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OCCRP: A high-profile Russian partner of Ukraine’s top banker
Denys Bigus, Roman Shleynov, Kiev Post, Apr 5 2016
Note: The following story is part of the Panama Papers investigative series involving the Organized Crime and Corruption Reporting Project, a Kyiv Post partner.
National Bank of Ukraine head Valeriya Gontareva has close ties with Russian state-owned VTB bank, which does business in Ukraine, the Organized Crime and Corruption Reporting Project has found. The second-largest state-owned bank in Russia, VTB, is on very good terms with the Kremlin. It has been sanctioned by the United States and the European Union for Russia’s annexation of Crimea. So it’s a little surprising that the bank is doing so well in neighbouring Ukraine, where an on-again, off-again war simmers and sanctions have been traded like so many punches. In fact, Ukraine’s top banking regulator, Valeriya Gontareva, the head of the National Bank of Ukraine, has defended and supported VTB, making sure the political problems have not become banking problems. That includes sanctions by the United States and European Union levied in July 2014 against VTB’s Ukrainian subsidiary. She said:
These are banks with Russian capital, but these are Ukrainian banks where our citizens keep their money, the banks that give loans to our firms and keep accounts of Ukrainian individuals and companies.
She noted in Dec 2015 that the bank had been monitored by Ukraine’s National Bank since 2014 and said she has no complaints about its activities. VTB has done relatively well in the universally disastrous Ukrainian banking sector which suffered record losses in 2015 of Hr 66.6b ($2.7b). It recently decided to increase the capital of its Ukrainian subsidiary by a sizeable Hr 8.9b (about $340b), showing a continued commitment to the Ukrainian market. VTB bank has pared its losses lately from Hr 14.5m ($556m) in 2014 to Hr 4.5b ($170m) for 2015. But Gontareva’s open-mindedness about a bank so closely associated with a Russian leadership that seized part of Ukraine and supports a separatist movement may be due to her financial ties with an official from the Russian VTB, including a still-unexplained $10m offshore loan given to her company six months before she took over as Ukraine’s top regulator. Documents appear to show that the wife of this same VTB official appears to have been Gontareva’s business partner. That’s according to documentation from Mossack Fonseca. Quite unexpectedly, the usually dry registration documents also reveal a possible emotional connection to a business decision made by a high-profile Russian banker.
Gontareva, like Pres Poroshenko upon whose recommendation to parliament she was appointed, comes from the business world and her position at the National Bank is her first foray into the public sector. Gontareva left as head of the ICU financial group where she served from 2007 to 2014 to join government. Today the financial group consists of the bank Avangard, the asset management company Investment Capital Ukraine, and an investment company with the same name. Oleg Gontarev, the top banker’s husband, is a former shareholder and a co-founder of the asset management company. The main holding company of the group in Ukraine is registered through a company in the British Virgin Islands named ICU Holdings. Poroshenko chose the ICU as his financial managers for arranging the sale of his confectionery corporation Roshen through a network of offshore companies, registered after Poroshenko was elected to office. But documents from Mossack Fonseca show there is a close cooperation, partnership and credit relationships worth millions of dollars between the ICU group of companies and the companies of the family of Yuri Soloviev, the first deputy chairman of the Russian VTB bank. The records indicate (that) only the threat of European sanctions disrupted that cooperation. The connections can be traced through a series of transactions between companies registered in different offshore tax havens. In Dec 2013, an offshore company called Quillas Equities, owned by VTB’s Soloviev, loaned $10m to another offshore, Keranto Holdings (British Virgin Islands) with an annual interest rate of 3%. The funds were transferred from Quillas’s account to a Cypriot bank, RCB Cyprus, which is owned by VTB. RCB is another bank that has close ties to friends of Pres Putin, going so far as to give a company affiliated with Putin’s close friend Sergey Roldugin an unsecured $650m line of credit.
Keranto is connected to Ukraine’s ICU. The loan documentation contains Keranto’s mailing address in Kyiv at the Leonardo Business Center, where ICU’s office is located. According to the loan agreement, Keranto was represented by Dmitriy Nedelchev. There is a man with such a name on ICU’s website in the firm’s operations management team. He also serves as a member of ICU’s investment committee. At the time of the loan, Gontareva was running ICU and owned a quarter of the company. But there are also more substantial ties between the Russian banker Soloviev and Gontareva’s company. These connections show up in documents from the National Bank disclosing the ownership structure of the ICU-owned Avangard bank. According to that document, 22.74% of ICU’s holding company in British Virgin Islands, ICU Holdings, belongs to another British Virgin Islands company named Cordova Management, which lists one “Ulyutina, G O” from Moscow as its sole owner. This matches the name and initials of Soloviev’s wife, Galina Olegovna Ulyutina. Such a listing, using just the initials of a bank’s beneficiary, violates the Ukraine National Bank’s regulations which require a full name. Those regulations are supposed to be enforced by Gontareva’s National Bank. Ulyutina held an equal share of the company with Gontareva and its managing partners Konstyantyn Stetsenko and Makar Paseniuk. With Gontareva’s appointment to head the National Bank of Ukraine, she sold her share of ICU in mid-Jun 2014 to her partners. In July, Pindostan & Eurostan imposed sanctions on a number of institutions and individuals including VTB and its Ukrainian subsidiary. Shortly after, in Aug 2014, Ulyutina from Moscow left ICU. The ICU refused to answer any questions concerning its partnership with Soloviev, stating that this information is not public and is not of public interest. Later on Apr 4, it admitted that Ulyutina’s partnership with ICU started in 2010. NBU insists:
(Gontareva) sold her shares in the company in Jun 2014 and since then did not have any relation to it.
However, it did not comment on the company’s partnership with Soloviev’s family. Soloviev is a key figure at Russian VTB Bank, invited to work there personally by its chairman Andrey Kostin, who reportedly spent several months recruiting him. At the time, Soloviev was the first deputy chairman of the Russian subsidiary of Deutsche Bank. He had spent some time working at Lehman Brothers prior to that. In the Mossack Fonseca data, Soloviev is listed as a citizen of the UK, residing in London at 10 Thornwood Lodge, Thornwood Gardens, a quiet green neighbourhood between Holland Park and Kensington Gardens. The property was worth $4m as of 2006. According to the Mossack Fonseca data, Soloviev’s offshore company Quillas has received millions of dollars for consulting services: $8.8m in 2009-2010 alone. The payments came from other offshore companies, mainly Bentox Trading from the British Virgin Islands and Aphrodite Services from the Marshall Islands. These offshores said they needed investment advice and knowledge about the macro-economic situation in Kazakhstan and the Baltic countries, including the state of their financial markets, and independent evaluations of stock markets. The money was wired from accounts in RCB in Cyprus to Quillas accounts in Swiss Pictet Bank. Soloviev and VTB representatives haven’t responded to OCCRP’s questions about the value of those consultations, and the beneficiaries behind the offshore clients. In Dec 2014, five months after sanctions were imposed on VTB, Soloviev gave Quillas Equities to Natalia Ulyutina, a 65-year old pensioner from a small Ukrainian town, Nikopol. Reporters for OCCRP visited Nikopol in eastern Ukraine where the new “millionaire” Ulyutina lives on the fourth floor of an old building, her flat distinguished from the neighbours’ only by a new metal door. A neighbour confirmed that Ulyutina was a permanent resident of the apartment. The pensioner was not home. However her sister-in-law, who heads the town’s pension fund confirmed that Ulyutina has a daughter named Galina who is married to “some businessman from Moscow,” and that Ulyutina had been gone for quite some time “staying with her grandchildren in Moscow.” Neither her relatives nor her neighboirs had any information on when she would come back. In the gift deed, Soloviev said that he handed over all his right and shares in Quillas Equities to his mother-in-law out of his “natural love and affection.”