Ablyazov’s Irish connection: a tale of two Dublins and basketball games

Who would tend to think that after almost half a decade of revelation after revelation of the tremendously complex financial diversion network deployed by one-time president of Kazakhstan’s bruised and battered BTA bank, including those brought up by lawyers in English courts of law, can still be in for some surprises these days. With the main culprit still on the run, BTA is now faced with the laborious task to grasp whatever it can lay its hands on in terms of assets and cash. Still, there are missing links in the reconstruction of Ablyazov’s schemes. At least one, and possibly more of them have been disclosed through a campaign by an international team of investigating journalist known as Offshore Leaks. The team, operating under the name Organised Crime and Corruption Reporting Project (OCCRP), has found traces of one of the biggest fraud cases, known as the Granton scheme and worth more than 2 billion US dollar – around an Irishman who is described in its reports as one of the shrewdest and most sophisticated global offshore brokers by the name of Philip Burwell. It adds Ireland to the ever-growing list of offshore havens together with The Netherlands, the British Virgin Islands, Cyprus, the Seychelles and others. But also New Zealand and the USA, with the latter always being the first and loudest to cry wolf over money laundering, herewith make their entry into the obscure hit parade.


Ablyazov’s Irish connection: a tale of two Dublins and basketball gamesIn a recent article, the London-based Sunday Times (http://www.thesundaytimes.co.
) shed some more beams of light on the complex Ablyazov pile of files – this time not gathered from a London court of justice but from an independent source. At the centre of the research stands Irish “corporate consultant” Philip Burwell, who operates from his home in a low-profile neighbourhood of Dublin, which does not prevent him from being “one of the world’s most prolific corporate offshore agents” in the paper’s words. “Burwell’s skill is creating complex networks of companies with nominee directors and nominee companies, often in remote corners of the world, acting as directors and shareholders,” the Sunday Times’ article on the issue, relying on reports publicised by the Organised Crime and Corruption Reporting Project (OCCRP – http://www.reportingproject.net/proxy/en/behind-the-proxies), was to read. “These nominees have little or no involvement in the businesses for which they are ostensibly responsible and their only role is to act as a front for the real owners. Investigators on the trail of illicit funds have often found themselves trying to unpick one of Burwell’s labyrinthine corporate structures.”

Burnwell’s name appears in relation to names which have been known for some time where it comes to funneling illicit funds through the offshore circuit. “Burwell has used a panel of Latvian nominee directors, including Erik Vanagels, a pensioner, and Stan Gorin, a law graduate,” the report reads on. “He has appointed more than 10 nominee companies to own shares, including one called Milltown Corporate Services and another called Ireland and Overseas Acquisitions. […]Burwell also helped to create a company for Mukhtar Ablyazov, the Kazakh billionaire accused of looting the BTA bank in Kazakhstan  of $5bn. The company, Loginex Projects LLP, was among a number of companies that were allegedly used to move $1bn illegally from the bank. Burwell said the financial ransacking of the bank was considered “the biggest fraud” in history. He created Loginex Projects LLP, but said he did not know it would be used for laundering. Burwell also set up offshore companies for the son of Valery Kargin, one of the founders of Parex, Latvia’s largest private bank. The bank collapsed in December 2008. Kargin and a fellow director were sued for having “enriched themselves at the bank’s expense”. Burwell said he was not responsible for the operation of the companies he helped to create and appointed nominee directors and shareholders under instruction from clients.”

The next to appear on the scene within the chain eventually leading to Ablyazov and associates has been another Latvian named Gints Poiss, “…who served as chairman of the Parex advisory board from the early 1990s to 2005, and continued as board member until nationalisation in 2008,” in the OCCRP’s words. But from there on, basketball was to serve as a front for the bank’s hazy offshore activities, and it was on the field where the nomenclature within the financial network came together. “Poiss had a low public profile with the bank but a high profile with the Parex Bank corporate basketball team where he served as captain and competed in the annual tournament of Latvia’s Association of Commercial Banks,” the report reads further. “The Parex team was coached by his father-in-law Peteris Rauda, and Poiss played alongside his brother-in-law, Martin Rauda, a Parex employee, according to Poiss and members of the Rauda family. Martin Rauda is also one of the main proxy directors among the Latvian group who serves as director of the Panamanian companies Cascado and Systemo  and the Cyprus registered Fynel Limited. […] Another former semi-pro player named Uldis Feldmanis also played for the Parex team. Feldmanis is the director of a company called OMI and may have played a role in the proxy system. And then there was Phillip Burwell, an Irish registration agent. Poiss and Burwell have been friends for 20 years, since the founding of Parex bank according to comments from Burwell.”

The basketball scheme lasted only until the middle of the first decade of the new century. From there on, a new brand was to appear on the horizon – both in the sportive and the corporate domain. “Somewhere around 2005 Poiss and Feldmanis left the Parex team and turned instead to organising, funding and playing for an amateur team called simply ‘I.O.S.’ Feldmanis displays certificates of the IOS team’s participation in a 2006 tournament along with medals and trophies. Feldmanis denied to OCCRP that he played for IOS and said that he had simply failed to give the certificates to IOS.  However, a website and press clippings from the time indicate he did play for the team.  Team ‘I.O.S.’ shows up not just on Latvian basketball courts, but also in British law courts. In a lawsuit brought by oil giant Royal Dutch Shell against one of its traders accused of taking kickbacks, International Overseas Services or ‘I.O.S.’ is named as a company services provider that set up an offshore company used in the corruption scheme.”

“In October 2008, a New Zealand registration agent made a number of filings to the New Zealand company register, on behalf of companies using Vanagels, Gorin and other Latvian proxies,” the report reads. “The filings notified the register that one Latvian proxy director Inta Bilder would replace another Latvian proxy director Voldemar Spatz for a batch of 18 shell companies owned ultimately by Unihold Ltd, which listed as its director Vanagels. The paperwork filed by the NZ company services provider still bore the fax headers from the name of the company who ordered the change in proxies.  That company was Parex Bank of Riga. […] The bank’s depositors took pains hide their identity behind shell companies, offshore zones with minimal disclosure, and nominee directors. One month after these tell-tale documents were filed, the global financial storm swept away Parex Bank’s foundations, which were made tenuous by more than a billion US dollars in loans from international markets.”

The fate of Parex, which bears striking similarities with that of BTA, must have alarmed Burwell and his associates to the extent that they found it wise not just to divert funds but traces that could lead to their location as well. “International Overseas Services is a Virginia private corporation founded in 1996, which owns subsidiaries in Riga, Kiev and Moscow that sell offshore companies,” in the journalists’ team’s report’s words. “Latvian company records list, Philip Burwell, or in Irish, Pilip Boireil, as the company’s representative in Latvia.  The corporation originally listed as its address Sandford Road in Dublin, Ireland but in 2007 changed it to the same address in Dublin, Virginia in the United States. There is no Sandford Road in Dublin, Virginia. Burwell (Boireil) also figures as the representative in Latvia of Offshore Management International, a company registered from 1999 until 2003 at the same address as Feldmanis’ OMI. Feldmanis in an interview said that the initials OMI did not stand for anything. According to testimony in from a 2010 Ukrainian court case, in 1999 through 2003 Parex Bank sent clients needing offshore companies to Offshore Management International registered at the same address as Feldmanis’s company OMI. According to representatives of post-nationalised Parex Bank, Burwell was director of companies that received loans from Parex before nationalisation that the bank now suspects were hidden loans to the former shareholders Kargins and Krasovickis.

Within the new construction, old names were to reappear which allowed the investigating journalists to identify not just the web of fake brands but the link to Ablyazov as well. “Burwell signed as president of the Virginia corporation International Overseas Services in 2010. Invoices obtained by the reporters show that Burwell administers two platform companies in the Parex proxy network – Milltown Corporate Services and Ireland and Overseas Acquisitions, the directors of which are Vanagels and Gorin. Companies with these names and directors have registered successively in Ireland, the British Virgin Islands and Belize, and have served as a platform to set up thousands of other shell companies for clients of the proxy network. The invoices show a local company services provider, Desmond Kearney, billed Burwell for Kearney’s having administered 17 British companies for Burwell in 2010. The invoices are made out to the IOS Panamanian branch, IOSG Secretaries. According to the UK company register, all seventeen companies on the invoices have as owners and directors Milltown Corporate Services and Ireland and Overseas Acquisitions, which have Vanagels and Gorin as officers.”

The structure of the Latvian troika’s business network looks indeed like a true copy of that used by Ablyazov: hundreds of mailbox firms with a wide variety of unlikely locations – except for those locations’ notoriety as offshore havens with a hush-up culture. “Gorin, Vanagels, and Vitman are linked as directors and shareholders for hundreds of companies in the UK, New Zealand, US, Ireland, Cyprus as well as companies in classic offshore jurisdictions such as the British Virgin Islands and Panama,” the OCCRP’s report reads further down. “The companies they control in turn serve as the directors or shareholders of hundreds or perhaps even thousands of more companies. Their primary companies are Milltown Corporate Services and Ireland & Overseas Acquisitions, (incorporated in Ireland, British Virgin Islands and Belize), Fynel Ltd, incorporated in Cyprus, Jargon Management, also in Cyprus, and the three Panamanian companies: Systemo AG, Cascado AG and Integri SA.”

Loginex also appears as the key linking Gorin and Vanagel to the so-called Granton file in the stockpile of cases against Ablyazov on the table in English court rooms. “On 17 June 2010, the Bank issued proceedings in the Commercial Court against Messrs, Ablyazov and Zharimbetov, Granton Trade Ltd, Branden & Associates Ltd, Aldridge Ventures Ltd, Zafferant Partners Inc, Forest Management Ltd, Loginex Projects LLP, Incompro Management Ltd, Perspective Communications Ltd, Austin Universal Inc and Maden Holding Inc.,” BTA reported to the court in the case referred to. “On 21 January 2010, the Bank filed Amended Particulars of Claim to include details of what are referred to below as the ‘Unlawful Loans’. In summary, the claim relates to two series of loans. The first set [of] the ‘Unlawful Loans’, totalling U.S.$1,428,840,000, was made by the Bank to 19 companies between March 2006 and August 2008. The Recipients are all incorporated in the Seychelles, BVI or Cyprus, and it is the Bank’s case that they were all owned or controlled by Mr Ablyazov. The second set of loans, totalling U.S.$1,031,263,000, were made between November and December 2008 to four companies Granton Trade, Branden & Associates, Aldridge Ventures and Zafferant Partners, together the “Borrowers”) and paid out by the Bank pursuant to letters of credit to six further companies (Forest Management, Loginex Projects, Incompro Management, Perspective Communications, Austin Universal and Maden Holding).”

Also mentioned in the journalists’ file is the case of a firm called Eurostate Corporation, “…a company managed by Burwell’s nominee companies, was at the centre of an alleged sham vaccine contract with Ukraine’s health ministry,” in the OCCRP’s words. “The Ukraine government has tried to recover its money in the British and American courts,” its report relates – without elaborating further. However, details about the vaccine scam have been described in these columns before, and the trace not only leads to a controversial American physician of Kazakh origin but to Mukhtar Ablyazov as well. This concerns the case of Kanat Alibekov alias Kenneth Alibek,

As reported before, in the course of 2008, the refurbishment of an old chemical plant in Borispol, a satellite town of Kiev, was started up. The new factory to which it was to become the home was set to produce a range of pharmaceutics, including anti-infection and anti-virus cocktails, meant to be marketed mainly in the USA as a remedy against eerie attacks from the dark side of the world using biochemical weaponry – in particular waves of smallpox microbes. None of the drugs the firm in charge claimed to produce was ever licenced either in Ukraine or elsewhere in the world. The company, named Zdorovye (Health), was registered in Ukraine. Its president was no one less than Kenneth Alibek (originally Kanatzhan Alibekov) who had been flown in from the USA: a last-minute defector from the now derelict Soviet Union who was also the founder and owner of a US-based company called Max-Well – a rather haplessly chosen name considering the bad end good old Robert had come to in the early 1990s.

“Alibek created this new pharmaceutical production company, MaxWell Biocorporation (MWB), in 2006 and serves as its CEO and President. Based in Washington, D.C., with several subsidiaries and affiliates in the United States and Ukraine,” his apparently authorised biography reads. “MWB’s main goal is said to be the creation of a new, large-scale, high-technology, ultra-modern pharmaceutical ‘fill-and-finish’ facility in Ukraine. Off-patent generic pharmaceuticals produced at this site are supposed to target severe oncological, cardiological, immunological, and chronic infectious diseases.”

The rest of the story came out more recently. Inhabitants of Borispol formed a protest group that warned the authorities that produce coming from Alibek’s factory could and probably would endanger public health. They also revealed that it was never Alibek’s facility to begin with. The property and the equipment had been bought with money from BTA’s Ukrainian subsidiary, then still under control of BTA proper but soon to diverted through stock issue manipulations to a number of “new” shareholders directly and indirectly controlled by Ablyazov and after loan payments fell into default taken over by a Ukrainian subsidiary of Eurasia Holdings, Ablyazov’s Russian umbrella to lay his hands on property and other collateral against loans granted by BTA through its Russian subsidiaries for similar purposes. Initially, Kenneth Alibek appeared on the scene in Borispol as president of Zdarovye, as the enterprise had been called. In the course of 2008, though, Alibek was replaced by a new henchman of Ablyazov, Razumny, along with other new board members including Rysbek Toktomyshev and Anwar Ayzhulov. By that time, the enterprise was steadily moving towards bankruptcy. In the process, the equivalent of at least 100 million US dollar must have “disappeared” into Ablyazov’s notorious offshore network.