Former manager of the Bank of Moscow, named as the financier of an overthrow attempt in Russia, talks to Forbes about what ties him to the opposition and Yuri Luzhkov.
I Am Unacquainted with Udaltsov or Targanadze
Q.: I believe you have watched An Anatomy of the Protest 2, a new film by NTV. Among other things, it said that you are funding street protests in Russia.
A.: This is an intended and planned provocation, at least in the portion that concerns me.
Q.: Are you acquainted with Givi Targamadze? The film says that you have been funding the Russian opposition through this Georgian politician.
A.: This name is not on the list of my contacts.
Q.: And are the names of Sergei Udaltsov or Ilya Ponomaryov on the list of your contacts? Which of the Russian opposition politicians are you in touch with?
A.: Due to the nature of my work in Russia, I used to be in touch with an enormous number of people from the Russian business and political community, including with those whose names figure today in the context of protest movements. I am unacquainted with Udaltsov or Ponomaryov, although I watch their activities with interest through media reports.
Q.: In what amounts are you prepared to fund the Russian opposition? How much money have you already allocated? Maybe you will support the opposition not only financially but also in other forms?
A.: No comment. In my view, every person has the constitutional right to support, including financially, political parties, movements and media registered in the country.
Q.: At one time you said you would launch a medium of your own. When will that happen?
A.: For understandable reasons, I have no opportunities to invest in Russian assets, including the media. And the foreign media are fine without my investments.
Q.: Have you discussed these topics with Boris Berezovsky, who used to be considered the “principal enemy” of the current regime? Maybe you did that with Vladimir Antonov, who is named in the film as another financier of the opposition?
A.: I reside in Britain, where there are many Russian expats, including businessmen. We regularly discuss political topics with them. However, I have not discussed these questions with either Berezovsky or Antonov.
Q.: What future do you think awaits the opposition? What will the street activity lead to?
A.: The existence of an opposition is necessary under any regime, be it democratic or authoritarian. But the actions of the Russian authorities, eradicating legality and political freedoms in the country, raise the chances of the opposition to be successful. People keep taking part in mass protests because the current regime has left them no other form to express their disagreement.
“There is no doubt that Yusufov acted in the interests of Medvedev and no one else”
Q.: You described your departure for London a year and a half ago as a trip to attend your daughter’s birthday party. When did you decide to stay in London?
A.: Practically immediately after my departure from Russia, events around the Bank of Moscow turned dramatic: a court ruling removed me from managing the bank and arrested me in my absence, and investigators brought serious charges against me. Advised by my lawyers, I planned to stay a little longer in Europe until the unlawful judicial pressure on me subsided and the events returned onto a legal field. Regrettably, that did not happen. Now I permanently reside in the United Kingdom.
Q.: How did you get acquainted with Igor Yusufov, to whom you sold your shares of the Bank of Moscow?
A.: It was a nodding acquaintance in 2007 or 2008.
Q.: Did you finance his projects?
Q.: Why was the role of intermediary given to Igor Yusufov and his son Vitaly, and not someone else, like Suleyman Kerimov, who also was a short-term shareholder of the Bank of Moscow, or Grigory Beryozkin?
A.: I was in touch with the senior Yusufov, Igor, while Vitaly took practically no part in the negotiations or the deal; he was simply his bureaucrat father’s front in commercial transactions. What made Yusufov different in principle from all the persons that you listed was the fact that at the time of the negotiations he was an effective high-level public servant of the Russian Federation. That is why he was chosen for the negotiations, for no one to have doubts that he had the authority to represent the true interested party. That also had to scare away other potential aspirers to the stake.
Q.: Why did you first reject the offer of Alfa Bank and then agree to Yusufov’s proposal?
A.: I agreed to Yusufov’s proposal because it had become obvious by then that no one else would be given a chance to buy my stake in the Bank of Moscow. I was to choose between agreeing to Yusufov’s proposal, even though it was not based on market prices at all, and facing a situation where the shares would be taken away by force. Alfa Bank made its proposal earlier, and it was based on market conditions, but at that time I was not prepared to accept it, because it implied my removal from managing the bank. As far as I know, later Alfa Bank was “convinced” not to get involved in this affair.
Q.: Where from was that price compromise – $800 million for 19.93 per cent of the shares of the Bank of Moscow belonging to you and your former adviser Lev Alaluyev?
A.: That was no compromise. From the start of the negotiations I was to face a number of facts. Firstly, no one else would be allowed to buy my stake. Secondly, the price of the asset would be a peculiar one. I believed that the Bank of Moscow cost more than the announced price of the deal between the government of Moscow and VTB. However, I was told that there could be no talk about even that price. The buyers said unequivocally that the price of the shares had to be reduced by the sum of the “interest” of the intermediaries. Frankly, the 50-per-cent “interest” shocked me.
Q.: Where is Alaluyev now, and what is he doing?
A.: I do not know what Lev Alaluyev is doing now. However, I have irrefutable proofs of that he is one of those on whom the current top management of the Bank of Moscow is exerting pressure for the purpose of obtaining false evidence and continuing unlawful judicial cases against me.
Q.: Yusufov used to state during the negotiations that he was acting in the interests of a “young man,” who in your understanding was president Dmitry Medvedev. Can you prove that?
A.: Let me say that I have undeniable proofs confirming my words. However, for legal considerations, I cannot make them public at this point. I have no doubts that Yusufov acted in the interests of no one other than Medvedev; I verified the information through my sources, of whose correct information I am sure. Thus, Yusufov was not lying or showing off.
Q.: A year ago Calculasio Holdings, a Cypriot company, repaid Bank of Moscow credits totalling $400 million. Sources say that Facebook shares have been bought for you with those credits. Is that so?
A.: I am not a shareholder of that company.
Q.: Has a portion of the shares of the social network been acquired in your interests?
A.: No comment.
“Provision of government assistance to the VTB bank was decided on in Kudrin’s office”
Q.: VTB top managers assert that the Bank of Moscow had problems with collateral supporting credits to companies connected with you. Can you make the situation clearer?
A.: VTB is easily throwing around accusations concerning connections and ownership of companies, etc. Let that be on their conscience. The factual side of the matter is different. VTB came to the Bank of Moscow for two things: for easy liquidity to patch the holes in VTB proper and for muddy water, where members of the new top management could enrich themselves. The “easy” money to save VTB was not to happen; under my management the Bank of Moscow was not a moneybox with cash but a credit institution in which money worked. That circumstance formed VTB’s strategy with respect to the Bank of Moscow: Proclaim the bank bankrupt, request unprecedented and barely monitored assistance from the state and sell collateral to related firms for a song.
This past March I sent a report to the Russian General Prosecutor’s Office with a detailed analysis of the reasons why the provision of significant government financial assistance to the Bank of Moscow was at odds with economic interests of Russian society and the Russian state and was based on intentional misrepresentation of the bank’s financial condition. There has been no response to my letter.
Q.: VTB says it did not know about the proportion of the problems until May 2011…
A.: VTB did not buy a pig in a poke. In the spring of 2011, already after the audit of the Bank of Moscow by the Accounting Chamber, when VTB management had long been sitting in the Bank of Moscow and thoroughly knew its situation, I made an offer to them to buy the stake that earlier belonged to the government of Moscow. If VTB regretted the transaction, they could get out of it without losing a single rouble. Having ignored my offer, VTB lost all right to present claims against me.
Q.: The Deposit Insurance Agency believes that under your management the real capital of the Bank of Moscow minus reserves was always negative. How could that be?
A.: In all the years of its operation the Bank of Moscow did not commit any serious violations of reservation norms established by the Central Bank. Regular audits of the Central Bank itself, bank auditors, etc., confirm that. And then there comes the DIA and discovers missing reserves worth hundreds of billions of roubles, a testimony of a potentially negative value of the capital. And all that happens during a hostile takeover by the state.
One should not forget that the principal overseer over both VTB and DIA was one and the same person: Mr Kudrin. In one interview, I read that the arrangement of providing government assistance was decided on in his office. Could he allow the DIA report to differ one kopek from the VTB version? This is a downright rhetorical question.
Q.: According to the DIA and VTB, within the Bank of Moscow there existed an “invisible bank” – the Investment Assets Department, managed by Dmitry Akulinin. The department would give credits to companies connected with you, would create the appearance of credit servicing and issued 150 billion roubles to offshore “rubbish” companies with no real operations. That is a strange scheme, is it not?
A.: The term “offshore ‘rubbish’ companies with no real operations,” if memory serves me, was actively used when charges were brought against Khodorkovsky. Let us not repeat ravings of uneducated prosecutors. All the more so since the press has already reported more than once that more and more “rubbish” companies have repaid credits to the Bank of Moscow.
Many borrowers in their work use operations companies, and there is no crime in it. There is also no crime in issuing loans without collateral if you are sure of a business client. In this context, DIA and VTB comments look convincing only to those who have no idea at all about how banks work.
Q.: VTB managers claim that these secondary assets are worth almost nothing in connexion with a high debt burden. Why did those assets during your management of the bank turned out to be so credit-heavy (the debt to EBITDA ratio of about 15)?
A.: If a business is in the middle of an investment cycle and going through technical retooling, it is silly to expect it to be profitable right away. Under my management, the ideology of the Bank of Moscow was built on long-term planning. In a long-term prospect, such an approach gives a maximal profit. And an attempt to “cash” a business instantly always leads to losses.
In addition, do not forget about the 2008-2009 crisis. At that time most companies found themselves in a difficult financial situation. The same VTB had quite a few borrowers who at that instant were technical bankrupts. Some of them continue in the same situation still today but nonetheless get a chance to extend their loans.
Q.: Are you not surprised that after the capital of the Bank of Moscow had been increased by 100 billion roubles, provided to VTB, a portion of its credits found itself on the balance of the acquired bank?
A.: I think this is about ridding the VTB balance of bad loans or of loans exceeding norms per one borrower, not about an increase of the capital of the Bank of Moscow.
Q.: When you participated in additional issues of the Bank of Moscow, did you pay with real money for its shares?
A.: All emissions of shares of the Bank of Moscow were verified by the regulator, and positive conclusions were given on them.
Q.: Did Andrei Kostin have an interest in the Bank of Moscow before the crisis? What did he offer you?
A.: There was an interest, but there were no details – the Bank of Moscow was not for sale.
Q.: The Russian Prosecutor’s Office suspects you and Akulinin of fraud with the credit of 12.7 billion roubles, provided to buy land assets from Yelena Baturina. Why was that doubtful credit issued?
A.: In my opinion, the accusation is absurd. The Bank of Moscow issued a credit against a liquid asset used as collateral, with an adequate price. The decision was made by a credit committee, not me. Legal actions of the Bank of Moscow already after my departure testify unequivocally that they consider it nothing but an issued credit, and not, for example, a stolen one. Why in this situation there arises the fact of crime and loss is unclear to both me and to lawyers.
Q.: Did you seriously expect when selling your stake that Yusufov would ensure you protection from criminal prosecution?
A.: Yusufov did talk about my protection, although of course there cannot be any guarantee in such promises; this is always a matter of trust. I cannot say that I trusted much the people who were taking away my business, but I had no choice.
Q.: The Russian Interior Ministry has agreed on cooperation with the Swiss prosecutor’s office about a check of your accounts in Swiss banks. Do you keep the money from the deal with Yusufov on those accounts or your previous incomes?
A.: No comment.
“I cannot say that I am in the circle of Yuri Luzhkov’s closest friends”
Q.: What is it like to be a person wanted by Interpol?
A.: Of course, that does not make your life more comfortable. That is exactly what this is aimed at. Interpol does not check if the persons put on the wanted list by national bureaus are indeed wanted for a good reason, and that is what the Russian power structures take advantage of. Placing one on an Interpol list is yet another element of pressure on an individual.
Q.: How do you assess your chances to get citizenship/political asylum in the UK?
A.: The only thing that I can say in this respect is that all the information published to date is far removed from the truth. For legal considerations, I cannot comment on this matter at this point.
Q.: What are you doing in London now, apart from taking care of a new home?
A.: No comment.
Q.: Are you in touch with Luzhkov? How does he assess the situation with your forced sale of shares of the Bank of Moscow?
A.: I cannot say that I am in the circle of Yuri Luzhkov’s closest friends. Therefore we are not often in touch. But I have met with him already after my arrival in the UK. Yuri Luzhkov understands perfectly well that this whole story is directly linked with his hasty and insulting dismissal. He is one of the few who know the history of the Bank of Moscow from the very beginning and can assess the significance of the bank for the city.
He knows what titanic work was behind the establishment of the present Bank of Moscow. [He knows] that from participation in the bank-stock the city received more than $3 billion of net profit. Apart from that, during 15 years, the Bank of Moscow was the city’s pivotal bank, funded numerous social and town-planning projects, etc. I would not like to talk in his stead, but Yuri Luzhkov has on numerous occasions expressed his bewilderment over the story of the takeover of the Bank of Moscow, both its city portion and the stake of other persons.
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