From Cork with love: Kazakh hotelier routes €228m to Russia through Irish firms

Hotelier’s trans­ac­tions via Cork high­light how oli­garchs fun­nel mil­lions through Irish com­pa­nies to Russia

Three Cork-based com­pa­nies were used by a Kazakh bil­lion­aire to route €228m to Moscow to pay off his loans on the Ritz-Carlton hotel, where Donald Trump report­ed­ly stayed in 2013 while attend­ing the Miss Universe pageant.

The three Irish enti­ties were used by Bulat Utemuratov, the rich­est man in Kazakhstan, to pay off his loans on the lux­u­ry hotel, which he bought for about €525m in 2011. Utemuratov’s only pre­vi­ous involve­ment with Ireland was pur­chas­ing what was once Derek Quinlan’s vil­la in the French Riviera, which had been on the mar­ket for €65m.

The Moscow hotel came to world­wide atten­tion last year fol­low­ing alle­ga­tions by a for­mer MI6 agent that Trump had hired pros­ti­tutes to uri­nate on a bed pre­vi­ous­ly slept in by his pre­de­ces­sor, Barack Obama, in 2009. Trump denied it.

The involve­ment of the Cork com­pa­nies in its financ­ing high­lights how vast sums of mon­ey are being moved through Irish enti­ties to Russia by some of the world’s wealth­i­est oli­garchs. Recent research by Trinity College Dublin found that 125 Russian-linked com­pa­nies had raised €103bn through the International Financial Services Centre since 2007.

Utemuratov is a close aide to Nursultan Nazarbayev, the author­i­tar­i­an pres­i­dent of Kazakhstan, who is regard­ed as a strong ally of the Russian pres­i­dent Vladimir Putin.

Company doc­u­ments show that the three Irish firms ben­e­fi­cial­ly owned by Utemuratov — Spelugues, Tenao and Moneghetti — all have an address at South Mall in Cork. The three were incor­po­rat­ed as spe­cial pur­pose vehi­cles (SPVs) in July 2012, a year before Trump’s vis­it to Utemuratov’s five-star hotel.

The mon­ey was trans­ferred to Moscow through a com­plex series of trans­ac­tions. On November 18, 2014, Utemuratov’s Verny Capital trans­ferred €820m in shares it owned in glob­al min­ing giant Glencore to the three Irish com­pa­nies. On December 18, 2014, the three Irish SPVs used the shares as col­lat­er­al to bor­row €228m. On the same day, one of the three, Moneghetti, trans­ferred more than €207m to the two com­pa­nies that own the Moscow Ritz Carlton — Red Square Investment Company BV and Wilbur Real Estate 7, a com­pa­ny reg­is­tered in the Cayman Islands tax haven.

After the loans were paid off, the hotel under­went a mul­ti­mil­lion-euro refur­bish­ment, includ­ing a new 2,590 sq ft pres­i­den­tial suite locat­ed on the top floor of the hotel, with floor-to-ceil­ing win­dows over­look­ing the Kremlin and Red Square.

Verny Capital con­firmed this week­end that the Irish com­pa­nies had been used to route the mon­ey to Russia through a series of deals. “We con­firm that the Glencore shares held by the three below-men­tioned Irish enti­ties (Spelugues, Tenao and Moneghetti) were used as col­lat­er­al to bor­row $260m (€227m) in December 2014,” it said. Verny Capital also con­firmed that Moneghetti sub­se­quent­ly trans­ferred $260m “to repay the then exist­ing loans of the hotel”.

Utemuratov, a for­mer Kazakhstan trade ambas­sador to the United Nations, made much of his for­tune through a series of share deals with Glencore, includ­ing the sale of stakes in a Kazakh gold­mine and in a com­pa­ny that is one of the world’s largest pro­duc­ers of zinc. Forbes mag­a­zine esti­mates his for­tune at $2.6bn.

The vast sums of Russian mon­ey pass­ing through Ireland recent­ly prompt­ed Bill Browder, a financier who is a crit­ic of the Putin regime, to call on the Irish gov­ern­ment to intro­duce leg­is­la­tion cur­tail­ing the activ­i­ties of Russian busi­ness­es. Browder, who runs an invest­ment fund, claims cor­rupt Russian state offi­cials mur­dered one of his employ­ees, a lawyer called Sergei Magnitsky, in a Moscow prison in 2009. He believes Magnitsky was tar­get­ed after rais­ing con­cerns over an alleged tax fraud com­mit­ted by Russian gov­ern­ment officials.

By Colin Coyle

From Cork with love: Kazakh hote­lier routes €228m to Russia through Irish firms