black and grey funds from Russia are believed to have also moved via Ukraine to Latvia, according to a bne source close to Ukraine's financial intelligence unit.
Fursin, who has chaired the anti-money laundering committee since 2012, is not running for parliament in elections slated for October 26, and thus will step down from the committee. He could not be reached for comment.
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