Financier Ruben Vardanyan with the Russian president, Vladimir Putin. Photograph: Sputnik/ Alamy
The cash was then employed legally to pay for private jets, custom-built yachts, luxury properties, holidays, football tickets and fees at top English private schools.
” This is the pipe through which the proceeds of kleptocracy flow from Russia to the west ,” said the anti-corruption campaigner
Bill Browder .
For years, Browder shall seek to tracing what occurred in $230 m been stealing from the Moscow tax office by a gang that take control of subsidiaries of his investment fund, Hermitage Capital. Evidence from the leak indicates some of the proceeds moved through this network.
The findings will be likely to add to concerns expressed by UK pastors who have vowed to crack down on those facilitating the transfer of lucks out of Russia by elites seeking to spend their money in the west. Ministers have demanded better due diligence by British organizations before accepting money from offshore companies.
The leak focuses on Troika Dialog, a resulting Russian investment bank now merged with the country's biggest high street bank. Emails reveal how certain managers at Troika kept money flowing through the pipeline for more than eight years, starting in 2004.
Troika's overall boss at the time was Ruben Vardanyan, an Armenian financier with close ties to Putin, a host of international celebrities and members of the British royal family. Two years ago he was listed as the 99 th richest Russian by
There is no suggestion Vardanyan did anything illegal, though he may have been an unwitting beneficiary of the flow of money.
Vardanyan said he believed the bank knew its clients and” applied regulations and conformity procedures that meet the requirements of the legislation of that time “. And he insisted he was unaware that Troika companies received funds relating to any frauds.
However, the data, which is being examined by government prosecutors in Lithuania, raises questions about the light-touch scrutiny of payments organised by the bank.
Graphic of fund flow in Magnitsky case
The files highlight how money flowed through the network in a way that maintained the sources of funds unclear. They disclose a number of intriguing transactions, including how staff at Troika apparently helped organise the transfer of $70 m to one of Putin's best friends, Sergei Roldugin.
A cellist who is godfather to Putin's eldest child, Roldugin was
unmasked by the Panama Papers as the potential beneficiary of fund suspected of being held on behalf of the Russian president. The sums revealed by this leak are higher than previously uncovered.
Vardanyan admitted he had heard of Roldugin, but said:” I haven't done any business with him personally. Why did he receive money from Troika Dialog companies? I don't know anything about that .”
In 2009, 2010 and 2011, three transfers from Vardanyan totalling $200,000 went to the Prince's Charity Foundation, a fundraising vehicle for Prince Charles. The money came from a British Virgin Islands shell company, Quantus Division Ltd.
The donations were, said Vardanyan, charitable gifts intended to” preserve architectural heritage in England “.
The money went towards the rescue of Dumfries House, a stately home in Ayrshire with a priceless collection of Chippendale furniture. In 2007, the mansion and its collecting were set to be auctioned off to private buyers. Charles came to the rescue, creating PS45m at breakneck speed to save the property for the nation.
But the venture left his foundation in debt, and in his efforts to plug the hole, the heir to the throne went on a fundraising drive. Vardanyan created a further PS1. 5m, from a group of Russian tycoons, and the prince thanked them with a black-tie dinner in 2014.
The files indicate monies from Quantus also encompassed the EUR2m cost of flying the late boulder star Prince to Moscow for a Troika corporate gala in 2007. A further EUR2 0,000 was spent on Vardanyan's attendance at the world leaders' meeting at Davos.
The data suggests Quantus sent nearly $500,000 to American Express to cover Vardanyan's credit cards bills.
His wife received EUR9 35,000 in pays over three years at an account in Spain, and his mother-in-law, Emilia Zonabend, a further EUR9 00,000.
Vardanyan described the network as an independent arm of his main investment bank, helping wealthy private clients manage their fund. It is understood he was never involved in its operations or management, did not personally oversee transactions or client accounts, and had no day-to-day involvement in its activities. However, he did not deny benefiting from monies held there.
The data indicates many of the Troika-managed companies, including Quantus, were not created for particular clients, but contained pooled monies. Fund entered from multiple legitimate sources and was then used to fund the lifestyle spending of dozens of individuals.
The leak ties some of the funds passing through the Laundromat companies to three major frauds, the most notorious of which was the Magnitsky scandal.
Sergei Magnitsky was a lawyer working for Browder who died in a Moscow prison after discovering the head of the city's tax office had conspired to issue fraudulent tax refunds.
Hub companies in the Troika structure received a blended $130 m from six shell vehicles, which attorneys say were used in the Magnitsky fraud, the data indicates.
Two more cases suggest criminal monies flowed through the network: Companies named in the prosecution of a
fuel price fixing swindle at Moscow's state-owned Sheremetyevo airport appear to have paid $37 m into the Troika network.
A further $17 m in transfers connects Troika-managed a corporation to a
Moscow resident accused of laundering 50 bn roubles using schemes that helped business sidestep tax and send money abroad.
A key component of the scheme utilize Troika companies was a Lithuanian bank, Ukio, which was shut down by regulators in February 2013 after being declared insolvent.
The bank is under investigation by Lithuanian prosecutors tasked with analyse the laundering of the Magnitsky money. Ukio accounts were also named by the US Department of Justice in documents tracing the Magnitsky proceeds.
Documents prove money moved in and out of the bank in bargains made by apparently fictitious businesses, taxation haven-registered entities with no offices , no staff, and no presence online or in the world of commerce.
” You have to ask yourself, why is money being moved in this way, through multiple companies ?” said Tom Keatinge, a money laundering expert at the Royal United Service Institute thinktank.” It's a way of obfuscating source and ownership .”
There appear to have been a number of others unwittingly caught up in the network. Troika-linked entities were used to pay for expenditures that open a window into the world of the super-rich.
One Troika shareholder, Valentin Zavadnikov, apparently described on EUR7 0m from Troika network accounts to fit out and run his two luxury motor yachts- Celestial Hope and Quinta Essentia.
An invoice for the Quinta, whose rooms were perfumed with fragrance made from wine produced at the family's Italian vineyard, itemises EUR6, 000 on electric sliding doorways for the bathrooms, EUR6 0,000 for installing a hamam( Turkish bath ), and EUR1 5,000 on” water playthings “.
Troika Laundromat companies loaned merely under EUR1 5m to the mother-in-law of the then governor of Samara, an administrative region east of Moscow.
The woman was at the time 80 years old and had no apparent means of repaying the loan, which appeared to be unsecured. Data indicates the money was used to buy land and build a holiday home in Spain, merely north of Barcelona.
Stamford Bridge, London, home of Chelsea FC. Panama-registered Airship Universal paid PS126, 000 for a corporate box at the stadium. Photograph: Peter Nicholls/ Reuters
Panama-registered firm Airship Universal Inc- also managed by Troika- sent PS126, 000 to Chelsea football club in August 2012 for a corporate executive box at its Stamford Bridge ground. The club said the purchase was arm's length, at full market value, and that it complies with all relevant legislation in copes with clients.
In May 2011, Airship paid PS100, 000 to the dealership Rolls-Royce Motor Cars London, apparently on behalf of the members of a Russian businessman. Had the showroom Googled their client, they would have found articles describing him as a former agent of the Russian security service the FSB.
” It's deeply concerning to us, and we take such a situation extremely seriously ,” the dealership said in a statement. They added the sale took place under a different proprietor, that new management had introduced “exacting” such standards and that an investigation was under way.
Airship paid PS100, 000 to the Rolls-Royce dealership in London in May 2011. Photograph: Sam Panthaky/ AFP/ Getty Images
A Quantus-funded offshore firm called Flashback Services Limited spent heavily on private jets. It paid more than $42 m to the Canadian manufacturer Bombardier, and millions more to cover the crewing and maintenance of two airplanes listed on the UK aircraft registry, and operated from Farnborough airfield. Bombardier said it had a robust due diligence proess, and that its checks on Flashback” did not disclose any anomalies “.
Vardanyan sold Troika in 2012 to the giant Russian state-controlled Sberbank, for a reported$ 1bn. But he remains in the business: he is the controlling shareholder in Armenia's Ameriabank, and his partner there is the European Bank for Reconstruction and Development, which holds 18% of the shares. Headquartered in London, the EBRD is owned by nation states including the UK and the US.
Vardanyandescribes himself as a philanthropist and social entrepreneur who has made a commitment to invest the vast majority of his wealth in charitable endeavours.
It is understood Troika Dialog was never penalty by any regulatory body or law enforcement agency and at all times observed international standards of transparency and compliance.