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24th Jul 2017

Investigation

EU countries launch joint probe into Magnitsky affair

  • Sikorski: 'Corruption can only be rooted out when there is leadership from the top' (Photo: Images_of_Money)

Financial sleuths from six EU countries are joining forces to see if millions of euros of Russian mafia money was laundered through their banks.

The move comes after the European Commission introduced a request for a joint investigation at a meeting of the so-called Financial Intelligence Units platform (FIU.net) on 7 February.

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FIU.net holds regular meetings of anti-corruption experts from EU interior ministries and operates a secure IT network helping them to exchange data.

Cyprus, Estonia, Latvia and Lithuania were already looking into allegations that some of the €230 million embezzled by the "Klyuev group," an organised crime syndicate, from Russian tax authorities in 2007 was wired via Russian and Moldovan banks to firms in their jurisdictions.

Austria and Finland have also carried out probes.

Their prosecutors earlier said there is no evidence crimes were committed on their territories.

But an EU commission source, who asked to remain anonymous, noted that they are taking part in the 7 February initiative. "There was no negative reaction from any member state … The FIUs are working on the case and there will be a follow-up meeting before the summer," the contact said.

The Kluyev investigation is a potentially explosive issue in EU-Russia relations.

Prompting outrage by Russian leader Vladimir Putin, the US last year imposed sanctions on Russian officials and gangsters said to have conspired to murder a Russian accountant, Sergei Magnitsky, who exposed the tax scam.

EU foreign affairs chief Catherine Ashton has so far ignored calls by MEPs to consider similar measures.

But her colleague, home affairs commissioner Cecilia Malmstrom, has been raising the case informally at meetings of EU interior ministers, stirring wider interest.

For his part, Polish foreign minister Radek Sikorski on Thursday (21 February) called for "leadership from the top" in handling the affair.

When asked by EUobserver at an event in the European Parliament if EU countries should take joint action on the money laundering probe, he said: "Clearly, it's a matter for international collaboration to purge corruption wherever it rears its ugly head. Corruption can only be rooted out when there is leadership from the top. So I believe in co-operation so that we oust the guilty parties and return the money, not just in this case but in all cases, to its rightful owners."

Sikorski spoke following a visit to Moldova earlier in the week.

Moldova's National Anti-Corruption Centre (NAC) in December also launched criminal proceedings into the case.

But there is a question mark on whether NAC chief Viorel Chetraru will do a proper job.

Chetraru has been exposed in Moldovan media as the owner of a luxury property worth up to €300,000 - well out of proportion with his salary - built on land seized by his agency in 2004.

He is also a personal associate of Gregory Gachkevich, the former head of Moldova's Banca De Economii, said to have wired the Russia mafia money on his watch.

Moldovan Prime Minister Vlad Filat recently launched a purge on corruption despite the fact it threatens to destroy his coalition with the Democratic Party, some of whose people are at the centre of allegations.

He also wrote a letter to Chetraru telling him to take action on the Kluyev probe after Chetraru sat on evidence for six months.

With Moldova in line to initial a political association pact with the EU in November, Poland's Radek Sikorski added on Thursday: "We regard the standards on fighting corruption as one of the strong indicators of whether a country wants to respect the spirit of association agreements and get closer to Europe."

Meanwhile, for Bill Browder - the CEO of Hermitage Capital, a UK-based hedge fund which used to employ Magnitsky - the EU's joint police and judicial bodies in The Hague, Europol and Eurojust, should also get involved.

"The key to freezing the proceeds and prosecuting the criminals is by having international law enforcement co-operation through Europol, Eurojust and the FIUs," he told this website.

EUobserver investigative reports

"The Magnitsky Affair" is the latest in a series of EUobserver investigative reports. It looks at what the EU is really willing to do to confront Russian human rights abuses on its doorstep.

Orban vows to defend Poland from EU's 'inquisition'

The Hungarian leader called EU Commission vice-president Frans Timmermans an "inquisitor", allied with George Soros and the Brussels elite, and argued for the EU executive to stop being a political body.

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