ANTI CORRUPTION

Putin’s Czech and Mate: How Moscow bought the Czech president’s affection

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On January 26 and 27, the sec­ond round of the Czech pres­i­den­tial elec­tion takes place, with Miloš Zeman, the incum­bent and a known sup­port­er of Vladimir Putin, sup­pos­ed­ly lead­ing the race. As The Insider found out, his sym­pa­thies could be jus­ti­fied by his involve­ment in a major cor­rup­tion scheme per­tain­ing to the repay­ment of Russia’s fed­er­al debt to the Czech Republic through shady go-between com­pa­nies. The Lithuanian law enforce­ment has charged one of the inter­me­di­aries, Falkon Capital, with con­nec­tions to orga­nized crime and the Russian intel­li­gence, which con­tributed to the Lithuanian president’s impeach­ment. The com­pa­ny also took part in doubt­ful bank­rupt­cy schemes that under­mined the con­struc­tion of wind­mills in Kalmykia, Russia. The Insider spoke to a direct par­tic­i­pant of the cor­rup­tion deal with the Czech Republic and found out: the result­ing prof­its had been dis­trib­uted between the Czech pres­i­dent and the Russian par­ty, name­ly Anatoly Chubais and Alexei Kudrin.

Chubais’ peculiar agreement

During his meet­ing with Putin in Sochi at the end of last year, Miloš Zeman made such loud dec­la­ra­tions as «Ukraine has for­got­ten its his­to­ry» and «Czechia needs Russia more than it needs the EU.» Previously, he had admit­ted the pos­si­bil­i­ty of a ref­er­en­dum on the Republic’s exit from the EU and the NATO, referred to Russia’s annex­a­tion of Crimea as a «fait accom­pli,» and sug­gest­ed that Ukraine con­sid­er set­tling for «reim­burse­ment in cash or oil and gas ship­ments.» Zeman had also repeat­ed­ly demand­ed that the EU lift the sanc­tions imposed on Russia (although the mat­ter is out of his juris­dic­tion, with Czechia being a par­lia­men­tary repub­lic).

The for­mer Czech pres­i­dent, Václav Klaus, seems to have tak­en Zeman’s cue. In January 2015, he indulged Putin’s ears with a num­ber of state­ments on the Ukrainian issue. Thus, Klaus said that Ukraine was like­ly to repeat «the pos­i­tive sce­nario of the Dissolution of Czechoslovakia,» that Russia was not wag­ing a war in Ukraine, that Ukraine was a failed state, and Crimea had always been a part of Russia.

Klaus is a long-time acquain­tance of Anatoly Chubais, Russian politi­cian and ener­gy tycoon. In 2014, Chubais post­ed two tweets from his offi­cial (now delet­ed) account: «My old com­rade Václav Klaus, for­mer Czech pres­i­dent, has sent me a link to his arti­cle on Ukraine,» and «I could prob­a­bly chal­lenge some of his points, but no one can blame him of being super­fi­cial or par­tial. I’ve fin­ished his arti­cle – a fas­ci­nat­ing read. Highly rec­om­mend­ed!» In his «impar­tial» arti­cle, Klaus main­tains, among oth­er things, that «the mod­ern-day Ukraine is a lam­en­ta­ble lega­cy of Stalin’s time, when peo­ples were uproot­ed and bor­ders torn down» and that «Ukraine has no his­tor­i­cal tra­di­tion of state­hood.» Calling the Euromaidan «a Kiev Putsch,» he also proph­e­sies the impend­ing dis­so­lu­tion of the coun­try.

Anatoly Chubais and Václav Klaus, ex-pres­i­dent of the Czech Republic

Zeman and Klaus belong to the scarce group of European dig­ni­taries who open­ly, in no uncer­tain terms express their sup­port of Putin. Among European lead­ers, only Viktor Orbán shares their sen­ti­ment. The Insider has already explained Orbán’s par­tial­i­ty by the mon­ey Russian crime lord Semion Mogilevich paid to the politi­cian and his par­ty. It has now become appar­ent that the rea­son behind Zeman’s and Klaus’ rev­er­ence for Putin’s poli­cies may be just as triv­ial, although in their case, the mon­ey could have been pro­vid­ed through fed­er­al chan­nels with the assis­tance of none oth­er than Anatoly Chubais, for­mer head of RAO UES (Unified Energy Systems of Russia) and cur­rent chair­man of the exec­u­tive board at Rusnano.

Back in 1999, Zeman had not yet been elect­ed President; how­ev­er, as Prime Minister, he was the head of state. Zeman’s gov­ern­ment struck a baf­fling deal on the par­tial set­tle­ment of the USSR’s debt to Czechoslovakia (trans­formed into Russia’s debt to the Czech Republic after the two unions col­lapsed) to the amount of $3 bn. The young European state did not hold out mush hope that Russia would pri­or­i­tize this debt any­time soon. Nevertheless, in 1999, the Czech gov­ern­ment was offered a scheme of pay­ments through inter­me­di­aries – a pre­vi­ous­ly unknown Czech com­pa­ny Falkon Capital on the Czech side and RAO UES on the Russian side.

Both the Czech and the Russian media viewed the deal as cor­rupt. Czech media brought up the inci­dent dur­ing Miloš Zeman’s recent elec­tion cam­paign, empha­siz­ing that the deal had been inves­ti­gat­ed by the Czech intel­li­gence, and yet its details had nev­er been dis­closed in full. In Russia, the deal entered the spot­light in the ear­ly 2000s, when Novaya Gazeta, Kommersant, and Vedomosti dropped hints of pos­si­ble embez­zle­ment – albeit with­out any direct evi­dence.

The deal was a curi­ous one indeed. Paying a mere $400 mln to the Czech gov­ern­ment, Falkon Capital effec­tive­ly pur­chased Russia’s three-bil­lion-dol­lar debt. The plan was to set­tle the debt through barter deals, with RAO UES sup­ply­ing ener­gy to third coun­tries. However, as ear­ly as in 2001, Falkon yield­ed the debt to RAO UES itself. On September 13, 2001, Anatoly Chubais, chair­man of the exec­u­tive board of RAO UES, writes a let­ter to Alexei Kudrin, Russian min­is­ter of finance (The Insiderhas been pro­vid­ed a copy of said let­ter), request­ing that his min­istry pay $1.3 bn to Falkon Capital and $1.35 bn to RAO UES «in reim­burse­ment.» Under the same deal, Inter-RAO (a RAO UES sub­sidiary) began sup­ply­ing ener­gy to Belarus (which result­ed in a crim­i­nal case – read on for details) and to Ukraine.

The Insider con­tact­ed an eye wit­ness of the ear­ly stages of the deal – busi­ness­man Vladislav Moskalev, who also fea­tured in our sto­ry on under­hand­ed financ­ing of Alexei Uchitel’s noto­ri­ous movie Matilda  (in Russian). At present, Moskalev resides in Canada (which refused to extra­dite him to Russia), but back in 1999, he was at the cen­ter of events.

Tennis and the «Debt Settler Club»: Talks with Kasyanov and Kudrin

According to Vladislav Moskalev, in the 1990s, he was a mem­ber of Bolshaya Shlyapa («The Big Hat»), an elite ten­nis club that orga­nized tour­na­ments for gov­ern­ment offi­cials and top-tier busi­ness­men. Its orga­niz­er, banker Yarosav Kalagursky, intro­duced him to Paata Mamaladze, the founder of the afore­men­tioned Falkon Capital. (As Kalagursky told The Insider, he could not recall the sequence of intro­duc­tions).

Background infor­ma­tion:

According to the Czech com­mer­cial reg­is­ter, Falkon Capital was found­ed in Prague in 1995 by Paata Mamaladze and a group of ex-Soviet nation­als. It was not long before the founders dis­solved into thin air, to be replaced by Slovakian nation­al Josef Čimbora, who became the new CEO. The cur­rent man­age­ment of the com­pa­ny includes David Mamaladze, born in 1986, and Czech nation­al Karel Hlaváček.

«Foreign debts attract entre­pre­neurs like a mag­net. Discounts may vary from 10 to 80 per­cent,» explains Moskalev.  It was not Mamaladze’s first attempt at the trade: he had already tried to skim mon­ey off the reset­tle­ment of Libya’s debt to Czechia. “When Kalagursky revealed that Mamaladze was oper­at­ing through the Czech Ministry of Finance, I took an inter­est to it too.”

According to Moskalev, quite a few busi­ness­men were look­ing to pur­chase Russia’s debt to Czechia, but offers of set­tle­ment with tim­ber and oil ship­ments had been reject­ed:

«I was the one to sug­gest the pos­si­bil­i­ty of set­tling Russia’s debt to the Czech Republic with ener­gy sup­plies, notwith­stand­ing the fact that the cred­i­tor pro­duced its own ener­gy in abun­dance. My friend Oleg Sysuyev, who had just resigned from the Presidential Administration, arranged my meet­ing with the then Minister of Finance, Mikhail Kasyanov,» recalls Moskalev. Currently senior vice chair­man of the board of direc­tors at Alfa Bank, Oleg Sysuyev con­firmed that he had met Moskalev at the Big Hat ten­nis club, where they had even won a team tour­na­ment once, but he did not shed any light on the cir­cum­stances of Russia’s debt repay­ment to Czechia because «he has nev­er been involved in for­eign debt set­tle­ment.»

Vladislav Moskalev (clap­ping in the last row)

Moskalev offers the fol­low­ing account of the sub­se­quent nego­ti­a­tions:

Sysuyev and I sit down with Kasyanov. ‘So, what have you got?’ he asks with a polite smile. I say: ‘Foreign debt, Czech Republic. Shall we set­tle it?’ He says, ‘How do we go about it?’ I say, ‘With ener­gy sup­plies.’ Kasyanov was the first to show imme­di­ate inter­est, with­out any stu­pid ques­tions like ‘Why would Czechia want our ener­gy?’ Five min­utes into our con­ver­sa­tion, he says ‘All right, let’s give it a go.’ He asked us to pro­cure a let­ter from RAO UES to con­firm that the com­pa­ny was ‘will­ing to par­tic­i­pate in the set­tle­ment of Russia’s debt to the Czech Republic with ener­gy sup­plies.’ The recip­i­ent of said sup­plies was con­ve­nient­ly omit­ted, and when the deal came into force, the ener­gy was sup­plied to Belarus and Ukraine.”

Kasyanov and Kudrin

According to Moskalev, Kasyanov want­ed the let­ter to be «con­vinc­ing, at least two pages long» because he would have to present it to the Czech Ministry of Finance, but he was in for a dis­ap­point­ment.

«At the time, RAO UES’ sign­ing offi­cers were Chubais and Alexei Kudrin, his finance deputy. Sysuyev did his best to put me through to Kudrin, but the man was always busy. So I approached Kudrin through Alfred Kokh instead, as we had a num­ber of com­mon acquain­tances. Sysuyev asked him for a meet­ing on my behalf. Koch had already resigned from the gov­ern­ment and was work­ing on a new foun­da­tion with his friend Arkady Yevstafyev in Gazetny Alley, so I came to see him at his office. Together, we drove to the premis­es of RAO UES in Kitay-gorod, Moscow. Kokh and Yevstafyev entered Kudrin’s office, while I stayed in the lob­by. We had pre­pared the let­ter in advance to save time.

Kudrin and Chubais

Some 20 min­utes lat­er, Kokh and Yevstafyev reap­pear with morose faces: ‘He refused to sign it.’ I ask them: ‘How so?’ They reply: ‘He said he was out of his depth with it.’  To think that he became the Minister of Finance a cou­ple months lat­er! I say: ‘Ask Kudrin’s sec­re­tary to type a sin­gle sen­tence: ‘RAO UES of Russia seeks to par­tic­i­pate in the set­tle­ment of Russia’s exter­nal debt to the Czech Republic to the amount of $3 bn.” What if sim­ple lan­guage makes him more amenable? They pop into his office for a cou­ple more min­utes and then return with his sig­na­ture on the let­ter. I take it back to the Ministry of Finance, where Kasyanov asks me: ‘Have you brought the let­ter?’ ‘I have.’ ‘Let me see.’ He looks at it, makes no com­ment, but gives me a heart­felt smile. The Czech Ministry of Finance was noti­fied about the new option of Russia’s debt set­tle­ment. The next step was a con­tract between RAO UES and the com­pa­ny appoint­ed by the Czech min­istry as the debt con­troller – Falkon Capital.»

«I used my cell as the number of the agreement.»

Whereas Falkon’s doc­u­ments were signed by Josef Čimbora, the com­pa­ny was in fact run by Paato Mamaladze, says Moskalev. «When Mamaladze real­ized that the deal was on the table, he final­ly set up an office for his com­pa­ny – pre­vi­ous­ly, Falkon had oper­at­ed with­out one. By the time the agree­ment was drawn up, Kasyanov had already yield­ed his post to Kudrin and become Prime Minister. Kudrin’s posi­tion in RAO UES had been tak­en by anoth­er Chubais’ finance deputy, Anatoly Zelinsky. We nego­ti­at­ed the terms of the agree­ment for about a week. My posi­tion was that the Ministry of Finance should pay $5 mln to RAO UES in advance. Zelinsky report­ed it to Chubais, who said: ‘Go on then.’ After our fourth or fifth meet­ing, Zelinsky said, ‘You’ll have my sig­na­ture by ten tomor­row,’ and I relayed the good news to Mamaladze. However, on the fol­low­ing day, he says, ‘I can’t sign it; I’m scared.’ That was when my jaw dropped for the sec­ond time. I spent two hours reas­sur­ing him – and he begrudg­ing­ly signed it, say­ing, ‘I’m sim­ply tired; let’s see how it goes,’» recalls Moskalev.

According to him, Alfred Kokh sud­den­ly showed inter­est in the deal as well. «I left RAO UES and went to the air­port to catch a plane to Prague, but Kokh held me up. He sug­gest­ed that Andrei Rappoport should sign the agree­ment instead (Rappoport was a sign­ing offi­cer as well). As I saw it, Kokh and Rappoport were try­ing to steal the show. Kokh even said things like, ‘Vladislav, who do you think you are?’ However, we already had Zelinsky’s sig­na­tures on the papers, and they were left out of the deal.»

Moskalev says he sub­mit­ted the signed agree­ment to Mamaladze, and the Czech Ministry of Finance reg­is­tered it on the fol­low­ing day. “About six or eight months after all the approvals were giv­en, the first pay­ments under the agree­ment were made. By then, RAO UES had appoint­ed a sub­sidiary, Inter-RAO, to act on its behalf under the agree­ment. At the time of the deal, Inter-RAO occu­pied a one-room office at the Morskoi Dom busi­ness cen­ter near the Moscow City Duma. Mamaladze nev­er came to Russia, but his rep­re­sen­ta­tives at first expressed their sur­prise that such a major agree­ment was being man­aged by a tiny com­pa­ny, to which I respond­ed, «You’re the ones to talk.» Indeed, Falkon’s web­site does not even fea­ture a tele­phone num­ber or an email.

According to Moskalev, he was dou­ble-crossed: “A year lat­er, Zelinsky resigned, yield­ing his posi­tion to Leonid Melamed, who took over the Czech deal. <The Insider’s note: Melamed has been under home arrest since 2015 on charges of a major embez­zle­ment at Rusnano.> Unlike oth­ers, Melamed had no trou­ble siphon­ing off funds to inter­me­di­ary com­pa­nies with­out my assis­tance. Eventually, they got rid of me, with a neg­li­gi­ble exit pack­age, which Melamed had pos­si­bly pro­cured from his per­son­al funds – just enough for a few meals at the restau­rant. It was far from what we had agreed upon, but I had been aware of the risks, as I had not signed any papers with them. So I said to myself: ‘All right, they have my num­ber if they change their minds.’ Any dis­plays of out­rage would have been futile. Sysuyev had already quit the Presidential Administration for Alfa Bank, so there was no one to stand up for me. Besides – speak­ing of my num­ber – I used it as the num­ber of the agree­ment, as hid­den evi­dence of my par­tic­i­pa­tion in the deal. That is, the frame­work agree­ment was reg­is­tered by the Czech Ministry of Finance under the num­ber of my cell phone at the time: #1017/1755 of July 28, 1999.

The Insider made an inquiry to the Czech Ministry of Finance as to the exis­tence of the rel­e­vant entry in their reg­is­ter, but the Ministry « failed to find an agree­ment with the indi­cat­ed num­ber.»  Similarly, the Czech author­i­ties refused to pro­vide any com­ment on Falkon’s deal­ings to Vedomosti in 2004. «This com­pa­ny [Falkon] is not quite ordi­nary,» said the spokesper­son of the Czech min­istry. «We sug­gest that you refer to them direct­ly for fur­ther details.»

A few days after the agree­ment was signed, Zelensky sud­den­ly calls me: ‘Vladislav, we need mon­ey. It’s for Chubais.’ I felt like laugh­ing out loud – such mat­ters are dis­cussed from the get-go. What is more, it was appar­ent that the mon­ey was for his per­son­al needs, as the amount was mod­er­ate – around $150,000 – and the Ministry of Finance had not paid the advance yet. I had to explain that, as a com­mer­cial enti­ty, RAO UES could con­clude a con­sult­ing ser­vices agree­ment with a third-par­ty com­pa­ny with the for­mal objec­tive of find­ing debt set­tle­ment part­ners (that is, Falkon Capital). The result­ing doc­u­ment was Agency Contract #1-ChR of July 22, 1999.

Article 4 of the Contract (stud­ied by The Insider) reads as fol­lows: «The Principal (RAO UES of Russia) shall pay the Agent (Yukom-Libero) 3 per­cent of the amount received from the Ministry of Finance of the Russian Federation for the sup­plies, as a result of per­form­ing its oblig­a­tions under each of the sup­ply con­tracts con­clud­ed as agreed upon with the Agent, or 3 per­cent of the amount of debt relief or debt swap against RAO’s sched­uled or over­due pay­ments pro­vid­ed to the Principal by the Ministry of Finance of the Russian Federation.»

According to the act of accep­tance, Yucom-Libero has alleged­ly pro­vid­ed the fol­low­ing ser­vices: «The Agent has con­duct­ed nego­ti­a­tions with the Czech par­ty – the Ministry of Finance of the Czech Republic and its autho­rized rep­re­sen­ta­tive, Falkon Capital; secured their con­sent to accept ener­gy sup­plies as pay­ments on Russia’s for­eign debt; pre­pared the agree­ment between RAO UES of Russia and Falkon Capital; and facil­i­tat­ed the sign­ing where­of on July 28, 1999, under num­ber 1017/1755,» and so on. According to Moskalev, Anatoly Zelinsky received a one-time bonus for the project to the amount of $144,000.

In 2001, Yucom-Libero Finanz- und Handels Aktiengesellschaft (Liechtenstein) – Yucom-Libero for short – becomes an offi­cial co-own­er of Falkon. Neither Chubais nor Kudrin has pro­vid­ed any com­ment to The Insider.

Distribution of profits: «Consulting services» and Zeman’s share

Since the Falkon deal was inter­gov­ern­men­tal, it could not have been con­clud­ed with­out Zeman’s approval. In the Czech Ministry of Finance, the deal is said to have been lob­bied by Zdeněk Rachač, for­mer advi­sor to Václav Klaus who was in charge of the Soviet (lat­er Russia’s) exter­nal debt to the Czech Republic. As for Klaus, from 1998 to 2002,  he occu­pied the post of Speaker of the Chamber of Deputies.

Rachač’s efforts were duly reward­ed: he was includ­ed in the board of direc­tors of Falkon Capital on May 23, 2012, where he stayed up to the end of 2017, accord­ing to the Czech com­mer­cial reg­is­ter. In addi­tion, Rachač is a mem­ber of the super­vi­so­ry board of Hotel Praha a.s. – the legal enti­ty in charge of Hotel Praha, one of Falkon’s prop­er­ties with David Mamaladze (Paata Mamaladze’s broth­er) on the board of direc­tors. Interestingly, Falkon Capital’s board of direc­tors once fea­tured Tomáš Chňoupek, the son of for­mer Czechoslovak min­is­ter of for­eign affairs.

The Czech Ministry of Finance has refrained from any com­ment on the coin­ci­dences. Moskalev is cer­tain that Kudrin and Zelinsky were not left in the dust either. «I once accom­pa­nied Zelinsky on his trip to Prague, and lat­er he brought Kudrin there. Zelensky had a small share of the prof­its, while Kudrin’s share was more than fair. I don’t have any papers to con­firm it because I was quick­ly squeezed out of the deal, but this was what Inter-RAO employ­ees told me. While Zelinsky got paid for intro­duc­ing Kudrin to Falkon, Kasyanov got noth­ing.»

Contracts with Falkon Capital regard­ing the out­stand­ing debt to Czechia were signed even after Mikhail Kasyanov was dis­missed from the post of Prime Minister, when «only a hand­ful of offi­cials were privy to the intri­ca­cies of our debt set­tle­ment process.» According to Vladislav Moskalev, at least $2 bn was earned on dis­counts, and the remain­ing bil­lion cov­ered the actu­al ener­gy sup­plies to Belarus and Ukraine. «The Ministry of Finance paid $1.15 to Falkon, while it was com­mon knowl­edge that the Czech state was only get­ting $400,000.

The remain­ing $700,000 had already been dis­trib­uted among the par­tic­i­pants: like Melamed and Chubais, each of them had a share. As Mamaladze’s employ­ee told me, Chubais trans­ferred a share of the dis­count rev­enue to Zeman – both in bank trans­fers and in cash. Presumably, that was when Zeman got on the Russian hook.»

The remain­ing $1.3 bn was appro­pri­at­ed by RAO UES and Inter-RAO. (Besides, ener­gy sup­plies to Belarus under the «Czech debt set­tle­ment agree­ment» result­ed in a crim­i­nal case – see below.)

The Insider’s source, who worked in the Presidential Administration at the time of the deal, recalls: «The deal was report­ed to Putin; he was expect­ed to act on it. However, all he did was nod at Kasyanov, who refrained from any action against Kudrin, his min­is­ter of finance.» Nevertheless, as our source pre­sumes, Anatoly Chubais could have been dealt with – behind closed doors.

«Around 2005, a mid-rank­ing FSS offi­cer approached me,» says Vladislav Moskalev. «He was look­ing for incrim­i­nat­ing evi­dence on Chubais’ involve­ment in the Czech deal. In the mean­time, Izvestia authors start­ed bring­ing up Falkon Capital again. Apparently, the FSS learned about the deal and were out­raged at hav­ing been left out. Considering that the scan­dal was swept under the rug, Chubais must have reached an agree­ment with them. Here’s a sto­ry to illus­trate his close rela­tion­ship with Putin. In 2001, I dropped by Anatoly Zelinsky’s office for yet anoth­er round of Czech deal nego­ti­a­tions. Zelinsky waved me off: ‘We’re in the mid­dle of some­thing here – they need a bil­lion for Chechnya.’ That’s the kind of quo­tas they had.»

For a while, Falkon was also co-owned by Zeev Ofer, says the Czech com­mer­cial reg­is­ter. Moskalev claims to have known him as Vladimir Ofer; he also says the man now lives in an elite gat­ed com­mu­ni­ty near Moscow. (On Facebook, how­ev­er, Ofer has stat­ed Prague as his place of res­i­dence. Notably, his list of Facebook friends includes Alexei Kudrin.) «Mamaladze claims to have hired him as an envoy to Russia, as he was not allowed into the coun­try back then. Ofer sug­gest­ed that I get an Austrian pass­port – he said he had the right con­nec­tions. As I under­stand, Kudrin and his wife received sim­i­lar offers.»

The infor­ma­tion is indi­rect­ly con­firmed by pub­li­ca­tions on Evgeny Dod’s case – anoth­er par­tic­i­pant of the Falkon deal and top man­ag­er at RAO UES at the time. When he was detained in 2016 on the charges of embez­zle­ment at RusHydro (which he head­ed from 2009 to 2015), the police dis­cov­ered that he had a Czech res­i­dence per­mit. Moreover, his wife Ekaterina had opened an account in a Czech bank, where Zeev Ofer had wired €100,000 from his account in Liechtenstein. Ekaterina had trans­ferred the amount to Malta as a deposit to strength­en her Maltese cit­i­zen­ship appli­ca­tion.

«Milking» Belarus

Energy sup­plies to Belarus and Ukraine were not entire­ly law­ful either. Belarus ini­ti­at­ed a crim­i­nal case against Northern Products, a com­pa­ny that had pur­chased Belenergo’s two-mil­lion-dol­lar debt for the sup­plied ener­gy from Falkon; how­ev­er, after the bilat­er­al clear­ing, it had trans­ferred a con­sid­er­ably small­er amount to Falkon’s account. The inves­ti­ga­tion con­clud­ed that the rep­re­sen­ta­tive of Northern Products Ltd had «con­duct­ed ille­gal busi­ness activ­i­ties of par­tic­u­lar­ly large scale.»

Valery Dashkevich of Independent Institute of Socio-Economic and Political Studies, Minsk, offered the fol­low­ing inter­pre­ta­tion to Vedomosti: RAO UES was sell­ing ener­gy to Belenergo through Falkon, but Belenergo was per­ma­nent­ly indebt­ed to the lat­ter because con­sum­ing enter­pris­es were behind on their pay­ments. Intermediaries would buy Belenergo’s debts from Falkon with dis­counts. Falkon would yield the pro­ceeds to the Czech state bud­get, while the inter­me­di­aries would accept prod­ucts man­u­fac­tured by Belorussian enter­pris­es as pay­ment and sell them with a 200-per­cent return. «Enterprises would sign an act with Belenergo; the pro­ce­dure was called ‘ener­gy off­set,’» says Dashkevich. In 2004, RAO UES and Inter-RAO sup­plied Belarus with ener­gy through this scheme to the amount of $80 mln and $71 mln, respec­tive­ly.

Windmills in Kalmykia and St. Petersburg

In the 1990s, Kirsan Ilyumzhinov, pres­i­dent of Kalmykia (con­stituent of Russia), promised to build a «wind park» in the repub­lic. Two wind­mills were erect­ed. They served pri­mar­i­ly as a tourist attrac­tion and even­tu­al­ly fell apart. However, the com­mit­ment has been reaf­firmed dur­ing Alexei Orlov’s term. The com­pa­ny that under­took to deliv­er on the promis­es was the infa­mous Falkon Capital, with a total of 13 wind­mills in the works. In 2012, Paata Mamaladze vis­it­ed Kalmykia to study a «par­tic­u­lar­ly promis­ing invest­ment oppor­tu­ni­ty.» However, they built two wind­mills again and called it a day. Falkon Capital claims to have spent $26 mil­lion from its own funds.

 Kirsan Ilyumzhinov and Paata Mamaladze 

Bad luck with wind ener­gy did noth­ing to deter Falkon Capital. The Czechs found­ed Kalmykian Energy Company (KEC OJSC), a straw com­pa­ny that skimmed mon­ey off ener­gy sup­plies to res­i­dents of Elista, the Kalmykian cap­i­tal. Further on, Falkon Capital estab­lished Alten, a Kalmykian enti­ty head­ed by David Mamaladze, which bought 94 per­cent of the KEC. KEC does not pro­duce ener­gy; it is sup­pled by Kalmenergo – an affil­i­ate of Interregional Distribution Grid Company of the South (IDGC of the South, JSC).  Another local enti­ty, Kalmenergosbyt col­lects elec­tric­i­ty bill pay­ments from indi­vid­u­als and trans­fers them to KEC. KEC keeps its mediator’s fee and trans­fers the rest to Kalmenergo in pay­ment for the sup­plied ener­gy. However, when KEC’s debt to Kalmenergo exceed­ed 700 mln rubles ($12.5 mln), Kalmenergo appealed to the Commercial Court of Kalmykia, and KEC – Falkon’s sub­sidiary – was declared bank­rupt. Now KEC is run by a bank­rupt­cy admin­is­tra­tion. (The Insider has explained the scheme of debt eva­sion through bank­rupt­cy of a straw com­pa­ny on the exam­ple of Gazprom.)

However, bank­rupt­cy in Kalmykia did noth­ing to impede Falkon Capital’s expan­sion in Russia. The Governor of St. Petersburg took an inter­est in their ser­vices. On June 2, 2017, the city of St. Petersburg and Falkon Capital signed a let­ter of intent at St. Petersburg International Economic Forum. The agree­ment was signed by the Governor him­self, Georgy Poltavchenko, and Sergo Mamaladze, vice chair­man of the exec­u­tive board of Falkon Capital. «The Czech entre­pre­neurs» promised to pro­vide St. Petersburg with wind­mills by 2024 for 1 bn rubles, says the web­site of St. Petersburg City Administration.

Falkon’s links to the Russian mafia and intelligence

In October 2003, the State Security Department of Lithuania (VSD) sub­mit­ted doc­u­ments tes­ti­fy­ing to the «inter­na­tion­al orga­nized crime con­nec­tions of President Rolandas Paksas’ inner cir­cle» to the lead­er­ship of Seimas, the Lithuanian par­lia­ment. Among oth­er vio­la­tions, Paksas was charged with under-the-table nego­ti­a­tions with Falkon Capital.

«A num­ber of indi­vid­u­als direct­ly linked to the Russian intel­li­gence and inter­na­tion­al orga­nized crime groups seek to pri­va­tize Lithuanian eco­nom­ic enti­ties of strate­gic val­ue. Notably, Falkon Capital a.s., a Czech legal enti­ty direct­ly involved in the financ­ing of inter­na­tion­al ter­ror­ists, intends to par­tic­i­pate in the pri­va­ti­za­tion of the Mazeikiu Elektrine pow­er plant,» says the VSD report. On December 1, 2003, a spe­cial com­mis­sion of the Seimas con­clud­ed that Paksas could be «under the influ­ence of cer­tain indi­vid­u­als,» which «pos­es a threat to the nation­al secu­ri­ty,» and Paksas was impeached. «They nev­er went through with the pri­va­ti­za­tion. Falkon Capital even declared their intent to lit­i­gate, but to no avail,» recalls Lithuanian polit­i­cal observ­er Marius Laurinavičius.

David Mamaladze, mem­ber of the board of direc­tors at Falkon Capital up to November 2017, had head­ed the Presidential Protocol of Eduard Shevardnadze, ex-Soviet for­eign min­is­ter and sec­ond Georgian pres­i­dent. In a 2008 inter­view to Idnes, David Mamaladze stat­ed that Paata «does not speak to any­one, let alone jour­nal­ists» and cur­rent­ly engages in «oil trade, among oth­er things.»

David Mamaladze: a Czech of Georgian descent

According to Nino Nakashidze, ex-Geogian ambas­sador to Prague, «Paata has no con­nec­tions with Georgia or Georgians. He lives in Switzerland and asso­ciates most­ly with Russians; his wife is Russian too.» The Insider’s source in Georgia also pre­sumes that Mamaladze «has con­nec­tions in the Russian mil­i­tary and was a KGB ser­vice­man» back in the Soviet times. Quoting Salome Zurabishvili, ex-for­eign min­is­ter of Georgia, as their source, a num­ber of media have report­ed that Falkon Capital is actu­al­ly owned by «ex-GRU offi­cer Paata Mamaladze and a group of Russian busi­ness­men includ­ing Anatoly Chubais.» However, as Zurabishvili points out to The Insider, «there is no spe­cif­ic data on Mamaladze.»

With ref­er­ence to Salome Zurabishvili, ex-for­eign min­is­ter of Georgia, a num­ber of media have report­ed that Falkon Capital is actu­al­ly owned by «ex-GRU offi­cer Paata Mamaladze and a group of Russian busi­ness­men includ­ing Anatoly Chubais.»

«Paata Mamaladze was clear­ly at odds with the law in Georgia; as I under­stand, this was the rea­son why he couldn’t even vis­it Moscow in the 2000s. However, his recent appear­ance in Kalmykia may sig­ni­fy that he has been par­doned. It is true that he’s spent a lot of time in Schafhausen, Switzerland, as he has a friend there,» says Vladislav Moskalev.

As to why Russian author­i­ties have par­doned Mamaladze, our guess is as good as yours. Besides, Falkon Capital has announced at its web­site that it has installed a solar pow­er sta­tion on Mount Athos (some media claim the com­pa­ny has even built a church there). Mount Athos is a cov­et­ed des­ti­na­tion not only for Orthodox Christian pil­grims but also for Putin’s inner cir­cle. However, this could be a mere coin­ci­dence.

By Anastasiya Kirilenko

Putin’s Czech and Mate: How Moscow bought the Czech president’s affec­tion

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