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Russian Laundering Machine

MONEY LAUNDERING SCHEMEOffshore, proxy run companies figured in the laundering of money in the Hermitage case

The money allegedly stolen by Russian authorities through Hermitage Capital passed through a series of front companies including Nomirex Trading Ltd. Nomirex is part of an international money laundering platform identified by the Organized Crime and Corruption Reporting Project (OCCRP) and used by several major criminals.

The Hermitage Capital case caused an international furore after Hermitage’s lawyer Sergei Magnitsky was allegedly tortured to death by Russian authorities after he named high ranking members of the tax authorities in the scam.

 In all, US$365 million passed through the Nomirex bank account, according to account statements obtained by OCCRP. Most of the money is unaccounted for and comes from phantom shell companies or even Asian criminal groups.

I Feel That I Was Framed

According to Hermitage Capital Management Limited, the money taken in their name by Russian authorities flowed to Swiss accounts through a chain of phantom companies, including Nomirex from UK and Bristoll Export from New Zealand. Those companies in turn received money from a Moldovan company named SC Bunicon-Impex SRL. The shell companies hid the real perpetrators of the crime.

One of the key companies was Nomirex. Nomirex is tied to Tormex through at least one financial transaction between the two phantom companies.

According to the UK business registry, Nomirex was established in August 2006 and was wholly owned by a Cyprus company named Voilent Trade Limited. Voilent Trade Limited in turn is wholly owned by a company from Belize – Trade Invest System Ltd. According to UK business registry, the same Trade Invest System Ltd from Belize was at some point director in at least 250 UK companies, half of which no longer exist.

The agent which registered Nomirex was Meridian Companies House Limited, an international financial company, which specializes in the incorporation and management of firms and asset protection. The director of Meridian Companies House is Erez Maharal who is a specialist in offshore management.

Maharal told OCCRP in an email that "criminals all over the world use modern technical and law instruments and we can’t do anything with this… It is possible to limit the use of such systems, but it will cause horrific troubles" to the majority of normal businessmen.

"Everyone can buy a company through the internet without saying anything about himself," said Maharal.

Maharal says that he really doesn’t know anything about Nomirex’s beneficiaries, bank accounts or why the company filed no reports to the companies’ regulator. "We just registered the company, and nobody ever makes us aware what is going on with the company in future … I feel that I was framed."

In July 2009 a yoga instructor from Cyprus Lana Zamba became the new director of Nomirex. Zamba, who is likely just a proxy, simultaneously was director of dozens of companies in Cyprus, UK and Eastern Europe. Zamba, however, fronts for significant financial and political interests. She is currently director of Eurobalt Limited, a UK company that owns controlling interest in Altkom OOO, a road construction company based in Donetsk (Ukraine). Altkom is a one of the major contractors for the Euro-2012 football championship and has received hundreds of millions of dollars in no-bid contracts. Altcom’s preferential treatment on lucrative contracts and its non-transparency led to a series of critical reports in the Ukrainian press most of which speculated that high-ranked politicians were behind Altkom.

While Nomirex’s annual reports from 2007 until 2009 described its business as "inactive," OCCRP found that dozens of firms from all over the world transferred at least US$365 million to Nomirex’s Latvian bank account in Trasta Komercbanka in Riga, Latvia. The majority of the transactions relate to Russia.

Millionaires for $3

Two-thirds of the total US$365 million received by Nomirex came from Treyd OOO, a small St. Petersburg construction company. Treyd was established in April 2006 and had an account in the Savings Bank of Russian Federation (Sberbank), the largest state-owned Russian bank. In January of 2007, Treyd deposited US$7.5 million into Nomirex’s account. Over the next two months Treyd made regular transfers to Nomirex, 76 in all, totaling US$234 million.

According to the Russian Law on Money LaunderingHOA2Le Duc Hoa and his group were indicted for laundering €600 million. and Terrorist Financing, banks must check each transaction of more than 600,000 rubles (US$20,000) as well as each party in the transaction. The law also says banks must check for suspicious deals, deals without any economic basis and repeated transactions. The Treyd transactions should have set off alarms at Sberbank bank since transfers were made nearly every day, one of the participants was inactive and Treyd was a small company. The fact that transfers involved a Latvian bank was almost enough to raise suspicion.

A representative from Sberbank would not discuss the transfers saying the bank could not provide information on private accounts. Sberbank provides its services in a "strict correspondence with the Russian law" and sends all the information about suspicious transactions to the Russian Federal Service for Financial Monitoring. 

The Service’s Deputy Head Alexander Klimenchenok said in a letter to OCCRP that his agency does monitor such transactions but could not provide information on any specific cases.

According to the Russian business registry, Vladimir Voronov from St. Petersburg is the sole shareholder and director of Treyd. It was formed with a share capital of 10,000 rubles (US$300). According to police records, Voronov was convicted of selling heroin in 2000 and illegal possession of three guns in 2001. OCCRP got in touch with Voronov and he confirmed his criminal past. As for Treyd, Voronov explained that in 2006 he was having trouble finding a job and went to the private company Regional Law Center Severnaya Stolitsa (Northen Capital) OOO. According to Voronov, he was offered the job of nominal director and shareholder in a number of firms. He received US$3 for signing company documents at the notary, and another US$3 for establishing a company in the tax office. There are 27 companies registered by Voronov in the corporate registry including Treyd.

Voronov told OCCRP that he was promised a share in each company which would be sold to clients, but, according to him, none of the companies had been sold and he had received nothing.

The Center was established in September 2004 but it was liquidated in March 2007. The sole shareholder and director of the company was Igor Blinnikov. OCCRP found a court decisionfrom 2010 where Igor Blinnikov was interrogated by tax authorities as the shareholder of a paper company, which had been used to avoid taxes. According to the decision, Blinnikov admitted that he had agreed  to become a nominal shareholder of a number of firms and signed some documents on their behalf in exchange for money.

Another company with the same name – Regional Law Center Severnaya Stolitsa, was set up in 2005 and again liquidated in 2010.

In 2006, the third company with same name – Regional Law Center Severnaya Stolitsa – appeared. According to the Russian commercial registry, it is still active, although its sole shareholder, Sergei Lubnin, died in March of 2007. OCCRP obtained a court decision from 2009 where tax authorities checked a number of phantom companies which were used to avoid taxes. The owner of one of the companies was Sergey Lubnin. Tax authorities, seeking to interrogate him, sent a request to St. Petersburg authorities and were told that Lubnin died in March. 2007. Meanwhile, according to the Russian commercial registry, he is still a general director of 97 companies.

Voronov told OCCRP that he was not the only one who had been used by the Regional Law Center Severnaya Stolitsa as a nominal shareholder and director. "Every day they hired a minimum of ten new nominees," says Voronov. OCCRP found five court decisions, where phantom companies were used to avoid taxes and the nominal owners said they were hired by the Regional Law Center Severnaya Stolitsa.

According to a transcript from one of the files, a "Mrs. Kudryavtseva" worked in the Center as a nominal director in 2004 and 2005. Her job was to establish different firms and she personally signed the documents for which she received 100 rubles [US$3] for each firm. Two employees of the firm, Sergey and Andrey, assured her that everything was legitimate. Kudryavtseva’s name was used to register about 100 firms.  

Voronov also mentioned Sergei and Andrei as the coordinators of all nominees. According to Voronov they didn’t disclose their surnames. A woman in one of the court decisions mentioned an entrepreneur from St. Petersburg Andrei Okruzhko as the one who had hired her. The same man with the surname Okruzhko also signed a labor agreement with Vladimir Voronov.

OCCRP found a photo of Okruzhko and showed it to Voronov, but he said that it is not the one who had signed the agreement with him and had managed all the nominees in the firm. OCCRP tried to reach Okruzhko, but his phones and phones of the Center were dead.

Asian Organized Crime

An ongoing case in a Romanian court points to Nomirex's connections to an Asian group indicted for laundering more than €600 million (US$800 million) and for organized crime activities in Romania.

Romanian prosecutors seized computers belonging to the group and found out that the financial organizer of the group, a Vietnamese citizen by the name Ngo Trong Tu, wired money to the same Nomirex bank account in Trasta Komercbanka, Riga, Latvia.

The investigators say that the group is coordinated by Hoa Le Duc, another Vietnamese national. In fact, the Romanian authorities monitored the activities of the Asians since 2007 and in February 2010 arrested Le Duc, Ngo Trong Tu and other eight other people of Chinese, Vietnamese and Romanian origin. They were all placed in pre-trial arrest for almost a year. They were subsequently released pending a judgment and forbidden to leave Romania. The indictment,  obtained by OCCRP indicates that between 2006 and 2010 the group sent €600 million (US$800 million) out of Romania. According to the document, Le Duc Hoa’s group was importing miscellaneous merchandise from China, Hong Kong and Vietnam through the Black Sea port of Constanza in Romania without paying import taxes.

The goods were then sold and the money was taken out of Romania in cars driven by a Moldovan citizen named Vasili Badika. From Moldova, the money was then moved to Ukraine and subsequently introduced in the Latvian banking system by Ngo Trong Tu. Besides Nomirex, the group used five other companies established in New Zealand by the Taylor/GT Group: Hector International Ltd, Keanu Group Ltd, Mervex Ltd, Piemonte (NZ) Ltd and Ferratex Group Ltd. All of them had bank accounts at the same Latvian bank where Tormex held its accounts: Baltic International Bank from Riga. The first four companies are represented by Stella Port Louis, the Seychellois proxy used in hundreds of GT Group registrations.

Hoa Le Duc met with OCCRP reporters in August in Bucharest. He said he met with Ngo Trong Tu and with another Vietnamese resident of Russia, Chu Hai Ha. Hai Ha was also indicted in Romania for money laundering, tax evasion and organized crime activities. The three Vietnamese businessmen have companies in Russia that make food products and are partners. They have university degrees from Russia and have lived there for a long time.

Le Duc is not that talkative when it comes to the financial transactions conducted by his group:  "It's an ongoing court case. I don't want to comment. Let’s say that some partners ask us to move some money from one place to another. We help them, but we don’t know where the money is. It’s not our business. We’re just doing a favor. Of course, this is an imaginary example."

According to the Romanian Prosecution's indictment, the Le Duc Hoa group specialized in moving large volumes of money through offshore circuits in exchange for two per cent cut.

Producers of Bricks

From January until March 2007, a US registered company named Ziteron Ltd from Portland, Oregon transferred approximately US$10 million from its account in Moscow Nefteprombank to its correspondent account in a German subsidiary of VTB Bank AG, one of the largest Russian state-owned banks and then on to Nomirex’s account in Trasta Komercbanka Riga. According to the Oregon commercial registry, Ziteron Ltd recorded its principal place of business as being in the Ukrainian city of Lvov. The president of Ziteron Ltd is Oscar Augusto Cedeno, 45, a lawyer from Panama who once worked for the Ministry of Foreign Affairs of Panama.

In a letter to OCCRP Cedeno claimed that "the Panama law firm, where I’m the director, has never established managed and has never been the registered agent for Ziteron Ltd."

Cedeno said a Russian client named Oleg Wol, who was an ex-employee of a Russian law Company, appointed him as a nominal director in Ziteron Ltd.

"At the request of Mr. Oleg I signed three letters of attorney. So I claim that I have never known of any bank accounts, I never managed them and didn’t have access to them and I don’t know anything about any transactions made by the company."

Oleg Wol, 36, is a lawyer who worked for a number of medium sized law firms in Moscow. OCCRP tracked him down and he said he was just a mediator in establishing Ziteron. Wol said that some years ago a man asked him for help in establishing an offshore company. "His name was Maxim. I didn’t ask his surname and I don’t know it now. Ziteron Ltd was established for him, and I didn’t know about his purposes", said Wol. He said he tried to get in touch with Maxim, but none of his phones worked. Wol gave OCCRP five mobile phone numbers which had allegedly been used by Maxim. None worked. Other contacts of Maxim included a corporate email at Nefteprombank, which was used in the transactions from Ziteron Ltd to Nomirex.

Nefteprombank is a Moscow-based bank, which was established in 1992 to provide financial services for Russian oil companies. Today the bank is controlled by its president Ivan Gubenko.

 In an official letter to OCCRP Gubenko claimed that the bank supports attempts to prosecute money laundering but that legally the bank has no right to give any information about transactions and clients to third parties, except corresponding governmental agencies.

Cedeno is a partner with Maxim Stepanov, head of Midland Consult.  

Midland Consult together with GT Group Limited established a New Zealand company Bristoll Export, which was mentioned in Hermitage Capital’s money laundering suspicious activity report to Swiss authorities as a company involved in money flow of US$230 million stolen from the Russian budget.

The GT Group, run by the Taylor family in Auckland, is a notorious company that has been shut down and investigated by New Zealand authorities for its role in setting up companies for terrorists and organized crime groups.  

According to the New Zealand company registry, Bristoll Export’s registered office was listed as the offices of the GT Group Limited, and Michael Taylor was the one who filed the reports to the New Zealand corporate regulator. Sole shareholder of Bristoll Export was Midland New Zealand Limited, whose director from 2008 till 2010 was Olga Demosthenous from Cyprus, banking advisor in Midland Consult. In 2010 Olga Demosthenous was replaced by Jaime Augusto Cedeno from Panama. The company was closed in September 2011.

Edward Aslanyan, director at Midland Consult, said while his company originally registered Bristoll Expert, they soon handed it off to GT Group. "We don’t know by whom it was used and in what way. Imagine that we are a plant which produces bricks. Somebody buys bricks to build a house. But another bought the brick, wrapped it in the paper and hit somebody’s head. Who is guilty? The producer of the bricks, or the one who hits the head? The same with us: our bricks are companies which we sell", says Aslanyan.

Stail

A Moscow company named Stail OOO sent more than US$53 million to Nomirex in 2008. Stail had an account in VTB-24, a large state-owned Russian bank. The first payment from Stail of US$1.2 million occurred in July 2008. According to the financial details listed in the transactions, the money was sent as payment "for construction materials", which Stail allegedly bought from Nomirex.  During the same time, Nomirex describes its business in its annual reports as "inactive".

If Stail really bought any materials from Nomirex, it would have been mentioned in the databases of the Federal Customs Service as an importer of products to Russia. OCCRP checked a list of importers but could not find Stail. The legality of the deals between Stail and Nomirex should have been checked by the state-owned VTB-24 as required by law.

Artem Bochkarev, the chief spokesperson for VTB-24, confirmed to OCCRP that Stail was the bank’s client. According to Bochkarev, VTB-24 checked the company and stopped further transactions. Further information is private, said Bochkarev.

According to the Russian commercial registry, Stail was established in January 2008.  Ekaterina Simchenko is listed as the sole shareholder and Alexei Volodkin as the general director. Simchenko in July 2007 became the member of the board in the Magadansky bank, according to minutes of a shareholders meeting. At the end of 2007 the Central Bank of Russian Federation, which is a supervisory agency for all Russian banks, liquidated the license of Magadansky. According to the press-release of the Central Bank, from July till August 2007 he violated the law on money laundering and terrorist financing. OCCRP tried to reach Ekaterina Simchenko but she did not answer her phone. Stail was closed in June 2011.

 

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