Sanctioned oligarchs, millionaires and bankers: the ‘Pandora Papers’ uncover 3,700 opaque companies linked to Russia | The ‘Pandora Papers’

Russian oligarch Alexei Mordashov divested himself of his stake in the German tourism conglomerate TUI in February, as soon as European sanctions on almost a thousand Russian citizens linked to the Kremlin were made public. He sold his third of the company to Ondero Ltd, a British Virgin Islands company, one of the most opaque jurisdictions in the world. This company would be the new shareholder of the ‘holding’ with which Mordashov controls part of his investments in Europe. TUI thus seemed to disassociate itself from the sanctioned Russian.

Ondero Ltd. has been controlled, since 2018, by Ranel Assets, a company linked to Marina Mordashova, mother of the tycoon’s children, as revealed by the internal documents of the pandora papersan investigation of International Consortium of Investigative Journalists (ICIJ) in which more than one hundred media participate, EL PAÍS and La Sexta exclusively for Spain. It was at the end of March that TUI learned that Mordashova was behind the company, an example of how Russian elites use the global machinery of opaque companies to circumvent the sanctions imposed on them.

In the investigation, based on the leak of 11.9 million internal files from 14 service providers offshore, there are at least 42 Russian billionaires whose combined wealth is equivalent to 15% of Russia’s gross domestic product. Eleven have been the subject of recent sanctions for the war in Ukraine. In addition to Mordashov, in whose network the papers reveal the participation of the consulting firm PwC, there is information about Anatoliy Kerimov, a man in Putin’s circle of confidence; on Serguei Chemezov, whose boat has been seized in Spain, or on eight directors of large Russian banks, among which the sanctioned Peter Aven, the executive of the largest Russian bank Herman Gref or Mijaíl Fridman, shareholder of Alfa Bank and (until beginning of the war) of DIA supermarkets.

In the files are 3,700 companies linked to more than 4,400 Russian citizens, the most common nationality in the documents. They were created by providers specialized in operating with companies, trusts and foundations often used to hide assets in secret jurisdictions, far from the eyes of the haciendas and national authorities.

Alpha Group, one of the firms at the center of the leak, is the one with the most Russian representation among its clients: four out of ten companies it manages are linked to Russia, according to an analysis of the leak data. This Monday, the ICIJ adds the information of that firm to its public database Offshore Leakswhich already adds more than 800,000 companies registered in opaque jurisdictions uncovered through various investigations.

How to lose track of millions of euros

In February 2003, Alexei Mordashov, then 37 years old, entered the Forbes magazine’s list of millionaires. Alongside this as-yet-unknown steel magnate was a list of celebrities ranging from talk show host Oprah Winfrey to the founder of the Red Bull energy drink. The Russian was written as “a self-made businessman.”

Even then, as the documents of the pandora papers, the consulting giant PriceWaterHouseCooper (PwC) was helping Mordashov’s millionaire climb to a fortune that Forbes today estimates at 29,000 million dollars. PwC assisted a company of this steel businessman to create and manage at least 65 opaque companies in the British Virgin Islands and other secrecy jurisdictions. The archives show how this network of companies was used to channel investments in European firms and, in Russia, to intervene in coal and wood exploitation companies or in the media.

Alexei Mordashov, considered the richest man in Russia and head of the Severstal industrial complex, with President Vladimir Putin in an undated photograph.
Alexei Mordashov, considered the richest man in Russia and head of the Severstal industrial complex, with President Vladimir Putin in an undated photograph.Mikhail Klimentyev (Getty)

In February of this year, the European Union and the United Kingdom have sanctioned Mordashov for the first time, due to his “links with the executive power” of Russia. Mordashev has lamented the sanctions saying he does not understand how they can contribute “to the resolution of the tremendous conflict in Ukraine”. The import ban also affects him directly: he owns Severgroup, with which he controls Severstal, the fourth largest steel producer in Russia, which exports some three million tons a year to EU countries.

That same month, Mordashov managed to escape the measures by divesting himself of his shares in the mining company Nordgold and in TUI, the tourism conglomerate that controls hotels around the world. The company forced the Russian to resign from the board of directors and sell his share (a third of the company).

At that time, Unifirm, the company with which Mordashov manages his investments, became dependent on Ondero, a company in the Virgin Islands that thus became the owner of 29.9% of TUI, a percentage valued at 1,400 million dollars (1,280 million euros). The pandora papers reveal that Ondero is owned by Marina Mordashova, indicated in the documents as “mother of the children” of the tycoon. Ondero, in fact, also took control of another company in the Virgin Islands that uses the Bombardier Global 600 aircraft registered in the Isle of Man and whose last registration places it in Moscow on March 4. The paperwork and procedures for this company were also carried out by PwC, as the documents reveal.

Mordashov has not responded to questions from the ICIJ about the change in shares and PwC, which has closed its operations in Russia after the invasion of Ukraine, assures that “it is in the process of abandoning all relations with sanctioned persons or entities controlled by them”

A similar situation, in which the trail of a tycoon disappears thanks to a shell company, is the one involving Suleyman Kerimov, one of the men in Vladimir Putin’s circle of trust. About this financial and industrial property with properties worth more than 9,800 million dollars (almost 9,000 million euros), according to the European Union, the ICIJ has already revealed that he had received large sums of money from Sergei Roldugin, considered the custodian of the Russian president’s fortune.

In October 2013, the investment bank BNY Mellon identified bank transfers of more than 270 million dollars (250 million euros) from a shell company in Cyprus to SH Advisors Limited, a company in the Cayman Islands. The bank failed to correctly identify the beneficiary of the company. But the files of the Trident Trust, one of the providers at the center of the pandora papersreveal that SH Advisors Limited was owned by Heritage XXI Holding Ltd, a shell company in the British Virgin Islands. Heritage is owned by the Suleyman Kerimov Foundation, a Swiss registered charity. A year later, the same bank reported millions of dollars in payments to LT Trading, which mistakenly associated a British entity with the same name: the pandora papers they reveal that the society, from the Virgin Islands, is linked to Nariman Gadzhiev, Kerimov’s nephew known to have worked with him. Through Swiss bank Credit Suisse, the company secured a $67 million loan to purchase two aircraft: a custom-built Boeing 737 Business Jet and a Bombardier Global Express.

The documents also reveal how another man close to the Kremlin used his network of opaque companies: this is Sergei Chemezov, CEO of Rostec, the giant Russian public arms company. His wife, Ekaterina Ignatova, and his stepdaughter, Anastasia Ignatova, are at the center of a network of nine companies in various secret jurisdictions linked to more than 350 million dollars (320 million euros) in assets and assets. Through Anastasia, Chemezov has also controlled several assets in Spain for years, as EL PAÍS revealed: an 85-meter yacht, held by the Spanish authorities, a villa near Girona and another in Estepona.

The offshore hideout of eight bankers

The Russian financial system has been one of the main targets of EU sanctions. But some bankers in the country already had an escape route to reduce the impact of these measures on their personal finances. During the last decade, eight executives in the five largest Russian banks (Alfa Bank, VTB and VEB, sanctioned, in addition to Gazprombank and Sberbank) have taken advantage of the secrecy offered by the offshore financial world to hide assets in distant jurisdictions, as revealed by this new delivery of the pandora papers.

Eight bankers can be linked to different operations in opaque jurisdictions carried out in the last decade, while Russia’s relations with the rest of the world worsened after the wars in Syria, Crimea and Ukraine. They often occur just before or after international sanctions come into effect.

Gazprombank’s Andrey Akimov, VTB’s Yuri Solivev and VEB’s Igor Shuvalov used opaque companies to invest in luxury villas in London and Cyprus. Herman Gref, executive director of the largest bank in Russia (Sberbank) used an offshore network in Singapore in 2015 to reorganize the 75 million dollars (68 million euros) of a family trust.

Peter Eve, German Khan, Alexey Kuzmichev and Mikhail Fridman, the founders and owners of Alfa Bank, are the four ultimate beneficiaries of a group of companies that control at least $1.8 trillion in assets, allegedly used for “operations with financial instruments.” .

An office of Alfa Bank in Moscow
An office of Alfa Bank in MoscowAndrey RudakovBloomberg

Alfa Bank, the largest entity not directly controlled by the Kremlin, was sanctioned in February by the United States and the EU, which claim that the four directors have “a close relationship” with Vladimir Putin. The Russian president, according to the EU, “compensated for Alfa Group’s loyalty to the Russian authorities by offering political aid to their investment plans abroad.”

The pandora papers reveal that the four, who have ties to offshore companies since the early 1990s, transferred to a “nominal shareholder” in Cyprus the shares of that shell company that they used for “consulting” and “operations with financial instruments” that accumulated 1.8 billion of dollars in assets. The operation, carried out in 2014 after Russia annexed the Crimean peninsula with the consequent round of Western sanctions, allowed that shareholder to appear as the sole real owner in public documents. The company, based in the Virgin Islands, was dissolved in 2019.

Contacted by the ICIJ, Shuvalov and Aven have denied any illegalities in their operations. Fridman, for his part, has been one of the first oligarchs to openly oppose the invasion of Ukraine. The rest of the bankers have not answered the questions.

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