By John Helmer, Moscow
The Central Bank of Russia has called for state prosecutors in Moscow to investigate its most costly bank takeover and bailout, the three-year refinancing and reorganization of National Bank Trust and Otkritie Bank, on suspicion of multibillion-dollar fraud by Vadim Belyaev, the former chief executive and leading shareholder of Otkritie.
In fear of arrest, Belyaev has reportedly taken refuge in the UK. According to a press leak  from the Central Bank on Wednesday, “Vadim Belyaev, the owner of Otkritie Bank, is hiding in London now and doesn’t intend to return to Russia. The [Central Bank] financial regulator sees no reason for cooperation with Belyaev any longer, and is ready to consider his activities at Otkritie as fraud. At the request of the deputy head of the Central Bank, Vasily Pozdyshev, the General Prosecutor is studying transactions of Otkritie involving the [largescale] withdrawal of capital.” The Central Bank source reports “the weight of evidence suggests that 127 billion rubles [$2.2 billion] allocated to Otkritie for the rehabilitation of Trust have been despatched, not to their intended purpose but in an unknown direction.”
Other Otkritie Bank shareholders involved in the transactions now under investigation by the prosecutors include Vagit Alekperov of LUKoil; Ruben Aganbegyan of the Moscow Stock Exchange, and Alexander Mamut, an investor in the Russian insurer Ingosstrakh and the Polymetal goldmining group.
Today the Central Bank refused officially to confirm or deny the details reported so far. Alexander Dmitriev, spokesman for Belyaev and the Otkritie board before its takeover by the Central Bank, also refused to respond to the reported allegations.
One of the allegedly suspicious transactions the Central Bank press leak has identified is Belyaev’s purchase from Alekperov of the Russian diamond-mining company Arkhangelskgeoldobycha (AGD) and its Grib diamond mine for $1.45 billion; the transaction in cash was announced by LUKoil on December 2, 2016. The deal price, for which Belyaev is suspected of using the Central Bank’s bailout funds, was reportedly “five times greater than the market value of the asset.” According to LUKoil, “Goldman Sachs acted as exclusive financial advisor to LUKoil” in the deal.
Otkritie has not announced who its financial advisor was. In the press release, an Otkritie spokesman claimed the purchase of the diamond mine was a “strategic investment in an attractive asset with potential for further development. This acquisition diversifies Otkritie’s range of business interests as the largest privately-owned financial company in Russia.” The full story of the diamond deal and the over-pricing was reported a month ago; click to follow the details.
Follow the Central Bank’s involvement in the takeover and rescue of Otkritie, which commenced on August 29, 2017, together with estimates of how much cash the Central Bank has put into the rescue while leaving Belyaev in management and accounting control; click .
For the earlier history of the collapse of Trust Bank in December 2014, and its subsequent takeover by Otkritie, read this archive . The account of what happened from former control shareholder and chief executive of Trust, Ilya Yurov, who has been accused in the Moscow and London courts of defrauding his bank, can be read in his New York state court dossier . Yurov’s court papers charge three Central Bank officials with conniving with Otkritie shareholders to steal his bank, and then the Central Bank’s bailout funds.
Through his lawyers in the New York court case, Belyaev has replied that after the Central Bank and the Deposit Insurance Agency (DIA) had authorized Otkritie’s takeover three years ago, their subsequent investigations revealed “widespread wrongdoing by Mr Yurov and by the two former NBT shareholders… Nikolay Fetisov and Sergey Belyaev (who is not related to me)…” He has called Yurov’s operation of Trust a “Ponzi scheme with a fancy name.”
At the LUKoil press office in Moscow, Alekperov was asked to comment on the reported investigation of his sale to Vadim Belyaev of the Grib diamond mine. There was no reply.
In London Yurov (right) responded to this week’s Central Bank  leak by saying this confirms what has long been known in the market about the collapse of both Trust and Otkritie. He charges the Central Bank with conspiring in the unlawful diversion of funds, and with attempting now to cover its tracks. “The whole issue of the ‘rehabilitation’ of Trust Bank was engineered maliciously by Vadim Belyaev and his colleagues from Otkritie in a conspiracy with top executives of the Deposit Insurance Agency (DIA) and the Central Bank of Russia (CBR). Their one purpose was fraudulent — to funnel all the DIA and CBR financial support to the sole benefit of Otkritie’s shareholders, and to extract as much cash and assets from Trust as possible for the benefit of the same shareholders.”
“The character and size of Otkritie’s fraud are now clear to everybody,” Yurov added. “The Otkritie holding company purchased full shareholding and operational control over Trust Bank for around $140,000 (Rb10 million) in April 2015. Since then, as of the end of August 2017, they funneled not less than $4 billion (Rb228 billion) of long-term state funding — including $2 billion (Rb126 billion) which had been provided by the Central Bank as ‘financial support’ to Trust Bank. Instead, this money went to the benefit of the Otkritie holding by itself. In addition to these astronomic sums of money, Otkritie stripped assets from Trust by compelling Trust Bank to pay about $700 million (Rb40 million) for purchase of equity in Otkritie Bank just days before the collapse of Otkritie.”
“The extraordinary fact is that in all these years neither journalists with few exceptions, nor the Central Bank, nor the state law enforcement agencies paid any attention to the clear evidence of fraud committed by Vadim Belyaev and his co-conspirators. The vast majority of the illegal siphoning of money in favour of Otkritie’s shareholders was sanctioned or supervised by DIA or CBR.”
“With this in mind it’s quite difficult for me to take the latest Central Bank statements on Vadim Belyaev at face value. I find it very hard to believe that only now, in mid-December 2017, has the Central Bank become aware of Vadim Belyaev’s dishonest practices. Everybody even distantly involved with the Russian financial industry in recent years is well aware that the CBR and DIA were major contributors to the growth of Vadim Belyaev’s banking empire since 2011; for example, loans to Otkritie were 80% of all the loans provided by the CBR to the Russian banking industry in 2014-2015, and that includes VTB and Sberbank. Otkritie was given the prizes of eight [bank] ‘rehabilitations’ to execute; there was the notorious deal with Rosneft’s debt in 2014, and in 2015 the famous deal for the buy-back of Russia’s 2030 bonds .”
“So there can be two interpretations of why this week the Central Bank has publicly announced it is cutting its relations with Vadim Belyaev . The first is that the Central Bank has decided to try distancing itself from Otkritie’s financial disaster, and will attempt to play the scapegoat game again — ‘we did not have the proper instruments to control Otkritie; Belyaev was solely responsible for the collapse; he was keeping us misinformed all these years’.”
“The second interpretation is that some Russians are trying to make Vadim Belyaev the ‘victim of Putin’s regime’, and use the story to avoid a second wave of American sanctions to be announced in February 2018.”