Posts Tagged ‘bloomberg’
Moldova Joins Campaign to Probe Russian Money Laundering
Moldova said it’s investigating Russian money laundering, becoming the fifth country to announce an inquiry into bank transfers stemming from the biggest tax fraud in Russian history.
Moldovan authorities opened a criminal investigation into suspected money laundering on Dec. 28, Anzhela Starinschi, a spokeswoman for the National Anti-Corruption Center in Chisinau, said by phone today.
The probe concerns funds transferred in 2008 to Moldova’s state-controlled Banca de Economii, according to a letter sent by Prime Minister Vladimir Filat last week to the anti- corruption center, the general prosecutor’s office and Interior Ministry. Banca de Economii declined to comment by phone and asked for an e-mailed request, to which it hasn’t repsonded.
Switzerland, Cyprus, Latvia and Lithuania are also investigating money laundering connected to a $230 million tax fraud uncovered by Russian lawyer Sergei Magnitsky, who died in 2009 in a Moscow prison. His case sparked a diplomatic dispute between the U.S. and Russia, after American sanctions imposed in December on Russian officials accused of having a role in his death prompted Moscow to bar U.S. adoptions of Russian children.
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Medvedev Seen Clinging to Job as Putin Frets About Economy
Prime Minister Dmitry Medvedev is clinging to his job as President Vladimir Putin grows increasingly frustrated with his protege’s inability to boost growth, three current and former Kremlin advisers said.
Putin criticized Medvedev’s government last week for failing to adapt to a “post-crisis” economic model. That followed what Izvestia, a newspaper owned by Putin ally Yury Kovalchuk, said Jan. 15 was a leaked Kremlin scorecard giving most ministers either average or “underperforming” marks. Medvedev said the scores were “plucked out of thin air.”
Medvedev, 47, is in a “very precarious position,” Sergei Markov, a political adviser to Putin’s staff and vice rector of the Plekhanov Russian University of Economics, said in an interview in Moscow. “He has a promise from Putin about his role as prime minister, but there are some very powerful forces that see him as a threat.”
Putin, 60, was forced by the constitution to cede the presidency after his second-straight term ended in 2008. Medvedev, the prime minister at the time, became president and appointed Putin his premier. The two swapped jobs again last May after elections that sparked the biggest protests of Putin’s political career.
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Russia Hires Goldman to Boost Investor Image Abroad
Russia hired Goldman Sachs Group Inc. (GS) to boost its image abroad as the most corrupt country among the Group of 20 last year seeks to attract foreign investors.
The Economy Ministry and the Russian Direct Investment Fund have signed a memorandum with Goldman under which the New York- based bank will advise on issues such as communicating government decisions, according to Deputy Economy Minister Sergei Belyakov. State-owned banks including OAO Sberbank (SBER) and VTB Group will also assist, he said.
“We don’t know how to communicate with investors,” Belyakov told reporters today in Moscow.
President Vladimir Putin last year ordered the government to improve Russia’s standing in the World Bank’s Doing Business rating to 20th by 2018. It climbed eight positions to 112 in the latest study, issued in October. While that’s better than BRIC peers India and Brazil, Russia is still the worst among major economies in terms of graft, Transparency International said last month in its annual Corruption Perceptions Index.
The world’s largest energy exporter plans to raise a record $10 billion from asset sales this year, First Deputy Prime Minister Igor Shuvalov said in an interview with Bloomberg Television this month. While corruption continues to be an issue, it’s less of an issue for foreign investors who have already committed to Russia, Shuvalov said.
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Medvedev Courts Davos Skeptics With Better-Than-China Pitch
Russia has a $10 billion sales pitch for investors at this year’s World Economic Forum: give us your money and we’ll worry about corruption for you.
That was the line from First Deputy Prime Minister Igor Shuvalov in an interview with Bloomberg Television last week and that’s what Prime Minister Dmitry Medvedev will try to convince skeptical investors of tomorrow with his keynote address at the conference in Davos, Switzerland, the third by a Russian leader in five years.
Russia plans to raise a record $10 billion from asset sales this year as it seeks to stem capital flight and reverse the state’s creeping hold over the economy, Shuvalov said. The government failed to reach a similar goal last year, when it retained its ranking as the most corrupt country in the Group of 20, an organization it leads this year.
“Russia, regardless of what people are saying, is a place that people can invest, can earn,” Shuvalov said on a Jan. 18 train ride to Moscow from Kaluga, a region that has attracted investment from companies including Volkswagen AG (VOW) and AstraZeneca Plc. (AZN) “If you talk with investors, they say they invest maybe less than in China, but lose less than in China. They say people don’t know Russia.”
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A Russian Lawyer’s Death Triggers a Global Money Hunt
In 2009, a lawyer named Sergei Magnitsky died in a Moscow jail after uncovering the biggest known tax fraud in Russian history—a theft of $230 million from the national treasury. The case has touched off a diplomatic row, with the U.S. imposing sanctions on Russian officials accused of having a role in Magnitsky’s death and Moscow retaliating on Dec. 28 by barring Americans from adopting Russian orphans.
Now about that $230 million. Russian authorities said it couldn’t be found because essential records were destroyed in a truck crash. A sawmill worker and a convicted burglar pleaded guilty to masterminding the heist, which involved filing bogus tax-refund claims. Both got five-year sentences.
Magnitsky’s associates, though, keep looking for the cash. An investigation spearheaded by his former client, Hermitage Capital Management, a London-based investment fund, has traced $134 million through bank accounts and shell companies in at least 17 countries. Banking records obtained by Hermitage and reviewed by Bloomberg Businessweek show that millions wound up in offshore accounts and real estate owned by Russian officials, their relatives, and the former owner of a Russian bank. Authorities in four of these countries confirm that they have opened money-laundering investigations.
In the Magnitsky case, Hermitage accuses government officials of stealing from taxpayers, and the Kremlin has made no apparent effort to recover the money. “That’s the most awful thing—it is our money,” says Roman Anin, a reporter at the Moscow newspaper Novaya Gazeta who has worked with Hermitage on its investigation. Russia’s Interior Ministry did not respond to repeated requests for comment.
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U.S. Online Petition Calls for Visa Ban on Russian Lawmakers
A petition on the White House website seeking to extend travel restrictions to Russian lawmakers who proposed to ban the adoption of Russian orphans in the U.S. surpassed 25,000 signatures, triggering a review.
Russia’s lower house of parliament, the Duma, proposed the adoption ban in retaliation for a law approved by Congress this month that imposes a visa ban and asset freeze on Russian officials suspected of involvement in the death of lawyer Sergei Magnitsky and other human-rights abuses.
Magnitsky, a Russian tax attorney, died in 2009 in a Moscow prison after saying he was abused and denied medical care to force him to withdraw allegations of a $230 million tax fraud by officials.
The web petition to U.S. President Barack Obama’s administration called the Magnitsky law “a profoundly pro- Russian step” in battling corruption and expressed outrage over the Duma proposal, which will “jeopardize the lives and wellbeing” of orphans.
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Senate Finance Reports Measure on PNTR For Russia, Moldova; Magnitsky Act Included
Key Development: Magnitsky bill included, vote is unanimous.
Next Steps: Kirk, Baucus, Camp to meet July 19.
The Senate Finance Committee July 18 unanimously reported legislation designed to allow the president to grant permanent normal trade relations (PNTR) to Russia and Moldova.
The bill would also replace human rights sections of the Trade Act of 1974 with provisions, named after deceased tax attorney Sergei Magnitsky, targeting corrupt government officials in Russia and elsewhere.
In his opening remarks, Chairman Max Baucus (D-Mont.) noted that the measure will make permanent the normal trade relations the United States already has had with Russia for the past 20 years and should double U.S. exports to Russia in five years.
The opportunities for increased trade with Russia are related to the massive Eurasian country joining the World Trade Organization in August after a 19-year accession process. The upper house of the country’s legislature July 18 approved the WTO accession package (see related report).
Baucus said hundreds of companies and trade associations have come out in favor of PNTR, as well as U.S. and Russian Jewish groups, including the National Conference on Soviet Jewry and the American Israel Public Affairs Committee.
Section 402 of the Trade Act, the so-called Jackson-Vanik Amendment, requires an annual review of respect for emigration rights that was originally intended to support Jewish emigration from the former Soviet Union. The bill would terminate the application of this section along with the others in Title IV.
The annual review constitutes a condition according to WTO rules and is therefore at odds with the organization’s core principle of unconditional most favored nation (MFN) status, which is the term for PNTR used in international treaties. Absent MFN, Russia is not required to grant the terms of its accession package to the United States and U.S. companies.
Baucus noted that Moldova is the only WTO member with which the United States does not have permanent normal trade relations. “Like Russia,” Baucus said, “Moldova has allowed freedom of emigration for many years, and Moldova joined the WTO in 2001.”
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Russia Bans 11 U.S. Officials Over Guantanamo And Abu Ghraib
Russia barred 11 serving and former U.S. administration officials for human rights abuses at facilities including Guantanamo Bay and the Abu Ghraib prison in Iraq.
The ban on entry to Russia was enacted last year in retaliation for a U.S. visa ban for 11 Russian officials accused of playing a role in the death of anti-corruption lawyer Sergei Magnitsky, President Vladimir Putin’s top foreign policy adviser, Yuri Ushakov, said in an e-mailed statement.
“These people are linked to high-profile human rights abuses, including torture and abuse of detainees in special prisons set up by the Pentagon and the Central Intelligence Agency in Guantanamo, Bagram in Afghanistan and Abu Ghraib in Iraq,” Ushakov said. Russia hadn’t previously made public the exact nature of its response to the U.S. visa ban, which was announced in July last year.
Russia is warning of further steps if Congress passes a law that would impose U.S. travel and financial curbs on any official abusing human rights in Russia, including all 60 people suspected of involvement in Magnitsky’s death in a Moscow jail in 2009. Ushakov criticized what he termed as an “anti- Russian” step that would complicate ties as Putin and U.S. President Barack Obama prepare to meet on the sidelines of the Group of 20 summit in Mexico.
The U.S. Supreme Court in December 2009 refused to revive a lawsuit against former Defense Secretary Donald Rumsfeld and other military leaders by four British men who said they were tortured while imprisoned at Guantanamo Bay, a detention center at the U.S. military base in Cuba. Abu Ghraib photographs showing U.S. guards mistreating inmates surfaced in 2004.
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U.S. Won’t Oppose Russia Sanctions That Risk Putin Reprisal
The U.S. administration will no longer seek to prevent Congress from passing a bill targeting human-rights offenders in Russia, a step that President Vladimir Putin has warned would spark retaliation and damage ties.
The House Foreign Affairs Committee will today consider legislation that would impose U.S. travel and financial curbs on any official abusing human rights in Russia, including 60 people suspected of involvement in the death of anti-corruption lawyer Sergei Magnitsky in a Moscow jail in 2009. This will be followed at a later date by a vote in Congress on the measure.
“You’d be hard pressed to find anyone who would bet against Congress expressing their concerns on the Magnitsky matter in some way,” U.S. Trade Representative Ron Kirk said today in Moscow. “It’s important to work with Congress on an appropriate mandatory response to that.”
President Barack Obama’s administration is seeking to repeal trade restrictions with Russia to prevent U.S. companies from being penalized once Russian membership of the World Trade Organization takes effect later this year. A bipartisan group of senators has made a repeal of the 1974 Jackson-Vanik amendment conditional on imposing sanctions on Russian officials for human-rights violations.
Such a law would be “a gross interference in Russian internal affairs and, of course, it won’t have any positive effect on U.S.-Russian ties, to put it mildly,” Konstantin Dolgov, the Foreign Ministry’s human-rights representative, told reporters in Moscow on May 15. Russia in April warned it would retaliate with unspecified measures against the law.
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