Billions of rubles were smuggled out of Russia using a unique money laundering scheme: its participants registered bills of sale abroad and tax-free import documents that said the goods were transported to Russia. In reality, the goods never crossed the border, or their price was many times higher than the actual cost. Novaya Gazeta. Europe is publishing an investigation carried out in cooperation with Transparency International Russia, Transparency International UK, Transparency International Czech Republic, Meduza, The Insider and Eesti Päevaleht about the new “laundromat” that involves at least 28 Russian banks, 130 companies from different states and many high-ranking officials.
We studied customs data on foreign trade operations to find that in the period from 2014 to 2016, over 41 billion rubles (over €600 mln) could have been withdrawn from Russia via dubious plastic manufacturing equipment deals. The prices of injection moulding machines were dozens or even hundreds of times higher than the actual cost. We have managed to detect 124 dubious deals. Transparency International Russia learned that this money laundering scheme was used by people with ties to Russian businessman Yevgeny Prigozhin, banker Sergey Kononov, sports manager Andrey Safronov, general-mayor of justice Igor Komissarov, former Russian MP Natalya Burykina, disgraced banker Roman Stroykov and many others.
Tax-free import and purchase documents are used to legally transfer money from a Russian company to a foreign enterprise, avoiding extra fees and taxes. This is a common money laundering method around the world, also known as Trade Based Money Laundering, or TBML. Fake trade deals are used to legalise illicitly obtained funds.
An expert in foreign economic activity who wished to remain anonymous told Transparency International Russia about dubious deals on the purchase of injection moulding machines used to manufacture plastic products. In Russia, the import of these machines with specific characteristics is tax-free, which created the conditions for illegally transferring funds abroad.
A plastic empire
In 2019, a court in St. Petersburg sentenced former head of a little-known Saint Petersburg Investment Construction Company Aleksandr Skirdov, 69, to a five-year suspended sentence. According to the case materials, back in 2016-2017, the company transferred money to an Estonian firm Grizpol allegedly for the purchase of several Italian injection moulding machines. In reality, two Chinese-made machines crossed the border several times instead of the Italian equipment.
This deal to the tune of €7.3 mln according to the falsified customs declarations was approved by Bank Saint Petersburg. Sergey Serdyukov, the son of former Russian Defence Minister Anatoly Serdyukov, owns a 5.8% share in the bank, while Sergey Matviyenko, the son of Russian senate speaker Valentina Matviyenko, owns 2.7%.
Transparency International Russia has uncovered a total of 28 Russian banks that were involved in the money laundering scheme with injection moulding machines. Many of those banks have lost their licenses by now.
A chart showing how much money was transferred by Russian banks to foreign countries in the period from 2014 until 2016.
Over 18.5 bln rubles (over €288 mln) were transferred via unknown banks using this scheme. There is no information on those banks in customs databases.
A total of 130 Russian and foreign companies participated in the money laundering scheme with plastic manufacturing equipment.
The Russian firms that purchased the plastic manufacturing equipment were mainly shell companies registered in St. Petersburg, Moscow and Kaliningrad.
The foreign companies participating in the money laundering scheme were registered in 18 countries, including Cyprus and other offshore zones in Estonia, Latvia and the UK. Many of them were owned by Russian, Ukrainian and Belarusian citizens. Soon after the deals were concluded, the majority of those firms shut down.
Many of the Russian banks that carried out these operations have had their licences revoked since then.
Despite the fact that customs officials must verify the prices of imported goods, they passed through customs offices in Russia’s Far Eastern, Central, Southern and Northwestern Federal Districts without a hitch.
This gives us grounds to believe that either the customs officials were full participants in this scheme or at least willingly turned a blind eye to the sky-high figures stipulated in the customs declarations.
A chart showing which customs offices the money passed through
Like 80% of the deals uncovered during our investigation, the deal struck by Skirdov’s St. Petersburg company went through Russia’s Northwestern customs department and the Kaliningrad regional customs office, which used to form part of the Northwestern department until October 2014, when it moved under the jurisdiction of the Federal Customs Service of Russia.
While the majority of the deals were registered with the Kaliningrad customs office, the largest sum of money (8.1 bln rubles, or approximately €126 mln) that went through the Northwestern customs department was recorded in the Kingisepp customs office in the Leningrad region. Employees of these offices regularly turned a blind eye to trade-based money laundering, which points to the fact that there was a steady “channel” established to transfer money out of Russia through these locations.
A transnational leader
The largest sums that left Russia through the plastic money laundering scheme were recorded in March-April 2015. Over 3 billion rubles (over €46 mln) were paid for four injection moulding machines made in the late 1990s. The price of these ranges from €7,000 to €30,000. There is no way that these machines could cost billions of rubles (dozens of millions of euros).
Three Russian firms — BusinessCapital, TradeMarket and NordTech — paid these insane sums for the injection moulding machines. All of them have been liquidated by now. The first two companies were registered in Moscow on the same day, 9 July 2014, while NordTech was registered a year before that. The companies were located in residential buildings on the outskirts of Moscow and St. Petersburg in the so-called mass registration locations: hundreds of firms were registered there. The majority of them have since been liquidated, and their formal owners were simultaneously the owners of dozens of other companies.
For example, BusinessCapital was owned by 67-year-old Nina Lyubimova from Podolsk, a town in the Moscow region. She was also the owner or co-owner of 19 more companies, the majority of which have shut down by now. Her son Dmitry Lyubimov, who formally resides in Lyubimova’s neighbouring apartment in Podolsk, was deemed a mass owner in 2017 by the Federal Tax Service of Russia. The Russian Federal Bailiffs Service points out that Lyubimov has a pending debt of 32 mln rubles (over €540,000). Promtorginvest, a company headed by Lyubimov, owed 325 mln rubles (over €5.3 mln) to MAST-Bank. After the bank went bankrupt, Russia’s Deposit Insurance Agency sold this debt at an auction with Lyubimov’s approval.
These Russian companies transferred money for the injection moulding machines to Latvia’s SIA Veikals 512 and the UK’s Bringston Corporation LP, whose beneficiaries were not shown. Both companies were mentioned in the so-called laundromat investigations into a network of banks and companies involved in money laundering schemes. SIA Veikals 512 was founded by Latvian national Valentin Voytenko in 2014, and two months later, the company’s management was transferred to a Russian citizen Aleksandr Vasilyev. By the time the injection moulding machines were sold to Russia, the company was already owned by a British company Exportum LP. Aleksandr Vasilyev was a member of the company’s board. SIA Veikals 512 changed its registration several times, moving from one apartment in a residential building to another.
Exportum LP was registered in Scotland by two offshore firms: Corporate Management LTD and Capital Consortium LTD. Both companies founded numerous firms in England, with over 4,000 companies registered under the same address. The UK’s Bringston Corporation LP was founded by two Seychelles-based companies Lancaster Management Association LTD and AFK Business Management LTD back in 2012.
These offshore companies also founded the firm owned by the wife of Andriy Kravets, who used to serve as head of former Ukrainian leader Viktor Yanukovich’s presidential office. They also own numerous companies in the UK. In July 2019, Bringston Corporation LP switched owners to other offshore firms: Anglo Holding International LTD and Inter Holding LTD).
Under this scheme, the money went through Transnational Bank that failed to see anything suspicious with the sky-high sums stipulated in the deals carried out by dubious companies. The bank was controlled by the Kononov family: board chairman Sergey Kononov owned 44%, his wife Olga owned 5%. Shares in the bank were also owned by other board members, including Andrey Safronov (18%), Dmitry Paltov, Elena Skorik and Irina Petrova (10.4% each).
In April 2015, Russia’s Central Bank suspended the bank’s license for “carrying out suspicious operations of its clients on transferring large sums of money abroad.”
After the bank had lost its license and a temporary management team had taken the reins, it was discovered that the “capital hole” in the bank came up to 2.56 bln rubles (over €39 mln). Russia’s Deposit Insurance Agency noted that for two years until its license was revoked, the bank had submitted falsified reports to the Bank of Russia on its financial situation despite the fact that it had been essentially bankrupt all this time.
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The money laundering schэрррннпрнпррeme through falsified trade deals had existed for several years, despite the fact that these deals should have been controlled by several law enforcement and economic agencies. It is hard to imagine that the purchase of tax-free goods for large sums, the majority of which went through the same customs department, had been simply slipping through the officials’ fingers for all those years. Perhaps it all comes down to the beneficiaries of the deals and the banks themselves. You can read more about it in the Russian-language version of this article.
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