Hidden transactions of a Russian oligarch at Swedbank

For sev­er­al years, Swedbank’s clients includ­ed one of the world’s largest coal traders, Cyprus com­pa­ny Carbo One. The next chap­ter in the Swedbank data leak shows how Carbo One and one of the wealth­i­est men in Russia, Iskander Makhmudov, who has no for­mal ties to the com­pa­ny, moved colos­sal sums between sev­er­al shad­ow accounts.

A data­base pub­lished by Sweden’s pub­lic broad­cast­er SVT sug­gests Carbo One was among Swedbank Estonia’s top cor­po­rate clients for years. The company’s accounts saw at least €1.4 bil­lion worth of trans­fers. While the offi­cial own­er of Carbo One is Dovronbek Ibragimov, the inves­ti­ga­tion by SVT showed how major sums were trans­ferred from the com­pa­ny to accounts with ties to Russian bil­lion­aire Iskander Makhmudov.

Tajik Iskander Makhmudov (55), born in Bukhara, Uzbekistan, has been one of the wealth­i­est peo­ple in Russia for the past 15 years. Forbes esti­mat­ed his net worth at $7.3 bil­lion last year. Makhmudov, who worked as an Arabic trans­la­tor for a Soviet arms exporter in Libya and Iraq in the 1980s, has made his for­tune from the cop­per and coal indus­try and mak­ing train and sub­way cars. The com­pa­ny Transmashholding that Makhmudov con­trols has a vir­tu­al monop­oly in the lat­ter area in Russia.

The busi­ness­man, who very sel­dom appears in pub­lic and is even hard­er to track down for jour­nal­ists, has done busi­ness or com­pet­ed with almost all of Russia’s wealth­i­est and most influ­en­tial busi­ness­men since the mid-1990s: from the first met­al tycoons, fol­low­ing the col­lapse of the Soviet Union, the broth­ers Cherney to Gennady Timchenko, Vladimir Yakunin, Oleg Deripaska and Alisher Usmanov.

Mossack Fonseca involved

The data leak sug­gests Makhmudov and Carbo One moved large sums using at least 20 Swedbank bank accounts. SVT con­cludes that each of these accounts shows clear signs they could be used for mon­ey laun­der­ing. Owners are reg­is­tered in tax havens, like the British Virgin Islands or Belize. Several com­pa­nies were rep­re­sent­ed by infa­mous Panama law firm Mossack Fonseca. In sev­er­al cas­es, com­pa­nies lack vis­i­ble busi­ness activ­i­ty and are reg­is­tered to clas­sic “mail­box address­es” that can be home to count­less oth­er companies.

Transfers most­ly moved from Swedbank accounts to those in Danske Bank, every year from 2007 to 2015 that is the last year the data leak cov­ers. Such trans­ac­tions were worth a total of at least a few hun­dred mil­lion euros.

Information avail­able to Postimees sug­gests Swedbank took its non-res­i­dent clients’ busi­ness under scruti­ny in late 2009. While over 350 clients were dropped after an audit looked at doc­u­men­ta­tion, they did not include Carbo One as the com­pa­ny was trad­ing in raw mate­ri­als. A large part of Carbo One’s trans­fers were between real com­pa­nies and con­cerned actu­al busi­ness activity.

In the years that fol­lowed, the bank’s non-res­i­dent clients’ busi­ness con­cen­trat­ed on clients that had busi­ness in Russia and oth­er CIS coun­tries. New clients were tak­en on fol­low­ing rec­om­men­da­tions from exist­ing ones, and their ties to Estonia ranged from weak to nonex­is­tent. Bloomberg wrote yes­ter­day, cit­ing an anony­mous source, that Swedbank took in at least 75 non-res­i­dent clients that were left in the cold by Danske Bank so to speak as recent­ly as in 2015.

Two methods: corruption and violence

Spanish pros­e­cu­tor Jose Grinda Gonzales shed light on Makhmudov’s pos­si­ble ties to orga­nized crime and mon­ey laun­der­ing in an inter­view to SVT. “Makhmudov main­ly used two dif­fer­ent meth­ods to build his empire: cor­rup­tion and vio­lence,” he said. Corruption cas­es pros­e­cu­tor Gonzales has been liv­ing with body­guards for the past decade as the Spanish police have alleged­ly repeat­ed­ly uncov­ered plans by the Russian mob to end his life.

Gonzales’ inves­ti­ga­tion into Russian orga­nized crime in Spain led him to Makhmudov. The results sug­gest one of Russia’s most influ­en­tial crim­i­nal groups Izmailovo could have used Makhmudov’s Ural Mining and Metallurgical Company (UGMK) to laun­der mon­ey. While the infor­ma­tion was shared with the Russian pros­e­cu­tion, the inves­ti­ga­tion died down before charges could be brought.

Makhmudov’s press rep­re­sen­ta­tives told SVT that the busi­ness­man has nev­er had ties to orga­nized crime and denied any and all involve­ment in Carbo One.

Head of Group Communication at Swedbank Gabriel Francke Rodau was reluc­tant to com­ment on Carbo One and Makhmudov, cit­ing bank­ing secrecy.

“Fighting mon­ey laun­der­ing is like putting togeth­er a puz­zle. We look for risk indi­ca­tors. In some cas­es, we see we could have react­ed when we only had a few pieces. However, these things are easy to say in hind­sight, when we already have the entire picture.”

Makhmudov’s ties to Estonia

Makhmudov is like­ly the most close­ly asso­ci­at­ed with Estonia of all Russian tycoons. This is reflect­ed in busi­ness ties with Sergei Glinka and Maksim Liksutov who were giv­en Estonian cit­i­zen­ship for spe­cial ser­vices by PM Andrus Ansip in 2005. The busi­ness­men had a plan for a coal ter­mi­nal at the Port of Muuga to export coal from the Kuznetsk Basin in Russia, but the grand ven­ture was ruined by the Bronze Night in 2007.

Despite this, Liksutov became a very use­ful asso­ciate for Makhmudov. Liksutov par­tic­i­pat­ed, as junior part­ner (togeth­er with Glinka), in the acqui­si­tion of sev­er­al Russian train car fac­to­ries and the two busi­ness­men cre­at­ed air­port ser­vice rail com­pa­ny Aeroxpress that is still suc­cess­ful­ly oper­at­ing in Moscow. Liksutov was cru­cial for Makhmudov after he became head of trans­port in Moscow and lat­er deputy may­or (that caused him to renounce his Estonian cit­i­zen­ship in 2012).

As Russia’s lead­ing rolling stock man­u­fac­tur­er, Makhmudov’s Transmashholding is prof­it­ing from large-scale sub­way devel­op­ment in Moscow that began when Liksutov land­ed in the city gov­ern­ment. Makhmudov’s com­pa­ny (owned part­ly by Glinka) oper­ates rail traf­fic in and around Moscow and Moscow Oblast, includ­ing an inner-city rail­road line, serv­ing a total of at least 750 annu­al passengers.

Original source of arti­cle: news.postimees.ee