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The Audiencia National (the Spanish National Court in Madrid) continues hearing «the case of the Russian mafia.» The Insider has covered the details of this case, which was initiated to investigate the money-laundering activities of Gennady Petrov's crime group in Europe. Its extensive list of defendants includes high-profile Russian politicians, businessmen, and officers of security services, such as Duma deputy Vladislav Reznik, head of Investigative Committee Alexander Bastrykin, chairman of Sberbank's Executive Board Herman Gref, billionaires Oleg Deripaska and Iskander Makhmudov, and so on. In court, the prosecutors have reported being threatened by the mafia. The Insider offers you a detailed report of the proceedings with relevant background facts.

How it all began

In 2008, Spanish authorities carried out «Operation Troika» against three Russian crime lords – the leaders of Petrov-Malyshev organized crime group. They arrested Gennady Petrov (who was also a minority shareholder at the Rossiya Bank, also known as «Putin's friends’ bank») and Alexander Malyshev. The third suspect, Sergei Kuzmin (another minority shareholder at the Rossiya Bank), avoided arrest. According to the Spanish law enforcement, who had wiretapped Kuzmin's phone, he was late for the flight because he had got drunk at the airport, but it was too late to cancel the warranted arrests. At present, Kuzmin is on an international wanted list. Malyshev cut a deal with the investigators, pleaded guilty, and, with his assets confiscated, returned to Russia. By contrast, Gennady Petrov was unexpectedly released on bail (to the shock and indignation of the prosecutor's office) and returned to Russia as well, to his St. Petersburg apartment on Kamenny Island, where his neighbors are former members of Ozero, Putin's dacha housing cooperative in the 1990s – what a coincidence! However, he had not reached an agreement with the investigators and is viewed as a fugitive.

Meanwhile, the trial goes on. Late in 2015, the Madrid court received an indictment for 26 defendants. The proceedings had been scheduled for the summer of 2017, but were postponed: the official pretext was one of the defendants' illness, but the real reason was the scandal around the prosecutor, José Grinda, who was accused of pedophilia in May 2017. Allegedly, he had sent an obscene tweet to an underage girl, and her parents went to the police. The outrageous accusations were voiced by Ignacio Peláez, a legal attorney with ties to Tambovskaya crime group, to our knowledge. Grinda is convinced that the attack on him was financed by Leonid Reyman, former Russian minister of communications. He sued the Spanish media that had been the first to spread the slander and Peláez himself.

And now the court has finally got to the essence of the case. A three-judge bench headed by Ángeles Barreiro started hearing it on Monday. For now, only 18 out of 26 defendants are being tried. The list includes Vladislav Reznik, a State Duma deputy for United Russia and author of 259 bills, and Antonio Fortuni, whom the investigators believe to be Sergei Kuzmin's straw man. Fortuni is expected to appear in court via video conference from Marbella, but the others, including Reznik, are present in person.

The prosecutor’s office has requested 8.5 years of prison for Gennady Petrov. However, it is not common practice in Spain to pass the verdict in the absence of the defendant. For most defendants, including Reznik, the prosecutors have requested a 5.5-year sentence and a 100-million-euro fine for money laundering and participation in organized crime.  For the two defendants who have agreed to cooperate with the investigation, shorter jail sentences are in the works. According to the investigators, Petrov's companies in Spain have helped launder a total of over 50 million euros since 1998. Their last deal alone – the purchase of a house on Mallorca – amounted to 7 million euros, wired from five entities registered in the Virgin Islands.

Day 1

The prosecutors opened the proceedings by presenting additional evidence: they stated they were being threatened and cited the letter from the Spanish prosecutor general to the minister of internal affairs about the threats issued to prosecutor José Grinda and his family, including his underage child, by Ilya Traber, representative of Tambovskaya crime group and owner of a Mallorcan villa. The letter is dated October 7, 2016, and mentions the possibility of introducing enhanced security measures for the prosecutor.

The defense attorneys were vocal, if not belligerent: they claimed the court was illegitimate, the charges were vague, and the rights of the defendants had been violated through their representation as dangerous criminals. The charges allegedly lacked specifics and sometimes did not apply to the defendants. «Why is Antonio Fortuni being held accountable for Sergei Kuzmin's transactions? Where is Sergei Kuzmin himself? Have him brought in,» demanded Antonio Fortuni's DA. (As a reminder, Sergei Kuzmin has been put on an international wanted list and is now in Russia.)

«The charge of participation in an organized crime group will not bear examination, and the trial is politicized.» Many of the DAs made claims to that effect, but the most eloquent was Mario Martínez, who is defending Juan Untoria Agustín – a lawyer who, according to the investigators, invested money of questionable origins in Spain on behalf of Gennady Petrov. «Petrov is a man of integrity, and Mr. Reznik is a Russian lawmaker – suspecting him of criminal activities is unthinkable. He has not committed any crimes in Russia whatsoever,» pointed out Martínez.

"Mr. Reznik is a Russian lawmaker – suspecting him of criminal activities is unthinkable"

Their claims culminated with the presentation of documents obtained from the Russian law enforcement, translated and apostilled, to certify that Petrov, Traber, Reznik, and Diana Gindin are not being prosecuted and have no criminal records in Russia. The documents were not read aloud; they were submitted to the judge and the prosecutors for inspection.

The judge was unimpressed by the defense attorneys’ emotional statements. At some point, she snapped: "You are wasting your breath trying to explain the charges to me. Save it for the Russian prosecutor's office, which keeps sending us letters about the violation of the defendants' rights."

(In the article "Putin's 4 percent: How criminal kingpins with Kremlin connections launder oil money in Monaco", The Insider covers how the Russian prosecutor's office reported «violation of Ilya Traber's rights,» effectively acting as his defense attorney in Spain – which the Spanish party objected to.

The DAs seemed unperturbed by the judge's attitude and kept insisting, almost shouting at times, that their clients had been deprived of the right to attorney because they fail to understand the vague, politicized charges. Other arguments were scarce. In particular, the attorneys referred to the 2007 amendments to the Spanish anti-money laundering law and the necessity of avoiding double jeopardy (a reference to the money laundering case instigated in Marbella against some of the current defendants and dismissed in 2002).

After the defense abated, the prosecutor's office in the face of Juan Carrau (Mallorca) and José Grinda (Madrid) made their statement. Juan Carrau stated that the prosecutor's office held evidence of money laundering and creation of an organized crime group. He also expressed his surprise at the fact that the defendants had refused to accept wiretapped telephone conversations as evidence: if this was the case, why would they procure an apostilled document from the Russian investigative authorities to certify Traber's innocence? By doing this, they effectively recognize the recordings as evidence because Traber is only mentioned there.

Prosecutor José Grinda added that the investigators had obtained hard evidence of serious crimes, including homicides, committed by the two crime groups involved in the case, Tambovskaya and Izmailovskaya, with some of the evidence supplied by Russia. Furthermore, the money-laundering activities were not confined to Spain because the structure of Sergei Kuzmin's organizations encompasses Spain, the UK, Liberia, and Panama, while Malyshev also laundered money in Cyprus. However, as the prosecutors pointed out, the current trial concerns only the defendants present in court and the deeds committed in Spain. The prosecutors rejected accusations of having a political agenda, emphasizing that they had been after owners of luxurious properties purchased with money of illegitimate origins. The fact that some of them turned out to be politicians had nothing to do with it.

At the end of the proceedings, the judge had a severe coughing fit and took a long time to recover. «Polonium!» a spectator joked. It could have been funny, had it not been for the fact that Alexander Litvinenko had been poisoned not long before he was scheduled to testify against the very same Tambovskaya crime group in Spain. (For details, read our article "Putin and mafia: Why was Alexander Litvinenko killed?")

In an interview to Spanish journalist Sebastian Rotella, Grinda shared that he had spoken to Litvinenko in person in London in 2006 and persuaded him to testify against the Tambovskaya gang. Litvinenko was poisoned a week prior to the scheduled deposition at the Spanish prosecutor's office that had been sanctioned by the investigating judge. Notably, before Andrei Lugovoi became a prime suspect in Litvinenko’s assassination case, he had linked Litvinenko's problems to «the Spanish mafia.»  Another witness, Mikhail Monastyrsky, who had volunteered to testify about the ties of Tambovskaya gang with special services, was run over by a bulk cement truck in France.

Vladislav Reznik chose to refrain from comment before the final verdict; the only thing he told the journalists during the break was that he intended to prove his innocence because he believed in the objectivity of the Spanish court. At the very beginning of the trial, Alba Garcia Lopez, the Spanish representative of Mr. Reznik and his wife, Diana Gindin, stated to The Insider in writing:

"With regard to the oral hearing at the Audiencia National, the party of Mr. Vladislav Reznik and Mrs. Diana Gindin would like to state the following:

They are profoundly aggrieved about the unfairness of the situation they have found themselves in due to a ridiculous misunderstanding, which, as we hope, will be put to end as soon as the court passes the verdict. We are particularly concerned about the possibility of this incident developing along the same line as many other, for instance, the case of Alexander Gofstein, a Russian attorney who had been deprived of his rights for five years without reasonable grounds until he was acquitted after a lengthy and strenuous litigation.

Similarly, Mr. Reznik and Mrs. Gindin have been involved in the investigation of criminal activities they had nothing to do with apart from holding the same citizenship as the individuals who may have been connected to criminal organizations. Thus, both of them have been influenced by a litigation that is full of inaccuracies, lacks consistent evidence, and has impeded the normal development of their public and private life.

There is no evidence to prove Mr. Reznik's or Mrs. Gindin's illegal connections to members of any crime group. Both of them are professionals with years of experience, and all their properties have been duly registered, including public records, considering Mr. Reznik's parliamentary activities.

In view of this, the only piece of evidence is based on an erroneous hypothesis made by a courtroom interpreter. As independent experts will show during the proceedings, the defendant's voice does not even match the voice on the recordings, and the experts have identified its true owner by matching the samples to a variety of radio broadcasts.

We hope that, after these long months, the judges will come to an understanding that there is no evidence to link my clients to any criminal activities and declare them innocent."

In reality, the transcripts of the wiretapped conversations mention the name «Reznik» a total of 68 times (the conversations in question date back to 2008 – the period relevant to the investigation). This includes Reznik's own conversations with Petrov and references to him made by other defendants. Thus, Petrov says «We're meeting Reznik tomorrow,» and even passes the phone to him once. The conversations also show that Reznik and Petrov use the same yacht and private jet. The Spanish investigators believe that Reznik was lobbying Petrov's candidature for a variety of governmental and law enforcement posts and participated in some of his money-laundering operations (the specific transactions are listed in the indictment). The Insider has already covered the story in detail.

Reznik's defense strategy was based on the claim that the voice in the recordings was not his: he refused to come to Spain and provide his voice sample at the request of the national prosecutor's office, saying he could do it at the Russian Prosecutor General's office. The Spanish side rejected this option. Eventually, Vladislav Reznik appeared in court in person.

Notably, the Spanish investigation files indicate that Reznik is a close acquaintance of Ilya Traber, whom Spain has put on an international warrant in connection with the same case. Ilya Traber, Vladislav Reznik, and Nail Malyutin were neighbors on Mallorca – and presumably accomplices in the dealings of the same gang.  The investigators also believe that Herman Gref had a hand in the political support of the gang. In the recordings, he is referred to as «Hera» and "Herman."

Herman Gref and Vladislav Reznik

Day 2

At the beginning of the trial, defendants Mikhail Rebo and Leonid Khazin were examined under the simplified procedure – for having pleaded guilty and cutting a deal with the investigators. Mikhail Rebo, a German national, admitted to participation in money-laundering activities in the 1990s in Germany and Cyprus on behalf of Alexander Malyshev through Peresvet and other companies. The prosecution requested a three-year sentence and a 1.6-million-euro fine for him. After that, Rebo was excused from the courtroom on the grounds of poor health.

Leonid Khazin admitted to running a number of companies on behalf of Sergei Kuzmin. The companies in question were registered in Spain, Panama, Liberia, and the UK. When asked whether he had known that the companies were transferring money obtained through Sergei Kuzmin's criminal activities, Khazin said «yes» and was dismissed to his seat. For him, the prosecution requested a sentence of one year and seven months.

The examination of the next defendant, Yuri Salikov, goes on for a couple of hours.  Unlike his predecessors, he fails to specify where and when he met Gennady Petrov – back in 1989 in the USSR or in the 1990s on Mallorca. He is neighbors with Petrov, he says, but they are just acquaintances. Further on, he admits they both hold shares of the same real-estate agency. Mallorcan prosecutor Juan Carrau asks Salikov how he earns his living. Salikov says he is a «developer.» «How many houses has your company built?» asks the prosecutor. Salikov replies they have built three, but eventually it comes down to one – a villa with two swimming pools, where Salikov himself lives.

At this point, it turns out that Salikov was previously convicted for money laundering in Marbella, which attracts particular scrutiny of the prosecutor: was there any chance that the activities in question financed Salikov's luxurious Mallorcan residence? When shown Malyshev and Petrov's common photos, Salikov insists: «We weren't friends, just acquaintances.» As for Kuzmin, Salikov «hasn't seen him for 20 years.» The prosecutor inquires whether Petrov has introduced him to another neighbor, Vladislav Reznik, who lived on Mallorca too. Salikov replies in the negative.

He also denies having known about Malyshev's two homicide conviction and Petrov's problems with the law in the Soviet times. When it comes to specific companies, such as Kanton, Salikov expresses astonishment: to his knowledge, the company did not engage in any activities, and he just happened to know its Russian CEO.

Salikov's notebook features the phone number of an «Iskandar,» which matches that of Iskander Makhmudov (whom the investigators affiliate with Izmaylovskaya gang, as The Insider wrote earlier). The prosecutor inquires whether it is true that Iskander Makhmudov paid a bail of 600,000 euros for Salikov's brother, Igor, who has recently been released from custody. Salikov denies it, saying it was his family who procured the money. He claims his income is based on «export-import operations in Germany» that he engaged in earlier (he does not specify the goods he exported).

The prosecutor attempts to pose a question about Salikov's photo with Boris Gryzlov <Translator’s note: Putin’s ally, Chairman of the Supreme Council of United Russia>. In exasperation, the judge orders him to make his questions more to the point.

A break is announced. Two other defendants, Yulia Ermolenko and Zhanna Gavrilenkova, are astounded by the harshness of the examination and do not believe the prosecutors will prove anything: "Look at that! 'Did you know this man?'  What kind of a question is that? Should I maybe say that Vitya <presumably, Viktor Gavrilenkov, who is now a fugitive too – The Insider> simply forgot his key from the villa and I once helped him call a plumber? Well, and we met at a barbecue party once."

After the break, no one brings up Gryzlov anymore. Prosecutor Juan Carrau asks Yuri Salikov whether he recognizes his voice in the recording of a conversation with Petrov and Malyshev, in which Salikov thanks Petrov for his release from custody on Mallorca. The prosecutor also hints at the fact that the defendants had access to the phone even in custody, which is normally forbidden in this detention facility.

The Insider got an independent confirmation that «the Russian mafia» had managed to bribe a number of detention officers. A businessman from St. Petersburg who currently resides in Europe shared that Spanish law enforcement had detained an associate of his on false charges a few years back. He did not spend much time in custody – only until the situation was clarified – but his jailers "showed nothing but respect for a man from St. Petersburg, thinking that they had already got paid for his 'special treatment.'"

In addition, a representative of the Spanish Civil Guard on Mallorca anonymously complained to The Insider that he had had to «hide from his own colleagues, not the criminals» during onsite investigation. The Spanish media are yet to cover the corruption in the investigative authorities because there are no volunteers to expose it.

As the second day of the trial draws to a close, Yuri Salikov's defense attorney claims they do not have the original files of her client's wiretapped phone conversations. The prosecution counters that the files are stored at the Audiencia National and provided to defense attorneys upon request; the prosecutors have no authority over the files. The defense attorneys were granted access to the materials as soon as the investigation began almost ten years ago, and the files have not changed. Nevertheless, the judge puts the proceedings on hold until the matter is settled.

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