By John Helmer, Moscow

The collapse of Otkritie Bank last month is the largest Russian bank failure since the collapse of National Bank Trust in December 2014.  The Central Bank rescue of Trust made inevitable the much more costly bailout of Otrkitie, announced a fortnight ago on August 29,   charges Ilya Yurov, the former control shareholder and chief executive of Trust, speaking from exile in the UK.  

The reason, according to Yurov, is “the dishonest and deliberately malicious actions of the management and shareholders of Otkritie Bank, and also, unfortunately, a number of officials of the Central Bank of Russia and the Deposit Insurance Agency.”   The state organizations, Yurov alleges,  “continue to adopt dishonest practices when initiating their processes of ‘financial rehabilitation’ or the prevention of bankruptcy of the Russian banks, which inevitably lead to the violation of the rights of customers and bank lenders,  and significantly worsen the situation of the financial industry as a whole.”

Bank analysts and investors in the Russian banks say the combination of failures reveals grave weaknesses in the Central Bank’s supervision. “The black holes in the Russian banking system are expanding,” believes a London banking source. “The more money the Central Bank lends to stop bankruptcy, the faster the cash disappears. Sooner or later, the falling dominoes will come down on [Central Bank Governor Elvira] Nabiullina [lead image] herself.”

Between December 2014 and May 2015 the Central Bank loaned Rb127 billion ($1.7 billion) to Otkritie for the takeover of Trust in what Russian bankers call a “sanitation” – a state funded bailout, administered by the Deposit Insurance Agency (DIA)  which stops short of bankruptcy, court-ordered administration, or liquidation.

Then late last month,  after Otkritie depositors lost confidence in the bank and withdrew Rb693 billion ($11.6 billion)  from Otkritie accounts in June,  July, and August,   the Central Bank topped the senior management and board, froze transactions, and commenced fresh lending to preserve Otkritie’s solvency. In exchange for the new cash, the Central Bank now owns 75% of the bank’s shares. Over the coming weeks, from Rb250 billion ($4.3 billion) to Rb400 billion ($6.9 billion) will be the Central Bank bailout required, a deputy governor at the bank announced on September 1. 

Yurov has been charged in Russia with defrauding Trust, triggering the bank’s failure after related-party lending to a network of offshore companies, which Yurov controlled, drained the bank of its cash. Up to $1 billion has been reported as unaccounted for, if not exactly lost. Early this year two of Yurov’s subordinates at the bank were tried and convicted of embezzlement from the bank, using fake loan papers.  

In London and New York Yurov is counter-charging the now ousted chief executive and control shareholder of Otkritie, Vadim Belyaev,  and the next most powerful shareholder on the Otkritie board, Ruben Aganbegyan,  with conspiracy to attack Trust, push it into sanitation,  and withdraw Trust’s cash for themselves through Otkritie. Yurov is also accusing three Central Bank officials at the time of being participants in the cash-and-grab conspiracy.

“Yurov is not a credible accuser,” a Central Bank veteran commented in Moscow. “As the old Russian saying has it, Вор у вора дубинку украл – a thief is stealing a bludgeon from another thief.” (more…)

by Editor - Monday, September 11th, 2017
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From Dimitri Lascaris, Baltimore* (more…)

by Editor - Wednesday, September 6th, 2017
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By John Helmer, Moscow

President Vladimir Putin decided there shouldn’t be a centenary commemoration this year for either the February or October Revolutions of 1917.  Instead, he recommended confining the interpretation of the events to “experts”.  Before that, Putin confided publicly his opinion that the Bolsheviks had caused Russia to lose World War I by collaborating with Germany.   Never mind the view of the experts that the strongest source of public support the Bolsheviks had in 1917 was that they – unlike Tsar Nicholas  II, the Provisional Government which replaced him, Prime Minister Alexander Kerensky, or the socialists – wanted to stop the war, and also the home front violence on which the tsarist order depended to rule. Thinking about that, however, has political implications for the present; that’s to say, for the presidential re-election campaign which concludes in seven months’ time, on March 18, 2018.  

Violence, inequality, foreign intervention, national elections, civil war – that’s a highly inflammable combination in Russia, still.  The president hasn’t wanted to add fuel to the flames, and that’s why there is no public commemoration of the Revolution this year. No debate among Russian experts either.

(more…)

by Editor - Tuesday, September 5th, 2017
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By John Helmer, Moscow

A Toronto newspaper has revealed that Canada’s leading Russia hater, Foreign Minister Chrystia Freeland, had a deal with George Soros (lead image) to write his biography after she had lost her journalist jobs at the Financial Times and Reuters,  and before she started her run for election to the Canadian parliament.

On August 16 the Toronto Globe and Mail reported Soros is a “close friend” of Freeland, and that with her he has “very great hopes for Canada”. Before she decided to run for parliament, the newspaper says Freeland had a “deal” for “a sort of authorized biography of George Soros”.  Soros’s spokesman in New York, Laura Silber, refused to answer repeated questions last week for clarification of the terms of this deal or the compensation Soros agreed with Freeland. (more…)

by Editor - Monday, September 4th, 2017
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By John Helmer, Moscow

by Editor - Sunday, September 3rd, 2017
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On August 24, 1991, Marshal Sergei Fyodorovich Akhromeyev committed suicide. He had returned from his holiday at Sochi responding to the attempted removal of Mikhail Gorbachev from power. According to the reports of the time, he hanged himself in his Kremlin office, leaving behind a note. One version of what it said was: “I cannot live when my fatherland is dying and everything that has been the meaning of my life is crumbling. Age and the life that I have lived give me the right to step out of this life. I struggled until the end.”

by Editor - Thursday, August 24th, 2017
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By John Helmer, Moscow

Among the famous cautionary tales of a century and a half ago, the one about Augustus, the boy who refused to eat his parent’s soup for supper, is meant to inculcate obedience, with death as the alternative. This August for Russia readers you can have a third variant that’s both – do what you’re told, then die. (more…)

by Editor - Tuesday, August 1st, 2017
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By John Helmer, Moscow

In a ruling of Russia’s Constitutional Court, issued on July 18, fifteen out of sixteen judges ruled that a state of lawlessness now prevails in the country, in which the constitutional rights of citizens to have courts adjudicate government decisions, with evidence and reasoning, have been abolished. 

The court ruling came in the dismissal of an appeal by 20 members of the St. Petersburg legislative assembly and citizen organizations against the transfer of St. Isaac’s Cathedral from state property to the Russian Orthodox Church.  Led by the court chairman Judge Valery Zorkin,   the court has ruled “the complaint does not meet the acceptance criteria applicable to such appeals to the Constitutional Court”. There was no elaboration of the criteria or legal reasoning.   

Just one judge dissented. In a lengthy opinion, Judge Yury Danilov called the actions of the Church, the city government, and district courts in St. Petersburg unconstitutional and unlawful because they failed to produce and review evidence of how the cathedral transfer had been decided.  Danilov also attacked Zorkin and the other judges for violating the court’s own statutory rules because he said they had considered no evidence; evaluated no legal arguments; and given no reasons for their decision. The lower courts had acted prejudicially, Danilov wrote. The majority of the Constitutional Court had acted “prematurely”.

The ruling by Russia’s highest court cannot be appealed. It follows by six months the disclosure by President Vladimir Putin that he operates a special telephone line to Zorkin in which the court’s opinions are discussed in advance. According to Putin:  “As Mr Zorkin can tell you… I call him maybe not every day but fairly often to ask what he thinks about some regulation that is going to be adopted by legislators or the Government.”

This week,  a Kremlin spokesman was asked to say if the president had spoken to Zorkin about the St. Isaac’s Cathedral case. The spokesman replied he has “no information about that.”    

Zorkin met Putin on December 16, and then again on March 14.  Zorkin’s spokesman at the court, Marina Mavrina, refuses to say if the two of them have discussed the St. Isaacs case. (more…)

by Editor - Monday, July 31st, 2017
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By John Helmer, Moscow

President Vladimir Putin doesn’t know how to talk to Americans. He thinks forbearance is the trick.

The advisors Putin listens to, like Dmitry Peskov the mouthpiece and Alexei Kudrin the wannabe premier, know even less. Peskov thinks giving large sums of money to a Hollywood hack is the trick. Kudrin thinks taking big promissory notes from oligarchs is the trick.

None of them has read the greatest American comic writer of the 20^th century, James Thurber. His tale, “The Tiger Who Would Be King” (lead image), first appeared in the New Yorker magazine in 1927,   and turns 90 years old in September. Not knowing it is a handicap Putin shares.  The military junta now in charge in Washington – click for more about them — also haven’t read the tale. That’s because they lack the sangfroid and irony required by Thurber’s sense of humour.  The reason President Donald Trump hasn’t is because he can’t — he is witless.

Thurber’s moral is: “You can’t very well be king of beasts if there aren’t any.” (more…)

by Editor - Sunday, July 30th, 2017
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By John Helmer, Moscow

Dixy is the Russian supermarket chain which is proving that the secret to selling groceries across the country at an annual loss of billions of roubles is, er, TOP SECRET.  

This makes Dixy unusual because it is the only one of Russia’s top supermarket chains losing money. It is also the only one  whose shares are traded daily on the stock market with the legal duty to explain to shareholders why it is operating in the red.  

Dixy is controlled by the cigarette oligarch Igor Kesaev, who is chairman of Dixy’s board of directors.  He and his men have presided over loss-making at Dixy at the same time as the rival foreign and Russian-owned supermarkets are all reporting fresh profits for the half-year just ended, and profit growth for last year, too.  Kesaev has also been purging his senior management, as if they, not he, are to blame.  

Kesaev’s riches – Forbes puts him down this month as worth $2.4 billion – have produced a reputation for succeeding in business, not failing. His reputation is  controversial because it is widely reported that he has benefitted from the administrative resources and personal backing of high-ranking officers of the former KGB, the present FSB, and the Russian Orthodox Church.   Whether this is true, exaggerated, or untrue,  the secretiveness of Dixy’s financial reports doesn’t help to clarify.  

Bank and stock brokerage analysts, who follow Dixy’s rivals carefully and promote their shares, are fearful enough of Kesaev and his friends not to ask questions about his 10-year record in the company.  TOP SECRET inside Dixy has turned, accordingly, into a plummeting share price – down by 55% since March 2015. Kesaev’s stake in Dixy has lost Rb147 billion ($2.5 billion). This is the minimum estimated loss of his stock value, because the full size of Kesaev’s shareholding in Dixy is also, er, TOP SECRET. (more…)

by Editor - Wednesday, July 26th, 2017
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