Mukhtar Ablyazov case in France: extradition on the crossroads/II

Will it be Kiev’s Lukyanivska, or Moscow’s Matrosskaya, Lefortovo or Lubyanka? Accordng to news reports following January 9’s initial verdict by a French court, Moscow seems to be thepreferred option for Kazakhstan’s BTA bank’s former controlling shareholder and president Mukhtar Ablyazov who ended up as the world’s top master-swindler, even though lawyers on the culprit’s behalf have already announced that they are going to appeal to the bitter end – meaning that a final decision which, for all it matters, is not up to tribunals but up to the government, could be pushed backward through the year 2014 and beyond. After having looked at the available information on the Ukraine files concerning Ablyazov, the Russian files amount to a much larger sum and are also a lot more complex – meaning that proceedings in Russia could require several years on top of the journey in Europe.


Mukhtar Ablyazov case in France: extradition on the crossroads/II“A French court has ruled that Kazakh tycoon and dissident Mukhtar Ablyazov should be extradited to Russia or Ukraine to face fraud charges. Ablyazov, arrested on the French Riviera in July, is accused of stealing more than $6bn (£3.6bn; 4.4bn euros) from Kazakh bank BTA. The court said that extradition to Russia should take priority,” the BBC ( reported on January 9. “Ablyazov is accused of embezzling $5bn in Russia and $400m in Ukraine. The court in Aix-en-Provence said it favoured his extradition to Russia in view of the greater sum involved.” The BBC correspondent all but explicitly dismisses the culprit’s arguments suggesting that he should be considered a champion of democracy rather than an ordinary white-collar criminal. “The general public in Kazakhstan is probably indifferent to Ablyazov’s case,” the BBC report observes. “Considering the mistrust of the general population towards rich people, it can be expected that many in Kazakhstan would agree that Ablyazov was a thief.”

But other observers still tend to take Ablyazov’s staunch claim as a victim of “political persecution” in his home country into account. One example is a lengthy report in Euromoney published in the wake of the French verdict issued on January 9 this year ( “What is the truth about Mukhtar Ablyazov?” the article opens. “Is the former head of Kazakh bank BTA a fraudster on a par with Madoff and Stanford, as prosecutors from Russia and Ukraine to England and France claim? Or is he the persecuted victim of his home country’s political elite? One thing is for sure: the hunt for Ablyazov, and billions of dollars in assets he is alleged to have illegally appropriated, is one of the great sagas of our time. The lavish life of Mukhtar Ablyazov – financial fugitive, convicted fraudster, political patsy, British jailbird-in-absentia – was all but over on July 13 2013.”

Just some reminders. According to information publicised by prosecutors in Almaty several years ago, on 18 December 2006, a transfer of 118.704 million US dollar was made by a company called Starwood Contracts Limited, based in Victoria on the isle of Mahe, Seychelles. The beneficiary was a firm named Somerset Projects IHC, based in Tortola on the British Virgin Islands, which had its account at a Latvian bank with ints headquarters in Riga, called Trasta Komercbanka. Somerset was controlled by a certain Stephen John Kelly. Shortly afterwards, Starwood received 100 per cent of all the shares in a firm called Archeston Solutions Inc. The latter was based on the British Virgin Islands, under a director by the name of T. N. Parskevich, and in turn it controlled 99 per cent of yet one more enterprise called Business Engineering, based in Moscow, which consequently owned 100 per cent in a firm called Central Engineering Company, equally Moscow-based, the director-general and “signatory” of which was named A. V. Fatayeva.

But that was not the end of the scheme. On December 19 2006, Somerset opened a credit line of $25,411,740 in favour of yet another company called Jollawood Trading and Investment Ltd., based in Nicosia, Cyprus (proper – not the maverick republic of Northern Cyprus), controlled by a certain Kypros Tsioparis. The credit line went through another Latvian bank called Kommercbanka Balticums, and was valid until December 19 2013 with an annual interest rate of 14 per cent. Through this bank, the very same day Jollawood issued a credit of $25,410,989 to Moscow’s Central Engineering Company on which we already stumbled in connection with the chain of stock-ownership. But this was by no means the end of the story. It would appear that on April 20, 2008, Starwood transferred all its debt to a Luxemburg-based company called Baldock Holding Sarl, with its bank account at the Luxemburg branch of ING of The Netherlands. Baldock’s director was a certain Marian Olde. The odd thing about it was that the firm bore the registration date of July 29, 2008 – meaning four months after the debt transfer had taken place. This would lift a tip of the veil concerning the wherefore of who-owns-whom chains with its tentacles spread all over the globe – in particular between one cash haven and the other.

But those who are already bewildered by the complexity of Ablyazov’s schemes are in for a lot more. For on December 18, 2008, another company named Winterra Holdings based in Victoria, Mahe, Seychelles, under the management of a certain Anabel-Jean Louyu transferred a share package valued at 104.9 million US dollar to Somerset Projects. On April 29 that year, Winterra’s entire debt (an undisclosed amount) had been taken over by Bangor Holding, based in Diekirch, Luxemburg. Like its counterpart Baldock, Bangor was only to be registered in the Grand-Duchy as of July 29, 2008. Somerset subsequently allocated a credit line of $25, 411,740 to a firm in Nicosia called Roadnext Holding Ltd., under the direction of Panagiotis Demetriades. The terms were the same as the one described above: 14 per cent interest per anum over a period of seven years. Somerset then transferred a share package to Winterra Holdings Ltd. As of 12 December 2006, Winterra was also registered in Tortola on the British Virgin Islands. Its manager then became the same (presumably) Russian national Paraskevich whom we have met at the helm of Starwood Contracts. Winterra thereby obtained a 100 per cent interest in Francis Alliance, which in turn controlled 99 per cent of Gorus, based in Moscow which in turn was the 100 per cent owner of Stroy Elit, also based in Moscow, the director of which bore the name of Denis Vorotyntsev – a name that would lead straight home to Mukhtar Ablyazov. Arrested in March 2011 downtown Moscow, after which he had tried to get himself bailed out in vain, he was considered by Russian prosecutors to be one of the three core figureheads in the Eurasia Holding/Eurasia Logistics scandal.

And even there the story does not end. On April 29, 2008, a Seychelles-based company called Netgold Services Ltd., under the management of a certain Cynthia Beril Alcindor, had transferred all its debt at an undisclosed sum to a company named Baltigate Holding Sarl. Assumably in December 2006, simultaneously with similar transactions, Netgold had transferred the sum of 146,485,583 US dollar to Somerset Projects. On December 19, the latter issued a credit of 31,225,170 to a company named Statedown Enterprises Ltd., Nicosia, Cyprus, which in turn opened a credit line, assumably of the same order, for InvestHoldingStroy, based downtown Moscow. The latter’s address is the same as that of Inzhservice, 99 per cent property of Orwell Import/export Ltd., based at the same address on the British Virgin Islands as Winterra, under the management of the already known Mr. Paraskhevich. The schemes looked into so far have in common that all credits were issued on the same day, namely December 19, 2006, all for a period of seven years and at an interest rate of 14 per cent a year. What they also have in common is that the nominal issuer of the “original” credit transferred its debt from the Seychelles to Luxemburg as of April 20, 2008.

The same happened with 120.836 million US dollar Somerset Projects received from Rimos Ltd, based on the Seychelles, and on the same day with another $109.904 million it cashed in from Highland Associates Ltd., also on the Seychelles. On April 20, 2008, both firms transferred their debts to two Luxemburg-based companies, Brockley Holding Sarl. and Brudall Holding Sarl. respectively. In the first case, Somerset set out a credit line for Cyprus-based Placefield Holding Ltd. of $27,494,450, which in turn provided Moscow-based Tsentr Invest with a credit of the same amount on the same conditions as the ones mentioned before. In the last case, Somerset Projects received the sum of $109.304 million in stock from a Seychelles-based firm called Highbond Associates Ltd., and subsequently allocated a $26,832,750 credit on the name of Nicosia-based Stateover, which passed it on for the same amount to the benefit of a Moscovite company called Otrimyavit. The “collateral chain” in the two cases involved names such as Mitchel Technologies Inc, and Fletcher Investors, both on the British Virgin Islands, Tiger Stroy and Streetside, both in Moscow, while the end-beneficiaries of the dwindled funds were Tsentr Invest and Russkaya Nedvikhslyst, both also based in Moscow.

It would appear that at the centre of Ablyazov’s Russian carrousel was the Eurasia holding, which operated through a number of wholly- and partly-owned subsidiaries and affiliated enterprises. According to what became known in spring 2009, between 2006 and 2008, Eurasia received from BTA’s parent company through its Moscovite subsidiary loans the lump sum of which totalled 775.4 million rouble, 19 million euro and 1.4 billion US dollar, a press release by Russia’s interior ministry on March 19, the day following a police raid on MTA which led to the arrest of most of its top executives, reads. There were strong indications that as late as early 2009, shortly before Ablyazov’s downfall and flight, the loans were transferred to an affiliated company of Eurasia Logistics named Eurasia Global. According to the press release, the latter stood under control of Mukhtar Ablyazov. In the case of Eurasia Logistics and Eurasia Global, it was reported that mortgages had also been used to divert ownership rights over collateral from the nominal borrower to the ones where the money ended up.

On March 18 2010, a number of arrests was carried out in the Moscow branch office of Kazakhstan’s troubled Bank TuranAlem (BTA), in the process of being renamed ATM, as its local general director Alexander Volkov, financial director Artem Bondorenko, economic director Alexei Byelov and the head of the legal department Denis Vorotyntsev were carried off in handcuffs. The three former were apprehended on the premises, while Vorotyntsev was caught in Krasnodar where he was on holiday. The arrests were part of a broad investigation by Russian authorities into embezzlement schemes masterminded by former BTA president Mukhtar Ablyazov and a number of his associates. One of the schemes under scrutiny, worth alone in the order of $1.5 billion, concerns Eurasia Logistics, a company engaged in the construction of trade and transportation centres in the regions of Moscow (Northern Domodedovo), Yekatarinaburg (Pyshma), Kazan (Byek Tau) and Novosibirsk (Tolmachevo). During the booming years between 2006 and 2008, Eurasia received from LLS BTA loans the lump sum of which totalled 775.4 million rouble, 19 million euro and 1.4 billion US dollar, the press release at the origin of the controversy issued by Russia’s interior ministry on March 19, the day following the intervention, reads.

By the time the affair came into the open, the loans had been transferred to an affiliated company of Eurasia Logistics named Eurasia Global. According to the ministry’s press release, the latter was, and still is, under control of Mukhtar Ablyazov. At the time, it looked like the objects under scrutiny, worth altogether up to the equivalent of 5 billion US dollar in obscured funding resources, were the only assets at stake in Ablyazov’s schemes. Later on, it would appear that the firms under Eurasia Logistics’ umbrella were used as vehicles for much further-stretching collateral deviation schemes. They included Eurasia Tower, a Canary Wharf-style business plaza in Moscow City, located with a Moscovite version of Paris’ La Defense on a river peninsula close to the Moscow World Trade Centre, worth in the order of 1 to 1.5 billion US dollar even in present-day real estate price assessments in the Russian capital, and an oceanarium on Poklonnaya Hill just outside the centre of Moscow, believed to have a face value of well over $100 million set against construction costs that hardly exceed $40 million.

The main prize, however, was the still half-built Eurasia Tower, known in court as the Tekhinvest file after the holding that controlled the project. As noted before, the site was located in Moscow City, a boom-site on a peninsula on the bank of the Moscow river, which showed the construction of a twin circular building, 75 floors up with a total commercial space of over 200,000 square metre. Tekhinvest, the nominal owner, had been established in 2002 by two parent companies. One was MosCityGroup (MCG), controlled by real estate tycoon and project developer Pavel Fuchs. The second one was the Eurasia Group, established in the winter of 2002/’03 by no one less than Mukhtar Ablyazov. Between 2004 and 2008, credits up to a total lump sum in the order of 300 million US dollar were set out by BTA, based on an annual interest rate of 20 per cent. Beneficiaries were not only Tekhinvest but also affiliated companies named Konvis, PaladioExport and CityBestPlus. As of 2011, a sale of Ablyazov’s 50 per cent share in Tekhinvest for the sum of 50 million US dollar to be paid over the counter was to be agreed upon with Fuchs, but creditors kept contesting it in courts of law both in Britain and the Russian Federation. Among them was BTA, intended to lay its hands of Ablyazov’s stake in Tekhinvest and through it into the Eurasia Tower, which, once completed, was supposed to have a value of up to six times the $50 million Ablyazov was supposed to have received for his share in the venture. (to be continued soon and perhaps forever…)