Unlawful, Dishonorable and Immoral Behavior

Last month we featured an exclusive translation from the German press by investigative journalist Hans-Martin Tillack about Gazprom and the “Gazoviki.” Now we’re posting a translation of the second article by the same journalist. The public authorities in Vaduz are investigating a company related to Gazprom. Who are the mysterious profiteers of the gas deals engineered by a management colleague of Gerhard Schröder? Stern reports again on Gazprom’s business conduct. The original text is over on our German blog, and the article link is here. Financial Review: Liechtenstein v. Gazprom By Hans-Martin Tillack Stern Magazine, Germany, October 10, 2007 Authorities in Vaduz are targeting a company with ties to Gazprom. Who are the mysterious profiteers of these gas dealings, which one of Gerhard Schröder’s manager colleagues engineered? The Russian energy giant Gazprom is having problems with the authorities – and namely in the little Principality of Liechtenstein of all places. The Financial Markets Supervisory Board (FMA) in Vaduz has launched an audit due to possible problems at the IDF investment trust, which has ties to Gazprom. FMA head Stephan Ochsner confirmed for stern.de that “at present an audit is underway.” The FMA is apparently concerned about a possible lack of transparency at Gazprom subsidiary Siritia Ventures Limited, which partly owns IDF. The regulatory authority is interested in allegations that the Cypriot-based Gazprom subsidiary has violated local law. As der stern revealed four weeks ago, Siritia – which belongs to Gazprombank – failed to present audited annual reports for 2005 and 2006 to the appropriate authorities at its seat in Cypriot Nikosia by mid-August. If a important shareholder of a “Liechtenstein-based participant in financial markets has violated the law, then that is relevant for the FMA,” said the head of the Liechtenstein supervisory agency. Silence concerning internal affairs Even the auditors Deloitte & Touche – which Saritia itself appointed – complained of departures from “business law and accounting rules” in Siritia’s 2004 annual report. A “consolidated financial statement” containing the subsidiary’s results was missing. In 2004, Siritia owned 100-percent of the Liechtenstein subsidiary. At present, company shares are split with the Russische Kommerzial Bank in Zürich. However, Gazprombank will soon take over the latter. IDF did not want to answer any questions from stern.de regarding the FMA audit. This concerns internal affairs, said manager Klaus Eberhard. The company, however, has not engaged in any “unlawful”, “dishonourable” or “immoral behaviour”. 20-fold return on investment Beforehand, however, IDF publicly confirmed that the Liechtenstein regulators were examining the “depth of diversification” of one of the company’s funds. This fund, Gas I, holds all of the shares in the Cypriot-Austrian gas distributor Centrex. The question was whether the fund was too dependent on the business developments of one company alone. In Liechtenstein financial circles, however, it is said that the supervisory body is concerned about more. It also wants to learn the identities of the mysterious owners of the fund’s shares in Gas I. The question of these shareholders is so explosive, because they have been made spectacular profits since 2004 – not least because Gazprom supplied Centrix (which Gazprom even originally co-founded) with lucrative gas contracts. However, primarily the secret owners of the IDF shares profit from Centrix’s commercial success. They may have had to invest at least U.S.$ 1 million. But the value of their shares has gone up more than 20-fold since April 2004. Gerhard Schröder’s colleague in play The gas delivery contracts with Centrix were signed by a man who is a close colleague of former Chancellor Gerhard Schröder: Alexander Medvedev, who is deputy chairman of the board of executive directors at Gazprom and sits together with Schröder in the Shareholder Committee of pipeline company Nord Stream. Gazprom and Gazprombank have so far reacted only evasively or not at all to the question why several anonymous fund owners in Liechtenstein of all places are benefiting from Centrex’s commercial success. According to research by stern.de, Andrei Akimov, the present head of Gazprombank, had already attracted attention in Austria due to irregularities similar to those Gazprombank subsidiary Siritia is now accused of. For years, Akimov had run Imag GmbH (later renamed Dehel GmbH) in Vienna. Because Dehel did not hand in its annual reports on time, the Vienna Commercial Court issued several subpoenas – most recently to Akimov himself as well in March 2006– and ultimately even imposed fines. Address unknown However, the letters to the company at Kohlmarkt 11, Vienna, as well as Akimov’s Vienna address came back regularly: The addressees had moved, address unknown. Michael Hason, an employee of Dehel’s tax consultant, wrote the Vienna Commercial Court on 15 February 2007 that Akimov was “oversees” and was “at present not reachable”. The letter did not mention that the former Dehel boss would most likely be reachable as director of the Gazprombank in Moscow. Hason must have known this, because he also sits on the supervisory board of Centrex, which is partly controlled by Akimov’s bank. Confronted by stern.de with these contradictions, Hason has now invoked his “obligation to maintain secrecy” as a “chartered public accountant and tax consultant”. That Akimov’s company Dehel was able to elude authorities was due also to the change of name, which was engineered just in time. Originally, the company operated under the name Imag (Investment Management and Advisory Group). When Akimov registered liquidation on behalf of Imag in August 2003, he changed the name to Dehel. At the same time, however, the company apparently continued to maintain an office under its old name Imag at Kohlmarkt 11 – in any event, it had still had a doorbell sign there until at least August of this year. Due to the change of name, the letters from the authorities to the Imag successor Dehel nonetheless were all returned to sender. “Trade in goods of all kinds” Akimov, who has run Gazprombank since 2002, was at the same time Imag’s business manager until 21 August 2003. In the 12 years of its legal existence, from 1991 until 2003, oddities did arise at the small business and its subsidiaries. As is the case today with Gazprom’s and Gazprombank’s subsidiaries, there were also bafflingly convoluted company structures and accounting problems at Imag. Akimov had its purpose of business recorded in Vienna’s trade registry as “trade in goods of all kinds”. At least intermittently, the company seems to have been considerably active. In 1997, it operated an imposing motor pool with seven cars, among them a BMW 323 and an Audi 100. Conspiciuous behaviour at Imag as well In the Swiss tax haven of Zug, there was an Imag AG operating parallel. Together with Akimov, it owned the shares in Vienna Imag. Here, too, it repeatedly came to conspicuous behaviour. In 1998, auditors demanded “a consolidated financial statement” – even adding “urgently”. A consolidated financial statement would have also meant taking into account the results from subsidiaries. The company managers – among them Akimov – rejected this at a meeting in Moscow on 21 October 1998. They were of the “opinion that the operating ratios had not been reached and therefore a consolidated financial statement is not urgently necessary”, it was said in the protocol, for which Akimov was responsible. According to the protocol, the business reports for 1995 and 1996, which were in fact necessary, had not at all been prepared as of October 1998. Due to the strange business conduct of Akimov’s Swiss companies, managers and auditors have resigned repeatedly from their posts. On 4 August 1998, the auditing company Revisuisse gave up its mandate for Imag AG – namely retroactively “starting with the fiscal year 1997”. Missing auditor’s reports Also within Imag’s orbit were several companies by the name of Wibro: a Wibro AG in Zug, a Wibro B.V. in Amsterdam and a branch office of Wibro B.V., which was in turn registered as an autonomous company in Zug. Wibro Amsterdam was controlled by a company called Granz N.V. in Curaçao in the Netherlands Antilles. Among the purposes of business of the Amsterdam companies – which were already founded in March 1989 – were also trade in the rights to “secret procedures or formulae”. They were last run by a Russian woman who gave as her residence the “Hawaii Suntan Complex” in Cypriot Limassol. At Wibro as well, there were repeated problems. With a letter to Akimov dated 17 July 1997, the company’s Swiss proconsul Franz-Xaver Camenzind resigned “with immediate effect” from his posts as administrative council at Imag AG and Wibro AG. The reason: Statutory, regular general meetings had not taken place. The “necessary auditor’s reports”, said Camenzind, had also not been prepared. Buchhaltungs- und Revisions AG Zug withdrew as auditing agency from Wibro AG on 18 August 1997 “with immediate effect”. Justification: “To this day,” it had not received “the auditing documents for the fiscal year 1996”. A copy of this letter also went to Akimov in Vienna. Russian sloppiness A former Akimov employee excuses these failures retrospectively as allegedly typical Russian “sloppiness”. In any event, the massive failures have hampered neither Akimov’s career, nor that of Alexander Medvedev, his partner of many years. From 1991 until 1996 and again from 1998 until 2002, Medvedev was director of Imag in Wien under Akimov as well as an associate. As the head of “Gazprom export”, Medvedev today controls billions of dollars of gas deals with Western Europe. And he is active at Nord Stream with former Chancellor Gerhard Schröder. When Medvedev was appointed Gazprom export boss in 2002, the Russian business newspaper Vedomosti quoted astonished insiders as saying nobody at Gazprom or the export subsidiary had ever “heard anything about Medvedev before”. Apparently – such is the reasoning – the appointment of the former Imag man was co-ordinated “with the presidential administration” of Vladimir Putin. Putin’s buddies – from the KGB? In doing so, did the former KGB officer Putin draw on his old secret service colleagues? There is no proof for this speculation. It is certain, however, that the now 54-year-old Akimov long before the fall of the Berlin Wall represented Soviet interests in Western Europe. He was born in Leningrad, now St. Petersburg, Putin’s hometown. From 1985 to 1987, he was deputy general director of the Russian Vneshtorgbank in Zürich. Immediately thereafter, he ran the Russian controlled Donau-Bank in Vienna until 1990 and his founding of Imag in January 1991. Vienna has always been considered a stronghold of Soviet secret service activities. It is also certain: A KGB past at Gazprombank is not considered scurrilous. According to information previously available on the bank’s homepage, Viktor Korytov, the bank’s deputy chief executive officer, served with the KGB from 1979 to 1992 – that is to say, for 13 years. Sergei Ivanov, a son of the deputy prime minister of the same name, is, at age 26, today vice president of Gazprombank. His father, like Putin, served in the KGB in Leningrad and is considered one of the favourites to succeed Putin as Russian president. Joint venture with Dresdner Bank The oddities surrounding Gazprombank should also be of interest to several financial managers in Frankfurt. For last year, Gazprombank almost came under the control of Dresdner Bank. It had announced in December 2005 that it was taking over a third of Akimov’s bank. The Russians let the already done deal collapse in June 2006. In January 2007, Dresdner Bank and Gazprombank announced instead the founding of a joint venture for emission trading.