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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.

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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.

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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.

 

 

 

 

Europol

Network selling fake financial services online taken down

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Law enforcement and judicial authorities from Bulgaria, Cyprus, Germany, the Netherlands and Ukraine, supported by Europol and Eurojust, teamed up against an organised crime group involved in binary fraud. The group was behind an online trading platform for financial services with binary options. Europol set up an Operational Task Force to support the cross-border investigation. 

The Action day on 6 October 2021 in Kiev, Limassol and Sofia led to:

  • Eight house searches (five in Bulgaria, one in Cyprus, two in Ukraine)
  • 17 individuals questioned in Bulgaria
  • One high value target arrested in Cyprus
    Seizures included phones, electronic equipment, bank accounts and data back-ups 

At least € 15 million lost on fake options

Operating between May 2019 and September 2021, the criminal network lured German investors into making transactions worth a total of at least € 15 million. The suspects advertised the financial services online and via social media, while using over 250 domain names. The criminal network connected to a company, based in Ukraine, set up a call centre in Bulgaria. The approximately 100 employees of the two call centres, located in Sofia, contacted “clients” and advertised pretend financial services in the field of binary options under the guise of financial advisers. To undertake the scam, the call centre employees had scripts containing predefined conversations and key messaging to convince clients to release more funds. However, a subsequent investigation suggests that most of the employees were not aware that the company they were working for was involved in a fraud scheme. Initial profits shown in the user interface encouraged the clients to invest large sums of money. However, clients did not receive payment of their winnings or credit balance once they requested it. The investigation has so far led to 246 criminal proceedings across 15 German federal states. 

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To support the investigation, Europol set up a dedicated Operational Task Force through which it facilitated the information exchange and provided analytical support. During the action days, Europol deployed six experts to Bulgaria, Cyprus and Ukraine to cross-check operational information in real-time against Europol’s databases so as to provide leads to investigators in the field. The experts also provided technical expertise to enable the extraction of information from mobile devices and IT infrastructure.

Eurojust hosted a coordination centre to facilitate the information exchange and support cooperation between involved authorities during the action day. 
 

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Crime

Labour in vineyards and farms checked across Europe

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Between 9 and 16 September 2021, Europol supported Europe-wide co-ordinated action days against human trafficking for labour exploitation in the agricultural sector. The operation, led by France, involved a wide range of law enforcement authorities including police, immigration and border guards, labour inspectorates and tax authorities from Bulgaria, Cyprus, Finland, Italy, Latvia, the Netherlands and Spain. The European Labour Authority also supported the action days. Almost 2 050 officers from national authorities took part in the operational activities on the ground.

The action week resulted in:

  • 12 arrests (eight in France and four in Spain)
  • 54 suspected traffickers identified (27 in France, 21 in Italy, two in Latvia, four in Spain)
  • 269 possible victims of exploitation identified, 81 of which of trafficking of human beings (17 in Cyprus, 91 in France, 134 in Italy, 24 in Spain and three in Latvia)
  • 704 locations (vineyards, farms and others) checked
  • 273 vehicles checked
  • 4,014 people checked
  • 126 new investigations initiated (14 in Finland, 93 in France, two in Italy, nine in Latvia, four in the Netherlands and four in Spain)

Focus on seasonal workers

Law enforcement authorities carried out inspections in working places identified as more vulnerable to exploitation, such as farms and vineyards. The checks focused on the working conditions of the employees. Non-EU nationals have been identified as most vulnerable to exploitation in seasonal employments, while EU nationals are reported to be exploited in the agricultural sector year-round. The action days targeted criminal networks and facilitators involved in the trafficking of human beings, specialised in ‘brokering’ employment on the illegal market. Labour exploitation is a very lucrative criminal activity, damaging the health and rights of the victims. A successful operation in France dismantled a criminal network, which has generated an estimated € 5 million in damages for victims and authorities. During the actions against this network, authorities searched 25 locations and arrested winegrowers, service providers and intermediaries.

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The fight against human trafficking for labour exploitation requires a consolidated, cross-border effort by different authorities. During this action week, the European Labour Authority organised the first joint inspection, which took place in France and involved officers from the Bulgarian General Labour Inspectorate. 

Europol coordinated the action days and facilitated the information exchange between the participating countries. Europol provided analytical and operational support 24/7 and facilitated the real-time exchange of communication between the participating authorities.
 

Headquartered in The Hague, the Netherlands, Europol supports the 27 EU member states in their fight against terrorism, cybercrime, and other serious and organized crime forms. Europol also works with many non-EU partner states and international organizations. From its various threat assessments to its intelligence-gathering and operational activities, Europol has the tools and resources it needs to do its part in making Europe safer.

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Europol

Over 60 charged in crackdown on Balkan cartel behind cocaine pipeline to Europe

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An unprecedented international law enforcement operation involving 8 countries has resulted in criminal reports being filed against 61 suspects belonging to a Balkan drug cartel flooding Europe with cocaine. 

A number of actions have been carried out in the past year in the framework of an Operational Taskforce between Spain, Croatia, Serbia, Germany, Slovenia, Bosnia and Herzegovina, the United States and Colombia, with coordination efforts led by Europol’s European Serious Organised Crime Centre. 

This highly mobile criminal organisation had branches active in several European countries and was composed mainly of criminals from Serbia, Croatia, Montenegro and Slovenia.

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An Operational Taskforce was established by Europol in July 2020 to bring together all the involved countries to coordinate a joint strategy to bring down the whole network. Since then, Europol has been provided continuous intelligence development and analysis to support the field investigators. 

Results of the Operational Taskforce Balkan Cartel 

  • 61 members have been charged, out of which 23 have been arrested (13 in Spain and 10 in Slovenia)
  • Seizure of 2,6 tonnes of cocaine
  • Seizure of 324 kilos of marijuana
  • Seizure of €612 000 in cash
  • Seizure of 9 luxury vehicles and 5 motorbikes

A co-ordinated strike 

In the framework of intelligence activities carried out with their international counterparts, the Spanish investigators developed reliable intelligence that this cartel was preparing a major cocaine importation from South America into Europe in spring of this year. 

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Special surveillance measures were put in place as the criminals moved back and forth between Spain and South America to finalise the details of the cocaine importation, totalling over 1,25 tonnes. 

The investigation gathered pace in March of this year when the leaders of this cartel travelled to Spain to prepare for the arrival of the cocaine shipment. These two individuals – considered as High-Value Targets by Europol, had until then avoided attending meetings in person in order to evade law enforcement. 

This was too good of an opportunity for law enforcement to miss: in the early hours of 10 March 2021, officers from the Spanish National Police (Policia Nacional) carried out simultaneous raids in the cities of Tarragona, Barcelona, Gerona and Valencia, arresting thirteen individuals, including the two kingpins and a police officer who collaborated with the criminal organisation. 
The Spanish investigators also dismantled the cartel’s alternative revenue streams, such as the production and trafficking of marijuana and the sale of luxury vehicles. 
 
In a follow-up action in May 2021 some 48 other members of the organised criminal group were charged in Slovenia by the National Police (Policija) for their involvement in the distribution of the cocaine and marijuana throughout Europe. A total of 10 of these suspects are now under arrest.  

The following law enforcement authorities were involved in this crackdown: 

  • Spain: National Police (Policia Nacional)
  • Croatia:  National Police Office for Suppression of Corruption and Organised Crime (Policijski nacionalni ured za suzbijanje korupcije i organiziranog kriminaliteta - PNUSKOK) 
  • Serbia: Criminal Investigation Directorate of Serbia (Uprava kirminalisticke policije)
  • Germany: Federal Criminal Police Office (Bundeskriminalamt),  Police Headquarters Frankfurt am Main (Polizeipräsidium Frankfurt am Main)
  • Slovenia: National Bureau of Investigation 
  • Bosnia and Herzegovina: Federal Police Sarajevo
  • United States: United States Drugs Enforcement Administration 
  • Colombia: National Police (Policia Nacional)

This Operational Taskforce was part of Europol’s strategy in countering serious organised crime originating from the Western Balkans. 

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