How Chernomyrdin's Secretary Helped Ilyas Khrapunov Move Money from BTA Bank

Orda.kz received a report from the US law firm Boies Schiller Flexner LLP concerning the investigation of illegal transfers of stolen assets of BTA Bank by Mukhtar Ablyazov and Ilyas Khrapunov to the accounts of offshore companies.

The report of the law firm Boies Schiller Flexner LLP was compiled by Matthew Schwartz and his team of lawyers. The company was contacted by the management of BTA Bank and the Almaty akimat. The lawyers conducted their own investigation and uncovered a chain of illegal transfers of stolen funds from the bank and details of Ablyazov's business relationship with Khrapunov Jr.

The report was published by the American news agency Courthouse News Service. This service "focuses on the civil process from the moment of filing a claim until the decision of the court of appeal."

A British Court's Unprecedented Decision

In the report, Schwartz and his colleagues point out that the exposure of Ablyazov's fraudulent schemes, which he was engaged in when he was the head of BTA Bank, occurred in 2008. As a result of the illegal withdrawal of billions from the bank in 2009, BTA defaulted on billions of dollars of debt owned by investors. Credit Suisse Group AG, HSBC Holdings Plc, JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc were all affected.

However, the backlash was not long in coming.

The report states that on or about November 12, 2009, shortly after BTA Bank filed its first lawsuit against Ablyazov in London, the British court took an unprecedented legal step. The judge ordered the freezing of Ablyazov's assets around the world dubbed the “Worldwide Freeze Orders.”

According to the report, the judge's ruling limited Ablyazov's ability to liquidate and launder assets that he had appropriated from BTA Bank. According to the document, Ablyazov was prohibited from reducing or alienating any of his assets without prior notification and consent of BTA's lawyer and the UK judicial authorities. This prohibition applies to any assets owned by trusted persons and companies affiliated with Ablyazov. The ban also applies to persons who will act on his behalf or in his interests, the report says.

This created a lot of problems for the fugitive oligarch. Mukhtar Ablyazov later turned to his son-in-law, Ilyas Khrapunov. The report indicates that he asked for help in the monetization and laundering of key assets that had not been discovered by the management of BTA Bank.

Did Ablyazov turn to Khrapunov Jr. only because of family ties? The report says that for more than ten years Ablyazov had been developing schemes of illegal enrichment with Ilyas' parents, Viktor and Leila.

The Conspiracy between Ablyazov and Khrapunov Jr.

In the report, lawyers indicate that around the end of 2009, Ablyazov and Khrapunov Jr. met in the United Kingdom and developed a plan to transfer the money.

They decided to do this by selling certain key assets remaining in Ablyazov's beneficial ownership.

The report cites Judge Waxman's words about Ilyas' role in this conspiracy:

"Khrapunov conspired with Mr Ablyazov to break the terms of an original freezing and a receivership order granted against Mr Ablyazov by effecting or assisting the removal or transfer of a number of funds so as to take those funds out of the reach of the freezing order against Mr Ablyazov and thus to assist him in evading and breaking clear court orders,"

An asset worth $440 million interested Ablyazov and Khrapunov Jr. The lawyers' report states that it is connected with Ablyazov's illegally obtained share in the oil company Zhaikmunai LLP, which is a subsidiary of Nostrum Oil and Gas PLC.

Further in the report, it follows that at the end of 2009, Ablyazov instructed his agent and accomplice Khrapunov to withdraw funds from the investment company "Zhaikmunai".

It follows from the report that Ablyazov's request to Khrapunov was that the proceeds from these investments should go to the banker personally and not be returned to BTA Bank, which invested money in the company.

The Circulation of Stolen Funds…Offshore

According to an OCCRP investigation and the lawyers' report, Ilyas carried out Ablyazov's instructions in the period from 2011 to 2012. Khrapunov Jr. withdrew income from the company with the help of the CEO of Zhaikmunai. He eventually received about $440 million in recoupment from another company, Zhaikmunai Investment, established in 2005.

The report further states that the stolen funds were transferred from two shell companies controlled by the CEO of Zhaikmunai – Sartfield Ltd and Claremont Ltd. Then they ended up on the account of Khrapunov's shell company Northern Seas Waterage (“NSW") in the bank FBME.

The report says that the funds were forwarded to other accounts of affiliated companies within FBME. After passing through this chain, the amount was divided and transferred from FBME for its laundering to several jurisdictions, including the USA.

FBME has long been known as a financial institution for money laundering.

However, it was only in 2014 that FBME was recognized as a “foreign financial institution engaged in primary money laundering activity.” In 2015, the activities of the bank with its clients and partners were actually vetoed by the US Financial Crimes Enforcement Agency. The report says that this was a death sentence for FBME.

In the report, lawyers indicate that the funds were partially combined with the assets of the Khrapunov family. In particular, this was done through a Panamanian offshore company called the VILDER Company, which was owned by members of the Khrapunov family and controlled by their son.

VILDER received at least $95.8 million in stolen funds from New South Wales in the form of transfers between the accounts of its offshore companies in FBME.

Schwartz and lawyers write that in order to avoid freezing the assets of his family members, Khrapunov transferred funds through accounts in FBME. The money was transferred to Gennady Petelin. The report indicates that Petelin is a distant relative of Ablyazov.

Lawyers point out that Petelin was the secretary of Viktor Chernomyrdin, the former Prime Minister of the Russian Federation. The report says that Khrapunov's assistant was involved in corruption in the Russian government. However, unlike Ablyazov and the Khrapunov family, Petelin's accounts were not frozen at that time.

Thus, Petelin's mediation was the best option for Ilyas Khrapunov. Nevertheless, control over the stolen funds was maintained by Khrapunov Jr. the entire time, who acted on the instructions of Ablyazov, the report says.

However, $440 million could no longer remain in FBME. In the report, the lawyers concluded that Khrapunov Jr. needed to withdraw this amount from the bank without warning BTA or the judicial enforcement agents.

It follows from the report that Ilyas Khrapunov could not bypass these instances, and therefore he turned to a long–time friend of his family - Felix Sater, a man with extensive experience in money laundering.

Orignal Author: Tamerlan Salyq

DISCLAIMER: This is a translated piece. The text has been modified, the content is the same. Please refer to the original piece in Russian for accuracy.