Tuesday

16th Jul 2019

Investigation

Illicit Russian billions pose threat to EU democracy

  • Shekhovtsov: "Schemes such as the Laundromat are used for these operations" (Photo: frankieleon)

Russia has secretly funded anti-EU political parties in Europe, but its attempts to buy influential individuals is a greater threat to democracy, experts have warned.

With France heading for elections on Sunday (23 April), Mediapart, a French investigative website has revealed that the far-right National Front borrowed €11 million from Russian sources in 2014 and planned to borrow a further €3 million last year specifically for "financing the electoral campaign".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Cypriot president (l) with Putin. Cyprus had more illicit Russian money in its banks than its own GDP (Photo: kremlin.ru)

There was nothing illegal about it, but both sides went to some lengths to conceal their activities.

The money came or was to come from Kremlin-linked banks, funds, and oligarchs instead of from the Russian state budget.

The €11 million was also funnelled via opaque structures in Cyprus to accounts controlled by party leader Marine Le Pen or by her father and former party leader Jean-Marie Le Pen.

Meanwhile, Germany's Bild newspaper has reported that Russia has funded the far-right AfD party in Germany ahead of elections in autumn.

AfD denied it, but Russia's modus operandi was so sneaky, Bild said, that the party might not have known it was being subsidised. It said, citing German intelligence sources, that Russia did it by selling gold to the AfD at below-market prices using middlemen.

Anton Shekhovtsov, a scholar of the subject at the Institute of Human Sciences in Austria, told EUobserver that Russia also had clandestine links to anti-EU parties on the far left, naming the Left Front in France, whose candidate Jean-Luc Melenchon is a frontrunner in the presidential election, and to Die Linke in Germany.

He said that if French or German journalists wanted to dig further "they should investigate the business activities of the party leadership and of people close to the leadership".

Russia has also cultivated more-or-less open ties with anti-EU parties further afield in Europe.

The list includes opaque "cooperation agreements" between the ruling United Russia party and the far-right FPOe in Austria, Jobbik in Hungary, Lega Nord in Italy, and, in what is still a work-in-progress, with Italy's Five Star Movement.

It also includes behind-closed-doors symposia that were organised by Kremlin-linked Russian oligarchs, such as Vladimir Yakunin and Konstantin Malofeev, and that brought together delegates from Germany's neo-Nazi NPD party, Bulgaria's far-right Ataka party, the far-left KKK party in Greece, and the pro-Kremlin Latvian Russian Union party.

But according to Shekhovtsov, the multi-million euro loans to the National Front appeared to be "an exception rather than a rule" and Russian financial or organisational support for anti-EU parties was not, in many cases, part of a Kremlin plot to sway upcoming elections.

"There is no coherent structure as such - there are various Russian actors who are trying to build ties with the European far-right, for instance. These ties are built on the basis of old networks", some of which go back to the early 1990s, he told EUobserver.

He said some European parties on the far-right or far-left were backing Russian leader Vladimir Putin for free because they "genuinely believe that Putin's Russia is guided by the same ideology they have".

He also said that funding for anti-EU parties was not good value for money because those parties remained independent, and because, the National Front aside, their "political power remains very limited".

He said parties such as the National Front and the AfD were primarily motivated by national issues instead of by foreign policy even if they did take the Kremlin's dime.

"There is no evidence that would suggest that the National Front is a Russian foreign agent," Shekhovtsov said.

"The AfD is independent from the Kremlin and would exist without Russia because it is a phenomenon that is rooted in German domestic politics", he added.

He said EU governments should instead be more wary of Russian efforts to buy the services of influential individuals in Europe.

"Russia would rather destroy the EU through corruption, implying collusion with establishment figures … than through the support of anti-EU forces", he said.

"Having access to the establishment is a more efficient way to exert influence on Russia-related politics", Shekhovtsov added.

No shortage of funds

Recent probes by the ICIJ, a club of investigative journalists in Washington, and by the OCCRP, a similar club in eastern Europe, have showed that there was no shortage of illicit Russian money in Europe that could be used to buy friends in high places.

Probes by US investigators and by Bill Browder, a British-American businessman who became a human rights activist, showed the same.

The ICIJ's "Panama Papers" investigation uncovered a money trail worth $2 billion (€1.9bn) of illicit funds linked to Russian leader Vladimir Putin that were funnelled using a law firm in Switzerland and a bank in Cyprus.

The OCCRP's "Laundromat" probe uncovered a trail worth $20 billion that went through almost every jurisdiction in the EU.

Sixty four million dollars of it ended up in the pockets of beneficiaries in Germany and $6 million in France.

A US probe into Germany's largest lender, Deutsche Bank, showed that it helped Russian clients to secretly move $10 billion out of the country.

Browder's investigation showed that the Kluyev Organised Crime Group in Russia, which had links to interior ministry officials and to the FSB intelligence service, used EU banks to launder $230 million of stolen money.

Thirty three million dollars of it ended up in France and $39 million in Germany.

Suspicion has swirled around certain German and Finnish MEPs in Brussels who appear to act in Russia's interests in a way that does not correspond to their parties' agendas.

It swirled around a prominent German MP in the ruling CDU party who later died in mysterious circumstances in 2014.

It also prompted a rare prosecution of Bela Kovacs, a Hungarian MP, who earned himself the nickname "KGBela" by reference to the KGB, the former name of Russia's FSB intelligence service.

It takes hard evidence and the resources to find it in order to name suspects, however.

When asked by EUobserver if he could give examples of Russian corruption operations in Europe, Shekhovtsov said: "I suspect that schemes such as the Laundromat are used for these operations", but he declined to name individual beneficiaries.

"This would be a very strong accusation, for which really strong evidence is needed", he said.

It also takes courage to name people.

Browder, who transformed his hedge fund in London into an investigative bureau to go after the people who embezzled the $230 million using his former holdings in Russia, has received death threats and relies on British state and private security protection to do his work.

Exposure of the scam led to a string of murders in Russia, including the death in prison of Browder's former lawyer, Sergei Magnitsky.

It also led to the suspicious death of a Russian whistleblower, Alexander Perepilichny, in the UK.

Browder agreed with Shekhovtsov's assessment of the corruption threat to European institutions.

"The more Western people that are feeding at the Russian trough, the more advocates they have to help them with their political objectives", he told EUobserver in a recent interview.

He also agreed with the assessment that buying individual friends was a more "efficient" tool than political party funding if you wanted to influence EU foreign policy.

Relatively cheap

If it takes €11 million or more to help the National Front in France to contest elections, it took just £75,000 (€89,000) to buy the services of a British former attorney general, Browder said.

Browder recently testified in a House of Lords enquiry in the UK that Andrey Pavlov, a Russian lawyer who is on a US sanctions list for his part in the Kluyev Organised Crime Group [KOCG] scam, hired several consultancy and law firms with links to the British establishment to lobby against EU sanctions on Russia.

One of those firms, Debevoise and Plimpton, which has offices in Paris and Moscow as well as London, employs Lord Goldsmith, who was the UK attorney general between 2001 and 2007.

Goldsmith personally signed a letter, seen by EUobserver, "to represent you [Pavlov] in connection with the proposal and any further efforts to make you the subject of targeted sanctions by the European Union" in return for a relatively modest fee.

"Lord Goldsmith sold his name for £75,000", Browder told this website.

He said he could not prove that Lord Goldsmith's fee was paid out of the KOCG's stolen money, but he added: "What we can say is that Pavlov was a beneficiary of the $230 million fraud and he paid for these expenses from his own resources".

Some experts have said there is lack of evidence to support Shekhovtsov and Browder's warning that Russia has far-reaching corruption operations in Europe.

Mark Galeotti, a British scholar of Russian affairs at the Institute of International Relations in Prague, told this website: "While some money used to influence elections comes through companies and oligarchs at Moscow's behest, this is not common and this is about supporting people whose views are useful, not bribing people".

He added that "the idea that there are many officials or parliamentarians in Europe who can be considered [Russian] 'agents' is … questionable".

Browder said one reason for the lack of evidence is that law enforcement agencies have been either too slow or too unwilling to find it.

He said Europol, the joint EU police agency in The Hague, had created a "Magnitsky taskforce" to help trace the stolen funds in Europe.

But he said the KOCG was able to move money from Russia to France via Moldova, Latvia, Lithuania, Estonia, and Luxembourg in a matter of days, while it took at least three months for EU states to agree on bilateral "mutual legal assistance requests [MLAs]" to go after it.

He said the MLAs moved even more slowly if "one country that's a link in the chain becomes uncooperative".

He named Austria and the UK as being among the worst foot-draggers.

He also named Cyprus, which was at the heart of the Panama Papers, Laundromat, and Magnitsky money trails, and whose banks, according to a leaked report by the German intelligence services, at one point held $26 billion of illicit Russian funds - a sum that is bigger than the country's GDP.

Cyprus is a leading opponent of EU sanctions on Russia and has helped Moscow to attack Browder's lawyers in Nicosia.

If its actions were linked to its Russian hoard, it would represent an example of state capture by Russian corruption on a scale that dwarfed the Lord Goldsmith case.

Furs and diamonds

The Laudromat investigation showed that a lot of the Russian funds were spent on real estate, private school fees, rock concerts, furs, and diamonds.

But Mikhail Khodorkovsky, a former Russian oligarch whose political movement, Open Russia, works with Russian expats in the EU to uncover Kremlin operations, said that could be a good thing.

Russia's invasion of Ukraine, its military build-up, and its aggressive propaganda have raised fears of a clash with Nato to levels last seen in the Cold War.

But Khodorkovsky said that if the Kremlin elite had a financial stake in peace in Europe it would make Putin think twice before going further.

"If people took money out of Russia for a good life, then it would be OK. It would make Russia poorer, but safer, because people who have something to lose don't shoot", he said.

"Unfortunately, the same money is now being taken out to influence European society", he said.

A German translation of this article may be found here.

Investigation

Sex and lies: Russia's EU news

France and Germany have been targeted for years with fake news and lies designed to incite sexual revulsion toward migrants and the politicians who gave them shelter.

Russia suspected of Macron hack

Likely Russian spies tried to steal email passwords from Macron's people the same way they hacked US elections, new study says.

Investigation

Russische schwarze Kassen bedrohen EU Demokratie

Es kostete €11 Millionen Le Pen im Wahlkampf zu helfen aber es kostete die russiche Mafia lediglich €100.000, einen ehemaligen britischen Generalstaatsanwalt zu rekrutieren, um gegen die EU Sanktionen vorzugehen.

News in Brief

  1. EU states threaten Turkey with 'targeted' blacklists
  2. Iran one year away from nuclear weapon, UK warns EU
  3. US trade war slows China's economy
  4. UK, France, Germany call for dialogue with Iran
  5. EU satellite system temporarily offline
  6. New flaw detected in Brexit app for EU citizens
  7. Italian coalition clashes over Russian financing
  8. Germany wants 'coalition of willing' to distribute migrants

Analysis

EU should stop an insane US-Iran war

"If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!", US president Donald Trump tweeted on Monday (20 May).

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Stakeholders' Highlights

  1. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  2. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  3. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  4. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  5. Nordic Council of MinistersNordic commitment to driving global gender equality
  6. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  7. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  8. Nordic Council of MinistersNordic talks on parental leave at the UN
  9. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  10. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  11. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  12. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership

Stakeholders' Highlights

  1. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  2. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  3. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  4. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  5. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  6. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  7. Nordic Council of MinistersSeminar on disability and user involvement
  8. Nordic Council of MinistersInternational appetite for Nordic food policies
  9. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  10. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  11. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”
  12. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit

Join EUobserver

Support quality EU news

Join us