Bank Rossiya, Putin’s bank

Bank Rossiya is indicated by all Western intelligence as the mega piggy bank of Putin’s entourage. The documents revealed in Panama Papers have thrown a bit of light on the financial tricks used to divert the rivers of dollars in their pockets. A new investigation by the Organized Crime and Corruption Reporting Project explains how it is possible.

The schemes are complex. The financial ploys are dark and convoluted. Companies are owned by figurehead. But the OCCRP, the international network of investigative journalists specializing in crime and corruption in the countries of Eastern Europe, has joined all the dots scattered by years of journalistic investigations, investigations of the Spanish judiciary and the revelations contained in the Panama Papers. And it came out a pretty clear picture of how Putin’s aides have turned Bank Rossiya into a huge reservoir of wealth. At the expense of Russian citizens.
The US Treasury Department does not hesitate to define Bank Rossiya “the personal bank for senior officials of the Russian Federation. Bank Rossiya’s shareholders include members of Putin’s inner circle associated with the Ozero Dacha Cooperative, a housing community in which they live”. At various times, Bank Rossiya shareholders have included Nikolay Shamalov, Putin’s son-in-law’s father, Mikhail Shelomov, a distant relative of the president, and the famous cellist Sergei Roldugin, Putin’s longtime friend and star of Panama Papers.
The bank was founded in 1990 in St. Petersburg by some members of the Communist Party. After the collapse of the Soviet Union investors like Yuri Kovalchuk, Vladimir Yakunin and Andrei Frusenko, all Putin’s friends, joined. In the mid-90s St. Petersburg criminal gangs entered the business, as the Spanish investigators have discovered after ten years investigating Gennady Petrov and the Tambovskaya gang. But with the rise to power of Putin, things changed.
Today Bank Rossiya is one of the largest Russian banks, with an assets of US$ 9 billion, and controls large slices of the national economy, including pieces of public money, such as Gazprom’s pension fund. How was it possible?

The Cellist who makes miracles

In 2010, Bank Rossiya put its hands on the majority State owned Russian energy jewel, Gazprom. The subsidiary of the gas giant, Gazenergoprombank, was at that time a public bank with equity of US$ 343 million, while Bank Rossiya reached a more modest US$ 270 million. The two banks decided to merge but, as we might have expected a fair distribution of the shares, the shareholders of Gazenergoprombank only received 16% of the new Bank Rossiya, whose owners instead managed to double their assets for nothing.
This was possible because in Rossiya’s annual report despite its low assets and equity it was estimated five times the market price of Gazenergoprombank. But, at OCCRP say, if the real value of Bank Rossiya was really that, or about US$ 3.3 billion, how is it possible that a 12% share in 2013 was sold for US$ 153 million when the correct price should havebeen at least US$ 340 million?
This is not the only case in which the Bank Rossiya owners did a roaring trade in the Russian taxpayers’ expense. In 2010 the offshore company Sandalwood, registered in the British Virgin Islands and owned by Sergei Roldugin, the cellist of miracles, bought 3% of Bank Rossyia at US$ 6.50 a share. Two days later, he resold the whole stake to the Horwich Trading of Cyprus at $ 211.5 per share, and the latter company resold it all a month later to Gazprom at US$ 1,120 a share. Something like 172 times the price paid by Roldugin. And, even worse, Gazprom has then resold the stake at half of the price paid, obtaining a big loss of taxpayers’ money.
Roldugin has always defended himself by saying he do not have a penny. “Even my cello is second-hand,” he said on several occasions. One would be curious to know how much he paid for it and at what price he will resell it.

@daniloeliatweet