Home / Case Studies / How the Russian mafia use the banking system (especially Britain’s)

How the Russian mafia use the banking system (especially Britain’s)

I was wondering what to blog about today, as it’s grey and
cold and wet and miserable and … then I realised, I should blog about Russia.

Here in London, we’ve gradually seen a takeover of some of
our key financial and national assets by billionaires from the former Soviet
Union states.

Some of these are glamorous, such as Roman Abramovich with
his Chelsea dreams and billion-dollar yacht, and some are a little bit more odorous, such as Vladimir Antonov.

Vladimir Antonov

Vladimir is on the run from various authorities, particularly those in Lithuania who accuse him of defrauding millions from the now bankrupt Snoras Bank.

The former owners of the bank allege that Antonov siphoned away money through transfers to personal accounts, collateral for loans, and fake real
estate deals using offshore companies.

Antonov and fellow shareholder Raimondas Baranauskas supposedly used the
Swiss banks HSBC Private Bank and Julius Baer & Co to transfer Snoras
assets, resulting in his arrest over here in November 2011.

Vladimir_antonov_and_raimondas_baranauskas_delfi

Antonov is now on bail awaiting extradition to Lithuania, with all of his assets in the UK seized whilst his position is investigated. 

The shame (or sham) of it all is that Antonov had acquired Portsmouth Football Club in June 2011, through a deal
that he was later accused of making through misleading the Football League authorities. 

That deal resulted in Portsmouth being forced into administration five months later, with massive debts they could not pay.  The club was given a 10-point penalty deduction by the league,
which resulted in the team being relegated to League
One.  It is the first time in thirty years that the club has played at this level.

These are not the only Antonov shenanigans, as he has also been caught
up in a storm in Sweden over his attempt to get a slice of the action with Saab, although he denies all allegations of wrongdoings saying it’s all politically
motivated.

Hmmm … with a father gunned down over the Saab deal and almost killed, I suspect there's more to it than that.

For example, back in 2010 a website dedicated to exposing the Russian Mafia wrote an interesting article
about the Antonovs, saying that the Ministry of Internal Affairs  of the Russian Federation were investigating
the fraudulent transfer of ten billion roubles (around $320 million) from Investbank to support
their acquisition interests in Saab.

The site gives a lot of intriguing background to what is
happening between these Russian bankers. 
Reading through a variety of articles, the history seems to go something
like this.

In 1999 Alexander Antonov, the former Chairman of Informprogress …

Aleksandr Antonov

Picture source: ReBaltica

… and his son Vladimir Antonov, a former employee of Sberbank, bought
49% of the shares in Akademchembank.  At the time, the bank was on the verge of bankruptcy.

Vladimir Yampolsky took the position of Deputy Chairman of Academchembank.  According to information from the Interior Ministry, Valdimir is a fomer staff member of the KGB and close to all those in power, and so an ideal choice as Deputy Chairman.

Academchembank apparently blossomed by being primarily engaged in money laundering
operations, attracting clientele that some would see as coming from a criminal underclass.

Nevertheless, the Antonovs somehow managed to stay out of
trouble until they started dealing with the Russian
Railways.

They persuaded Russian Railways to deposit $660 million with the bank.

The deal was clear, but it got into troubles downstream when the Antonovs tried to change the
name of the bank to Converse Moscow.

The Deputy Chairman of the Central Bank of
Russia, Andrew Kozlov, refused to accept the bank into the Deposit Insurance
System.

As you will see later, this is a critical part of the Antonov's operations – merge and close banks, as long as one is part of the Deposit Insurance System – and so they worked out a plan to get around this issue by transferring the bank to two banking friends, Peter Chuvilin and German Gorbuntsov.

Academchembank was therefore renamed Capital Commercial
Bank and this bank was accepted into the Deposit Insurance System.

Everything seemed hunky-dory … until the Russian Railways requested to withdraw their money, now worth $1 billion.

Capital Commercial Bank realised this was going to be too big a hit on their balance sheet, and made it clear that the bank was incapable
of paying out at that time.

Whoops!

Various discussions took place amongst all of the authorities, including discussions from Putin's personal offices down, to work out
what had happened.

The bankers were finally ordered to pay with Chuvilin and Gorbuntsov agreeing to pay $500 million; their
long-term partner Eugene Dvoskin would pay $300 million; and the bank’s
Chairman Sergei Mendeleev $200 million.

The bank executives were feeling pretty unhappy about this disastrous outcome and decided that the Antonovs should also be
held liable, since they had borrowed around $200 million from Russian Railways before
the sale of Conversebank Moscow. 

However,
the Antonovs had built a new bank empire by then, including a number of British
and Baltic banks, through their core financial vehicle Investbank and refused to pay.

Their refusal allegedly led to the assassination
attempt on the family on March 11th 2009.

Alexander Antonov was shot five times in the stomach, once
in the chest, and one of his fingers was blown off but, despite the brutal
shooting, Anatov survived albeit disabled.

Vladimir Antonov was wounded but not
as seriously and left the country, arranging for funds to be withdrawn from
Investbank and sent to Snoras Bank via Spyker, the car company his father owned who were trying
to buy Saab.

Two years later, the Antonovs
purchased English Portsmouth football club, and were joined by several senior managers from
the Russian Railways in the transaction.

Strange?

Apparently, all of the issues with Russian Railways had been resolved through money obtained from the Central
Bank of the Russian Federation.

This is because the Antonovs helped the Russian Railways get
their money back by allegedly blackmailing $1 billion from their former friend, the banker German Gorbuntsov.

German Gorbuntsov

Picture source: The Times

German had placed most of his assets in his wife’s name, Larisa.

According to the rumafia website, these assets were transferred to the managers
of the Russian Railways by holding German and Larisa at gunpoint, with threats made to their families and
promises to burn down their house unless they signed the documents of transfer, which
they did.

However, even with all of their assets taken, the Gorbuntsov’s
assets did not cover all of the losses of the Russian Railways.

The railways found that they were still left with 8 billion roubles
(about $215 million) of debt outstanding.

The Antonovs then came to the rescue, proposing a scheme where
the debt would be repaid.

The scheme was to buy several small to medium sized
banks as long as one of them was a member of the Deposit Insurance Scheme (DIS).  Being a member of the DIS means that the bank is backed by the
Central Bank if it gets into any trouble. 

The banks then offer attractive interest rates to customers,
which might include friends, until eventually the banks exposures and leverage
are massively inflated.  At this point,
the banks are merged into the one that has the insurance with the Central Bank, and
they can successfully get a stabilisation loan from the bank to bail them out.

Sounds like the sort of scheme used by Western banks recently,
except that these guys did it on purpose.

Anyways, back to the Antonovs.

By this time Capital
Commercial Bank, a member of the Central Bank’s Deposit Insurance Scheme, was on the verge of bankruptcy.

The bank was therefore merged with Sberkredbank,
another bank owned by Vladimir Antonov, and applied for a stabilisation loan from the Central Bank for 10 billion roubles ($320 million), of which 8 billion paid back the Russian Railways and the rest was distributed amongst other interested parties.

About two billion roubles to spend at discretion on anything
you like, such as buying a UK football club called Portsmouth.

The newly merged bank was then allowed to collapse,
leaving the Central Bank with the loan covered by the Deposit Insurance Agency.

A grand scheme undermined by German Gorbuntsov, who submitted
a written statement to the authorities – the Investigative Committee of the
Russian Federation – in February 2012.

In this statement, Gorbuntsov admitted guilt to contracting the
murder of Aleksandr Antonov in 2009, along with co-bank owners Petr Chuvilin
and to Sergey Mendeleyev.

He did this to also lay on the table the whole history of
the deal with the Russian Railways, the losses made, the threats he and his
wife had received, the forced method by which he lost a billion dollars of assets,
along with details of the actions and activities of the Antonovs and the
Central Bank.

Not a good thing to do.

Shortly afterwards Gorbuntsov was shot six times in Canary Wharf, London.

Gorbuntsov was left for dead but miraculously survived …

German Gorbuntsov 2

… these bankers are tenacious.

Picture source: the Daily Mail

Guarded round-the-clock by the Metropoolitan Police, German believes he was attacked because he was preparing to give
evidence to Russian prosecutors about the assassination attempt on Alexander
Antonov, and all the mud that goes with it.

Truly a story of intrigue and undertones that will rumble on,
and makes me think that when we talk about shadow
banking
we don’t know what we’re talking about.

And why am I talking about this today?

Because the UK encourages these activities.

According to investigative journalist David Leigh, several Soviet billionaires enjoy
Britain’s offshore secrecy rules to stash away their billions.  Here's his article:

Questions arise as mega-rich from Russia and former
Soviet republics descend on London.

Britain’s friendly
regime of offshore secrecy has tempted an extraordinary array of post-Soviet
billionaires to descend on London, sometimes to the sound of gunfire.

Vladimir Antonov fled permanently to Britain
after his father, Alexander, was gunned down in a Moscow street in 2009.
Another associate, German Gorbuntsov, narrowly survived a volley of
shots in London last March.

When Antonov bought a luxury yacht in Antibes, the Sea D, he
was careful to register its ownership to an anonymous British Virgin Islands
(BVI) entity, Danforth Ventures Inc. 

He also got his hands on enough cash to try to take over the
ailing Swedish car manufacturer Saab, though he did not take control. He did
succeed for a while in owning Portsmouth FC, the even more ailing British
football club. 

Antonov is currently on bail in Britain. Lithuanian
authorities are trying to extradite him for allegedly looting their collapsed
bank Snoras, which he denies.

The allegation that oligarchs exploit Britain’s offshore
secrecy regime to shift assets out of their own countries is not an uncommon
one. Another refugee from the law is the Kazakh billionaire Mukhtar
Ablyazov
, who was last seen in February allegedly heading out of London on
a coach to France.

Ablyazov has been sentenced to 22 months in jail for
contempt of a UK court as the BTA Bank in Kazakhstan attempts to pursue his
maze of offshore assets. The bank’s lawyers claim Ablyazov, who denies it, has
made off with an astonishing £4 billion using BVI and Seychelles companies,
nominee directors and layers of front-men.

These billionaires justify their use of British-controlled
secrecy jurisdictions because they say they must protect themselves from
corporate predators and political enemies in their home countries.

Another fleeing oligarch, the Georgian Badri
Patarkatsishvili
, – a partner of fellow exile Boris Berezovsky – was found
dead in 2008 in his Surrey mansion.

Patarkatsishvili’s business manager, Eugene Jaffe,
managed £500 million of the Georgian’s assets from a central London office in
St James’s Square through a BVI company, Salford Capital Partners. In an
additional layer of secrecy, Jaffe’s company was owned in turn by an opaque BVI
trust he set up called Montana River.

The wild-west financial landscape of post-Soviet Russia has
attracted at least one entrepreneur from the British Isles to exploit the
possibilities of the BVI secrecy regime.

We have traced opaque BVI entities used in Russia by the man
once known as the richest in Ireland, the property developerSeán Quinn.
He expanded into schemes for shopping malls in Moscow and Kiev. He has now
declared himself bankrupt and has received an Irish jail sentence for contempt,
as the now state-owned Allied Irish Bank seeks to recover what it says is a
missing £2 billion.

Other post-Soviet financiers have used Britain’s secret
offshore facilities for widely different purposes. The London-based Latvian oil
trader Evgeny Tikhonov set up an entity in the BVI to hide a
total of $2.4 million (£1.5 million) that his employer, Shell, subsequently
convinced a civil British court he was wrongly skimming off from fuel deals. He
was, however, acquitted of criminal charges after this.

The fund manager Igor Tsukanov, another arrival
in the fashionable west London area of Notting Hill, kept funds in the BVI that
will have apparently legally sheltered them from Russian taxes.

And on a lesser scale, Dimitry Sergeev, a mobile
phone games entrepreneur from Novosibirsk, faced a potentially costly dispute
with a small Manchester supplier over some allegedly unpaid invoices because
his firm was BVI-registered firm. A source there said: We decided it was too
difficult to bring a legal action in the BVI. Sergeev did not comment.

Undoubtedly the most flamboyant post-Soviet beneficiary of
Britain’s offshore secrecy regime is Rinat Akhmetov, the richest
man in the Ukraine. From a base in the coal-mining Donetsk region, he has
personally acquired industrial assets estimated to be worth £11 billion. He
shifted £136 million out of the former Soviet republic in 2007, in order to buy
the most expensive flat ever sold in London, at One Hyde
Park
.

Asked why he hid behind a BVI company, his company spokesman
in the Ukraine said it was for internal structuring reasons. He added: Water
Property Holdings Limited fully paid all taxes and charges . . . as required by
applicable laws in the UK. This includes payment in February 2011 of stamp duty
land tax (SDLT) at a rate of 4 percent which amounted to £5.467 million.

Details of Russian, Kazakh and Latvian BVI companies

These ownership details are being published in the interests
of transparency. It is not suggested that the setting-up of such offshore
companies was in itself illegal.

Evgeny Tikhonov

  • Company: T Capital 
  • The London-based Shell trader hid $2.4m (£1.5m)
    commissions offshore in Russian fuel deal. A Latvian, he was hired by Shell for
    £120,000 pa plus bonus to obtain Russian fuel supplies. Tikhonov allegedly
    overcharged freight costs and skimmed off the proceeds to his British Virgin
    Islands entity with its Swiss bank account. He had another offshore account with
    HSBC in Jersey, used to buy an €800, 000 (£645,000) apartment in Riga. Shell
    had a UK high court judgment against him in 2009 for dishonest behaviour, by
    which time the BVI company account had been emptied. He was acquitted, however,
    of criminal charges over this.
  • Company formation:  Phil Burwell in Dublin,
    acting for Latvian affiliate, IOS, with a nominee director in Riga, Eriks
    Vanagels.
  • Shell sources confirm that the high court
    judgment stands and some cash has been recovered.

Dimitry Sergeev 

  • Salazar Multimedia 
  • The Russian mobile phone games entrepreneur
    allegedly avoided litigation over some unpaid UK invoices. The Manchester phone
    games firm Mforma/Connect2Media claimed Sergeev’s firm owed it $42,000 for a
    distribution contract. The company was set up in 2004 with nominee Cypriot
    directors. They were replaced in 2010 by nominee directors for Bonical
    Corp, registered in the Seychelles.
  • Company formation: Appleton Company Services, of
    Hammersmith, London.
  • Sergeev has not responded to requests to
    comment. A Mforma source said: We decided at the time it was too difficult to
    bring a legal action in the BVI.

Sean Quinn

  • Soverint Holdings; Lyndhurst Development
  • The bankrupt Irishman is alleged to use offshore
    entities to hide Russian activities and profits. The Quinn family, once
    lionised as Ireland’s richest, are being pursued after the collapse of the
    Allied Irish Bank, for alleged debts to the bank of more than £2bn. This
    follows a buying spree of Russian property, commenced in 2007, including
    shopping malls in Moscow and Kiev bought via offshore companies. Since Quinn’s
    bankruptcy, Irish courts have declared that assets have been shuffled away into
    other offshore companies in a dishonest charade. As a result, Quinn is
    currently serving a 9-week prison sentences imposed by a Dublin court for
    contempt. 
  • Company formation: Unitrust, London and Canada
  • Quinn denies any wrongdoing

Vladimir Antonov

  • Danforth Ventures Inc; Paterson Association Inc;
    Griffon Properties [Jersey]; . . . and others 
  • This major Russian oligarch and one-time
    Portsmouth FC owner is fighting extradition from London, following collapse of
    a Lithuanian bank and assassination attempts. The Danforth entity was used to
    buy a superyacht in 2007 in Antibes in the south of France. The 37-year-old
    Antonov also allegedly used offshore entities to hide property holdings. He
    moved to Notting Hill in west London after his father narrowly survived an
    assassination attempt in Moscow by Chechen hitmen. Antonov is now accused of
    looting the assets of the Snoras bank in Lithuania, which is trying to have him
    extradited on a European arrest warrant. Assets worth €492m (£397m) have been
    frozen. As director, he used his business associate Vladimir Oplanchuk, then
    nominee director Edward Petre-Mears in Nevis.   
  • Company formation: Unitrust, London and Canada
  • Antonov’s lawyers say the allegations are
    politically motivated, following articles criticizing the government published
    by an Antonov media company.

Mukhtar Ablyazov

  • Roverfield Europe Corp; Forrell Real Estate Inc;
    Lafe Technology [Seychelles]; Mount Properties; Bensbourogh [sic] Trading
  • This fugitive Kazakh banker is being sued for
    £4bn. Ablyazov fled Kazakhstan, obtained asylum in the UK, and fled the UK in
    turn on a coach to France, receiving a 22-month jail sentence for contempt of
    court for lying about his vast fortune, should he ever return. According to
    lawsuits by the crippled BTA Bank in Kazakhstan, he looted the bank of £4bn. He
    bought UK property in 2007 through BVI offshore vehicles, not only avoiding
    stamp duty, but allegedly using a Latvian nominee director, Eriks Vanagels,
    signing a power of attorney to his brother-in-law Syrym Shalabayev, posing in
    turn as the nominal beneficial owner. UK purchases included a Hampstead mansion
    in Bishops Avenue, a flat at Albert Court, London NW1 and a 40-hectare country
    estate, Oaklands Park near Windsor.
  • Company formation: GWM (Global Wealth
    Management), Russia
  • Ablyazov denies wrongdoing and says he was
    trying to protect assets from raids by the Kazakh president, Nursultan
    Nazarbayev, and his cronies.  

Igor Tsukanov

  • CentreInvest Capital Partners; Enid Investments;
    Dakoro; Boulivot Invetments; Peritas Holdings; Floros  
  • Tsukanov is a prominent Russian fund manager
    with offshore holdings. The founder of CentreInvest Group, he partially sold
    out in 2007 to Gleb Fetisov, owner of My Bank, Moscow, and bought a £5m Notting
    Hill house. The exit deal with Fetisov left him in charge of the BVI entity
    CentreInvest Capital Partners Inc. He held interests in Russian poultry farm,
    Enid Investments Ltd, incorporated in the BVI, 2007.  
  • Company formation: Hill Consulting, Moscow 
  • No response.

Eugene Jaffe 

  • Montana River Trust; Salford Capital Partners
    Inc
  • The BVI entity Salford, with disguised
    ownership, managed £750m of investments in Georgia and Serbia for the Georgian
    oligarch Badri Patarkatsishvili. Jaffe originally worked in the Russian finance
    ministry, but acquired US nationality and a luxury central London flat in Hyde
    Park Gate. He managed Patarkatsishvili’s investments, including a bank in
    Georgia, from an office in St James’s Square. Patarkatsishvili was a partner of
    Boris Berezovsky and fled to London as Berezovsky did. He was said to be worth $12bn
    (£7.5bn), and suddenly died in 2008, aged 52, at Downside Manor, Leatherhead,
    the Surrey mansion where he was in exile. Until Patarkatsishvili’s death, Jaffe
    kept his own assets at Salford Capital Partners hidden in a BVI trust called
    Montana, set up 2003 – of which 40% was for Jaffe and his son, and the other
    60% for the benefit of various business employees.  
  • Company formation: London lawyers Salans 
  • No response

David
Leigh
 is a member of ICIJ.

The source of many of the allegations against the Antonov’s in this article are taken directly from rumafia.com, and specifically these three entries:

 

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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