Thursday

20th Sep 2018

Investigation

Two EU countries shut down money laundering investigations

Austria and Finland have said their companies did no wrong in a case of suspected Russia-EU money laundering. But victims of the crime disagree.

The sums involved are not so big - $150,000 in Austria and $199,500 in Finland.

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  • Browder: 'Dirty money was used to buy luxury goods before being returned to Russia as 'clean' assets' (Photo: ljlphotography)

But according to documents obtained by the UK-based investment firm Hermitage Capital, the money is part of the largest white collar crime in Russian history, a money laundering operation involving six EU countries and a plot to murder its Russian accountant, Sergei Magnitsky.

Bank statements sent by Hermitage to Austrian authorities show that in 2008 a Moldovan firm wired $150,000 to Austrian company Colop, which makes rubber stamps.

Documents sent by Hermitage to Finland show that the same year a second Moldovan firm made a payment to Finnish fur supplier, Saga Furs.

The money originated in the embezzlement of $230 million from Russian tax authorities by an organised crime group, the so-called Kluyev group, and went through a maze of Russian and Moldovan banks before coming to the EU.

When Magnitsky exposed the fraud, he was jailed and died in suspicious circumstances while in custody.

But for his part, Christian Hubmer, a spokesman for the local prosecutor in Linz, Austria, the home of Colop, says his people can find no record of the dodgy payment.

"[We] checked the account of Colop and the amount you spoke of didn't come in; why I (we) don't know. So the prosecutor's office did its work and checked the complaint," Hubmer told EUobserver last week.

He added that the case is now being closed.

The Finnish National Bureau of Investigation (NBI) shut down its probe in November.

It said in a letter to Hermitage that "there is … reason to believe that the sum of $199,500 originates from proceeds of crime."

But it noted that no crime was committed in Finland because Saga was "not aware of the criminal origin" of the money and that it has "no reason to suspect that Saga … acted by gross negligence" in failing to check where it came from.

The fur story shows the slipperiness of the Klyuev operation.

According to NBI, the Moldovan firm hired the services of one of Saga's regular clients. The Saga client wired the Moldovan money to Saga, which used it to buy furs in an auction. Saga then hired a forwarding company to ship some of them to Estonia, while the Saga client used its own forwarding firms to ship the rest of the furs to Russia.

The net result is that Saga knew little about where the money came from or who its furs went to.

For Hermitage chief Bill Browder, Austria and Finland's explanations do not stack up.

He noted that Lithuania and Switzerland have frozen bank accounts and that Cyprus, Estonia, Latvia and Moldova have opened criminal proceedings on the back of the same information he gave to Austria.

"How could Austria come to a different conclusion than six other law enforcement agencies based on the same evidence?" he told this website.

He is also drafting a fresh complaint to Finland.

"Dirty money was layered through several banks in several different countries and then used to buy luxury goods before being returned again to Russia as 'clean' assets. If one was to agree with the decision of the Finnish police, then one should also accept that Russian organised crime has created a new scheme to launder money that will never be challenged by the Finnish authorities," he said.

See no evil

Austria and Finland are not alone in showing reluctance to confront Russian interests.

Cypriot authorities sat on Hermitage's complaint for six months before German politicians began to say it might not get an EU bailout unless it takes action on money laundering.

Its sleuths are currently poring over Hermitage files.

But for Christos Pourgourides, a former Cypriot MP who runs a law firm in Limassol, Cyprus, and who has examined the evidence, things look black and white.

"There is a substantial case proving that some of this stolen [tax] money came to Cyprus," he told EUobserver.

He added that Cyprus should not be made a scapegoat because big EU countries also have a poor track record on Russia, however.

Recalling his previous experience in the Council of Europe, the Strasbourg-based human rights watchdog, he said that large EU states routinely vote against Russia-critical resolutions for the sake of diplomatic relations.

"How can Cyprus, a small island, be expected to stand up to Russia, when other countries, such as Germany and France, don't do it? This must be done at the top level of Europe in co-operation with all the member states," Pourgourides noted.

Browder agreed.

"The only way to stop transnational organised crime is for all the nations that have been used by the criminal groups to co-operate. It doesn't work if certain countries don't take their responsibilities seriously," he said.

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