Sunday

25th Jun 2017

Investigation

Illicit Russian money poses 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”.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

  • 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.

Interview

EU visa waiver unlikely to import Ukraine crime

Visa-free travel, which began last week, unlikely to prompt a Ukrainian crime wave, an EU police expert has said, but Ukraine itself is seeing increases in lawlessness.

News in Brief

  1. Merkel and Macron hold symbolic joint press conference
  2. Juncker has 'no' clear idea of kind of Brexit UK wants
  3. Belgian PM calls May's proposal on EU citizens 'vague'
  4. UK lacks support of EU countries in UN vote
  5. Spain to command anti-smuggler Mediterranean force
  6. Estonia confirms opposition to Nord Stream 2 pipeline
  7. Ireland and Denmark outside EU military plan
  8. EU leaders renew vows to uphold Paris climate deal

Stakeholders' Highlights

  1. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  2. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  3. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  4. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  5. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  6. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  7. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  8. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  9. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  10. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  11. Malta EU 2017End of Roaming Charges: What Does It Entail?
  12. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move

Latest News

  1. Macron’s investment screening idea watered down by leaders
  2. Leaders unimpressed by May’s offer to EU citizens
  3. New Irish PM praises unscripted nature of EU summits
  4. EU extends sanctions on Russia
  5. UK's universities set 'Brexit wish list'
  6. Decision on post-Brexit home for EU agencies postponed
  7. May's offer on citizens’ rights dismissed as ‘pathetic’
  8. 'Historic' defence plan gets launch date at EU summit

Stakeholders' Highlights

  1. European Social Services ConferenceDriving Innovation in the Social Sector I 26-28 June
  2. Dialogue PlatformMuslims Have Unique Responsibility to Fight Terror: Opinon From Fethullah Gülen
  3. EUSEW17Check out This Useful Infographic on How to Stay Sustainable and Energy Efficient.
  4. Counter BalanceEuropean Parliament Criticises the Juncker Plan's Implementation
  5. The Idealist QuarterlyDoes Europe Really Still Need Feminism? After-Work Chat on 22 June
  6. EUSEW17Create an Energy Day Event Before the End of June. Join the Call for Clean Energy
  7. UNICEF1 in 5 Children in Rich Countries Lives in Relative Income Poverty, 1 in 8 Faces Food Insecurity
  8. International Partnership for Human Rights26 NGOs Call on Interpol Not to Intervene Versus Azerbaijani Human Rights Defenders
  9. Malta EU 2017Significant Boost in Financing for SMEs and Entrepreneurs Under New Agreement
  10. World VisionYoung People Rise up as EU Signs Consensus for Development at EU Development Days
  11. ILGA-EuropeLGBTI Activists and Businesses Fighting Inequality Together
  12. Nordic Council of MinistersNordic Prime Ministers Respond to Trump on Paris Agreement