Why did Roman Abramovich, the owner of Chelsea football club and world famous oligarch, steal his money from ING in the Netherlands? And shouldn’t that bank have intervened more quickly when its transactions were identified as suspicious?
I really have to report this, an employee of the Deutsche Bank Trust Company America’s (DBTCA) must have thought. It’s June 2, 2016 and he’s sitting somewhere in the 227-meter-high Deutsche office at number 60 Wall Street, New York. In front of him he has the payments of a customer at ING in Amsterdam, with transactions that are too suspicious to be kept quiet for the American authorities. The ING account holder makes payments in enormous, nicely rounded amounts. It is often not immediately clear what these payments are intended for.
Such a combination of large, perfectly rounded and economically useless transactions alone could be grounds for reporting to the authorities. This combination indicates the possible concealment or laundering of illegal money. But the conscious account holder is also someone with political ties, what they call a pep in the jargon, a politically exposed person. The bank analyst writes quite frankly in his report: “Roman Abramovich is a close friend and ally of Russian President Putin.”
Abramovich. As the owner of the London football club Chelsea, he is one of the world’s best-known oligarchs. Estimated capital: more than 10 billion euros. An engaging man with his large, watery, blue-gray eyes and boyish face. But also the subject of various international studies into his person and assets. For example, the Swiss police labeled him “a potential danger to the population” when he applied for a passport in that country in 2016, media group Tamedia reported on the basis of a confidential investigation report. One of the reasons for that qualification was the suspicion of money laundering. Abramovich’s application was denied.
Why precisely in the small Netherlands?
Why did Abramovich steal his money from ING? Why precisely in the small Netherlands? He has houses all over the world, from London to New York, but not here as far as is known. And shouldn’t ING have dumped him as a customer because of those suspicious payments?
The report of the DBTCA employee comes from the FinCen files. U.S. banks are required to report unusual or suspicious transactions to FinCen, the Treasury Department’s financial intelligence agency. Thousands of those reports have come into the hands of journalistic research collective ICIJ (see box). Some are about transactions from European banks. American banks see this when they have a partner relationship with a European bank.
One dates from March 14, 2017, three quarters of a year after the first report about Abramovich’s payments through ING. DBTCA took a peek: between April 28, 2016 and January 27, 2017, Abramovich sent over $ 55 million (55,175,000 to be exact) back and forth between three of his personal bank accounts: at ING, the Russian Alfa Bank and a US branch of the Swiss UBS. Pump 55 million, he must know that himself, you might think. But DBTCA thinks it is suspicious that it regularly involves large, round numbers. Business transactions are rarely completed precisely. This behavior is more like sending money to disguise its origin in a mist of hot-to-re-payments. So DBTCA issues a second report.
For that pumping around, Abramovich uses several anonymous companies, letterbox companies that are used for little else than bouncing large sums back and forth, it seems. They are registered in countries that help shield the “ultimate beneficial owner” of the company, the person whose assets are involved.
You can indeed call them private and anonymous
DBTCA comes with a long list of letterbox companies that appear to be managed by Abramovich, or at least deal with his companies a lot. You can indeed call them private and anonymous. Take Eucla Investments limited, a letterbox company with an account with ING and an address in the British Virgin Islands. DBTCA only knows that Abramovich is the owner because an article about it was once published in the British newspaper The Guardian. Or Cantley Limited, also with an ING account and registered in the Virgin Islands. That Abramovich manages this company, DBTCA knows because they once asked questions about it to ING, which the oligarch then identified as the ultimate beneficial owner.
These are just a few of the companies that Abramovich seems to have to his name. ING confirms to DBTCA that the Russian manages a “large number of entities”. In its report of 14 March 2017, DBTCA spoons out fifteen and they seem to operate according to a fixed and striking pattern.
Each time, one of the companies with an ING account sends a large sum of money to a company from Abramovich’s network with an account at the Latvian bank Rigensis. That bank is largely in Russian hands and has been quite disappointed by regulators for lax anti-money laundering policy. That same day, the same amount is transferred to a third company from the oligarch’s network, which again has an account with ING in Amsterdam.
DBTCA gives five specific examples of this remarkable payment traffic. They go up to $ 33,259,000 per transaction. Add these amounts to those from other bank reports about Abramovich and ING, remove double counts and you come to more than 1.3 billion dollars in swinging money, well over a billion euros. That’s a substantial part of Abromovich’s ability.
Jan van Koningsveld, director of the Offshore knowledge center and previously employed by the Fiscal Intelligence and Investigation Service, sees a number of risk indicators converging here: a wealthy Russian, who has no activities in the Netherlands, with letterbox companies in Cyprus and the Virgin Islands. “That could be a reason for the bank to ask critical questions again, for example about the origin of that capital. If you get no or insufficient answers, you should consider saying goodbye. ”
Abramovich made his fortune in the gold, oil and metal trade
Why did Abramovich ever decide to keep that part of his assets with ING? His lawyer does not want to answer that question. Only here and there something becomes clear about its origin. The oligarch, “also known as Mr. R.A. Abramovich, “made his fortune in the gold, oil and metal trade, writes DBTCA, especially in the 1990s.
In his twenties, Abramovich began selling imported rubber ducks from his Moscow apartment in the late 1980s, the story goes. With the 2000 rubles he received as a wedding gift from his parents-in-law, he also included perfume and deodorant in his trade. His small empire allowed him to invest in oil. He became a true magnate when he became co-owner of the privatized state oil company Sibneft. In 2000, he left with his family for the most inhospitable region of Russia, the far eastern Chukotka, to become governor there. In his own words, because he wanted to do something else than earn money and to give something back to society. But according to sources from Catherine Belton, who published the book “Putin’s People” earlier this year, that public role had been imposed on him by the new president, Vladimir Putin. The oligarch wanted to keep it under control, she writes.
Abramovich’s most famous achievement, the purchase of Chelsea football club in 2003, was little more than a public relations stunt, Belton said. The British press loved his extravagant lifestyle, his then largest yacht in the world (168 meters long, two helicopter landing sites and a submarine pending) and his Boeing 767. In addition, he used his own money to buy players and refurbish the stadium. A former confidant of Abramovich told Belton: “With Chelsea, he gets three pages in the back of the paper and there is nothing negative in between. Nobody questions him. ”
But the bank should question someone like Abromovich, says professor and money laundering authority Louise Shelley of George Mason University in the US state of Virginia and director of the Terrorism, Transnational Crime and Corruption Center, which maps global money laundering practices. “He is an individual that you have to follow, someone you have to look closely at.” The kind of payment schemes DTBCA describes in its reports are “exactly of the kind” used to hide the origins of money, Shelley says.
“I literally can’t think of a legitimate reason to send these transactions around like this”
Graham Barrow, a British expert on banking policy and money laundering checks, also calls Abramovich’s payments “inherently suspicious”. “I literally can’t think of any legitimate reason to send these transactions around like this. Especially since they came back within one day. ” And remember that it costs money to make international payments of this size, he says. “So pumping around costs money, while banks see no underlying economic reason for it.”
He recalls a lawsuit in which a wealthy person went to court for a similar kind of pumping around of his wealth. “He argued that he thought one of his accounts had been hacked, which meant that his assets had to be transferred to another account. But even if that is also the case here, it is still illogical that Abramovich sends the money via multiple, foreign accounts to his other ING account.
In the UK, where Abramovich made himself somewhat popular with his club purchase at the beginning of this century, the failure to question oligarchs seems like a pattern. For a long time, Russian magnates were welcomed with open arms, a committee of the British parliament recently concluded. The British government hoped that Russian companies would become more transparent and ethical if they settled in London, the committee writes, but it worked the other way around: the capital transfer to London could actually be used to launder illegally earned money. After all, hardly any questions were asked about the origin of that money. And wealthy Russians with close Kremlin ties bought influence all the way into the British House of Lords. The committee is gloomy: measures to limit this influence are no longer preventive, they at most limit the damage.
That ING did not always ask the right questions to customers, became clear from a criminal investigation by the Public Prosecution Service. In 2018, ING settled with the Public Prosecution Service for 775 million euros due to negligence in the inspection of customers, who were given too much room for shady payment transactions. The OM’s investigation report states that ING classifies its customers based on risk and that it was too common for high-risk customers to end up in the wrong category, which meant that they were less likely to be subjected to more intensive investigation. And ING researched its customers at “account level”, not at “customer level”. In other words, if someone has multiple accounts, like Abramovich, the bank does not oversee the big picture.
ING may have reported Abramovich’s payment transactions to the Dutch authorities. If so, ING may not say anything about this to DBTCA if it inquires about the payments.
Is the Russian still a customer? His ING account appears to have been frozen. We send a small amount to the account number from the FinCen files and that will be returned. Reason? Refused for unknown reason.
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