Raiffeisen’s Russia Scandal – Part II

In our continuing coverage of the probe into the Austrian bank Raiffeisen’s alleged ties to money laundering and possible trail leading back to the assassination of Andrei Kozlov, below we are posting an exclusive English translation of the second investigative piece from the Russian magazine The New Times, which kicked off the whole RZB scandal. Yesterday we posted the translation of the first New Times investigative piece, which followed my first post on this case.

Translated from The New Times – Issue No. 16 of 28 May 2007, p. 12

Sensational details have appeared in the case about the laundering of large sums by Russian officials through the bank «DISKONT» and the Austrian «Raiffeisen» By Natalia Morar — From the story of «DISKONT» — In the last issue (No. 15 of 21 May), The New Times described in detail the scheme for taking money out to the West by big Russian officials, close to the oil companies controlled by the Kremlin and lieutenant-general Alexander Bortnikov, deputy director of the FSB and head of the department of economic security of the FSB of Russia. More than 50 Russian banks were involved in the scheme. Five of them are in the top ten banks of Russia. The money from these banks with the use of 17 fictional firms was transferred to accounts of dummy Russian commercial companies, founded by the bank «DISKONT». Next, «DISKONT» transferred the money to three foreign offshores, registered on the British Virgin Islands and on Cyprus, with accounts in Raiffeisen Zentralbank Oesterreich AG, and already from these offshores, that very same «Raiffeisen» transferred the money to the accounts of various European banks. On 8 September 2006, based on the act of a mass removal of money beyond the border, the MVD of Russia initiated criminal case No. 248089. A week earlier the deputy chairman of the Centrobank of Russia, Andrey Kozlov, had revoked the license from the bank «DISKONT». Five days later the banker was killed. — Speak, «Raiffeisen» — The Austrian «Raiffeisen» reacted to the article in The New Times without delay. An official representative of the bank, Gregor Bitschnau, declared that “information about the participation of the Austrian Raiffeisen Zentralbank Oesterreich in schemes with respect to the laudering of monetary funds out of Russia, disseminated by a series of mass information media, is absurd.” However, Mr. Bitschnau admitted that in the year 2006, the bank had found itself involved in a series of doubtful operations. “We conduct business with a respected bank in Russia. This bank received money and transferred it to us. Being a provider of services with respect to the transfer of funds, we forwarded this money to other international banks”, reported Bitschnau, not specifying about which specific bank he was speaking. “In August of the year 2006 we received a warning about how the transactions, perhaps, are doubtful. We promptly reported about this to the corresponding authorities in Russia and Austria.” In the Austrian «Raiffeisen» they likewise told The New Times about the existence of three Latvian offshore companies, which in actuality were mixed up in the doubtful transfers from Russia. “As soon as it became known to us about this, we immediately submitted all the information to the competent Austrian organs”, they noted in so doing in the Austrian bank. — According to the data of the MVD of Austria — However, that which the Austrian «Raiffeisen» calls “absurd”, in the MVD of Austria they are regarding as a cause for the most serious criminal investigation. Materials of an annual report on the struggle with the laundering of monetary assets, prepared by the Ministry of internal affairs of Austria based on the results of the work of the Administration of financial intelligence of Austria in the year 2006, have turned out to be at the disposal of The New Times (the report was presented at the end of April 2007). From the part of the report devoted to Russia it follows that a series of suspicious monetary operations was conducted between a certain Austrian bank and a Russian bank (names are not indicated) in 2006. The New Times cites excerpts from the report without changes. “In the year 2006, one Austrian bank received information from the president of one Russian bank (by telephone) that large volumes of monetary funds (the result of operations with respect to currency exchange) were credited to the correspondent account of one Russian bank (they are speaking, most likely, of the bank «DISKONT» — The New Times), opened in this Austrian bank. “As was reported by telephone, the given monetary funds were the result of an operation with respect to the laundering of money, in connection with which an inquiry was sent about their blocking. “With the help of one of the employees of the Russian Centrobank (perhaps they have in mind former deputy chair of the CB of Russia Andrey Kozlov — The New Times), it became known to the Austrian bank that this Russian bank had already been formally accused of not paying taxes and laundering money and it had been prohibited by the Centrobank of the RF to carrying out any further payments whatsoever. Likewise the Russian Centrobank asked the Austrian bank to return all assets from the correspondent account. “Received on the account of the Russian bank were $44 mn 435 thousand, which by means of 34 payment orders during the course of one day were distributed to a multitude of offshore companies (at the meeting of ministers of finance of the countries of the «Big eight» in Singapore on 18 September 2006, the head of the Russian Ministry of Finance, Alexey Kudrin, declared that employees of the bank «DISKONT» had allowed the taking out of assets to take place already after the arrest of the accounts and the shutting down of operations — The New Times). “The Austrian lending institution directed to A-FIU (the Administration of financial intelligence of Austria — The New Times) a report-substantiation on suspicion. A-FIU immediately presented the circumstances of the case together with results already had of an investigation to the procuracy. “By a temporary order of the corresponding court, the monetary funds had on the correspondent account of the Russian bank (the current balance of the dollar account comprised $2 990 290 and on the euro-account 2618 euros) were shielded. “To the urgent inquiries of A-FIU, Russian organs of power answered only that a criminal case had been started up for managing an enterprise with violation of the law and laundering money on the responsible persons of the Russian bank. “In September the channel ORF (that same channel to which initially president Putin had refused an interview last week — The New Times) under the headline ‘Execution by shooting of deputy head of Russian Centrobank’ reported about the killing of the head of the agency for control over banking activities and his driver on a football training field in the northeast of Moscow. This crime may have been connected with his activities. “The head of the banking supervision department of the Russian Centrobank communicated by telephone with A-FIU and the Austrian bank right up until what happened. “During an evaluation of the accounts conducted by A-FIU it was established that all told, during the course of only four days, $112 056 428 and two cents were credited to the correspondent account of the Russian bank, which money upon the instructions of three offshore companies by means of 189 transactions were distributed without delay to 50 other offshore companies with addresses and bank accounts all over the world. “For the reason of the very complex and voluminous offshore construction at the present time it is impossible to establish who of the concrete persons could stand behind these transfers, and, correspondingly, what aim during the use of this money could have been pursued…” — Unfinished business — In the Ministry of internal affairs of Austria they confirmed for The New Times that the case about the laundering of funds through two banks – an Austrian and a Russian – is indeed found under consideration and that a probe is being conducted with respect to it. “For now we can not comment on this case, inasmuch as it is still not closed and the probe continues. Who is engaged in it (the MVD or Interpol — The New Times), we likewise can not say in connection with secrecy of investigation”, they noted in the MVD of Austria. In the Austrian procuracy, on conditions of anonymity, they likewise confirmed the existence of a so-called case with respect to the laundering of money from Russia for The New Times; however, in the words of the source, the Russian Procuracy-General never did submit all the necessary materials, which were requested by the Austrian side. Unlike its Austrian colleagues, the Russian Procuracy-General has so far not commented in any way on the article in The New Times.