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While an investigation of the criminal case of money laundering by the Russian mafia is ongoing in Spain, more and more new details flesh out the ties between the criminal kingpins and the highest-ranking Russian state officials. In this investigation, The Insider has focused on one of the most noteworthy lines – the bankruptcy of German shipyards on the Baltic Sea. The German proprietors had planned to sell the shipyards to the state, but eventually, the assets were purchased by private shareholders, including both the leaders of Russia's largest organized crime groups and entrepreneurs «acting on behalf of Dmitry Medvedev.» Moreover, the participants of the deals claim that one of the direct beneficiaries of the project realization was Vladimir Putin himself. 

 

Purchased for the state, given away to the Yusufovs

Russian investors first approached the German shipyards in 2008. Using dummy offshore companies, Russian national Andrei Burlakov bought the Baltic shipyards of Aker Yards, a Norwegian group of companies, in Wismar and Warnemünde (a district of Rostock). Burlakov, a 44-year-old graduate of the Military Institute of the Ministry of Defense of the USSR, was a top manager of government-controlled Financial Leasing Company at the time. In the 1990s, he was a close associate and partner of an «influential» businessman Shabtai Kalmanovich (the papers provided to The Insider by the Italian police refer to Kalmanovich as a «KGB colonel who was arrested in Italy in 1975 on the charges of arms trafficking»).

In early March 2008, Aker representatives struck a deal with Burlakov, yielding the shipyards to FLC West, a Luxembourg-based business with 50 percent shares held by Financial Leasing Company, for 249 million euros. «The direct participation of the Russian government played the primary part in our decision to sell the shipyards to Burlakov's Luxembourg-based company,» said Aker in its corporate documents, according to Spiegel.

Background information: Officially, Financial Leasing Company (FLC) was engaged in «state support of leasing programs in civil aviation.» Apart from Nail Malyutin and Andrei Burlakov, the board of directors included representatives of the ministries of finance and transport as well as federal agencies in the area of production and public property management. The Presidential Executive Office was represented by Vladimir Vysotsky, Major General of the Police and Chief of the Presidential Civil Service and Personnel Directorate.  Since 2012, FLC has been deemed bankrupt by the ruling of the Arbitration Court of Moscow; a bankruptcy administration has been introduced. The court revealed that the company had operated in the red since 2008.

However, it soon turned out that the Russian government did not intend to participate in the project. On March 11, 2008, just a few days after the negotiations with the Norwegians, Burlakov bought out 49 percent of FLC West shares and transferred them to Blackstead Holdings Limited, an offshore company registered in Cyprus, as confirmed by the records of Luxembourg Trade and Companies Register from 2008 that The Insider referred to.

Almiar Investments Limited, a Cyprus company controlled by FLC’s allies, owned the other half of FLC West. Even before the Norwegians and the Russians had signed the contract, the following changes were recorded in the Luxembourg register: on July 10, 2008, Almiar transferred its 50 percent of FLC West shares to Templestowe Trading Corp, registered in the British Virgin Islands (as Luxembourg auditors found out later, it had been controlled by Vitaly and Igor Yusufovs). Eventually, the Russian government (in the form of Financial Leasing Company) was left with a nominal one percent of FLC West shares.

Andrei Burlakov (left) and Igor Yusufov (right)

On July 28, 2008, the last payments were made, to finalize the agreement concluded in March. Of the 249 million euros paid to the Norwegians, 50 million was procured by Andrei Burlakov, who was appointed chairman of the shipyards' board of directors, while the remaining 200 million were allegedly loaned from banks; however, he refused to name the banks on the pretext of "commercial secrecy."

The shipyards were renamed to Wadan Yards with fanfare. In his address to the workers, Burlakov emanated the optimism of a Kremlin dreamer: not only did he promise to keep all the 2400 jobs, but he also declared his commitment to the creation of new jobs by securing orders from the Russian government for a total worth of 2.5 billion euros. «We are afraid that we might come short of workforce and will have to start hiring,» said Burlakov.

However, in less than a year, the shipyards would go broke, and in two years, Burlakov would be assassinated.

Burlakov's elimination

The local journalists had been sarcastic about Burlakov's declarations because the shipyards had been a failing enterprise, and the German authorities could only hope for a miracle to change it. Approving the agreement, they shared the Norwegians' confidence that Burlakov and his offshore companies were backed by the Russian government.

After six months had passed without any incoming orders from Russia, the administration of the Mecklenburg-West Pomerania state loaned 60 million euros to Burlakov, with another 180 million in credits coming from the state-owned KfW-Ipex bank and Deutsche Bank. Burlakov was affluent in his expressions of gratitude to the German authorities, without whom «he would not have achieved anything.» The Germans remained certain that he was acting on behalf of the Russian government.

In December 2008, Mecklenburg minister Jürgen Seidel visited Moscow and returned with reassuring news that his meeting with Burlakov was marked by the presence of the Russian minister of industry and trade, Viktor Khristenko. The Germans felt reassured for a while. All the more so because Burlakov explicitly mentioned that the success of his business was very important to another prominent Russian politician, Igor Yusufov.

Minister of Energy in 2001–2004, member of Gazprom's board of directors, and special presidential envoy for international cooperation in power industry with an office in Staraya Square in Moscow, Igor Yusufov attended the closure of the deal with the Norwegian party in Oslo and the ribbon-cutting ceremony at the Moscow office of Wadan Yards.

However, it did not become the long-anticipated turning point for the yards. Having been unpaid for a while, the workers of the Wismar dock walked out in protest. On June 5, 2009, Wadan Yards declared bankruptcy, and a crisis management team was introduced, stirring concern on the highest level of the German government. 

Angela Merkel asked Medvedev in confidence: «Is it true that Burlakov is linked to you and Putin?»

On July 16, 2009, the fate of the shipyards was one of issues addressed by Chancellor Angela Merkel and President Dmitry Medvedev at the high-level Russian-German intergovernmental consultations in Munich. As Spiegel found out, Merkel, whose electoral district included the shipyards, asked Medvedev in confidence: "Is it true that Burlakov is linked to you and Putin?" Medvedev replied that he had never met Burlakov and such suspicions belong to a «Gogol's novel,» although it remains unclear whether he referred to «The Inspector General» or «Dead Souls.» Be that as it may, the German chancellor had already made her own research and was well aware of the situation in general (more details below).

In September of the same year, Merkel returned to the matter at her meeting with Medvedev in Sochi, after which her website released a formal communique concerning the further fate of the shipyards. It said the following: «Along with his son, Igor Yusofov, Member of the Board of the Russian energy company Gazprom, intends to buy out the insolvent Wadan Yard shipbuilders in Mecklenburg-West Pomerania. This is the start of a cooperation arrangement which we, as the government, also wish to accompany.» Merkel added that she was under the impression that the «new investor» was «seriously interested» in the project.

In other words, the Yusufovs re-joined the same business, but this time did it openly. Igor Yusufov's son, Vitaly, who was 29 at the time, purchased the shipyards in September 2009 on behalf of Gevor IV AG, a company registered at a mailbox address in Zug (Switzerland). Yusufov paid 40 million euros for the yards to the bankruptcy administration, and the rehabilitation process was completed in under a month. The shipyards were renamed yet again – to Nordic Yards AG. Half of the employees were made redundant, but Yusufov promised to keep the remaining 1200 jobs.

Vitaly Yusufov against the background of Rostock shipyards

How had the Yusufovs earned such trust of the German authorities? One of the reasons could be that, as head of the Moscow office of Nord Stream AG, Vitaly Yusufov worked in close cooperation with Matthias Warnig, an ex-Stasi officer, friend of Vladimir Putin, CEO of Nord Stream AG, and member of the board of directors of Rossiya Bank. It cannot be ruled out that Warnig facilitated the sale of the shipyards.

After Vitaly Yusufov was made the official proprietor of the yards, a criminal case was filed against Burlakov on the charges of embezzlement. Allegedly, he had misappropriated 1.8 billion rubles from the funds of Financial Leasing Company (the figure was later upped to 3 billion), spending part of that sum on the purchase of the shipbuilder. He was placed into custody in a Moscow detention center along with the financial director of the yards, Anna Etkina (who was also the director of Okean BV, a plant in Mykolaiv, Ukraine, which belonged to the Wadan group).

They were released from custody as early as the following year. Burlakov was released on bail of a record-breaking 50 million rubles, and Etkina, for medical reasons. What is more, Etkina claims that they paid another 5 million dollars to Denis Voronenko (who was shot in Kiyv this March) for his facilitation in the «mitigation of the government's negative attitude to Burlakov.» However, it was not the end of their misadventures. In September 2011, Etkina and Burlakov came to Khutorok, a restaurant in Leningradsky Prospect, to give an interview. The conversation had barely begun when a killer burst into the establishment and discharged the gun, firing the entire magazine at them. Burlakov died shortly after the ambulance arrived; Etkina received a face wound but survived (the journalist was left unscathed). After the attack, Etkina left Russia immediately. She was tried in absentia and found guilty of fraud and money laundering at Financial Leasing Company. Etkina declared her intention to appeal to the ECHR against her sentence.

During the investigation of Burlakov's murder and Etkina's attempted murder, Tom Einertsen, former top manager of Wadan Yards, admitted that de-facto ownership of the yards had always belonged to Igor Yusufov, who «presided as the primary owner.»  The Yusufovs, father and son, were also interrogated on the subject of Burlakov's murder, but the investigation concluded that the crime had not been linked to the German shipyards. Nevertheless, in January 2015, one Russia's most wanted criminals was detained in Vienna – the leader of a gang of extortionists and murderers, 43-year-old Aslan Gagiyev («Jako»). The gang is believed to be responsible for at least 56 contract killings; as it was revealed, it was Jako's gang that took down Burlakov.

Aslan Gagiyev, aka Jako, aka Sergei Morozov

Gagiyev told the press that he owned a 25 percent share of the German shipyards. Moreover, he was not the only representative of organized crime in the business.

De-facto owners: Medvedev and the criminal kingpins

Phone tapping enabled the Spanish detectives to find out that FLC was in fact co-owned by Gennady Petrov, a criminal kingpin and leader of Petrov-Malyshev organized crime group (you can read more about Petrov's case here). According to the investigation, he was the one to drive the yards to bankruptcy, leaving thousands of people unemployed. The insolvency of the two German shipyards was caused by the transit of Petrov's funds through their accounts, says José Grinda, special prosecutor of Spain for corruption and organized crime.

"We have obtained records of Petrov's conversations with a number of individuals, and these records have led us to believe that Petrov was a de-facto owner of a large share of FLC. In particular, Petrov conspired with Nail Malyutin, CEO of Financial Leasing Company. Their plan included two steps: gaining profit through stock-market speculations and withdrawing it by transferring FLC's funds to their Luxembourg-based company, which led to the bankruptcy of the yards."

In January 2011, the Russian and the Spanish prosecutors submitted their findings to the prosecutor's office of Mecklenburg-West Pomerania in Schwerin. The Spanish prosecution provided the tapes of Petrov's phone calls to their German colleagues as evidence of money laundering through the accounts of the yards.

However, the Germans eventually decided against filing of a criminal case. As to the reasons, we can only make assumptions. They might have hoped that Vitaly Yusufov could save the enterprise, while another scandal would do nothing but aggravate the situation. All the more so because the down-manned dock workers, who had been guaranteed employment by the German authorities, continued their protests. Claudia Lange, spokesperson of prosecutor's office in Schwerin, told Frankfurter Rundschau that the inspection conducted after the meeting with Grinda "did not confirm the allegations."

The prosecutor's office initiated the inspection in 2011 and completed it in October 2012. Meanwhile, in mid-September 2012, the office received a personal visit from the CEO of FLC, Nail Malyutin. He had appealed to the prosecutor's office in Schwerin three months earlier (Malyutin presented the confirming documents to The Insider), claiming that he had not been aware of the scheme of money laundering through the yards' accounts; according to him, one of the culprits could have been Viktor Drachev, his deputy with signature authority in FLC. Malyutin soon had a criminal case filed against him in Russia; like Burlakov, he was suspected of misappropriating FLC's funds, part of which (namely 253 million rubles) was used for the purchase of the shipyards.

The Russian authorities filed an extradition request to Austria, Malyutin's country of residence. He was extradited in early 2017 after a series of appeals. The Austrian authorities had to conduct a detailed analysis of the charges made to Malyutin by the Russian authorities; in particular, they included the laundering of money withdrawn from FLC in Spain, where Malyutin had bought a villa in Palma de Mallorca.

According to Malyutin, the money had nothing to do with FLC and was borrowed from Aslan Gagiyev, whom Malyutin knew as «Sergei Morozov.» Russia is currently trying to secure Gagiyev's extradition from Austria on the grounds of being a shadow FLC co-owner (and the leader of a major organized crime group to boot). Gagiyev was using two passports, with one of them in the name of Sergei Morozov. In his interview to Kurier (Austria), Gagiyev offered the following version of the events: "In 2009, the German shipyards, 25 percent shares of which I owned, went bankrupt, and the Russian authorities filed criminal cases against my two partners and me. After one of them was assassinated, I realized the gravity of my situation and went into hiding in Austria."

In Austria, Gagiyev revealed that he had made payments to the head of the Investigative Committee through his deputy for the protection of his business.

In August 2015, Nikolaus Rast, Gagiyev-Morozov's Austrian lawyer, addressed a letter to the U. S. Department of Justice. Its content is confidential; however, at the exact same time, Gagiyev sent a letter to David Sakvarelidze, deputy of the Ukrainian Prosecutor General, declaring his willingness to «testify on the circumstances of misappropriation of shares of the Okean plant by Igor Yusufov and the details of the money laundering scheme, which involved employees of the Prosecutor General's Office of the Russian Federation and officers of FSS agencies.» At an extradition hearing in Austria, Gagiyev revealed that he had made payments to the head of the Investigative Committee through his deputy for the protection of his business, and he got in trouble the moment his «pocket general» may have failed to pass the bribe to his superiors. One way or another, Gagiyev has not been extradited yet.

From Aslan Gagiyev's testimony at an Austrian hearing:

A: The entire business system in Russia makes it impossible for an enterprise to survive without paying off the authorities. For every level of business, there is a fixed price. On behalf of my Society, I made a monthly payment of 1.2 million euros to Bastrykin, head of the Investigative Committee, and another 1.2 million euros to the minister. We were accountable to the Ministry of Industry and Trade. In total, I had to procure 2.4 million euros on a monthly basis. The burden was distributed between my partners and me, but I was the one in charge of logistics – I delivered the money to the recipients.

Defense Attorney: What is the nature of the problem?

A: I had an unplanned meeting with Bastrykin's deputy, who was in charge of a Committee directorate. Nothing was out of order. I gave him the money for having a business. He asked me how things were going, and I replied everything was fine. Then he asked me specifically about the success of my business, and I replied, «Never been better.» That’s when the problems began.

Defense Attorney: Why is that?

A: I don't know. Either my partner didn’t pass the money to Bastrykin or the general didn’t pass the money to Bastrykin.

Since German authorities decided against opening a criminal case on Petrov's and Malyutin's ties, the final charges made by the Spanish prosecutors to the defendants of the «Russian money laundering case» did not contain any mentioning of the German shipyards' accounts. However, it can be found in the list of evidence at page 920 of the criminal indictment (provided to The Insider), which was submitted to the court by prosecutors José Grinda and Juan Carrau in October 2015.

Yusufov said he was acting in the interests and on behalf of Dmitry Medvedev

Through his spouse Natalia Sytnik, Nail Malyutin shared the following with The Insider: "The shipyards were purchased in 2008 for 248.9 million euros by a group of Russian investors represented by Burlakov. The new owner was FLC West, a Luxembourg company with Burlakov as the CEO. Seventy-four percent of FLC West belonged to Templestowe, the Yusufovs' company registered in the British Virgin Islands, and 24 percent, to Blackstead in Cyprus. Blackstead was Burlakov’s. Templestowe procured 200 million euros, and Blackstead, the remaining 50 million; notably, the latter had borrowed almost 40 million euros from FLC. Igor Yusufov said he was acting in the interests and on behalf of Dmitry Medvedev. Burlakov and his associates withdrew the money through a number of dummy companies, some of them in the British Virgin Islands. The list of end beneficiaries included Igor Yusufov and Dmitry Medvedev."

Interestingly, in 2011, Andrei Borodin, ex-owner of Bank of Moscow, gave a very similar account of his negotiations with Yusufov:

Nevertheless, the analysis of what has happened to the Bank of Moscow since last September makes it clear that the starting point was a political decision to take the bank under control. The ones to execute this decision were Andrey Kostin, chairman of VTB Bank Management Board, and Igor Yusufov, member of the political elite. Yusufov told me in plain Russian that he was acting in the interests and on behalf of Dmitry Medvedev, who was the one to make the decision about gaining governmental control over the Bank of Moscow. 

In both cases, Yusufov used the same wording – «in the interests and on behalf of Dmitry Medvedev.» The task Yusufov was referring to may have been the same, considering that he bought the Bank of Moscow's shares with the money borrowed on the collateral of the above-mentioned shipyards.

At Petrov's place

The sale of shipyards was negotiated on Mallorca, at Gennady Petrov's house

According to Nail Malyutin, «Petrov had nothing to do with the deal»; he also denied his close acquaintance with the criminal kingpin.  By contrast, Anna Etkina's lawyer, Vladislav Tkachenko, offers a drastically different interpretation: «The sale of shipyards was negotiated on Mallorca, at Gennady Petrov's house, in the presence of Burlakov, Malyutin, and Petrov himself,» he told The Insider. As we found out, Malyutin's charges made by the Russian law enforcement contained the address of the villa that Malyutin had bought with Sergei Morozov's (Aslan Gagiyev's) money, having withdrawn it from FLC: Sollieric, 13, Palma de la Mallorca. Petrov's villa is situated in the Calvia district of Palma de Mallorca. The two houses are separated by a twenty-minute drive.

Gennady Petrov's arrest

According to Tkachenko, «Malyutin, who worked under Herman Gref in St. Petersburg city administration, brought Gref to Petrov.» The Insider could not find any mentioning of Malyutin's employment in the official documents of the city administration from the 1990s. Yet still, Mikhail Mokrousov, a St. Petersburg businessman who headed the Gefest company in the 1990s, confirmed to The Insider that Malyutin indeed worked at the City Property Management Committee for Admiralteysky District of St. Petersburg even before Gref was appointed head of the City Property Management Committee of St. Petersburg. In 2002, Malyutin gave his St. Petersburg address (Botanicheskaya Street) when registering a vehicle, but moved to Moscow soon after.

The Spanish case file contained the following record (which was not included in the indictment either): "On November 1, 2007, Petrov received a call from Nail Malyutin, the then CEO of Financial Leasing Company (FLC). Nail told him that Gref, a friend of Petrov's, was inviting him to the banquet on November 12 on the occasion of Sberbank's 160th anniversary."

"Malyutin told him that Gref, a friend of Petrov's, was inviting him to a banquet"

In the same conversation, Malyutin also mentioned a certain «draft resolution on these issues» that had been «approved by Sergei Borisovich.» He could have referred to Sergei Borisovich Ivanov, the then deputy prime minister.

Business in Vyborg: Putin's interest

There is a possibility that Vladimir Putin could have a financial interest in the German shipyards as well: 25 percent of shares of Vyborg Shipyard were held by Lirus Management AG (Switzerland). In 2012, Sergei Kolesnikov, former co-owner of the shipyard, revealed that Putin was its owner through «bearer shares.» (According to him, these funds were used for the construction of Putin's palace near Gelendzhik).  Taking into account the share of Putin's closest associates (Shamalov Sr., father and son Gorelovs, and Kolesnikov himself), together they controlled a total of over 50 percent of the shipyard's shares.

The enterprise was co-owned by members of Putin's inner circle and Ilya Traber's people (Traber was another defendant in the Spanish case of the «Russian mafia» ) – Natalia Belikova, Alexander Ulanov, and Alexander Petrov. In July 2008, they gave up some of their shares but remain co-owners of the shipyard.

As The Insider discovered, in 2009, Vyborg Shipyard and Wadan Yards intended to launch the «Russian-European Shipbuilding Holding (RESH)» – a joint venture with New Wadan as the holding company (we managed to obtain the project presentation).

Talks about the cooperation between Nordic Yards and the Vyborg shipbuilder were conducted by Burlakov and Vitaly Yusufov. «In simple terms, Vyborg Shipyard's task was to win tenders, whereas the German and the Ukrainian shipyards were supposed to build ships and deliver them to Russia, where the plant in Vyborg would install liquefied gas containers and attach a 'Made in Russia' plaque,» Anna Etkina explained to Forbes.

We were aware of Vladimir Putin's involvement

Here is what Vladislav Tkachenko, Etkina's lawyer shared with us: "We were aware of Vladimir Putin's involvement; Sergei Kolesnikov mentioned it during our project-related interaction. What is more, all the deals related to Vyborg Shipyard were concluded with the participation of Putin's personal massage therapist Konstantin Goloshchapov, one of the believers who made regular visits to the Valaam Monastery. Yusufov had let it slip to Burlakov and Etkina that he managed Medvedev's money. In fact, he did not make a secret of it; even the German authorities knew it. Naturally, telling it to Merkel was out of the question, but he even had an official, paid lobbyist of the German shipyards, so Merkel could have easily found it out. Nail Malyutin represented his own interests and, partly, those of Sergei Ivanov. In the meantime, Kolesnikov and Goloshchapov, who represented Vyborg Shipyard as well, were acting on Putin's behalf."

According to him, the project had been driven by its moneymaking potential: "at Wadan Yards’ Okean plant in Mykolaiv, cheap Ukrainian steel could be recycled and used in hull construction; the ships could be sold to Russia for an artificially high price, which would enable to launder some of the money. Eventually, the parties started quarreling and it all came down to trivial money laundering."

The project finale

Shady transactions made through the accounts of the shipyards did not cease in 2015, as German magazine Focus pointed out late in 2016, referring to the information provided by Hypovereinsbank (known under its trade name, Unicredit) to the German Customs Investigation Bureau (an agency that investigates cases of smuggling and money laundering). Moreover, after the article was translated into Russian, it was removed from the magazine's website, along with all of its translations, and is now accessible only to Focus subscribers in the PDF-version of the issue (the magazine failed to clarify the reasons behind the removal of the article).

According to Focus, in June 2015, Hypovereinsbank drew the Bureau’s attention to suspicious money flows through Vitaly Yusufov's Nordic Yards accounts. In particular, a payment of 20 million euros arrived from Prosal Investment Limted, a company registered in the British Virgin Islands, with its purpose marked as «debt repayment.» On June 17, the same company wired another 8.5 million euros.

Interestingly, the Luxembourg Trade and Companies Register entries from 2012 indicate that Prosal Investment Limited was represented by Swiss national Philippe Meyer, among other individuals. According to the Commercial Register of Zug, he was also a member of the board of directors at Nordic Yards. That is, «debt repayment» could have been made by the beneficiaries themselves (which qualifies as money laundering), so the bank saw it fit to inform the relevant authorities. In addition, Philippe Meyer, born in Switzerland in 1946, had already been found guilty of money laundering and sentenced to a fine in 1996.

At the end of the day, the plans of linking Wismar, Warnemünde, Mykolaiv, and Vyborg into a «super-shipyard» remained just plans. In March 2016, Vitaly Yusufov yielded the German yards to the Malaysian Genting Group for 230.6 million dollars, never delivering on the promise he had made to the German workers about the long-anticipated orders from Russia. Today, he is a minority shareholder at OAO Kuzbassrazrezugol, a company controlled by another defendant of the «Spanish case,» Iskander Makhmudov, and his partner Andrei Bokarev (The Insider has already covered Makhmudov’s and Bokarev’s mafia ties).

Igor Yusufov owns Fund Energy, an enterprise engaged in oil and gas drilling on the Yamal Peninsula through OOO Yargeo, a joint venture of Yusufov and OOO Novatek (with Gennady Timchenko, Leonid Mikhelson and Total as the primary shareholders). Yusufov Sr. is optimistic about the future and committed to «investing in the real sector of economy, both in Russia and in European countries,» according to the website of his fund.

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