The Khrapunov & family files: a wakeup call from California dreaming

In a surprise disclosure, it has appeared that the USA, known for raising fingers at other countries accused of harbouring thieves and their ill-gotten gains safe from prosecution, has been doing exactly that by allowing former Almaty mayor Viktor Khrapunov and his relatives to funnel 300 million greenbacks in embezzled funds to Beverley Hills’ glamour paradise in order to launder them by investing in luxury real estate. A civil lawsuit initiated by the current municipality of Almaty should reveal in more detail how the money, despite a freezing order by Swiss authorities pending an investigation, could have left Switzerland to end up at the American West Coast. The case could also reveal long-suspected links between the Khrapunov affair and the location of billions in stolen funds from Kazakhstan’s ailing bank BTA when it used to be run by the main perpetrator Mukhtar Ablyazov, who used to run the bank. The bedroom connection between the two cases concists of the fact that the latter’s daughter happens to be Viktor Khrapunov’s daughter-in-law. Her name appears among the sued parties in Los Angeles as running a trust fund which is suspected to have served as a hedge tool for the illegal transactions.

BY CHARLES VAN DER LEEUW, WRITER, NEWS ANALYST

The Khrapunov & family files: a wakeup call from California dreamingRPM USA LLC and RPM-Maro LLC, both based in New York, a number of other enterprises 628 Holdings LLC, and Candian International Ltd. based on the British Virgin Islands. Such are the names of offshore mailbox firms used by former mayor of Almaty, Viktor Khrapunov, and his family to sluice funds derived from the sales of Swiss assets all the way to Hollywood, according to a report [http://www.courthousenews.com/2014/05/14/67858.htm] from the LA court dated May 14, “VK abused his position of trust as a public official in order to convert and sell numerous assets belonging to the City of Almaty for his own benefit and the benefit of his co-conspirators, and VK and his co-conspirators thereafter set out to launder and conceal their ill-gotten gains by acquiring assets, including assets located in the Central District of California and within the United States, and making investments in entities in the United States and throughout the world,” the lawsuit was quoted as reading. “[For] more than six years, VK repeatedly and systematically […] abused his position of power and authority to steal millions of dollars of real property and assets from the people of Almaty.”

For people living in Kazakhstan, the story is far from new. But on the sunny shore of the Pacific, home to tycoons, movie starts and hippie folk, used to gossip rather than hard news, the affair has made rather spectacular-looking headlines. “According to the civil complaint filed in the U.S. District Court in the Central District of California, Khrapunov used his position and influence as mayor of Almaty to illegally sell city-owned assets to benefit himself, his wife and other co-conspirators,” a press release [https://uk.finance.yahoo.com/news/kazakhstan-city-sues-former-mayor-191700713.html] picked up by most of the local news mediaon the issue from Almaty’s Californian lawyers reads. “The lawsuit claims that while Khrapunov served as mayor from 1997 to 2004, he and his wife systematically looted city assets by arranging auctions of state-owned real estate at below market value to entities they controlled, and the Khrapunovs later sold the property at substantially higher prices.  The suit also alleges that Viktor Khrapunov misappropriated city funds and personal property. After amassing a fortune of more than $300 million, the Khrapunovs fled to Geneva, Switzerland in 2008, according to the suit.”

 

Apart from the abovementioned companies, the accused include Viktor Khrapunov, Leila Khrapunova, Iliyas Khrapunov, Madina Ablyazova alias Madina Khrapunova, Elvira Khrapunova, alias Elvira Kudryashova, alias Elvira Balmadani and Dmitri Kudryashov. Moreover, Elvira Kudryashova is being sued in her function as Trustee for The Kasan Family Trust, and Dmitri Kudryashov as Trustee for The Kasan Family Trust. “The lawsuit also alleges that the Khrapunovs and their children, Ilyas and Elvira, violated both U.S. and Kazakh law when they set out to launder proceeds from their scheme,” the press release continues. “Ilyas Khrapunov owns a home in Beverly Hills, CA, and Elvira Khrapunov lives in Studio City, an upscale suburb of Los Angeles. In addition to civil actions against him, Viktor Khrapunov faces criminal charges in Kazakhstan, and Swiss authorities have opened an investigation into the family’s financial activities in that country.” The press release quotes David Schindler, Partner at Latham & Watkins LLP in Los Angeles. As stating: “Khrapunov, along with his family and their cronies, took advantage of his position to siphon off hundreds of millions of dollars from the people of Kazakhstan and then went on a worldwide shopping spree to hide the money. We are confident that the United States does not want to be a money laundry for the world’s corrupt leaders, and we are seeking the return of the people’s assets that are wrongfully harbored in the United States.”

As reported earlier, exemplary schemes illustrating Khrapunov’s manners, during his years at the Almaty City Hall, of generating illicit gains using public property  include a nursery centre on the upside of Almaty’s Furmanova Street, located in the uppity business neighbourhood under development. On December 26, 2001 – more than four years after Viktor Khrapunov entered Almaty’s City Hall, a tender written out on his instruction was won by a firm called KazRealIncome, which obtained the site for the price of 52 million Kazakh tenge, with the commitment to reconstruct, refurbish and expand the centre at the cost of 464 million tenge (at the time, the tenge stood at around 120 to the US dollar). Nothing happened afterwards, until on September 26 2003 the site appeared on KRI’s list of “fixed assets”. Not that fixed, though, as it would appear – for on 1 October KRI sold the property for 52 million tenge to another private enterprise called Karasha Plus, which in turn the same day resold the plot for the same sum to a third firm called Building Service Company. According to documentation provided by the Almaty prosecutor’s office, there was little more and little less than the mayor’s spouse, Leyla Khrapunova, behind the three firms involved. On October 16, Madam Leyla finally sold the BSC, including all its property, to an outside party, apparently of good faith, called Stroytekh, for the total sum of 2.079 billion tenge.

Downtown Almaty, at least 16 prime sites have been allocated in closed procedures circumventing all open bidding requirements through corporate stock swaps, facilitated by municipal authorities on Khrapunov’s order and carried out by companies under control of the mayor, in most cases through his spouse and relatives. Some of these larger objects appropriated by the Khrapunovs included a plaza on the corner of Gogolya and Panfilova Streets, apartment and shopping space blocks on Furmanova Street Dostyk Avenue, both on the edges of the uppity business neighbourhood of Samal-2. Further uphill, property, comprising parts of protected natural zones, included a forest site named Wood Fairy Tale and another one known as Oak Grove were purchased by a company called Gulmira Ltd., run by one of the Krapunov pair’s associates by the name of Shebityevov and believed to be closely affiliated to VILED the Khrapunovs’ longstanding key instrumental property enterprise, for the negligible amounts of 1.8 and 2.1 million tenge respectively. Public property has also been sold illegally to another one among Khrapunov’s shell firms called Phoenix Unlimited, run by a certain G. Mukashev, who in particular obtained blue-chip locations with permission to demolish the kindergardens, pensioners’ homes and other social facilities located on them, with the aim to build commercial glamour objects on them.

According to a report dated April 25 last year and published by Tengrinews (referring to a local newsreel known as Nomad) [http://tengrinews.kz/kazakhstan_news/smi-hrapunovyi-hranili-sberejeniya-v-bankah-kipra-233005/], Viktor Khrapunov and his spouse Leyla have deposits on Cyprus with “savings for a rainy day”. The article also suggests that revenue from the sale of the family’s main asset in Switzerland, known as Swiss Development Group to a Swiss tycoon are supposed to have ended up in Cypriot bank accounts. Preliminary results of an ongoing judicial investigation into the wheelings and dealings of the Khrapunovs have revealed a number of business connections through strings of both domestic and offshore companies in the style of his son’s spouse’s father Mukhtar Ablyazov. Some of them had already been identified in media reports. But names and locations of mailbox and camouflage companies also point at Switzerland as Khrapunov’s main haven to stack his embezzled funds and collected “commissions” years before he ended up on the bank of Lake Geneva himself: a well prepared network to cache assets’ and funds’ ownership and keep them out of reach for Kazakh authorities trying to recuperate lost paper and cash. A recent global request for Khrapunov’s arrest and subsequent extradition to Kazakhstan was issued in late February this year. Switzerland is unlikely to honour such a bid, since “economic offences” are excluded from its list of reasons to extradite any foreign citizen, and on top of that Khrapunov’s application for Swiss citizenship dates from earlier times and therefore the extradition request cannot be taken into consideration in the decision whether or not to grant it to him.

Ireland-based, but German-controlled Depta Bank seems to have been playing a key role in the fraudulent transaction, back in 2003, of 15 million US dollar worth in bonds originally issued by the municipality of Almaty for the nominal sum of $7 billion, with the obvious channel to filter the difference minus a handsome commission for the German bank to Khrapunov’s Swiss-Dutch financial tandem Helvetica. But it might very well have played a similar role in cases where the honourable mayor and his equally honourable spouse and other associates could have played somewhat less honourable roles in a modern boardroom variant of Shakespeare’s display of old-time English royalty performance.

The shopping list of the Khrapunovs in Switzerland and elsewhere appears to be long. Upon arrival of the parents in 2007, Elvira Kudryashova bought a luxury chalet, 49 chemin de Ruth, Cologny, for 32 million Swiss francs. Following this, the family purchased two uppity apartments downtown Geneva, 10 rue Rodolphe Toepffer and 28B chemin du Petit Sacconex, for 16 million each, followed by the purchase, for an undisclosed sum, of a seven-storey building, 3 rue du Mont Blanc. But the list of corporate interests is a lot longer. According to Kazakh prosecutors, Elvira is in control of at least three corporate entities: Phoenix International Holding, Dragon Financial Company and Unic Life Style Sarl. The latter firm in turn controls Phoenix Jewelry SA. Chairperson of the board of both Phoenix International and Dragon is said to be a certain Nicolas Garnier.

The Khrapunovs’ main financial transaction and reinvestment instrument seems to have been, and possibly still is, a Swiss company called Helvetica Capital SA, rue du Mont Blanc 3, Geneva. With a share capital of 100,000 Swiss francs, divided in 1,000 shares, the enterprise’s goal is being described as prise et administration de participations dans toutes societes ou enterprises a l’exclusion de prise de participations dans les societes immobilieres en Suisse. In other words: a nominee interest holder in all kinds of enterprises with little other aim than hiding the identity of the true owner. As of January 19 2010, Helvetic Capital had two authorised directors, being Leyla Khrapunova and  Swiss national by the name of Marc Gillieron. A note dated April 4 2011 was to report Leyla’s retreat from her post, leaving the entire job to her Swiss peer. The Swiss company Helvetica Capital, for all it mattered, had, and assumedly still has, a Dutch subsidiary called Helvetic Capital BV, based at Schiphol Airport near Amsterdam. “Dutch” Helvetic Capital in turn controls a company, also based in The Netherlands according to information from Kazakh investigators, called Toepffer Investment. The boards of all the three companies are chaired by Leyla Khrapunova.

Following exposure in Switzerland, a new “corporate vehicle” to funnel the Khrapunovs’ fortune was initiated over summer in 2012 with the Luxemburg-based Swiss Development Group Real Estate Investment SICAV-SIF SCA, the new fund is meant to have a life-span of seven years, with the option to prolong it with another three years. The fund claims to have accumulated half a billion Swiss francs so far from unnamed “investors” – leaving the tangible origin of the money hard to guess, but not its kind of origin. Assets under the fund include luxury tourist and residence resorts in Switzerland and Greece. According to local media in Kazakhstan at the time,Ilyas Khrapunov had already been spotted on surprise visits in the “Democratic Republic” of Congo – meaning former Zaïre, Gabon and Macaõ. The alleged purpose of his tour: seeking “opportunities” for a new investment fund based in Luxemburg at the cradle of which he is standing. Dubbed the Swiss Development Group Real Estate Investment SICAV-SIF SCA, the new fund is meant to have a life-span of seven years, with the option to prolong it with another three years, according to a recent official announcement by the SDG. According to the communiqu?, its “target equity” stand at 250 million Swiss francs. Today, it appears that attempts to funnel income from the sales of Swiss assets to the Mediterranean and from there into Africa and the Far East must have failed. Instead, the bulk of the funds are now believed to have ended up in California. Investigations are supposed to deliver enough evidence in America’s court to sustain their illegal origins.

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