By Democracy Watch
At the beginning of 2019, Swedbank’s management were concerned. Only a few days ago, news had leaked that their bank’s Estonian subsidiary may have been used to launder billions of euros. They were rushing to keep the scandal under control.
Staff received a message on February 25 detailing the bank’s past efforts to deal with “high-risk” customers, including hundreds of accounts that had been cancelled. With them came a global metals corporation, Solway Investment Group, which has operations in several countries.
Several “questionable transactions” have been made by the Solway group’s “holding/transaction entities,” according to a document acquired by Eesti Ekspress. Solway was “offboarded in 2011” because it “declined the requirement to submit accurate ownership papers.”
As suspicious money was pouring through Swedbank’s Baltic operations, it decided to remove Solway. Between 2007 and 2015, investigators discovered that at least 200 billion euros had been laundered via Estonian offices of Swedbank and Denmark’s Danske Bank. This money laundering scam was one of the greatest of all time, with a substantial portion of it coming from Russia and Eastern Europe.
The Mining Secrets project, coordinated by Forbidden Stories, has found hundreds of suspicious transfers from these institutions that may have prompted Swedbank to abandon Solway as a client.
A total of 23 businesses linked to the mining company were found to have sent about $1.9 billion in big, round-dollar payments without a clear economic purpose between 2007 and 2015. All of them have been connected to the Solway Group or its top executives, according to the OCCRP’s findings.
“Anonymous businesses are routinely used to transport problematic money since it is so difficult for anybody to establish who owns them,” says Mara Martini, the head of Transparency International’s anti-money laundering program.
Fraudulent transactions may be carried out by using a network of businesses that includes legal as well as sham entities. This is not unusual, according to the expert,
Swedbank wasn’t the only bank worried about these firms. According to papers published to BuzzFeed News as part of a project organized by the International Consortium of Investigative Journalists, known as the FinCEN files, other banks also alerted some of them for making questionable transactions over the same time.
When it comes to the $1.9 billion, it’s not obvious where the money came from or why Solway would need to transfer it about like this. As a result of a prior investigation, OCCRP reporters discovered that 23 of the 23 firms were linked to other Russian tax evasion and money laundering crimes.
Unnamed former Swedbank officials stated Estonia was seen as a “sort of transit republic” for Russian money at the time they talked.
Having ties to the Kremlin, according to the former official, is now seen as a liability. That at the time was a comfort that your customer will probably have a somewhat longer career than other clients.
According to Solway, it “acts entirely in accordance with existing national laws and international rules” and “strives to prevent corruption,” denying any involvement in unlawful activities. Asked about Swedbank’s choice not to respond, a representative said the bank had “followed all the appropriate steps” to comply.
“Solway Investment Group emphatically denies the claims of money laundering and wrongdoing.” According to the corporation, no financial or regulatory organizations have ever accused us of any misconduct.
In response to a slew of articles OCCRP and 20 partners published as part of the Mining Secrets investigation earlier this week, Solway issued a statement disputing the conclusions of the reporters and adding that the business has quit all of its Russian interests.
It was observed that Swedbank had previously been penalized by authorities for “prior inadequacies in the administration and supervision of measures against money laundering in the bank’s Baltic operations.”
While the investigation into Danske Bank’s activities in Estonia is ongoing, the bank refused to comment, stating that it has made major investments in compliance measures. When the financial crime and money laundering situation in Estonia deteriorated in Estonia, “we were in a different position,” stated chief administrative officer Philippe Vollot.
For the 23 dubious transactions, OCCRP searched business registrations and leaked papers to find out who owned them. Many of their owners and directors’ personal information was made public in certain situations.
Reporters relied on earlier Solway annual reports for information on other corporations located in secrecy countries. The FinCEN data included evidence that two more were connected to Solway.
Twenty-one firms had connections to Solway or key officials throughout the time of questionable transactions, according to the reporters who pieced it all together.
Solway co-founder Aleksandr Bronstein and his son Dan, as well as Solway group secretary Andre Seidelsohn, were among the executives who represented or controlled the firms in multiple instances. An additional was held by a Cypriot lawyer named Christodoulos Vassiliades, a former associate of famed Russian mobster Semion Mogilevich.
Although it isn’t obvious who owns Core Trading Ltd and Raznoimport Holdings Ltd, reports and government investigations reveal that they have long-standing links to the mining business and its founders.
In a statement to the media, Solway said that just 13 of the 23 firms cited by reporters were connected to the mining company. A request for comment from Vassiliades was not returned, although his legal firm has said that it conforms with due diligence standards.
Transfers of huge, round-dollar quantities that occurred for no apparent cause were flagged by SVT using the same methods as those used by financial investigators. More than a thousand transactions totaling about $1.9 billion in value were highlighted by journalists between 2007 and 2015. According to specialists in anti-money laundering, these payments should raise red lights.
The vast majority of the transactions were reported as repayments on debts that had been taken out. In other cases, money was shifted back and forth between firms, or payments for the same or similarly titled agreements were made on many occasions in the same week or day, according to documents.
Is there a reason why a corporation seems to be borrowing and lending the same amount?” Graham Barrow, a financial crime specialist who evaluated certain transaction data, stated, “This doesn’t make business sense.”
In the event that a business has an elaborate corporate structure and transfers money around inside it without any apparent economic purpose, the bank is likely to see this as a “red flag.”
Tactica Limited, a company linked to Aleksandr Bronstein, was one of the most productive, according to a leaked FinCEN report from 2011. Between 2007 and 2011, Tactica completed more than 750 deals totaling more than $900 million, most of them through Core Trading, a 23-company consortium. Every single transaction, including several payments on the same day, was linked to the same loan arrangement.
Solway’s office from the outside
Francois Ruchti, RTS Solway’s office in the canton of Zug, Switzerland, is credited.
“In general, all transfers and deposits were held as a regular business course and are customary entrepreneurial procedures,” Solway replied when asked about the transactions. Tactica’s affiliation with Core Trading or Tactica has not been confirmed, however a spokeswoman for Tactica denied that Solway had any connection to any of these companies.
Criminal and civil investigations have been conducted on both Swedbank and Danske Bank for a long time. During those judicial proceedings, Solway Group has never received any queries from either the banks or the prosecutors’ office, a representative said.
“Everything about it is in order,” Natalja Kesler, a Tactica official, said when asked about the company’s transactions. He was only ever engaged in legal matters, according to her, throughout the 33 years she’d known him.
Bronstein’s philosophy is that everything should be open and accessible, she added.
Core Trading, which was registered in St. Vincent and the Grenadines at the same location as Tactica, was not owned by OCCRP. According to reports, however, two of Solway’s subsidiaries have been accused of tax cheating.
Pobuzhsky Ferronickel Plant in Ukraine was suspected of evading roughly $1 million in taxes via the use of bogus contracts with Core Trading and several other local businesses between 2011 and 2014. In this instance, the corporation was able to persuade the court that the transactions were legal.
It has also been alleged that another Solway firm, which owns a copper and gold mine in North Macedonia, worked with Core Trading between 2006 and 2008 to influence the pricing of copper concentrate in order to avoid taxes. According to investigators’ findings, a case was started, but it has since been placed on hold, as is common in this nation.
In response to an inquiry concerning the mining firm’s link with Core Trading, Solway only said that Core Trading is not a member of the group. Further legal proceedings have not been taken, said the spokeswoman, despite “many audits and inquiries relating to Pobuzhsky Ferronickel Plant’s operating activities.”
Core Trading declined to respond when contacted by the media.
Filings with FinCEN
As far as I know, it wasn’t simply Eastern European law enforcement officers that were suspicious. Four of the 23 firms were also reported to the Financial Crimes Enforcement Network (FinCEN) of the United States Treasury Department by foreign banks.
They are not conclusive evidence of misconduct, since they were all filed between 2011 and 2016. Reporters and bank compliance inspectors both found the same kinds of problems in these documents.
For more than $23 million in questionable payments, the majority of which went via a correspondent account with Danske Bank Estonia, a U.S. affiliate of Deutsche Bank reported Solway Industries to FinCEN in 2011.
Another $47 million in transactions by Solway Industries, some involving another one of the 23 Solway-owned companies, Dagaskar Developments Ltd., were detected later in the year in a supplementary report submitted by the Deutsche Bank subsidiary.
Raznoimport Holding LLC seems to have been involved in both transactions. Raznoimport, according to Forbes Russia, was the Soviet Union’s primary aluminum exporter, according to a study. Aleksandr Bronstein and two other Russian investors apparently took over the firm after it was privatized, and he was in charge of the company’s UK operations for many years.
In 2011, when the Deutsche Bank unit submitted the FinCEN report, the firm was run by Sergei Khramagin, who was given the Order of Honor by President Vladimir Putin for his economic successes last year.
Although Raznoimport Holdings Ltd is incorporated in St. Vincent and the Grenadines, which is a secrecy jurisdiction, there is no record of who owns the firm, which is the parent company of Raznoimport in Russia.
Aleksandr Bronstein “is presently retired and is not participating in Solway’s operational operations,” a Solway representative responded when asked about the suspicious behavior reports.
Several of the 23 firms involved in money transfers with one another were also involved in money transfers with corporations implicated in significant Russian money laundering incidents.
Leaked papers from Troika Dialog, previously Russia’s biggest private investment bank, revealed the majority of the payments. OCCRP and its allies revealed in 2019 that they were at the heart of a large financial “laundromat” that funneled billions of dollars via offshore firms on behalf of its customers, including influential oligarchs with links to the Kremlin.
In one case, the Troika Laundromat was linked to an investigation into a tax scheme reportedly orchestrated by Sergei Tikhomirov, who was suspected of utilizing fictitious contracts to conceal the earnings of Russian insurance businesses abroad. Arbitration records claim that Rosgosstrakh, a state-owned corporation, exploited his network to avoid taxes to the tune of 700 million rubles at the time.
Approximately 50 billion rubles were reportedly moved out of the country by Tikhomirov between 2006 and 2009. South American Reinsurance Company (SARC), based in Montevideo, Uruguay, has been named as one of these firms by Russian authorities.
SARC sent more than $1.4 million to two of the 23 businesses involved in Tikhomirov’s scheme, according to stolen data from the now-defunct Troika bank. Solway Real Estate Limited, a subsidiary of the mining company, received the vast majority of the dozens of payments. All of the payments were classified as consultancy or stock compensation.
Consultant agreements may be a “valuable technique of transporting dirty money throughout the globe since it is extremely difficult to track ‘consultancy’ in any meaningful sense,” according to anti-money laundering specialist Barrow.
“Suspicious,” he replied, describing the situation.
After a warrant was issued for his arrest in connection with the plan, Tikhomirov departed Russia, although he is said to have returned in 2015. Journalists were unable to get a hold of him for an interview.
A spokeswoman for Solway said that the company’s archive, which spans the previous 10 years, included no evidence of payments to SARC or any of the other entities related to the Russian scandals.
As part of a $967 million money laundering conspiracy operated by a Russian organized criminal syndicate, SARC and two other offshore businesses that dealt with entities in the Solway cluster were also investigated.
SARC and two other offshores, Weenlix Trading Inc. and Merabella Ltd., were accused of funneling approximately $40 million of suspicious cash into Austrian banks by asset manager Hermitage Capital in 2019. Russian state railroads may have been the source of some of the stolen goods.
A Russian tax scheme known as the Magnitsky case is suspected to have provided cash for Weenlix. In the wake of Sergei Magnitsky’s imprisonment and eventual death from mistreatment, new anti-corruption legislation were passed in the United States and across the world.
Data from the OCCRP suggests that between 2006 and 2009, Merabella and Weenlix paid Solway Real Estate and another business from the 23 about $1.5 million, mostly for office equipment. Nearly $2.9 million has been provided to the 23 firms by SARC, Merabella, and Weenlix throughout the years.
Fraudulent transfers of value between organizations may be disguised by using generic terms like “consulting services,” “legal services,” and “office equipment,” according to anti-money laundering specialist Eryn Schornick.
A habit of working with dubious organizations and persons, particularly in an operational environment where we would later find that money laundering was rampant, may swiftly dispel any appearance of legitimacy and lead to engagement in unlawful activities.
A spokesman for Solway confirmed that the mining business has no Russian financing and is “completely owned and operated by EU residents,” adding that the company recently abandoned all its interests and activities in Russia.
Russian mining and metals operations were formerly run by Solway, which lately had “relatively little investment and operational activities on that market,” Solway stated.