Alexander Perepilichnyy, Lantana Trade and the Magnitsky money

NOTE. This is a long, complex and, in my view, important article. I make no apologies for the complexity, it is essential to understanding the story and which is why it would struggle to get into mainstream media. It almost needs a book (and who knows, one day I might sit down and write it!).

On the 22nd August 2005, Alexander Perepilichnyy was appointed a Director of the newly formed Ukraine Opportunity Trust PLC (UOT). The sole Global co-ordinator, Placing Agent, Bookrunner and Financial Adviser was a firm called UFG (through its subsidiary company UFGIS Trading Limited). UFG was subsequently bought by Deutsche Bank AG and became the heart of its Moscow Equity Trading (see, for example: https://www.db.com/russia/en/docs/Combined_Statemnets_2008.pdf).

One of the employees of UFG was Tim Wiswell who went on to stay with the firm after they were bought by Deutsche Bank and who was, allegedly, intimately involved in the Deutsche Bank mirror trades (see: https://www.bloomberg.com/features/2016-tim-wiswell-deutsche-bank/).

The prospectus for UOT lists all the current companies of which Mr. Perepilichnyy was a director. They were:

The investment adviser for the placing was EVU Management Limited.

It goes on to state:

Which is odd given that I found this online (although it has subsequently disappeared)

Perepilichnyy subsequently resigned as a director on 12 March 2007 an act which was brought about by a dispute between the board and  the investment manager (Fabien Pictet) and EVU Management Ltd which prompted him to leave.

However there is no suggestion that there was anything improper about the way that UOT was run and neither would I wish it to be inferred from this article.

The date of Perepilichnyy’s resignation is interesting however, given that it is close in time to the beginning of what we now know to have been a huge amount of Russian money starting to flow through Danske Bank Estonia.

Perepilichnyy was known to have at least one more company, called IC Financial Bridge. This has been referenced in previous mirror trade reporting (see: https://www.newyorker.com/business/currency/deutsche-bank-mirror-trades-and-more-russian-threads) as well as on days three and four of the inquest into Perepilichnyy’s death (see page 81 – https://www.judiciary.uk/wp-content/uploads/2017/04/7-June-2017-Transcript-day-three.pdf and page 37 – https://www.judiciary.uk/wp-content/uploads/2017/04/8-June-2017-Transcript-day-four.pdf).

But before we look at Financial Bridge in more detail, let’s look at some of those other companies which were quoted in the UOT prospectus.

Here are some of them again, although several years later:

So, Aliondo, Chorus, PF Realty and Baikonur all appear in this graphic, which is part of a huge network identified as part of the Magnitsky case and which appeared in exhibit 2 of United States of America v. Prevezon Holdings Ltd et al. (See: https://www.docketalarm.com/cases/New_York_Southern_District_Court/1–13-cv-06326/United_States_of_America_v._Prevezon_Holdings_Ltd._et_al/555/2/).

Perepilichnyy is also alleged to be the man behind Quartell Trading Ltd (see: https://inews.co.uk/news/long-reads/alexander-perepilichnyy-russia-police-death-whistleblower/).

In a way, this should not be too surprising, given that Perepilichnyy acknowledged his role in the Magnitsky affair and had, in part, turned whistleblower to save his own skin after investments he made on behalf of some of the alleged perpetrators of the Hermitage fraud turned sour during the credit crunch prompting them to demand their money back from Perepilichnyy himself.

And this is where it all gets both interesting and a little confusing.

Perepilichnyy is known to have left Russia around 2009/2010 and yet, according to the Bloomberg report quoted above, the mirror trading didn’t move to Financial Bridge until November 2011 following the suspension of Westminster Capital’s licence (the firm who were previously conducting the trading activity).

What is not known is whether Wiswell already knew Perepilichnyy from the UOT placement in 2005 or if this is entirely coincidental.

Intriguingly, there is a hint of the mirror trading activity in a Russian Court case, reported on the official website for the “Judicial and regulatory acts of the Russian Federation” (see: http://sudact.ru/arbitral/doc/7foh0bFyYIs/).

Ostensibly, this was a case brought against Financial Bridge for failing to provide documentation to the regulator as requested, giving rise to an administrative fine which Financial Bridge subsequently appealed. It’s worth noting at this point, that all this happened in May 2013, some months after Perepilichnyy himself died so clearly, whoever was running Financial Bridge by then it wasn’t Perepilichnyy.

However, what is interesting are the other companies involved in the court case (the ones who placed the trades in question). They include Lantana Trade LLP and Cherryfield Management both of which have been mentioned in the Deutsche and Danske mirror trade stories.

Indeed, it is Lantana Trade LLP which is alleged to be linked to the Putin family via an ownership chain that includes Igor Putin, the Russian president’s uncle. And it’s equally as interesting that, according to filings available on the org-info.com website (a catalogue of Russian companies) the founders (shareholders – as at 2012) of Financial Bridge are given as :

OBSHESTVO S OGRANICHENNOJ OTVETSTVENNOSTYU BALT TREJD ESTI (OOO Balt Trade Esti)

TOVARISHESTVO S OGRANICHENNOJ OTVESTVENNOSTYU VESTPUL KOMERSHIAL (Westpool Commercial LLP)

Westpool Commercial LLP is due to be struck off the register on 9 October 2018.

Unbelievably, both Lantana Trade LLP and Westpool Commercial LLP have filed accounts signed by Ali Moulaye (who’d have guessed)!

Let’s go back to the Prevezon graphic though.

At the bottom of the page is this:

Prevezon is obviously the company at the centre of the court case (which was ultimately dropped following the sacking by newly installed president Trump of Preet Bharara, then US Attorney for the SDNY and an out of court settlement payment by Prevezon of c$6m). One of the lawyers representing Prevezon was Natalia Veselnitskaya who subsequently turned up at the now infamous Trump Tower meeting attended by Donald Trump jr, the now jailed Paul Manafort and a number of other colourful characters.

Veselnitskaya was also seen on many occasions with another lawyer for Prevezon called Andrei Pavlov (see: https://www.dailymail.co.uk/news/article-4712384/Two-Russians-met-Don-Jr-pictured-accused-killer.html). Pavlov has been blacklisted for his alleged connection to the death of Sergei Magnitsky as well as being named during the Perepilichnyy inquest as a candidate for his killing.

So what does all this mean?

All parties agree that the total sum defrauded (allegedly) from Hermitage was $230m.

Equally, it’s beyond doubt that (taking into account the recent FT article relating to the mirror trades at Danske) tens of billions of dollars were moved out of Russia through the mirror trading activities, so the Hermitage money was a small fraction of the total. Where the rest came from remains a mystery although there are few potential sources which could generate such significant sums.

And that means the Prevezon network was being used to launder for a much wider population over a much longer period of time than was required to dispose of the Hermitage funds and, all things considered, is probably still operating now (although not out of Danske Bank, Estonia!!).

It also means that Alexander Perepilichnyy was just one small cog (albeit an intriguing one) in a much bigger wheel.

And given the hitherto (as far as I am aware) unreported evidence of the connection between Perepilichnyy, UFG (and, by extension, Tim Wiswell and then Deutsche Bank) via The Ukraine Opportunity Trust PLC, there is still much to be discovered. The connections between, Perepilichnyy, Financial Bridge, Deutsche Bank and Danske Bank are, at the very least, odd and potentially rather more than that. There are other possible connecitons which I can’t report yet but which I hop[e to be able to do over the coming weeks.

Let’s see what transpires.