- Dances With Bears - http://johnhelmer.net -

CYPRUS, RUSSIAN FRAUD INVESTIGATIONS CLOSE IN ON LEONID LEBEDEV – US BANKS ACCUSED OF MONEY LAUNDERING

DwB_1708b

By John Helmer, Moscow

Cyprus Government investigators have opened an inquiry into ex-Senator Leonid Lebedev (lead image) for transfers into a hidden Cyprus trust of $150 million in cash allegedly stolen from the regional Russian electricity company TGK-2 and a related company, TKS. Investigations by Russian prosecutors and the Ministry of Internal Affairs (MVD), reported to court hearings in Yaroslavl, have counted almost $240 million Lebedev has been accused of stealing through a chain of companies associated with his Sintez group, ending up in Cyprus. A Russian Government request for the Cypriot authorities to open Lebedev company registers and tax filings has been confirmed as triggering criminal checks on the island.

The Cyprus authorities are also checking how Lebedev managed to obtain a Cyprus passport in 2011; and the source of the funds he pledged to place in Cyprus to meet the €5 million requirement for buying citizenship [1]. That was a year before Lebedev swore in the Limassol District Court that he was a Russian citizen, without assets in Cyprus, and “impossibil[ity] to travel to Cyprus”. His testimony was in response to a lawsuit by Commerzbank of Germany charging Lebedev with $240 million in loan fraud. At the time, Lebedev was a Politically Exposed Person (PEP), according to Cyprus and European Union regulations, and subject therefore to much tougher official checks [2].

Lebedev also hid his Cyprus nationality from the Federation Council, where he was the senator for the Chuvash Republic between 2002 and April of this year. For more on his dismissal, read this [3].

Documents uncovered in Cyprus reveal that three banks based in New York – Citibank, Bank of America, and HSBC – were engaged by Imperium Services Ltd., a Cyprus trustee company, to receive Lebedev’s cash and open deposits for a Cyprus entity he called North Sintez International Trust. At opening, Citi (below, left) was holding $98.4 million of Lebedev’s money; Bank of America (right), $17.9 million; and HSBC of New York, $33.4 million.

1708_1

In their originating transactions with North Sintez, and in their subsequent payments of interest on these funds, the American banks appear to have violated US money-laundering laws and regulations. The banks also appear to have failed to uncover evidence that Lebedev was obliged to report his income to the US Internal Revenue Service. According to unverified sources, the 59-year old Lebedev, who emigrated [4] from Russia to the US in his twenties, and lived there in the 1980s and early 1990s, held a US passport between September 2001 and September 2011.

An international police source has disclosed that Lebedev was issued a Cyprus passport on March 29, 2011. Official Cyprus sources will neither confirm nor deny the record.

Recently, the office of the Attorney-General of Cyprus, Costas Clerides, was officially requested to investigate cashflows through a group of Cyprus-registered companies controlled by Lebedev, as well as his personal and trust bank accounts, and real estate. The request was made by the Ministry of Internal Affairs (MVD) in Tver region.

Clerides, a Supreme Court judge, took the chief prosecutor’s office in 2013 after his predecessor, Petros Clerides (unrelated), was pushed into early resignation following a number of corruption scandals. Costas Clerides [5], who opened his term with a public commitment to attacking public corruption, has clashed with both Cyprus President Nicos Anastasiades and Deputy Attorney-General Rikkos Erotocritou in a case involving alleged bribery and manipulation of the Cyprus legal system for the benefit of Russian businessmen claiming [6] a $300 million fortune.

1708_2

President Nicos Anastasiades (right) signs the appointment of Attorney-General Costas Clerides (left) on September 15, 2013.
Source: http://www.financialmirror.com/blog-details.php?nid=1157 [7]

Lebedev, Cyprus lawyers allege, has manipulated local officials and the courts to shield his offshore fortune. The MVD request identifies more than ten Lebedev companies, including Sintez Green Energy Cyprus Ltd., Divent Enterprises, Negusneft Corporate Ltd., Rustemburg Co. Ltd., Rusenergo Fund Ltd., and Lopilato Investments. Divent is one of the Lebedev companies named in a lawsuit filed a few weeks ago in the Eastern Caribbean Supreme Court, charging asset stripping and fraud. For details of this case, click [8]. Negusneft is a small oil producer in the Khantiy-Mansiisk region, whose dwindling fortunes can be followed here [4].

Lopilato and Lebedev himself were defendants in a 2012 case brought by Commerzbank of Germany. The bank accused Lebedev of devising a scheme to pass liability for a $240 million line of credit from one company to another; taking the cash for himself; leaving the bank empty-handed. The details were reported here [9]. Commerzbank sought a freeze of $180 million in Lebedev assets in Cyprus, and worldwide.

Lebedev’s law firm, Nicos Anastasiades & Partners, testified in a Cyprus court in April 2012 that Lebedev could not testify himself “because he is a foreigner and he resides in Russia…. It is impossible for [Lebedev] to travel to Cyprus and to swear an affidavit due to his restricted time.” The Anastasiades law firm claimed the freeze order should be cancelled because Lebedev had nothing to do with the affair. “He did not have nor does he have any proprietary or other interest or relation with [Lopilato]…[He] is not subject to the jurisdiction of the Cyprus Courts, nor does he have any assets in Cyprus.” According to the lawyers, “the fact that he is a Senator and a political person excludes” his involvement in the business of TGK-2 or the Commerzbank loan. “He has not committed any fraud and conspiracy.”

Lebedev won that legal round; Commerzbank lost. But MVD prosecutors investigating TGK-2 have continued compiling a detailed dossier. This names Lebedev as the principal beneficiary of another larcenous scheme for taking gas without paying for it; selling it to regional consumers of heat and hot water; and making off with their payments. The modus operandi looks the same – the legal source of the cash is cheated of repayment by a chain of fronts and intermediaries through which the mastermind assigns and reassigns the right to collect the debt; takes the money and conceals himself. According to Lebedev, he is blameless in business practice; innocent of the allegations; and the target of kompromat from his enemies.

On May 19 presiding judge Tatiana Kuznetsova in the Yaroslavl Arbitrazh Court case, No. A82-12211 / 2011, ordered [10] the production of a MVD report on TGK-2’s cash operations. A court record shows the report was lodged on July 7 [11]. A court source confirmed today that the document is now in the registry, but is open only to parties in the case. The MVD dossier for the criminal investigation of Lebedev, for which the report is a summary, carries the criminal case number 0270614.

arbitr [12]

CLICK TO ENLARGE [12]
Source: http://kad.arbitr.ru/card/2c2454b0-5025-4fb5-bc68-5f0fd5e3fc64 [11]

In an uncorroborated photocopy of this MVD document, Russian prosecutors allege that Lebedev diverted billions of roubles of payments by consumers of heat and hot water , as well as inter-company payments for plant and equipment leases, services and supplies through a company called Tver Utility Systems (TKS). The till at TKS was then emptied, the cash transferred to companies with the control stake in TGK-2, starting with Lebedev’s Russian asset holding Kores Invest. TKS was left behind in debt to the regional Gazprom subsidiary, Gazprom Mezhregiongaz Tver, and in bankruptcy. The money went offshore, where the MVD investigators have now asked the Cyprus police to search for it in the bank accounts of Lebedev-linked companies.

Andrei KorolevThe court-appointed administrator of the TKS bankruptcy, Georgy Busygin, is one of the parties in the Yaroslavl court seeking a judgement that the bankruptcy was premeditated fraud. Alleged accomplices of Lebedev in the scheme identified in the court papers are Andrei Korolev (right) and Anatoly Brenchagov.

Korolev moved from running the Sintez group to be chief executive of TGK-2 in 2013. He can be followed here [4]. Brenchagov is the chief executive of Sintez, and a board director at TGK-2.They profess innocence. A management spokesman at TGK-2 says his company “is not related to TKS.” TKS spokesman Elena Mazurova is no longer contactable at her former official telephone number. TKS’s press office and website have been dismantled.

In July, according to a local press report [13], armed police acting on instructions from the Tver region MVD conducted a search of TGK-2’s offices. A public statement was released, explaining that “within the framework of a criminal investigation pending before the investigative unit to investigate organized criminal activities the Investigation Department of the Russian Interior Ministry in the Tver region carried out searches in the offices of TGK-2. [This is in connexion with] a criminal case on the evidence of premeditated bankruptcy and abuse of power of TKS and TGK-2.” Author of the release was Vadim Levshin, head of press for MVD in Tver.

Yaroslavl

In four hearings last month, Judge Kuznetsova heard applications by bankruptcy administrator Busygin, TGK-2, and Gazprom Mezhregiongas Tver contesting each other’s proposals for independent experts to review the evidence of alleged fraud [14]. TGK-2 – that’s Lebedev, Korolev and Brenchagov – want their expert to assess the MVD and other evidence tabled in court. Busygin and Gazprom object. Busygin has disconnected his mobile telephone and cannot be contacted for comment.

In a parallel proceeding in another Yaroslavl arbitrazh court, directed by Judge Natalia Kartashova, minority shareholders in TGK-2 accuse Lebedev of shareholding fraud and using the Cyprus courts to legalize his scheming. That case is No. A82-13348/2013. On June 10 Judge Kartoshova agreed, ruling the Cypus court had been hoodwinked, and that Lebedev had unlawfully manipulated shareholdings he controlled in TGK-2 through two Cyprus companies, Kardikor Holdings and Bitar Holdings. Bitar owns an electricity generating plant in Skopje, Macedonia; for background, read this [15]. A proposed sale of the asset for more than $200 million was blocked by the Cyprus proceedings for what the Russian court has decided is another scheme by Lebedev to prevent the cash returning to Russia to cover TGK-2 debts.

The next hearing in this case has been scheduled in Yaroslavl for September 22. Cyprus sources expect the role of local lawyers and the courts in the affair to come under fresh scrutiny.

Lebedev’s lawyers have been able to protract the Russian court cases for years now. According to an account of the shareholder fraud scheme, published [16] in the Moscow Times in 2010, “Ever since [Lebedev’s privatization takeover ofTGK-2 in 2008], Kores has created legal diversions to avoid meeting its obligations. Kores owes PCM and other minority shareholders more than $300 million. But Kores effectively sued itself, obtaining an injunction blocking the previously agreed buyback. Appeals have since been repeatedly adjourned on flimsy technicalities.”

PCM stands for Moscow and London-based Prosperity Capital Management. Weeks ago, it commenced a Caribbean court action because PCM believes this is the only way to go after the money which Lebedev has allegedly transferred offshore. If the court rules in favour of PCM, enforcement against Lebedev’s assets in the US, UK and Europe is likely to follow. For the full story, read this [8]. Because Lebedev was able to slip out of a Cyprus court freeze of his assets in the Commerzbank case, Russian prosecutors are now seeking Cyprus Government intervention in the affair of TGK-2 and TKS.

Russian and international bankers, who have worked with Lebedev in the past, say the pressure of this hot pursuit has motivated Lebedev to launch fresh cash collection cases of his own. One for €675 million against German electric utility RWE was started [17] by Rustemburg Co. Ltd; that is one of the Cyprus entities in the Sintez group on the Russian investigation request to the Cyprus Attorney-General. The Essen regional court dismissed the claim in March [18] of this year.

Another Lebedev claim was launched last year in a New York state court against Len Blavatnik and Victor Vekselberg; that’s for $2 billion. For more details, click [3]. This is facing dismissal when Justice Saliann Scarpulla returns with a verdict later this month. This week in New York an international banker commented: “Lebedev is clever at Russian scheming, not so clever in international schemes. This is catching up with him.”

Introducing his claim in the New York Supreme Court last October, Lebedev called himself “a Russian citizen and a resident of Moscow.” Among the allegations in the court papers Lebedev says Blavatnik and Vekselberg “played a shell game with [him]”. They respond in court papers that after years of negotiating they paid Lebedev a full and final settlement of $600 million through company names and go-betweens he nominated. They charge Lebedev with double and triple-dipping, using the New York court to defraud them. Lebedev claims not to have anything to do with the companies which received the payoff. Lebedev’s New York court claim doesn’t mention Cyprus where the evidence of his beneficial ownership is now being uncovered to support the proceedings in Russia.

The role US banks Citi, Bank of America, and HSBC, are playing to move Lebedev’s money and to conceal his beneficial ownership will become clearer to the US authorities when the Cyprus Attorney-General and MOKAS, his unit for investigating money-laundering, complete their investigation. HSBC [19] has already paid more than $2 billion in fines in other cases of money-laundering, and it is under constant monitoring by the US Department of Justice and the US Treasury’s Financial Crimes Enforcement Network. So too are Citibank and Bank of America [20].