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Russian banker Georgy Bedzhamov smuggled money

Georgy Ivanovich Bedzhamov, Georgy Bedzhamov, Demetrios A. Demetriades LLC, Pandora Papers, Deposit Insurance Agency

World

Russian banker Georgy Bedzhamov smuggled money

Georgy Bedzhamov, wanted in Russia over a high-profile embezzlement case, used the law firm Demetrios A. Demetriades LLC, known as Dadlaw, to conceal his assets and disguise transfers. Company records and contracts also show how he moved tens of millions of dollars around the world around the same time his sister embezzled billions of dollars from their bank, Vneshprombank. Writes Stelios Orphanides

Georgy Ivanovich Bedzhamov, a fugitive Russian banker, used companies and trusts set up by a prominent Cypriot law firm to shift and hide assets while on the run, new leaked documents reveal.

Nicosia-based law firm Demetrios A. Demetriades LLC and affiliated companies, collectively known as Dadlaw, helped Bedzhamov and his sister Larisa Markus backdate the transfer of a company in a move expert say may have been designed to keep assets out of the hands of Russian authorities.

Markus, who co-owned Russia’s Vneshprombank with Bedzhamov, was arrested in December 2015. In May 2017 she pled guilty to embezzling US$1.8 billion from the bank, and was sentenced to nine years in prison, later reduced by six months. Russian authorities are still trying to seize assets belonging to Markus and Bedzhamov, who is also implicated in the scam.

Bedzhamov left Russia in December 2015, shortly before his sister’s arrest. Initially detained in Monaco on an extradition request from Russia, he was later released and travelled to London. In June 2021 Yury Isaev, director general of Russia’s Deposit Insurance Agency, said the agency continued to search for hidden assets to cover Vneshprombank’s obligations, which had risen to 218 billion rubles (around $3 billion).

Now, an analysis of documents from the Pandora Papers — a massive leak to the International Consortium of Investigative Journalists of nearly 12 million documents from 14 offshore corporate service providers, shared with media partners around the world — indicates that Bedzhamov and Markus used the services of Dadlaw to hide some of those assets.

The Pandora Papers documents also shed light on how Bedzhamov may have moved some of the stolen bank funds. Company records and agreements show how he and his associates used a convoluted scheme to move tens of millions of dollars around the world. The scheme included what appears to be a series of related party loans that were often vaguely formulated and included surprisingly unclear repayment terms and loan periods, and which even had misspellings of the parties’ names.

An anti-fraud expert said such loan deals raise various red flags, and may have been used to conceal the borrower’s identity.

“Often loans without a clearly defined repayment period and not requiring repayment, which are carried out by one person, but are actually made in the interests of another person — these are transactions that have signs of money laundering,” said Ilya Shumanov, the director of Transparency International in Russia.

An Army of Beneficiaries and Partners

The Pandora Papers indicate that the siblings’ business relationship with Dadlaw started in 2010 and continued until the summer of 2019 — long after evidence of Bedzhamov and Markus’s central involvement in the Vneshprombank scandal had become public knowledge.

Dadlaw, which has a checkered track record of servicing clients who are involved in fraud cases, finally took steps to drop Bedzhamov as a client after a London court imposed a worldwide freezing order on his assets. Starting in mid-2019, staffers of the law firm stepped down as directors in all companies linked to the two siblings, and all companies were finally struck from the Cyprus corporate registry in April 2021.

In addition, the documents from the Pandora Papers show the lengths that the siblings went to disguise their financial dealings.

The documents set out a scheme in which Markus transferred the ownership of Stanferme Asset Management Inc, an opaque British Virgin Islands company, to her brother days after her arrest. Bedzhamov waited almost 13 months to acknowledge and accept the share transfer, at which time he instructed Dadlaw to backdate the transaction to more than one month before his sister’s detention. The firm apparently did as instructed.

Bedzhamov’s sister had written to Dadlaw with instructions for the transfer on Dec. 28, 2015 — nine days after her arrest on suspicion of embezzlement of Vneshprombank’s funds. However, Bedzhamov only wrote to Dadlaw to accept the shares more than a year later, on Jan. 16, 2017, by which time he had fled Russia and was living in the U.K.

He stressed the need to backdate the transaction to Nov. 2, 2015, writing: “Please pay special attention that this transaction must be recorded with effect from 2nd November 2015, as that is the date that I wish the transaction to take effect.”

The Vneshprombank Scandal

In January 2016, after discovering a shortfall of 187.4 billion rubles ($2.3 billion) in Vneshprombank’s balance sheet, the Central Bank of Russia revoked its banking licence.

According to the court ruling in the case against Markus, the bank extended loans to “legal entities” that did not carry out “independent financial and economic activities” between June 28, 2011 to December 8, 2015. These companies were controlled by Markus, a second defendant and Bedzhamov.

The loans led to a loss of over 101.1 billion rubles for the bank.

The court ruling said that Markus and Bedzhamov “developed a plan” to attract large depositors “in order to fill the Bank with cash and create the possibility of committing theft.”

Among Vneshprombank’s depositors affected by the collapse were several VIPs, including family members of Russian government members, government ministries and state-owned corporations, as well as the Russian Orthodox Church. They reportedly entrusted the bank with tens of billions of rubles in deposits.

Four months after Markus was arrested, one of her creditors, the state-owned VTB Bank, initiated an insolvency proceeding against Markus over a loan extended to her in October 2015, which both her husband Lazar Markus and her brother, Bedzhamov, had guaranteed.

“Often, backdated transactions are needed to confirm the legal ownership of a company or asset on a specific date,” Transparency International’s Shumanov said. “An attempt to confirm the transfer of the company’s shares retroactively looks like a pre-agreed action by the parties in order not to lose control over the assets.”

Shumanov added that in his opinion, backdating the confirmation of ownership of the company to November 2, 2015, may have been necessary to reduce the risk of having Markus’s assets seized.

Layered Loans and LLPs

Pandora Papers documents and corporate records reveal the full details of more than $50 million loaned to Bedzhamov in 2012 and 2013 — in the midst of the embezzlement of Vneshprombank funds — by an opaque Cypriot company registered in the name of Bedzhamov’s associate.

The company, Felarco Management Limited, seems to have been little more than a conduit for loans, receiving large sums of money from obscure entities in the U.K. and then quickly transferring the same amounts on to Bedzhamov.

For example, Felarco Management received money from two U.K. limited liability partnerships, Tradeberg United LLP and Silverrow Invest LLP, which were ultimately owned by companies in secretive tax havens, the Marshall Islands and Belize.

Tradeberg United loaned Felarco Management $20 million on Dec. 10, 2012, and Felarco Management loaned Bedzhamov the same amount 10 days later.

Silverrow Invest loaned Felarco Management $10 million on Dec. 17, 2013, and Felarco Management loaned Bedzhamov the same amount three days later.

Silverrow Invest lent Felarco Management almost 17 million euros on Nov. 27, 2013, and Felarco Management sent the same sum to Bedzhamov as a loan 16 days later.

Although the ultimate owner of Tradeberg United isn’t known, the firm appears to have ties to Bedzhamov and Markus. In mid-2011, it loaned another large sum — $13.3 million — to Saferio Investments Limited in Cyprus, which at the time was owned by Markus. Tradeberg United then forgave the entire debt six months later.

A finance expert said these complex loan arrangements might have been designed to make money from a questionable source appear legitimate.

Loans cycled between companies can be used to “make money move between multiple jurisdictions, making it harder to connect dots and establish a forensic trail,” said Lakshmi Kumar, Policy Director at Global Financial Integrity, a Washington, D.C., nonprofit.

“In the end, the criss-crossing across the world makes it go through jurisdictions where it’s harder to get information. The idea with these schemes is to create a veneer of legitimacy.”

The owner of Felarco Management in Cyprus was listed as Veronika Cheliabi, a vice president of Vneshprombank. Cheliabi could not be reached for comment, but Bedzhamov and his sister had a history of using the names of Vneshprombank associates to set up shell companies without their knowledge, according to Russian court documents.

Cheliabi also appears as a shareholder in other companies in Cyprus and the British Virgin Islands (BVI) linked to Bedzhamov, but she seems to have been used as an intermediary who moved shares between the companies, then eventually on to Bedzhamov. In November 2011, for example, her controlling stake in a Cypriot shell company, Beraford Holdings Limited, was transferred to a BVI company, Bilow Investments Ltd. Two months later, her shares in Bilow Investments were transferred to Bedzhamov following instructions issued to Dadlaw in Cheliabi’s name.

Using different names is another way to create the sense that dubious money flows are actually legitimate business transactions, Kumar said.

“When you start moving money into companies under different people’s names – often companies owned not by the person but by their associates – it makes it seem like money is moving and working.”

“In reality it’s moving but not working: It’s just being funnelled.”

Missing Clauses, Missing Letters

Among the Pandora Papers is one of the original loan agreements made between the shell companies and Bedzhamov. It is missing key elements usually found in such documents, like a repayment schedule and the names of any guarantors for the loan. It also does not state a purpose for the funds to be loaned.

Felarco’s 2013 financial reports and the loan agreement also misspell Bedzhamov’s name in two different ways (“Bezamov” and “Bedgamov”), though subsequent debt transfer documents confirm that Bedzhamov was the recipient of the funds.

“The use of different spelling versions of the client’s name could be used to mislead the compliance division of a bank … in an attempt to avoid being held accountable by the financial regulator,” said Shumanov.

To guard against money laundering, compliance officers at banks are supposed to check account holders’ names against databases of high-risk clients, said Shumanov.

“If the client’s last name is misspelled, then it is highly likely that in the [due diligence] report, the compliance officer identifies the client as a person who does not have a high risk of money laundering. This will make it possible to carry out a bank transaction without additional verification of the sources and legality of the origin of the transferred funds.”

Double Discounted Debt

The mystery of Felarco Management does not end there.

In early summer 2017, paperwork was filed in Cheliabi’s name that sold the company for 2,000 euros to a New Zealand resident named Vladimir Yurievich Dobrov. At the time, Bedzhamov had not paid back a cent of his massive debt and still owed Felarco Management over $50 million — at least on paper.

Less than two months later, Felarco Management sold that debt to yet another British Virgin Islands shell company, Clement Glory Limited, for a little over $8 million.

It’s unclear what business reasons there could have been for such loans, and the beneficial owner of Clement Glory is not publicly known due to corporate secrecy rules in the BVI.

Bedzhamov may have sought to use this debt to protect his London mansion from seizure by Russian authorities. In January, the Russian Legal Information Agency — set up by three of Russia’s highest courts and a state news agency — reported that a Moscow court had taken steps to seize a sprawling London property owned by Bedzhamov.

However, Bedzhamov said in 2019 that he owed “a lot of money” to Clement Glory, and that the company therefore had a claim to his London property, according to a London High Court ruling.

The court documents show that Vneshprombank disputes the validity of Clement Glory’s claim to the assets. Russian prosecutors appear to agree with the bank. They allege that, after arriving in the U.K., Bedzhamov “orchestrated a scheme to protect [the property] from any poten In the U.K., the Russian hunt for Bedzhamov’s assets continues. In September a British High Court judge indefinitely postponed a January 2022 start date for Vneshprombank’s fraud case against Bedzhamov due to uncertainty over the Russian charges and whether his assets could be used to pay off his creditors.

Meanwhile Bedzhamov, after applying for asylum in the U.K., lives in London under an asset freeze, though he is unlikely to be sleeping rough. In 2019 a court increased his monthly allowance to 120,000 British pounds (around $160,000) to pay for his subsistence, rent, personal security, and other expenses.

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