EU – Baltic States, Legislation

Photo: A.Zdanov

Following the Latvian investigative journalism center Re: Baltica, a media outlet from another Baltic country has been investigating the alleged money laundering of the former owner of the world's second-largest aluminum concern Rusal, Oleg Deripaska. Two months after the publication in Re: Baltica the Finnish magazine "Mega" (http://www.megamedia.fi/fi/geopolitik-1-the-russians-are-coming-and-not-leaving/)  found out that in 2019 alone the scientific and methodological center School of the new generation, the Rassvet Foundation for the Development of Russian Regions and through the latter, the Volnoe Delo charitable foundation, pulled almost 645.9 million rubles from Rusal.

At the same time, Deripaska personally heads Volnoe Delo’s Board of Trustees, and the foundation itself is one of the co-founders of School of the New Generation. Another co-founder Oleg Vikhansky, is the head of the Institute for Integrated Strategic Research and Development (ICSIR), which is the main think tank for Deripaska’s team. The founder of Rassvet Vladimir Erenburg was previously running the company Sibirsky Aluminium, from which, in fact, Rusal grew. Finally the member of the Board of Trustees Tamara Rumyantseva is concurrently the co-founder of Volnoe Delo. So when Rassvet transfers more than 75 million rubles to Volnoe Delo to cover administrative expenses, it is indeed the same as transferring money from one pocket to another.

The reaction to the article was immediate. First, unknown hackers with a powerful DDoS attack brought down the server of the Megamedia publishing group, which issues the magazine. The recovery took three days, but in the end, the publication attracted even more attention and was reprinted in several Russian media.

Then the already well-known lawyers of the offended benefactors began to threaten with lawsuits, demanding to withdraw the text and to publish a refutation. The bluff did not work, and the Rusal’s Center for Social Programs had to be satisfied with the right to respond on the Mega magazine’s website (http://www.megamedia.fi/fi/correction-to-article-geopolitik-1-the-russians-are-coming-and-not-leaving/).

It would be better if they didn’t. Because no empty reasoning is able to refute the information about the real amounts that the entities close to Deripaska throw to each other with the skill of magicians. We can read and see for ourselves:

«The article does not mention that the activities of charitable organizations in Russia are governed by an extensive legal framework created by the relevant legislation, that those organizations are required to publish their annual and financial reports. The article does not mention that all or almost all of the data provided in it was already published by the official regulatory institutions and was never concealed from the public».

It means that the figures and facts stated in the publication correspond to reality.

«The article was prepared without any attempt to contact the legal entities mentioned in it in order for them to comment on the presented facts. Resulting from these mistakes, which could easily have been avoided if the authors acted in accordance with journalistic ethics, the article contains a number of statements based on false facts and assumptions. The foundations mentioned in the article used the funds exclusively for charitable purposes, their activities were and remain transparent. The falsehood of the accusations and statements made in the article could and can be confirmed by the publicly available documents. The funds were not used in the private interests either of Oleg Deripaska or of any other person. The auditors, the Ministry of Justice and the Federal Tax Service of the Russian Federation, are aware of the ultimate recipients of charitable funds. Donors of funds also have the right at any time to demand more detailed information about all previously made donations, which, according to the law of the Russian Federation, must be returned in case of abuse».

It’s an empty discourse about nothing and an attempt to blabber the topic. No document proving «the falseness of accusations and statements from the article» is provided. There are simply none.

«The funds collected by the autonomous non-profit organization Scientific and Methodological Center School of the New Generation by the end of 2019 were intended for the implementation of various charitable programs in 2020».

But the only ‘news’ for 2020 on the School’s website are congratulatory announcements on Victory Day and Teacher's Day. The section ‘Events’ is pristine and informs that «there are no events scheduled for the nearest future». The same virgin emptiness is typical for the School’s blogs in social media Vkontakte and Facebook.

«The Volnoe Delo Social Innovation Support Fund, taking from the publicly available declared reports, in 2019 spent about 400 million rubles for various charitable programs. Administrative expenses amount to 126 million rubles, as Volnoe Delo serves as a cost center for other related charitable organizations. Therefore, it bears all administrative costs. For example, the Fund has about 50 employees who supervise the operations of the Volnoe Delo Social Innovation Support Fund, other funds of the Volnoe Delo Fund and of School of the New Generation. Consequently, about 80% of administrative costs are salaries, employees health and social insurance, and other personnel-related costs. Thus, any assumption that administrative costs are disproportionately high or are used for other, side purposes is false».

It is extremely valuable to recognize that every fourth ruble withdrawn from Rusal for charity is spent on the charitable organisations themselves. The only thing to find out is how much the most important ones get, which are Deripaska’s closest ‘accomplices’. And where did the remaining 400 million actually go to if the School of the New Generation did not hold events, and the Forbes magazine, ranking the largest charitable foundations in Russia (Volnoe Delo takes the 4th line), failed to find the financial reporting for 2019? Probably it was spent on the following:

«The funds raised by the Rassvet charitable foundation by the end of 2019 were intended to organize a summer camp for children on the Black Sea coast of the Krasnodar Territory. Due to the interference of third parties and the resulting legal difficulties, the project was closed by the end of 2019. In 2020 the funds were redirected to other charitable programs».

That's all, and the Center for Social Programs has nothing more to say. It is typical that nothing is specified on the programs, which will be covered by Rassvet funds. It will not be surprising if another third party is involved in the process again, the funds are redirected to the programs of 2021, part of it is spent on salaries of qualified employees and simply vanished in the thing air, and it won’t be long until a new portion from Rusal arrives.

Having read this response one cannot but doubt that all transactions in the Russian charity market are thoroughly controlled by the Ministry of Justice of the Russian Federation. At the same time, experts of the Skolkovo business school, together with the UBS bank, have calculated that the largest corporations spend on charity from 160 to 220 billion rubles per year, which roughly corresponds to the amount of state expenditures on culture and sports. Why is the spread so big? The answer is that billionaire benefactors swearing in transparency of their expenses, in reality hide them by transferring money from the fund to the fund, from the current annual budget to the next one. As a result, the funds never reach those in need but successfully stuff the pockets of the right people.

Such schemes are common for Deripaska. The Financial Crimes Unit of the US Treasury Department payed attention (https://en.rebaltica.lv/2020/09/the-unknown-bank-which-serviced-one-of-the-worlds-richest-men/) to $ 3 billion transacted by him through the Latvian Expobank. Fictitious companies were frequently involved in transactions and, coincidentally, in the very Expobank the account was opened for an offshore company Tangril Equities Limited (now Advante Management Corp) registered in the British Virgin Islands and managing a group of real estate properties in Montenegro. They include 3 luxurious mansions, 9 guest houses and a 500-meter swimming pool. There are good reasons to believe that all of them belong to Deripaska.

The Re: Baltica Center for Investigative Journalism, mentioned at the beginning of the publication, points out (https://en.rebaltica.lv/2020/09/the-unknown-bank-which-serviced-one-of-the-worlds-richest-men/ , that n the early 2000s Expobank bought MDM-Bank, where Deripaska was a member of the Board. Then five years ago MDM-Bank was acquired by the leading shareholders of Binbank Mikhail Shishkhanov and Mikhail Gutseriev. Were they aware of the billions passing through the Latvian branch? Perhaps initially they didn’t, but recently the financial flows of the aluminium king have poured through the different channel, under the guise of charity.

The similarity of the situation of the School of the New Generation and the Rassvet foundation with the scandal around the Latvian bank is striking. In both cases, money passes through muddy streams and dissolves into thin air. Such "charity" mostly reminds of a sewer system, where billions, sinlessly acquired by the oligarch, are being flushed down the drain.

 https://finance.rambler.ru/money/45289474-razgrom-deripaski-v-helsinki