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Forensic accountants investigate Russian media mogul Vladimir Gusinsky

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Forensic accountants and lawyers are probing the finances of a disgraced Russian press baron to see if he lied on oath in court. A team of experts is sifting through the last days of Vladimir Gusinsky’s media company before he declared it bust.

Working extensively in the Cayman Islands, they are probing exactly why Mr Gusinsky collapsed his New Media Distribution Company (NMDC) and when it was sold.

The date is crucial to a High Court hearing in London last October.

Under oath Mr Gusinsky said he was the owner of NMDC and could therefore accept a $5.2 million settlement from a separate case.

He promised the court he would use $4.75 million of the settlement money to pay a debt to the East-West Bank United in Luxembourg.

During the hearing on October 17th, 2018 Mr Gusinsky was asked by Mr James Ramsden QC if he owned NMDC.

Mr Gusinsky said he did – outlining that 90% of the company was his and the remaining 10% was with family interests.

And, High Court papers show: “New Media is a company incorporated in the Cayman Islands.

“It is, and at all material times was, indirectly owned to approximately 85% by Mr Vladimir Gusinsky”.

The money was part of an agreement with East-West made at the London Court of International Arbitration (LCIA).

The High Court had awarded Mr Gusinsky the $5.2 million as a settlement from a former business partner Mr Konstantin Kagalovsky.

Mr Kagalovsky and Mr Gusinsky were involved in the action in London in October 2018.

They were before the Honourable Mr Justice Marcus Smith.

Mr Gusinsky was claiming that his former partner Mr Kagalovsky had “diluted” his [Gusinsky’s] interest in the Ukrainian television station TVi by undervaluing its worth.

In a statement to the High Court Mr Kagalovsky explained why he wished to part company with Mr Gusinsky.

It read: “I have always had a wider interest and motivation to preserve TVi as an independent broadcaster in Ukraine.

“I believe that the best way to achieve that aim was to take TVi into my exclusive control because I did not consider that Mr Gusinsky shared my interest.

Mr Kagalovsky said that it was imperative that TVi remained independent during forthcoming elections.

He said Mr Gusinsky told him the channel must follow the Gazprom position – influence from Russia.

Mr Kagalovsky said that wasn’t possible, adding it was the “final straw” in the partnership.

Mr Justice Marcus Smith accepted that, under Ukrainian law, Mr Kagalovsky believed his taking control of TVi was lawful.

But, despite giving “as much weight as I can” he couldn’t accept that Mr Kagalovsky put TVi beyond the reach of Mr Gusinsky’s NMDC for that reason alone.

He ordered Mr Kagalovsky to pay NMDC $4,571,059.54.

However, the money was “on hold” while the former partner appealed the ruling.

When the Appeal Court ruled Mr Kagalovsky had no grounds to appeal the money was transferred to NMDC in the Cayman Islands.

But, despite telling the High Court it was earmarked for East-West, it was used to pay in four equal amounts an NMDC “creative talent team” who said they were owed money.

So far, all efforts to trace the money and the four people have proved fruitless.

Days later Gusinsky declared NMDC was bankrupt and filed for insolvency.

However, paperwork registered in the Cayman Islands later showed that NMDC was no longer owned by Gusinsky but two other Russians.

It appears that as Gusinsky was swearing in the High Court that he owned NMDC that might not be true.

The exact date of that transaction is now under intense scrutiny by investigators working for East-West and Mr Kagalovsky.

Mr Ramsden QC, who represented Mr Kagalovsky in the High Court hearing, said: “Mr Gusinsky may have a complete answer to when the company was sold.

“When he answered my direct question in the High Court, he may have been unaware of who owned NMDC.

“It is, however, something that needs to be tested.

“Certainly, Mr Kagalovsky and East-West Bank United are pursuing this matter with vigour.”In a complex financial hearing, court papers show that all Gusinsky’s media companies are owned by Swiss New Century (SNC).

In turn, SNC is ultimately owned by Gusinsky’s New Media Distribution Company (NMDC).

The East-West loaned SNC $75 million – of which it spent $35 million.

Later, SNC returned $26 million – leaving, with interest, more than $9 million still owing.

According to the initial agreement the loan need to be paid immediately, and Gusinsky has failed to make that payment.

East-West filed a claim for the outstanding amount at the London International Court of Arbitration on January 15th, 2018.

In turn, the Russian’s lawyers filed a counter claim accusing East-West of “being underhand”.

The counterclaim was later withdrawn.

East-West argued Gusinsky was at risk of bankruptcy because he had insufficient funds to make a one-off payment.

The bank’s lawyers said payment had already been delayed by a year following the claims of “underhand dealing”. And, it feared it would miss out all-together on payment.

Gusinsky’s lawyers asked the Arbitration Court to allow two debt payments – March 31st and October 31st, 2019.

The court delivered a compromise agreement to “prevent the defendant’s bankruptcy and minimize delay of payments to the claimant”.

Gusinsky promised to pay $4.75 million to East-West within weeks. He said the money was already in his UK bank account.

It was earmarked for East-West following a successful claim against Mr Kagalovsky, his former partner in the Ukrainian media project ITVI.

Kagalovsky paid the money into an escrow account to Gusinsky’s lawyer who then passed it on to NMDC in the Cayman Islands.

However, within a month Gusinsky filed to make NMDC bankrupt, claiming there were debts of $5.75 million to the creative team.

The money promised on oath in court as part payment to East-West Bank had gone – as the bank feared.

It’s now claimed Gusinsky deceived the London court.

Court documents record Gusinsky’s sworn testimony on October 17th, 2019, where he claims that he is the major beneficiary of NMDC and guaranteeing the return of funds to the East-West.

However, NMDC’s register at the date of the testimony shows that might be incorrect.

James Ramsden QC asked Gusinsky in court on October 17th who owned NMDC – and the oligarch confirmed he did.

However, the register, dated October 23rd, shows the beneficiary owners to be Klyamko Anton Andreevich (85 %) and Chernomyrdina Svetlana Nikolaevna (15 %).

And, payments to buy Klyamko and Chernomyrdina’s shares went out on October 22nd.

But the register still shows on October 31st that the couple were still the beneficiary owners.

 

 

 

 

Crime

High-level conference on anti-money laundering and countering terrorist financing - closing the door on dirty money

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On 30 September, the European Commission hosted a high-level conference on the EU's fight against money laundering and terrorist financing. This conference marked the conclusion of the public consultation that was launched in parallel with the adoption of the Anti-Money Laundering Action Plan on 7 May 2020.

There was a series of dedicated panel debates and keynote speeches by high-profile speakers who are on the front line of the fight against dirty money, including Catanzaro Chief Prosecutor Nicola Gratteri and French Court of Cassation General Prosecutor Francois Molins.

An Economy that Works for the People Valdis Executive Vice-President Dombrovskis said: “Dirty money should have nowhere to hide. The EU has been ramping up its anti-money laundering rules. They are now among the toughest in the world - but still not enforced equally across the board. It is clear that we must do a lot more to shut off remaining loopholes, remove weak links, and co-ordinate better between EU countries. Effectiveness, efficiency, enforcement: these are the governing principles of our strategy in tackling money-laundering. They should apply across the EU and across the world. That is how we can beat it.”

Three thematic panels will cover the areas for future reform of EU rules, while a closing roundtable will bring together representatives from the European Commission, the German Presidency and the European Parliament to highlight the EU's united position and commitment to fighting money laundering and terrorist financing. Each panel will include an opportunity for questions via Twitter with the hashtag #StopDirtyMoneyEU. For more information, details on the programme and a link to the live feed, please see here.

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Ireland

Russian - Irish Business Council launches an inquiry into Russian businessman

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The Russian Irish Business Council has launched a broad inquiry into alleged illegal activities of Russian businessman Mr. Sergey Govyadin and his close associate Mr. Ildar Samiyev.

The Council, unifying companies working in the UK, EU and Russia, have sent a letter to HSBC and a number of other financial institutions in the UK requesting information the banks might have about Mr. Sergey Govyadin. It alleges that both he and Mr. Samiyev were obviously involved in money laundering and other illegal purposes via the UK legal system and the UK offices of HSBC. The Council asks to investigate possible acts of fraud by Mr. Govyadin and Mr. Samiyev.  This information was also sent to the US Internal Revenue Service for consideration and possible feedback due to its criminal background. There are indications that both are using the US monetary mechanisms for their illegal activities. Full copies of these letters can be read at the foot of this article, whilst numerous legal papers are in EU Reporter's possession.

The story of Sergey Govyadin has much in common with other infamous "new riches" from Eastern Europe who have a profound criminal portfolio.

Sergey Govyadin

Sergey Govyadin

Visibly a prosperous real estate businessman and developer, Sergey Govyadin is alleged in Russian media as being involved in many criminal cases related to fraud and other criminal incidents on selling elite property and apartments in luxurious districts in Moscow. Newspapers in Russia call Mr. Govyadin a "shadow influencer" alleging corrupt connections with a number of police authorities.

Togather with Ildar Samiyev, Mr. Govyadin has long been featured in the Russian criminal chronicle as a scandalous person, primarily found in fraudulent deals with private property and luxe apartments in fabulous districts in Moscow and in its suburbs. Back in 2015, Govyadin was “crowned” as a “successful millionaire” by tabloid press. By that time he was married to the beauty pageant - Miss Russia.  However, his name remains on the lists of fraudsters and corrupt officials published from time to time by the media.

According to them, Govyadin and Samiev denigrate other people who are their partners, in order to justify their allegedly illegal transactions. In Moscow, a high-profile trial has long been underway in the case of developer Albert Khudoyan, whom Govyadin and Samiev accused of fraud and deception. As a result, the businessman was arrested. His case became additionally known due to violations on the part of the investigation. Some corrupt law enforcement officials tried to profit from his arrest according to the media.

Russian business ombudsman Boris Titov has already defended Khudoyan. However, the process against him continues. Khudoyan suffers from heart disease.

The alleged illegal activities of Govyadin and Samiyev have a long history.

Ildar Samiyev

Ildar Samiyev

For example, together with Ildar Samiev, Govyadin is alleged to have taken part in the withdrawal of funds from Russian Svyaz Bank. He is alleged to have been involved in fraud with apartments in the elite Knightsbridge residential complex in Khamovniki district of Moscow, as well as a number of other stories.

For example, back in 2014, Optima property management LLC, owned by Govyadin, took $ 95 million loan from the state-owned Svyaz Bank and used the funds to purchase 22 apartments in the elite Knightsbridge residential complex under construction in Khamovniki. This company was controlled by Sergey Govyadin and Ildar Samiev through a chain of companies, namely the Russian LLC "Eurofinance" and the English company Mansfiled Executive Limited (from 25 to 50 percent of Mansfiled Executive Limited belongs to Govyadin, according to the Endole database). At the same time, the price of apartments under the deal was inflated, which allowed to actually withdraw more than a billion rubles from the state Bank.

The residential complex was constructed in 2016. Probably, because of the extremely high price, the purchased apartments remain on the balance sheet of Optima property management, since it is impossible to sell them at such a high price. Optima properties has not yet returned the debt to the Bank, and in 2018 Svyaz Bank filed a lawsuit to recover $ 95 million from Optima property management, but failed. As a result, the state, which is the owner of Svyaz Bank, suffered, having completed its rehabilitation in 2011. The debtor has apartments on the balance sheet that are unlikely to cost more than 50 percent of the debt amount, and more than 1 billion rubles settled on the accounts of the developer Knightsbridge, controlled by Govyadin.

It is obvious that the request of the Russian Irish Business Clouncilwill be an occasion for more close and detailed attention to the illegal activities of Govyadin & Co. British and American financial institutions will hopefully be held accountable of those international speculators.

Source information

HSBC letter

 

 

USA tax letter

 

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Crime

Victims' Rights: Commissioner Reynders launches new platform and presents first European Commission's Co-ordinator for victims' rights

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At a high-level videoconference on 22 September, co-hosted with the German Presidency, Justice Commissioner Didier Reynders inaugurated the new Victims' Rights Platform – an important deliverable following the adoption of the first EU Strategy on Victims' Rights earlier this year.

The new platform, which will meet annually and on an ad-hoc basis when necessary, will serve as an important forum for discussions on victims' rights with all relevant actors. These include the European Network on Victims' Rights, the EU Network of national contact points for compensation, the EU Counter–Terrorism Coordinator, Eurojust, the European Union Agency for Fundamental Rights and civil society.

In addition to these organizations, who will also participate this afternoon, the event will gather EU ministers of justice and members of the European Parliament. At the conference, Commissioner Reynders will also introduce the Commission's newly appointed Coordinator for Victims' Rights Katarzyna Janicka-Pawlowska.

Ahead of the event, Commissioner Reynders said: “Today is an important moment in our work to protect victims' rights in the European Union. With a new EU-wide Victims' Rights Platform and a new Coordinator for Victims' Rights, we are showing clear commitment to carry this work on, and only a few months after the Commission presented the first EU strategy in this area. I welcome the support of the German Presidency as well as our stakeholders, and I look forward to our cooperation going forward. On 24 June 2020, the Commission adopted the first ever EU Strategy on Victims' Rights. The primary goal is to ensure that all victims of crime can rely on their rights no matter where in the European Union and no matter in what circumstances the crime happened."

More information on the strategy is available here.

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