A New Bank of Crooks and Criminals

A New Bank of Crooks and Criminals

Cyprus’s FBME scandal may be bigger than Panama Papers

Death on the street

Another businessman named Alexander Perpilichny fled Russia in 2010, to hand Swiss prosecutors details of the alleged involvement of senior Russian officials in the Hermitage theft, only also to end up dead, collapsing on a London street as he jogged. Although two autopsies turned up nothing, Perepilchiny’s insurance company ordered tests that detected a toxin from a Chinese plant called Gelseminium, which causes cardiac arrest, in his stomach. That form of poison is closely identified with Russian intelligence authorities.

Browder has continued to fight for the funds he insists were stolen from him, to no avail.  The Prevezon funds allegedly traveled through a series of front companies including Nomirex Trading UK, Balec Trading Ltd. Quartell Trading Ltd., of the UK, Baikonur Worldwide Ltd., Arivust Holdings of Cyprus and Tredwell Marketing Ltd., a BVI concern alleged to be linked to Michael Norbert Saab. The graphic below, also prepared by US government lawyers, shows the path which runs from the Central Bank of the Russian Federation eventually into Quartel, Baikonur, Nomirex and others.

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Arvest is headed by Vladien Stepanov, the ex-husband of Olga Stepanov, the head of the Moscow Tax Office. It is that tax office that is alleged to have been responsible for the trumped-up tax charges that allowed the government to seize the Hermitage assets.

The Office of Foreign Assets Control, an agency of the US Department of Treasury, or OFAC has placed sanctions on several of the depositors and transferees, including the Syrian Scientific Research Center – which is believed to have manufactured sarin nerve gas for Syrian President Assad, as well as Balec Trading, a front for the research center into which Prevezon funds flowed. Others sanctioned by the US are Piruseti Enterprises and Frumineti Investments Ltd., which also received funds from Prevezon. (United Nations inspectors after an alleged 2013 sarin attack on civilians by Syria removed what was said to be all chemical weapons from Syrian depots as a result of an agreement struck by US President Barack Obama.)

The Russians are coming

The Prevezon interests, however, are hardly the only Russians with funds in FBME. Much of the information comes from an explosive – and confidential – 63-page report prepared in 2013 by the international accounting firm of Ernst and Young and made available to Asia Sentinel. It indicates that Balec Ventures Inc., which in turn was linked to the Syrian Scientific Research Center, was also linked to the Hermitage theft through Quartell Trading Ltd., which is registered in the British Virgin Islands, and the UK-registered Nomirex Trading Ltd. All were involved as “intermediary offshore companies” in moving the funds out of Russia.

According to a CNN report on June 20, bank records and a contract show that a Russian mafia front called the Klyuev Group, consisting of high-level Russian businessmen who were involved in the Hermitage theft, agreed to pay Balec US$3 million, allegedly for high-end furniture. Balec is headed by Issa al-Zaydi, who was sanctioned by the Americans for his connection to the Syrian gas factory and was listed as one of FBME’s highest-level clients.

Individuals said to be connected to the Russian Mafia hold accounts for Altem Investment Ltd., and Zibar Mgt. Ltd.  Another was said to be Joseph Karam, identified as a “financial advisor for a major transnational organized crime figure who banked entirely at FBME Cyprus (and who) maintained a relationship with the owners of FBME.”

Karam was said to be close to Oleg Deripaska, a Russian billionaire who in turn is said be a member of Putin’s inner circle. Deripaska did business in the previous decade with Paul Manafort, formerly President Donald Trump’s campaign manager. Deripaska has offered to testify before congressional committees in exchange for immunity but has been turned down.  There is no indication that anyone connected to Trump has had anything to do with the Hermitage scandal,  Browder said.

The Russians also seem to have enjoyed extensive relationships with Lawrence Mafuru, the special administrator of FBME Bank Tanzania, who is currently under indictment for fraud related to FBME. He is so famous among Russian launderers that he has allegedly earned the nickname “Mr. Ten Percent.”

Another depositor is oligarch Mikhail Dmitrievitch Prokhorov, a Russian billionaire who ran Norilsk Nickel, the world’s largest producer of nickel, among other Russian businesses. Said to be Russia’s third-richest individual, he has since bought the Brooklyn Nets basketball team. The rapper Jay Z is a minority shareholder in the team.

Other depositors include Teodoro Obang, the president of Equatorial Guinea, and his son, who deposited US$70 million in 2011.  Another is Isabella dos Santos, the daughter of Angolan President Jose Eduardo dos Santos, who is said to be the richest woman in Africa.

Thousands of suspicious reports

As Asia Sentinel reported on April 18, hundreds of so-called SARS or Suspicious Activity Reports have been issued by other banks over FBME’s transactions, disclosing transactions that the institution knows or suspects to involve possible illegal activity. The US Financial Crimes Enforcement Network, or FinCEN, the US Treasury Department’s lead financial money-laundering combatant, reported at least 4,500 suspicious wire transfers to FBME through US accounts that were suspected of laundering as much as US$875 million between 2006 and 2013.

According to the ruling, FinCEN considered “shell company activities accounting for hundreds of millions of dollars between 2006 [and] 2014.” FBME is accused of maintaining accounts for the head of an international drug trafficking network as well as a Syrian proliferator of weapons of mass destruction and the former owners of Bank J Trust before it changed its name.

The Tanzanian head office of FBME, under the administration of Lawrence Nafuru, has continued to fight the ruling banning it from US global transactions. In an appeal brief filed in the US earlier this month, the bank’s lawyers stated that the bank was railroaded with evidence and allegations it did not have a chance to review, saying in a brief earlier this month that FinCEN has “frozen the bank out of the US financial system through an unfair, unlawful process.”

The Saab family seems to have even put the Tanzanian government of President John Magufuli at risk with the US government in the Tanzanian Central Bank’s quest to control FBME’s future liquidation through Mafuru and the Tanzanian Deposit Insurance Corporation, adding to problems the Tanzanians already have with Acacia Mining Plc and Barrick Gold Corporation. The Saabs are alleged to have ties to the Tanzanian mining industry and FBME Tanzania was marketed actively to local concerns.

*Corrected on 7 July 2017 to reflect new information

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