Banks Accused of Harboring a Criminal Nationality
// An Old Case Revives Along Ethnic Lines
Officials at the Russian Ministry of Internal Affairs and Russian Information Monitoring have exposed a criminal organization that controls several Moscow banks. Law enforcement officials maintain that the malefactors, who laundered and illegally cashed 200 billion rubles and around $400 million, were lead by a Georgian. The illegal revenues were then purportedly transferred to Georgia. Moreover, officials claim that the matter has been under investigation since last year, when it had no underlying ethnic implications. The Georgian link appeared after the Internal Affairs Ministry took up the cause of the anti-Georgian campaign recently unleashed by the authorities.
Yesterday the press service of the Russian Internal Ministry's Department of Economic Security (DEB) released a statement in which it claimed to expose a criminal organization involved in money laundering and illegal cashing-in operations that included hard currency being moved out of the country. The DEB maintains that this organization controlled more than eight Moscow banks and that it had "ethnic and financial ties to criminal representatives of the Georgian diaspora." "The channel was used to transfer funds to Georgia and other countries," stressed the DEB, noting that most of the money came from casinos run by criminal gangs, supplemented by robbery and budget skimming. According to the DEB, the group was run by a native of Tbilisi, who "has links to Georgians fighting in Abkhazia, as well as to Russian criminal organizations." The statement from the DEB's press service also mentions that the money moved out of Russia is going to fund "a small victorious war." The department maintains that "the interests of the group were advanced by several officials in the Ministry of Finance and the Bank of Russia" and that the offenders made use of ties within law enforcement organs.
According to the DEB, the "Georgian" criminal organization legalized cash flows via Print Bank, Vek-Bank, Investkombank Balkom, and UKB "Tsenturion." "The revenues from illegal banking operations alone were more than $500,000 a day," maintains the DEB. A Kommersant source in the Ministry of Internal Affairs (MVD) said that the criminal group, which had ten members, was run by a Georgian by the name of Jumber Elbakidze, familiarly known as Juba. According to the MVD, Mr. Elbakidze received Russian citizenship illegally in 1991, having "legalized" himself in one of the rural regions of Lipetsk before basing his operations in Moscow. Investigators maintain that Juba's group bought up several Moscow banks and, on the basis of those banks, developed different schemes to cash and launder illegal revenues. They also say that Juba controls at least six more banks in Moscow. Until 2004, Juba himself worked in different positions in several of these banks. At the beginning of October, Mr. Elbakidze left Russia for France, supposedly to invest part of the laundered money in real estate. However, according to several sources, he met with difficulties in France concerning the necessity of declaring funds, and last Sunday he returned to Moscow. Kommersant's source in the MVD said that none of the members of Juba's group have been charged and that the case was being investigated only according to the facts of the illegal activities uncovered thus far.
The case, under Article 172 of the Russian legal code ("Illegal Banking Activities"), was opened in October 2005 using evidence uncovered during inspections of two Moscow banks, "New Economic Position" (NEP) and "Rodnik," by officials from the DEB and Russian Information Monitoring. Inspectors, acting on information received from the government-run "Deposit Insurance Agency" (the agency was founded in 2004 by Central Bank first deputy chairman Andrey Kozlov, who was shot dead in Moscow on September 13 of this year), found that the two banks had cashed 200 billion rubles, $391 million, and 66 million euros in nine months between 2004 and 2005.
Inspectors soon uncovered a third commercial bank, AKA-Bank, that was involved in the illegal cashing-in scheme. The case was then transferred to an investigative committee in the MVD, in conjunction with which the Bank of Russia informed the aforementioned credit organizations that they were to be stripped of their banking licenses. Commenting on his decision to revoke the banking license for "Rodnik," Mr. Kozlov noted that the bank had cashed 75 billion rubles in eight months between 2004 and 2005 – a volume of operations larger even than that of Sberbank – despite having acknowledged capital of only 20 million rubles. Funds were cashed by "Rodnik" within the framework of a government-run program for the purchase of insulin.
During investigations into these illegal banking activities, in February 2006 investigators searched and removed documents from "Tsenturion" bank, which, as it turned out, was also involved in the criminal scheme. The bank's license was similarly revoked. The list of banks soon grew to include Vek-Bank, Investkombank Balkom, and Print Bank. The DEB told Kommersant that the banks legalized funds through noncommercial organizations such as "The Fund for Strategic Planning," "The Noncommercial Partnership for Supporting Entrepreneurial Activity by Citizens," "The 'Harmony' Educational and Study Society," and "The Welfare Fund for Invalids, War Veterans, and Armed Forces Veterans" that had been founded for that purpose.
Of the seven banks, only Printbank is still in operation. "Information disseminated by the MVD mistakenly refers to the credit organization "KB 'Print Bank'," while our correct name is "Printbank," managing chairman Leonid Pakhno told Kommersant yesterday. "In any case, our bank has suffered material and moral damage. Clients of the bank who did not pay attention to the incorrect spelling have taken this information negatively in relation to Printbank." According to Mr. Pakhno, Printbank carries out banking operations in strict accordance with the law. "Not only was our license not revoked, it was not even suspended," he said. "Printbank has carried out no operations or transactions with the banks on the MVD's list and in fact has never had agreements with those banks."
The Bank of Russia said that it was its officials who kicked off the investigation by contacting the Deposit Insurance Agency. The agency then turned to the MVD a year ago, which is when the criminal case was opened. The Georgian connection was made only after relations soured between Russia and Georgia. However, now that the MVD has gone public with its expos? of the next ethnic criminal organization at hand, the case will undoubtedly be moved to the back burner. In any case, the MVD says that "many who would otherwise be detained in connection with this case are not currently in Russia." The purported leader of the group, Jumber Elbakidze, who is in the country, will apparently not be officially charged.
Yury Senatorov, Yulia Chaikina, and Svetlana Dementieva
All the Article in Russian as of Oct. 18, 2006
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