JOHANNESBURG — A global money laundering scandal involving Russian private investment bank Troika Dialog has started getting bigger by the day. Revelations of the illicit money flows have primarily been thanks to the Organised Crime and Corruption Reporting Project (OCCRP) which has carried out incredible investigative journalism to join the dots in this scandal. (You can see OCCRP’s coverage by clicking here.) The scandal is so huge and complex that there are even concerns now that Standard Bank may have had exposure to it owing to it previously having had a minority stake in Troika Dialog which it later sold in 2011. But execs at Standard Bank have strongly asserted that none of the bank’s businesses was linked to the money laundering scam. – Gareth van Zyl
By Vernon Wessels
(Bloomberg) – Standard Bank Group Ltd., which owned a minority stake in Moscow-based Troika Dialog from 2009 to 2012, said there’s no reason to believe any of its businesses were linked to alleged money laundering involving the Russian lender.
None of the entities that the Johannesburg-based company was involved in at the time have been mentioned in reports about the scandal, Alan Bedford-Shaw, the head of corporate development, said on a conference call Thursday. Standard Bank agreed to sell Troika to Sberbank PJSC in 2011 as part of a strategy switch to focus on Africa and exit emerging markets from Turkey to Brazil.
The Standard Bank representative was responding to a question from an analyst during its full-year results presentation as almost daily revelations from the Organised Crime and Corruption Reporting Project and its partner news organisations widen the group of lenders involved in the scheme. The so-called Troika Laundromat was a financial network set up to help clients move money out of Russia and hide it.
The rejigged focus on Africa has paid off for Standard Bank, with a jump in earnings from its 20 operations outside of its home market helping to compensate for slower growth in South Africa. The stock fell 1.8% as of 12:19pm in Johannesburg. That’s the biggest drop in the six-member FTSE/JSE Africa Banks Index hit by weakness in the rand and rising bond yields after South Africa’s current-account gap widened.
What We Know About the Troika Laundromat, and What We Don’t
That much we know from disclosures by the Organised Crime and Corruption Reporting Project and its partner news organisations. Almost daily revelations over the last week have widened the group of banks involved and added to a picture of massive laundering – perhaps facilitated by the absence of a central enforcement agency in Europe.
What we don’t yet know is the identity of many of the participants on the Russian side, what proportion of the money was illicit, and whether additional banks are likely to be named. Financial institutions from Stockholm to Amsterdam already face uncomfortable questions, with investigations under way in the Baltic nations, the US, the UK and the Nordic countries.
While the sums reported by the OCCRP are small – at least compared with the $230 billion handled by a tiny Estonian unit of Danske Bank A/S between 2007 and 2015, much of it suspicious – the disclosures this week give a more detailed glimpse of the Russian money trail.
Here’s what we know
- The scheme consisted of at least 75 shell companies set up by Troika. Money was moved between them for deals that were entirely made up, including fake invoices, in order to disguise the recipients. In total, $8.8bn of internal transactions were generated to obscure the source of the money. Clients used the funds to buy real estate or luxury yachts, while criminal groups worked to launder illicit funds. Troika needed a commercial bank that wasn’t looking too closely at contracts and trades.
- It chose Lithuania’s Ukio Bankas. Ukio set up accounts for 35 of the companies in the Laundromat, probably more, OCCRP says. Because Lithuania wasn’t yet using the euro, it needed correspondent banks to handle euro-denominated transactions. That’s how most of the Western banks seem to be connected to the system. Analysts say for that reason, potential fines, if any, would be limited, because the onus is usually on the respondent bank to vet clients.
- OCCRP previously exposed three similar money-laundering schemes. The latest is based on a subset of a data trove that includes about 1.3m leaked transactions from 238,000 companies, the bulk of them between 2003 and 2013. Reports by the group’s media partners keep adding fresh details about the role of Western banks. Nordea Bank Abp, the biggest Nordic bank, allegedly handled about €700m ($790m) in potentially dirty money, with funds arriving from Ukio and heading to shell companies in countries such as the British Virgin Islands and Panama, according to Finnish broadcaster YLE. More than $889m moved from accounts at Deutsche Bank AG to Laundromat accounts from 2003 until 2017, according to Süddeutsche Zeitung, a German daily.
- The report comes on top of regulatory scrutiny of Deutsche Bank’s role as a correspondent bank in the Danske Bank money-laundering scandal. At ING Groep NV, hundreds of millions of euros passed through bank’s Moscow branch from companies that were part of the Troika Laundromat, the Dutch newspaper Trouw reported. A former unit of ABN Amro Group NV was used by the Troika Laundromat to move about €190m, Trouw and De Groene Amsterdammer, a Dutch magazine, reported.
- That unit was bought by Royal Bank of Scotland Group Plc, which is now looking into the matter, in 2008. About €43m from the Troika Laundromat landed in an account at Cooperatieve Rabobank UA for a Dutch yacht builder, Heesen. The money was for the construction of two boats for Russian senator Valentin Zavadnikov, according to Trouw and De Groene Amsterdammer. Turkiye Garanti Bankasi AS’s Dutch unit processed €200m in transactions from two Lithuanian banks, the Dutch media outlets reported.
- Accounts at Credit Agricole SA’s Geneva unit received about $150m from the Troika system through 2012, in more than 500 transfers, Tages-Anzeiger reported. Austria’s Raiffeissen Bank International AG was accused by Bill Browder, an investor, of ignoring red flags in the transfer of $634m from Ukio Bankas and the Estonian unit of Danske Bank.
