• USD89.70
  • EUR97.10
  • OIL82.15
  • 1833

"Once a week, Sobchak would arrive at the bank with a briefcase full of cash": Putin's involvement in the Magnitsky affair

The British House of Commons has recently passed a bill similar to the U.S. Magnitsky Act. Like its overseas counterpart, it outlaws “dealing with property, funds or economic resources owned, held or controlled” by people connected to gross human rights abuse. In the meantime, more and more evidence testifies to Vladimir Putin's personal involvement in the scams exposed by whistle-blower Sergei Magnitsky. The Insider has learned that Igor Sagiryan, one of the key defendants in the Magnitsky case, helped Putin launch a branch of a French bank, Crédit Lyonnais, in St. Petersburg back in 1991. Moreover, our sources reveal that state officials used the bank as a channel to move large sums of embezzled money abroad.

The possibility of Putin's involvement in the Magnitsky affair became apparent in April 2016, when the Organized Crime and Corruption Reporting Project (OCCRP) learned that an old friend of Putin's, cello player Sergei Roldugin, had been receiving money from an offshore company called Delco Networks SA around the same time when the company had been part of a giant embezzlement scheme based on income tax refund fraud. It was this very scheme that lawyer Sergei Magnitsky had exposed – and died in prison not long after.

The culpable Russian officials did the following: early in 2008, misappropriated federal money was moved abroad through Elenast and Bunicon-Impex SRL, two Moldavia-based entities. It was immediately transferred further, to Vanterey Union Inc. (Virgin Islands) and to Roberta Transit LLP (UK). Roberta Transit, in its turn, wired the amount to Delco. IMO, Roldugin's Panama-based offshore company, got $800,000 from Delco in payment for Rosneft shares.

This is just one example. Apart from Vanterey, three more companies that were mentioned in the Magnitsky case – Protectron Company Inc., Wagnest Ltd, and Zarina Group Inc. – had wired money to Roberta Transit as well.

Why were the funds transferred to Roldugin's offshore company? A man called Igor Sagiryan could shed light on the situation.

Renaissance vs. Hermitage

On December 11, 2007, Igor Sagiryan, the then chief executive of Renaissance Capital Ltd., met with William Browder in London and suggested that Renaissance could dissolve the companies that Hermitage had reported to the Investigative Committee as stolen the day before. Here is the account of their meeting according to Hermitage representatives:

"Without any comprehensible justification, Sagiryan offered to dissolve the Russian entities of Hermitage. Our company could not have been interested in his offer either in theory or in practice. Moreover, Hermitage executives concluded that his move had been a provocation. First, it was unclear how Sagiryan had learned about the incident with the companies in the first place (at that point, apart from Hermitage and the criminals, only law enforcement officers knew about the thefts and fake multi-million-ruble lawsuits filed against those companies). Second, it was unclear how the dissolution could help regain control over the companies, so his offer sounded ridiculous.

Many months had passed before we realized the real motives of Sagiryan's visit. The only thing he had wanted was to figure out if Hermitage had understood why the companies had been stolen. Learning that we had not known their actual goal must have alleviated his – and someone else's – concerns because, just a few weeks later, the audacious criminals misappropriated federal money, even though Hermitage had already filed a police report.

Later, we discovered that a similar tax return scam had taken place a year prior to the attack on Hermitage, with the participation of the same tax officials, lawyer Pavlov, and companies that had previously been under Renaissance's control."

At the meeting, Browder tried to record the conversation but failed: he thought Sagiryan must have been using a voice shielding device. Browder was flabbergasted by the fact, in addition to wondering who had given Sagiryan the power to resolve the conflict.

By then, Russian authorities had barred Browder from entering the country. (His problems had started soon after he had tried to identify the real owners of Surgutneftegas).

After the meeting, Sergei Magnitsky, who represented Hermitage as an auditor, gained evidence that Dmitry Klyuev, ex-owner of Universal Saving Bank, and his lawyer Andrei Pavlov had been involved in the company thefts. In 2002, they worked for Renaissance Capital as consultants at the invitation of Igor Sagiryan, the then CEO of Renaissance Capital Group.

Igor Sagiryan

In November 2008, BusinessWeek correspondent Jason Bush spoke with Magnitsky and released a story titled «Suspect Lawsuits Target Russian Financial Firms.» In the article, Jason presumes that the lawsuits were an attempt of getting millions of dollars in tax refund to companies connected to Hermitage Capital and Renaissance Capital. In 2012, Jason Bush confirmed that his investigation had been based on Magnitsky's testimony, but the lawyer had asked to keep his identity secret. He also pointed out that tax fraud allegations against Browder looked misplaced, considering that the scam had been mastered in 2006 with Renaissance Capital companies that Browder had nothing to do with. By contrast, lawyer Andrei Pavlov and Igor Sagiryan had been closely associated with the culpable entity. Renaissance companies got their tax refund from the budget in December 2006.

According to the Russian Untouchables documentary (presumably made by Hermitage representatives), it was Sagiryan who commissioned Dmitry Klyuev to assist in the tax refund scheme:

 "Dmitry Klyuev and his lawyer Pavlov orchestrated a fraudulent tax refund, stealing $107 million that had previously been paid in taxes by companies affiliated with Renaissance Capital Bank. In 2002, its chief executive, Igor Sagiryan, had hired Klyuev to set up tax refund for the company. In his interview to BusinessWeek in October 2008, Sergei revealed that all the tax frauds had been committed by the same group of individuals, who had embezzled billions of federal money over the span of several years. Immediately after the interview was published, Olga Stepanova, head of Moscow Tax Office 28, and her husband Vladlen took off for Dubai. On November 20, 2008, Igor Sagiryan got on a plane to Dubai as well in the company of Vladimir Dzhabarov, another Renaissance top executive. Three days later, the Stepanovs and Igor Sagiryan shared a plane back to Moscow. The three of them went through the passport control one after another. On the following day, Magnitsky was arrested."

Sagiryan does not deny having met with Browder. He justifies it as follows: in 2007, Magnitsky's colleague Jamison Firestone approached him and asked to help William Browder, head of the Hermitage fund, to solve problems with tax authorities and company thefts. Sagiryan agreed to offer legal advice on the condition that the head of Hermitage stops verbal attacks on the Russian government in public. «I didn't want anything to do with politics. I didn't want to be seen alongside Browder while he was shouting that Putin was a scoundrel and a thief. Had he committed to stopping the scandals, we would have sat down with my lawyers and remedied the situation eventually,» Sagiryan explained to RBC.

Bill Browder

 After appearing in the Russian Untouchables, Sagiryan confirmed to RBC that he knew Klyuev but denied having ever used his services for tax refunds. "They <the authors of Russian Untouchables – The Insider> wanted someone on the hook but failed to present any viable evidence. All they have on me is that I happened to be with them <members of the crime group – The Insider> in the same place at the same time. My guess is that a million other Russians were there with us. Had Viktor Bout been one of them, would it mean I was in arms trade? Had one of them been Osama Bin Laden, would that mean I had been part of the 9/11 attacks? The allegation is beyond ridiculous."

"Putin was a fixer – he covered up all Sobchak's deeds"

Igor Sagiryan was born in Tbilisi in 1952, graduated from Moscow State University and completed a joint post-graduate program of the Institute for U.S. and Canadian Studies and Harvard University. In 1987, he headed the department of press and information at the Committee for Youth Organizations of the USSR. In 1988–1989, he worked as a consultant at the International Department of the Presidium of the Supreme Soviet of the USSR.

In 1991, Sagiryan helped Vladimir Putin and Anatoly Sobchak launch a foreign bank subsidiary – second in St. Petersburg and all of Russia. Here is Sagiryan's own account of the events:

"Somehow I won over Crédit Lyonnais management. Anatoly and I flew abroad to meet the bank's chief executive, Mr Haberer. <The Insider's note: In France, Jean-Yves Haberer was charged with the embezzlement of millions of euros and sentenced to a fine.> He gave his consent. So I had to spend three months in St. Petersburg living at a hotel because everything halted whenever I left town. I realized I could not go away until the job was done. We were resettling the tenants from the building the city authorities had offered us. I kept nudging the municipal agencies for them to make any progress. That was how we launched Crédit Lyonnais in St. Petersburg."

 Crédit Lyonnais Russia, a subsidiary of the French bank, opened its doors in St. Petersburg in December 1991. The Central Bank of Russia authorized its launch with General License #2, after the famous BNP-Dresdner Bank, which was then represented by ex-Stasi officer Matthias Warnig (current CEO of Nord Stream AG). The media lauded the efforts of St. Petersburg Mayor's Office in the attraction of foreign banks as "groundbreaking experience."

Putin's personal involvement in the launch of their Russian subsidiaries was  revealed by Anatoly Sobchak in his interview to The New York Times not long before his death. «Mr. Sobchak and others say Mr. Putin had a major hand in every significant foreign investment in St. Petersburg in the early 1990s, from Coca-Cola to Crédit Lyonnais to Dresdner Bank,» says the newspaper.

Early in 1992, Igor Shadkhan released a film called Vlast («Power») – essentially, a long interview with Vladimir Putin he had recorded for the Russian Video – Channel 11 network. The film is not available online, but The Insider obtained a copy and uncovered some intriguing testimonies:

"At the Mayor's Office, while were were walking from one hall to another, I noticed a few representatives of a French bank you must have heard of. It's Crédit Lyonnais; they are about to open a branch in Nevsky Prospect. The management of the bank have decided to launch a subsidiary here. It will be the first foreign bank to become an active participant of the Russian banking system, so to say. But we have heard that Dresdner Bank is looking to start operating in Russia as well... They are studying the market and looking for lending opportunities. More than once have they approached me with a request for assistance. Their advent will secure stable, predictable economic conditions, in which local enterprises will thrive."

Issued on January 10, 1992, Mayor's Directive 39 authorized Crédit Lyonnais to use the building at 12, Nevsky Prospect, on the condition that representatives of the bank make necessary arrangements with existing lessees. In March 1992, Leningrad City Council annulled the directive because it had been issued without people's deputies' approval. However, after a short struggle between the Mayor's Office and the deputies, the bank kept the building, and the City Council was dissolved under the pretext of «fighting Communism,» which was in the way of capitalistic development.

However, the deputies who suspected corruption were right. The Insider spoke to Franz Sedelmayer, a German businessman whose private agency provided security for Crédit Lyonnais at the time. In 1991–1996, Franz Sedelmayer headed a security agency called Kamenny Ostrov, which had been in fact established by St. Petersburg Directorate of Internal Affairs. Vladimir Putin personally registered Kamenny Ostrov JSC at the Committee for External relations of St. Petersburg on September 23, 1991. In 1996, the company's premises were confiscated and its registration was declared unlawful. Sedelmayer fled from the county and appealed to Stockholm Chamber of Commerce.

«Crédit Lyonnais is among those who entrust their security to Kamenny Ostrov. The headquarters of the bank meet high security standards,» claims the agency's advertising brochure from 1994.

Among other things, the Crédit Lyonnais subsidiary in St. Petersburg was used for transfer of corrupt money abroad, says Sedelmayer. He shared the following with The Insider:

"At first, Putin was hostile to me. However, he soon realized that I wasn't a threat for the existing system and changed his attitude. Putin was a fixer – he covered up all Sobchak's deeds. Once every seven or ten days, Sobchak would arrive at Crédit Lyonnais – where Kamenny Ostrov, my agency, provided security – with a briefcase full of cash.

He needed the bank's services because he had faced difficulties at the customs when trying to carry a large sum of money abroad. So he tasked Crédit Lyonnais with the transfer. Eventually, it became my problem because I was in charge of security at the bank.

The management of the bank wanted to have their French employees carry money across the border. Someone made an arrangement with the customs, and the money was flowing directly to the Crédit Lyonnais head office. The French experts who worked for Crédit Lyonnais were apprehensive because they realized: if they get caught, they would go to a Russian prison – a bleak prospect for anyone. Therefore, we had to sit down with the deputy CEO and make sure that the officer responsible for those transactions, Mikhail Chesnokov, stopped the practice. Starting from that day, Chesnokov carried cash abroad personally.

When Sobchak left Russia, where did he go? To Paris – what a coincidence! Back then, I never heard anyone say that Putin accepted bribes. But he was definitely covering up Sobchak's activities so that Sobchak would not get in trouble with the law enforcement. It was apparent that he had not resigned from the KGB when he joined the Mayor's Office."

To train officers for his security agency, Sedelmayer rented a facility of Comprehensive School of High Performance Sports on Kamenny Island, which later served as headquarters of the Yavara Neva Judo Club (famous for Putin's active membership in it). «I recall hearing Rotenberg's name, but I'm not sure if I saw him there – we weren't acquainted. I never saw Putin or Timchenko,» says Sedelmayer.

Like ex-Stasi officer Matthias Warnig, who wokred for Dresdner Bank (and whom Sedelmayaer describes as «the most unpleasant Eastern German he has ever met»), St. Petersburg-based Crédit Lyonnais executives built their careers during Putin's office at the city administration. As for banker Mikhail Chesnokov, he found his place under the sun even after Anatoly Sobchak's untimely demise. Mikhail Chesnokov (now Michel, according to some sources), head of the Russian subsidiary of transnational corporation ABB Russia, has recently been listed as a defendant in a Swiss criminal case. The lawsuit was filed after Gazprom had bought equipment from Siemens by paying off to ABB Russia, which is registered in Cyprus. However, the Swiss court freed Chesnokov from the charges in 2016, after the Russians testified they had received the multi-million money transfer in payment for consulting services rendered.

"They may or may not have been laundering money"

Igor Sagiryan, who helped launch Crédit Lyonnais, made an impressive career too. After working for Renaissance Capital from 1999 to 2009, he took up the position of chief executive at Troika Dialog Group and went on to head the board of directors at Troika Dialog Bank (2009–2011). In 2012, he was appointed managing director of Sberbank CIB. At present, he is the chief executive of RKS Development Group.

In his conversation with The Insider, Sagiryan denied his personal acquaintance with Putin.

"Back then, in St. Petersburg, I never met Putin, not even once. I met him later, in Moscow, in the company of bankers and investors, after Khodorkovsky was arrested. As for his office in St. Petersburg, I know he was Sobchak's deputy, but we never crossed paths. I worked for Bain, an American consulting firm. We had a meeting with Sobchak once. We started looking for prospects and learned that Crédit Lyonnais might be interested. So we sat down with them and offered our consulting services. After they were registered as a legal entity and got their license from the Central Bank, I never saw them again. Our task was to organize the launch of their subsidiary, which we did. Notably, the bank did not start operating until a year later. The building in Nevsky Prospect was renovated, and the bank welcomed its customers a year later. I've never been to the place after we organized its launch. How are you going to spin it? That they were laundering money? Well, they may or may not have been doing it."

He also denies that Sobchak could have participated in fraudulent schemes:

"I don't know anything about Sobchak's black, green, or whatever-color assets. I think he was a man of integrity. His contribution to the development of democracy in Russia is momentous. Whenever I did business with him, everything was clean and free from any corruption. He was always willing to cooperate."

In the meantime, Sagiryan admits to knowing Klyuev:

"We've met. So what? When he was working for Renaissance, I was making dumplings in London. I have a restaurant there. Browder accused me of barring him from entering Russia, but how could I have done it? I hardly ever visited Russia at the time."

Sagiryan has his own version of why he turned up at the passport control on Olga Stepanova's heels – a mere coincidence, says he:

"Their core evidence is that Dzhabarov and I were on the same flight from Dubai to Moscow as that woman, Olga Stepanova. But it was during November public holidays, when half of Moscow flies out to Dubai. I went there to open my restaurant, and a friend of mine tagged along to keep me company. <The Insider: Ping Pong, Sagiryan's restaurant, opened in Dubai Mall on October 30, 2008.> So what if we shared the same flight? I still don't know her. Why go to Dubai with your counterpart instead of meeting them here? Why not wait until they return? To my knowledge, none of Renaissance companies worked with Stepanova's tax office – whatever its number was."

As to why Sagiryan learned about Browder's predicament so quickly, he parries that bad news travels fast:

"Gangman Browder accuses me of being on top of things. Who in all Moscow hadn't known it by then? When special police forces were searching Browder's office near Paveletskaya metro station, everyone knew it. When Renaissance was being searched, and six of our employees were questioned eight times or so, everyone knew it. Everyone in Moscow who had anything to do with finance knew what will happen even before the police came to Jamison Firestone in Paveletskaya office. You can count local investment banks on the fingers of one hand.  Of course I knew. Just like everyone else."

Sagiryan's business contact in banking has anonymously shared the following: "I doubt he is a close acquaintance of Putin's. Sagiryan's field of expertise is very specific. The administration resorted to his services for complex fraud schemes or to remedy financial failures, like attempts of bringing Browder to heel. Reading Browder's book, I was taken aback by his demonstrative surprise at the fact that he had failed to record the meeting with Sagiryan. All of Moscow knew he was KGB – with the apparent exception of Browder."

 However, the banker pointed out that Vladimir Dzhabarov of the Federation Council is «much closer» to Putin because he is «a known shadow lobbyist.» Dzhabarov refrained from any comment to The Insider.

Vladimir Dzhabarov

A retired FSS major general, Vladimir Dzhabarov became a Jewish Autonomous Oblast representative in the Federation Council late in 2009. Prior to that, he had worked in investment companies Troika Dialog and Renaissance Capital alongside Sagiryan as a government relations officer. To remind you, according to the Russian Untouchables, it was Dzhabarov who flew to Dubai with Igor Sagiryan on November 20, 2008, supposedly, to join tax official Olga Stepanova and her husband at the time, Vladlen Stepanov. Stepanov's former business partner, Alexander Perepilichny, provided Hermitage with the details of Vladlen's Credit Suisse accounts, where at least part of the embezzled money is believed to have been transferred. Alexander Perepilichny later died a mysterious death. In 2011, Switzerland froze Stepanov's accounts and launched an investigation, which is still in progress.

Subscribe to our weekly digest

К сожалению, браузер, которым вы пользуйтесь, устарел и не позволяет корректно отображать сайт. Пожалуйста, установите любой из современных браузеров, например:

Google Chrome Firefox Safari