CORRUPTION
For years, Russia has been using a unique scheme to siphon off and launder money: fictitious deals were made through fly-by-night companies to purchase duty-free equipment - injection molding machines (machines for making plastic bottles). From 2014 to 2016 alone, more than 41 billion rubles was siphoned off from the country in this manner. The schemes involved people associated with Putin's chef Yevgeny Prigozhin and the Russian security forces.
This story was prepared by The Insider in cooperation with Transparency International Russia, Transparency International UK, Transparency International Czech Republic, Novaya Gazeta Europe, Meduza, and Eesti Päevaleht.
The money laundering scheme involved 28 Russian banks, through which at least 124 suspicious transactions were conducted over three years. 11 banking licenses were revoked after that, sometimes right after the payments were made.
In the same club with Shoigu
The largest sums - a total of $51 million - in dubious thermoplastic transactions went through Transnational Bank in March-April 2015. The money was transferred ostensibly for the purchase of four 1990s models of injection molding machines which actually cost half a million rubles or less. At a price almost a thousand times higher, they were “purchased” by three Russian fly-by-night companies, registered at locations used for mass company registration. The companies themselves have already been liquidated. The money went to shell companies in Latvia and the UK.
Immediately afterwards, the Central Bank revoked Transnational Bank's license for “conducting dubious operations which involved withdrawing money abroad in significant amounts.” A criminal case was opened against the bank's president for falsification of financial statements. But a few months later the case was closed.
Interestingly, the bank's shareholders included Andrei Safronov, Elena Skorik and Irina Petrova, who had held senior positions in the Ministry of Internal Affairs' hockey club and then moved to the hockey club “Dynamo”. The latter had Interior Minister Vladimir Kolokoltsev, Defense Minister Sergei Shoigu, FSB Director Alexander Bortnikov, and former FSO Director Yevgeny Murov on its Board of Trustees. Currently the bank and its main shareholder Sergei Kononov have problems with the law again. But those problems connected with a different charge, a fraud case. Read more about the Transnational Bank fraud in the Novaya Gazeta article.
Serdyukov's son and a failed scheme
Around the same time, in the spring of 2015, $9.8 million in payments for injection molding machines was transferred through Bank St. Petersburg, co-owned by the son of former Defense Minister Anatoly Serdyukov, Sergei Serdyukov, and the son of Federation Council Speaker Valentina Matvienko, Sergei Matvienko.
On one occasion, money was transferred from a fly-by-night company, a certain St. Petersburg Construction Investment Company (PSIK), to Estonia. But the scheme malfunctioned: after a tax audit, a criminal case was opened. As a result, only the owner of the fly-by-night company, pensioner Alexander Skirdov, was prosecuted, with several other shell companies registered to his name. In 2019, the Moscow District Court of St. Petersburg sentenced Skirdov to five years of suspended imprisonment.
Money for Putin's chef
It was also found out that the scheme to siphon off funds abroad was used by one of the nominees of Putin's chef Yevgeny Prigozhin, a certain resident of St. Petersburg Vitaly Murentsov. In April-July 2015, three fly-by-night firms transferred $30 million through Promsvyazbank as payment for five used injection molding machines.
Three firms, including the Estonian firm Kaupleader, turned out to be the sellers and, consequently, the recipients of the money. The company had been registered in February 2015 just a couple of months before the deal, with Murentsov, CEO of the Prague branch of the Seychelles company Linburg Industries, being its CEO as well. The firm owns Prigozhin's Hawker 125-800B business jet, which has fallen under Western sanctions. Murentsov also heads a number of other companies associated with Putin's chef that have been implicated in the “Moldovan Laundromat” - the largest money-laundering scheme in the CIS to get money out of Russia. According to Novaya Gazeta and OCCRP, money from government contracts and bank assets was moved into Moldova as loans that in reality had never been issued. Court orders were used as the basis for the money transfers. From 2011 to 2014, at least $21 billion left the country in this manner.
A total of 130 Russian and foreign companies in 18 countries were involved in dubious transactions with injection molding machines. Most of them were fly-by-night companies that were liquidated after the transactions.
Since the customs value in all those cases differed by a factor of a hundred or even a thousand from the real value, it can be assumed that the customs at least turned a blind eye to the existence of the scheme. It is worth noting that 80% of the transactions passed through the North-West Customs Directorate, namely through the customs posts in the Kaliningrad region. Back in 2015, the Accounts Chamber auditor Sergey Shtogrin pointed out in his reports that the Kaliningrad customs from 2013 till the first quarter of 2015 submitted 755 declarations which appeared to overstate the value of goods by a total of $7.3 billion.
This article has been written with the participation of Ilya Shumanov.