- Print This Post Print This Post

By John Helmer, Moscow

One of the Central Bank of Russia (CBR) officials responsible for the state takeover and subsequent collapse of Trust Bank and Otkritie Bank has been removed from office for the second time in fifteen months.  Mikhail Sukhov (lead image, right), a deputy governor of the CBR responsible for regulating Russia’s biggest banks, was ousted from the Central Bank in October 2016. Hired by the state VTB Bank the following month, he was removed by VTB this week. 

A Moscow newspaper reports Sukhov was ousted because he was unable to perform his role at VTB “in strengthening mutual understanding with the regulator [Central Bank], which, in fact, was his key task.” The newspaper, reporting VTB sources, hints that Sukhov’s job was a sinecure to cover up what had happened at the Central Bank. VTB, the bank told reporters, “does not expect his responsibilities will be redistributed between the relevant chairmen.” 

Ilya Yurov, the former chief executive and control shareholder of Trust Bank, commented from London that Sukhov had “played an important role in Otkritie’s conspiracy” to take over Trust Bank’s assets.   Yurov’s version of where the $4 billion in money reportedly missing from the Trust-Otkritie combination since 2014 can be read here.  

Until Sukhov’s ouster, Elvira Nabiullina (lead image, left), who heads the Central Bank, had assigned him to  “coordinate and control the work of the Systemically Important Banks Supervision Department, the Credit Institutions Licensing and Financial Rehabilitation Department and the International Cooperation and Public Communications Department.”  Neither the CBR’s press office nor Sukhov commented at the time  on his ouster.  Sukhov and VTB are not responding to calls for comment on this week’s exit.

Last September, sources close to the Central Bank claimed Sukhov had been purged from the bank by Dmitry Tulin, the first deputy governor in charge of bank clean-up.  Read the story details here.  

Tulin, according to the insiders, had determined that some of the CBR regulators were too close to the banks which were failing because of self-dealing, fraud, and embezzlement. Tulin agreed with Nabiullina that he himself would take charge of “developing and implementing measures to mitigate systemic banking risks and to ensure banking sector consolidation; supervision of the activities of credit institutions, banking and financial groups.”   Under Tulin, Vasily Pozdyshev was assigned the job of  “interaction with the state corporation Deposit Insurance Agency on the activities of provisional administrations assigned to credit institutions prior to their banking licences revocation, developing and implementing plans for the Deposit Insurance Agency to participate in bankruptcy prevention measures at credit institutions.”

Left, Dmitry Tulin; right, Vasily Pozdyshev. Pozdyshev is a relative newcomer to the CBR, compared to Tulin, a 20-year veteran, and Sukhov, a 13-year veteran. Pozdyshev spent several years at BNP Paribas before being appointed in 2010 by German Gref, chief executive of the state Sberbank, to run the risk department at Sberbank; he and Gref are kin. Pozdyshev moved to the CBR five years ago. 

Sukhov was then let go, although no word that he had been fired or why was reported in the press.  Instead, the CBR leaked to Reuters that his departure was “part of a reshuffle of responsibilities among the bank’s management.”    The bank’s notice of the reshuffle was this

Sukhov’s removal took place in September 2016, and his exit became public on October 3.  Before that,  his role at at the CBR had been  “oversight of systemically important banks, the development and implementation of measures to raise the sustainability of systemically important credit institutions and the banking sector, licensing of activities of banks and their financial recovery, as well as the development of international cooperation and public communication.” 

On November 2, 2016, VTB issued a press release to the London Stock Exchange announcing Sukhov had been appointed to VTB  as  “Deputy President-Chairman of VTB Management Board”    No trace of this press release appears on the VTB website.  

The following month it became clearer what had happened to Sukhov and why. That is, it became clear in the files of a New York state court, not in the public records of either the Central Bank or VTB in Moscow.

According to the American court filing  by Ilya Yurov, the former head and owner of National Bank Trust (NBT),  Sukhov had been one of a group of Central Bank officials who had negotiated with Yurov for what began as an amicable process of recapitalization of Yurov’s bank, with financial backing from the Central Bank, the Deposit Insurance Agency (DIA) and Otkritie Bank. In Yurov’s court submission, he “and the Other [Trust] Executives reached an oral agreement with Defendants [Otkritie] on or about December 3, 2014 that they would sell their NBT shares to Otkritie for $50 million through the RCB [Central Bank] financial rehabilitation process.”

“In particular,” Yurov’s court claim went on, “the Agreement called for Yurov and the Other Executives to: (1) permit Otkritie to conduct due diligence of NBT’s books and records, (2) cause NBT to apply for financial rehabilitation with the RCB, (3) formally request in NBT’s application that Otkritie be named as the takeover partner, (4) make the same request informally to officials at the Russian Deposit Agency (‘DIA’) and the RCB, and (5) transfer their shares in NBT and other companies related to, affiliated with, or controlled by NBT to Otkritie. In return, Defendants [Otkritie] agreed to pay $50 million in two tranches—$10 million upon Otkritie’s appointment as the takeover partner, and $40 million within one year of its appointment. This two-tranche structure was requested by Defendants to smooth out their payment obligations.”

The December 30, 2016, court filing in New York doesn’t identify Sukhov by name, although it implies his involvement by association. “Between December 15, 2014,  and December 17, 2014, Yurov spoke with Alexei Simanovsky, the Deputy Governor of the RCB, and Yuri Isaev, the General Director of the DIA, and told them that NBT would apply for financial rehabilitation and was amenable to Otkritie’s appointment as the takeover partner. Yurov would have never taken any of these steps absent Defendants’ commitment to pay $50 million under the Agreement.”

At the time, Simanovsky (right) was Sukhov’s direct superior; officially, Sukhov took his running orders from Simanovsky on the CBR’s “financial rehabilitation of credit institutions”.  When Sukhov was ousted by Tulin and sent to VTB, Tulin also removed Simanovsky from line responsibility at the CBR, and given the job of “advisor” to Nabiullina. Simanovsky has worked at the Central Bank since 1986. With his wife, he is the fourth wealthiest official at the Central Bank, according to the statutory asset and income reports for 2016.   

Yurov says he himself had no “direct communications with Sukhov in 2014-2015. However, he [Sukhov] played an important role in Otkritie’s conspiracy.  It was Mikhail Sukhov who abruptly invited the President of NBT [Trust] Fedor Pospelov for an urgent meeting late at night, around 9pm, on Sunday 21 December 2014,  to announce the ultimatum:  if NBT’s CEO [Yurov] will not formally apply to the Central Bank for ‘rehabilitation’ first thing on Monday 22 December 2014, CBR will withdraw NBT’s banking license immediately. According to our oral agreement with Otkritie’s shareholders, NBT’s management should make application to CBR in the second decade of January.”

“It was Mikhail Sukhov who made public the first false statement regarding NBT’s ‘falsified reporting’, ‘negative net assets’, and ‘run on deposits’ on the very first day of the interim administration on 22 December 2014.”  

That day Interfax reported  Sukhov as announcing “the Bank of Russia will study the available facts for the purpose of making a decision on applying to the law enforcement agencies concerning falsification of the reporting of Trust Bank.” Sukhov told Interfax  Trust Bank had been “in the sphere of special attention of the regulator [himself] from the point of view of assessment of its financial state.” He also told Interfax he was “involved in the mechanism through which the DIA [Deposit Insurance Agency] is working as the temporary administrator [of Trust].”

According to Yurov, although the Central Bank’s organizational chart at the time placed Simanovsky  above  Sukhov, Sukhov’s power was “on a par with Simanovsky’s. One way or another, Sukhov was more involved with Otkritie.”

Yurov’s attempt to have the New York Supreme Court adjudicate his case against Otkritie failed on  November 8, last year, when Judge Charles Ramos said there were “serious questions about [Yurov and the New York court] having jurisdiction”.  Ruling the case should be heard in Russia, Ramos dismissed Yurov’s filing. 

Sukhov’s  last day at VTB was February 28, 2018.  His name was immediately erased from VTB’s website records. This VTB announcement of Sukhov’s post has been followed by an error notice as if Sukhov had not existed.

Source: https://www.vtb.com/group/management/guide/sukhov/

VTB was asked to clarify whether Sukhov had regularly attended his office during his fifteen-month appointment. The bank spokesman refuses to say.


Leave a Reply