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KENYA ON TRIAL: Truth, Justice and the Supreme Court

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Confronted on his excesses, abuses and disregard of rights of the people of France, Louis XVI responded, “L etat c’est moi”, “I am the State”. That was in 1715. Louis was tried by the people and executed. Four centuries later, Zaire’s Mobutu Seseko repeated Louis’ “royal liturgy” to a French journalist. Mobutu went further; he pronounced himself God. Mobutu fled and died in exile.

Entitlement is a malaise that afflicts absolute rulers. It thrives where law is what the ruler decrees it is; not the people, through their Courts. Where the peoples’ sovereign franchise prevails, and truth, justice and the rule of law governs the affairs of man, there is tranquility.

World attention today focuses on the Supreme Court of Kenya. The Court will, for the second time in a row, hear and rule on whether President Uhuru Kenyatta was validly elected for a second term. Just as in 2013, the suitor is former Prime Minister Raila Amolo Odinga. Raila says he has “given the Court a second chance to redeem itself.”

On 13th August, Raila protested the declaration of Uhuru as winner, accusing the Independent Electoral and Boundaries Commission (IEBC) of subverting the will of the people, not once, but for the third consecutive time and substituting it with the dictate of a minority ruling elite.

Having initially vowed not to contest it in Court, but rather through other means, he claims that a crackdown on human rights organizations expected to do that necessitated the change of tact.

What is Raila’s case? How did Kenya end up here? Is there cause for concern or alarm on the Court? Will the Court decide otherwise than before and with what consequences?

Case summary

The petition claims that “the Presidential Election was so badly conducted and marred with irregularities that it does not matter who won or was declared as the winner of the Presidential Election…Instead of giving effect to the sovereign will of the Kenyan people, the IEBC delivered preconceived and predetermined computer generated leaders.”

The IEBC is accused of interfering with the Kenya Integrated Elections Management System (KIEMS) and unilaterally disbanding the Elections Technology Advisory Committee (ETAC).

Whereas people voted, the IEBC did not count and tally the results. It adopted Joseph Stalin’s principle, “It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.”

Evidence in support of the case is contained in a voluminous record of over 25,000 pages. The evidence supports 12 main issues.

The IEBC is accused of interfering with the Kenya Integrated Elections Management System (KIEMS) and unilaterally disbanding the Elections Technology Advisory Committee (ETAC).

KIEMS is a single unit electronic platform. It was intended to ensure that voters are biometrically identified, and polling results transmitted and declared in a simple, accurate, verifiable, secure, accountable and transparent manner. These tenets of a free and fair election are anchored in the Constitution and the 2017 amendments to the Elections Act.

It is alleged that the IEBC had, through a proxy, sought to declare unconstitutional the law that requires biometric voter identification and electronic transmission of results from polling stations to the Constituency Tallying Center and the National Tallying Center. The case was filed by a third party against the IEBC but through a lawyer who is on the advisory panel of the IEBC.

Though not determined at the time of the elections, Raila believes that the case was filed with the connivance of the IEBC to sabotage the integrated, electronic electoral management system. He claims that the manipulation of the system resulted in a permanent pre-set 11% margin between him and Uhuru. It is Raila’s position that the outcome of the case would, as did the manipulation of the system, countermand the requirement for finality of results declared at 290 Constituencies established under the Constitution.

The finality of Constituency results was affirmed by the Court of Appeal. It would remove the risk of rigging at the National Tallying Center as recommended by Judge Johann Kriegler in his report following the disputed 2007 elections.

The ETAC’s function was to advise on adoption and implementation of election technology. It entailed the participation of stakeholders, in this case, candidates and political parties in the elections. In a Judgement made on 15th June, 2017, the High Court held that the requirement for a professional audit of the voter register 6 months before the election was overtaken by events. The Court further declared unconstitutional, the law establishing ETAC.

It is Raila’s complaint that being a stakeholder he ought to have been notified of the proceedings leading to the disbandment of the ETAC and that the IEBC intentionally failed to defend the case properly. As a result, the disbandment compromised the transparency of IEBC’s preparation for the elections. The IEBC then monopolized the management of the electronic voter system to the exclusion of other players. This, it is claimed, enabled manipulation in the transmission of results that could not be independently verified.

The IEBC is also accused of intentionally supplementing its server on a private cloud. The decision was made contrary to advice from the Communications Authority of Kenya. KIEMS became vulnerable to intrusion and manipulation.

Raila claims that 2 days to the elections, the IEBC designated 11,000 polling stations outside 3-4 G network coverage. There was not sufficient notice or time for Raila to appoint his agents in those stations. Results from those stations account for over 7.7 million votes and cannot be verified in the manner prescribed by law and intended by KIEMS.

The IEBC is also accused of intentionally supplementing its server on a private cloud. The decision was made contrary to advice from the Communications Authority of Kenya. KIEMS became vulnerable to intrusion and manipulation. The murder of IEBC’s ICT Manager Chris Msando a few days to the election is claimed to have been planned. His password or information obtained from him were used to infiltrate KIEMS, create and relay computer generated results.

Uhuru is accused of unduly influencing and inducing voters with 2007/2008 post-election reparation payments, hurriedly launched projects and advertisement of his administration’s achievements. He is said to have intimidated voters in his campaigns with military deployments and outright threats on public servants. A widely publicized incident in Makueni where Chiefs were threatened is cited. Uhuru is alleged to have used state resources and State Officers, in particular Cabinet Secretaries, to actively solicit for votes contrary to law.

Raila’s agents are also said to have been ejected from polling stations in Central Kenya and Rift Valley. It is claimed that they were replaced by those procured by Uhuru’s Jubilee Party. Massive manipulation of results is claimed to have ensued as a result.

KIEMS was designed to transmit results from polling stations to the Constituency and the National Tallying Centers simultaneously with electronic images of Forms 34As. It would also enable electronic transmission of final results from the Constituency level to the National Tallying Center. Form 34A is the official declaration at the polling stations whilst Form 34B is for the Constituency declaration.

However, provisional results are alleged to have been transmitted from polling stations to the National Tallying Center, bypassing the Constituency Tallying Centers. The results were not accompanied by Forms 34A and 34B. The results were said to be provisional, again, in disregard of the Court of Appeal decision. 10,000 stations with 5 million votes were affected. The complaint by Raila is that this was a precursor to the rigging of the election in favour of Uhuru.

Further, the petition claims that scrutiny of spoilt and rejected votes would reveal that nearly 400,000 votes were deducted from Raila and added to Uhuru. It is alleged that the manipulation and doctoring of Forms 34A and 34B means another 7 million votes cannot be authenticated.

Raila states that the declaration of a winner was made prematurely in the absence of 11,883 supporting Forms 34A and 187 Forms 34B. 3.5 million votes are affected. He also wants the Supreme Court to go against the precedent it set in 2013 and have rejected votes, this time numbering 477,196 or 2.6% of votes cast, considered when ascertaining whether the Constitutional threshold of 50% plus 1 has been crossed.

The great trek

Kenya gained internal self-rule and political independence from the then British Empire 5 decades ago. The Union Jack quickly came down. The Kenyan flag was hoisted. Jomo Kenyatta was appointed Prime Minister by the colonial Governor-General and one year later declared President by parliament. The Lancaster Constitution did not provide a term limit for the Presidency. The leader of the dominant political party was appointed President by acclamation in periodic parliamentary elections, whose occurrence he controlled. Kenyatta being the leader of the Kenya National African National Union (KANU) party would rule for life, for 15 years. Kenyatta was succeeded by Daniel Arap Moi. Moi ruled for 24 years; 14 for life and 10 on a 5 year term.

In 2013, Raila challenged the election of Uhuru. The Supreme Court jettisoned all evidence before it. It then proceeded to dismiss the Petition, in reliance upon decisions from Nigeria, Gabon and Uganda.

The British had an elaborate law for periodic election of their Prime Minister back at home. They saw no need for the same in Kenya, or any of their former colonies which did not have established political systems in place. With the exception of India, which embraced democratic rule at inception, former British colonies suffered absolute leadership until after the collapse of the Soviet Union and the second liberation in the 1990s.

In the intervening period, a change in government in the Commonwealth was effected in two ways only; a coup or the natural or unnatural death of the President. Determinations by Courts on the legitimacy of the regimes were unheard of.

In Uganda, Judges declared unconstitutional the government of Idi Amin upon the overthrow of Milton Obote. They were killed on the same day. Whitehall often supported similar governments in the entire Commonwealth. Without periodic elections, there was no precedent for a Presidential Election Petition.

The clamor for change saw to the re-introduction of multi-party politics in 1992. Moi won the Presidential Election despite a determined opposition wave. A Petition by Kenneth Matiba was dismissed by the High Court and Court of Appeal without a hearing. The requirement for personal service upon Moi and signature of the Petition by Matiba, who could not because he was ill, were technical considerations relied upon by the Courts. A petition by Mwai Kibaki upon Moi’s re-election in 1997 suffered the same fate. The Courts had no semblance of independence. The President controlled the Courts. A Petition against his election was doomed to fail.

The 2003 election of Kibaki was not challenged in Court; it was not even disputed. Kibaki had defeated Uhuru with a landslide victory. Uhuru had largely been viewed as Moi’s project. The people had resolved to overrule Moi’s prophesy that the independence party, KANU, would rule Kenya for 100 years.

Kibaki’s re-election in 2007 was highly disputed. It is widely believed to have been stolen from Raila. Raila did not go to the Courts as they were controlled by the President. The post-election violence that ensued resulted in the unhappy marriage between Kibaki and Raila. One outstanding achievement of the Grand Coalition Government was the promulgation of the 2010 Constitution. An elaborate process for the period election of the President and determination of a dispute arising from the election was put in place. The Supreme Court was created specifically for this function, with a minimum of 5 and maximum of 7 Judges as quorum.

In the aftermath, radical changes in the Judiciary sent packing Court of Appeal Judges who presided over the Petitions by Matiba and Kibaki. This was a pointer to the Supreme Court that the issue of election of the President was not that simplistic and legalistic. It is one that must be considered on the wider public interest, to uphold the popular will of the people and the Constitution.

In 2013, Raila challenged the election of Uhuru. The Supreme Court jettisoned all evidence before it. It then proceeded to dismiss the Petition, in reliance upon decisions from Nigeria, Gabon and Uganda. These countries, unlike Kenya, had experienced the full brunt of authoritarian military rule. Their Courts could not be objective. In fact, this was the first time a Kenyan Court took refuge in decisions from such countries.

The 2013 decision set an unreasonably high standard and burden of proof. It was not different from Matiba and Kibaki earlier decisions. The legal fraternity in Kenya and worldwide has condemned, trashed and shelved it as bad law. The Supreme Court could be forgiven for arriving at the decision since the Constitution was nascent and barely 2 years old. The Court itself was only a year old. Though composed of highly learned minds, three of the Judges, including the President of the Court, were in their novitiate, having been appointed from outside of the Judiciary and with limited or no courtroom experience at all. This was their first election petition they were handling and were confounded by the magnitude of the exercise and perhaps scared of the consequences of their decision. They may have played safe and sacrificed truth, justice and the law.

This was their first election petition they were handling and were confounded by the magnitude of the exercise and perhaps scared of the consequences of their decision. They may have played safe and sacrificed truth, justice and the law.

The Supreme Court’s image has since then been dented by credibility concerns. Unconcluded investigations for bribery involving one of the Supreme Court Judges demonstrated that the Court was susceptible to manipulation and compromise. It does not better the case when two Senior Counsel who accused the Judge, as well as an Advocate who was alleged to have conveyed the bribe as well as the Judge’s Advocate, a senior counsel, will act together for some of the parties in the current Petition.

That thwarted attempts by President Kenyatta to have a final say in the appointment of the Chief Justice, who is the President of the Court, publicly played out during the retirement case for two of its Judges, both matters again involving the three Senior Counsel cannot be overlooked. In his election campaigns in Kisii, Uhuru recently stated that he had appointed their son the Chief Justice. The Judicial Service Commission quickly refuted this claim and reiterated its independence from the Presidency. It was too little too late. The damage had already been done and aspersions cast. There is therefore, profound merit in Raila’s call for redemption.

Collective success or failure of the Court

The 2017 Petition will be decided in a polarized setting. Both parties are on record, attacking the judiciary whenever a decision goes against them. Several Judges of the High Court and Court of Appeal recused themselves from pre-election cases. They did so out of fear or to escape the badge of bias.

A bench to hear the case by Raila’s coalition, seeking that the election be conducted solely on an electronic basis, the IEBC having failed to make regulations for a manual back was constituted of Judges outside the Constitutional Division of the High Court. The Presiding Judge, Odunga had been accused by Jubilee Party of being compromised to rule in favour of the opposition. The Judge and his other two colleagues in the Division would not feature in subsequent benches set up by the Chief Justice. At the Court of Appeal, three Judges recused themselves on account of their handling of previous electoral cases, real or perceived relations with some of the Advocates or the parties. The outcome is the same. It is an indicator that Courts could still be subject to accusations of manipulation from litigants.

The Supreme Court suffers a numerical disadvantage. It has 7 Judges, all of whom may sit, going by the precedent of 2013. Whereas 5 Judges constitute quorum, it is unlikely that the earlier precedent will be departed from. None can be recused on account of bias, compromise, relations or affiliations with the parties or their advocates. It is, however, troubling that most of these Judges share Advocates with the parties appearing in the petition. It is very untidy. Suspicions of possible bias and compromise cannot be dismissed. This calls for extra caution and vigilance.

There is a popular view that the Judges should declare their interests if any and possible conflict. The Judges should write their individual decisions. Indeed, that is the practice in the Commonwealth. It was the practice adopted by the Court of Appeal until recently, when it appears to have been abandoned. The only way to ensure judicial fidelity and interrogate judges’ Jurisprudential Quotient, is to test their individual decision-making abilities. They should not hide in the cocoon of collective success or failure. This conduct amounts to judicial laziness.

Repeat performance or improvement?

Approval and dismissal of merits of the petition is as varied as is the public support for Raila and Uhuru. Raila’s side perceive a strong case, better than the first one. Uhuru’s team consider the case much weaker. Viewed objectively, it is a case of desire for justice on the part of Raila and one of a sure win on the part of Uhuru. This is likely to play out in Court.

The 2017 Petition will be decided in a polarized setting. Both parties are on record, attacking the judiciary whenever a decision goes against them.

The only difference between a Presidential Election Petition and a National Assembly Election Petition is the volume. A Presidential Election is held in all 290 Constituencies. Intriguingly, the Petition must be heard and determined in 14 days. The other Petitions are heard and determined within 6 months.

The Supreme Court does not have the luxury of the High Court. It cannot recount, scrutinize and audit results from all 290 Constituencies. A decision must be based on pillars of “a free and a fair election”. International and national public policy must play a role also. The Supreme Court is empowered to depart from its previous decisions depending on the circumstances of the case or change in public policy. It is a delicate balance, but one that can be attained with a National Assembly Election Petition as a simulator.

Interference with KIEMS to transmit and project provisional results or to generate results contravened the Constitution. Such action would have gone against the decision of the Court of Appeal, in respect to the finality of results declared at the Constituency Tally Center. Publication of achievements, use of state resources and threats by a party to an election are election offences. Some of the State Officers are being investigated for possible prosecution. Uhuru’s election could be nullified on account of the election offences by his administration.

Massive inconsistencies and discrepancies of results in Forms 34A and 34B and in the IEBC portal could be indicative of manipulation towards a flawed electoral process. The 5 to 7 million votes claimed to have been affected is such a huge number that cannot be ignored. This limb of the case may be very strong on the fidelity of the electoral process. The demanded forensic examination of IEBC’s server and portal would establish whether there is a case. It remains to be seen how the Court will undertake a detailed examination of evidence within 14 days and order scrutiny and recount of votes to verify the numbers. If it does, the truth or falsity of Raila’s claim will unfold. The hasty announcement of the winner without the benefit of Forms 34B and before the completion of the tally, affecting over 3.5 million votes is a grave violation. The case seems to be strong on this limb.

The Supreme Court is not handicapped on precedent in the decision to be made. Resort to decisions from other countries alone is unnecessary. There are many locally decided cases that may be of guidance to the Court. Being a Court of law as well as public policy, numerous cases, not necessarily in respect to Presidential Election Petitions are available internationally and locally.

For example, the election of the Member of Parliament for Juja Constituency was challenged in the disputed 2007 General Election. The declared winner was the Chief Government whip for Kibaki’s wing in the Grand Coalition Government. Malpractices in the election mirrored those leveled against the election of Kibaki. The then Electoral Commission of Kenya was accused of subverting the popular will of the people and replacing it with a pre-determined choice of the ruling elite. The inconsistencies and manipulation of the declaration of results was so monumental that the election could not be sanitized by either a scrutiny or recount of the votes. The entire process was flawed. The election was therefore annulled.

The High Court pronounced itself thus; “One may ask why courts should hold an electoral body to a high standard in the performance of its duties. I think if there is any statutory body whose actions should be considered to be above the board and which should perform its duties to the required standard of integrity and probity, it should be the electoral commission. The electoral commission has a duty to inculcate and imbue confidence in the electorate that its process is transparent, free and fair.” Raila’s claim of manipulation of the entire electoral process would be based on principles set out in this decision. If the process is flawed, numbers or margin of difference between two candidates does not matter. The election may be invalidated without the need for scrutiny or recount of the votes.

 Of the election petitions subsequent to the 2013 elections that of Mathare Constituency attained distinction, in electoral law. The winner was from Raila’s Orange Democratic Movement. The loser, from Uhuru’s The National Alliance had been awarded the certificate. The High Court dismissed the petition. It held that results declared at the Constituency are not final and may be altered by the Chairman of the IEBC.

When called upon to review the issue, the Court of Appeal affirmed the finality of the declaration at the Constituency as the will of the people. The Court of Appeal held that it could not declare the claimant winner and directed that fresh election be held.

The dispute found its way to the Supreme Court. The decision by the Court came fast, crisp and sharp; “Apart from the priority attaching to the political and constitutional scheme for the election of representatives in governance agencies, the weight of the people’s franchise-interest is far too substantial to permit one official, or a couple of them, including the Returning Officer, unilaterally to undo the voters’ verdict, without having the matter resolved according to law, by the judicial organ of State.” The case supports Raila’s plea on finality of results declared at the Constituency level and fidelity of the process attendant to the declaration. It also buttresses the position in law that the IEBC cannot subvert the popular will of the people and replace it with that of a ruling elite.

That the petitioners in the two cases referred to won the by-elections that followed goes a long way to demonstrate how the electoral process can be subverted to defeat justice.

The complaint of use of State Officers and resources for campaign is one that Uhuru will be hard put to defend. It is well documented and publicly known. There is evidence in the Petition that the entire Government machinery from top bottom was deployed to campaign for Uhuru with threats to those perceived to rally behind the opposition. These events were concentrated within the campaign period and cannot be said to have been part and parcel of normal Government administrative duties.

The Public Officer Ethics Act and the Election Offences Act prohibit State Officers from engaging in politics, yet these Officers actively campaigned for Uhuru and defended their actions as part of Government business. Prohibited also is the advertisement of achievements for political gain. Raila has a strong case on this ground, supported by precedent.

The election of Moses Wetang’ula as Senator for Bungoma in 2013 was invalidated by the High Court. The decision was upheld by the Court of Appeal and the Supreme Court. The Courts found that the offences of bribery and voter treating had been proved and were sufficient to warrant the annulment of the election. In the words of the Supreme Court, “Moreover, we take judicial notice of the centrality of elections in the functioning of established governance bodies, as signaled by the Constitution in both general and specific terms. On that principle alone, a party found on fact to have befouled the electoral process, cannot maintain an argument that his or her offence may not be declared, save alongside that of other parties.” If Raila convinces the Court that Uhuru breached the law on the campaign trail, the Court could invalidate the election on the basis of this decision.

If Raila convinces the Court that Uhuru breached the law on the campaign trail, the Court could invalidate the election on the basis of this decision.

The case by Raila will have to be examined on the basis of these principles. If established, the Supreme Court would order a fresh election. The case could be dismissed if the evidence does not support the complaints before the Court.

The Austrian Court overturned results of election in which Alexander Van der Bellen narrowly beat far-right candidate Norbert Hofer for electoral malpractice. A South Korean court removed the President from office for abuse of office. The Brazilian senate impeached Brazilian President Dilma Rousseff for illegally manipulating government accounts. The Pakistan Supreme Court stripped the Prime Minister of his office, for corruption. Here in Kenya, former Deputy Chief Justice Nancy Baraza was removed from office for misbehaviour for merely pinching the nose of a security guard. The bar on integrity has been set high locally and internationally. The Court may be persuaded to use these out of court processes in arriving at a decision.

A majority of Kenyans feel that a minority ruling elite has since independence, acting through unlawful means, denied other regional and ethnic communities the legitimate opportunity to rule. That feeling may prevail, irrespective of whatever legally acceptable or meritorious outcome is to be made by the Court. It may be high time that a rotational presidency, on the basis of the 8 main regions or provinces Kenya was demarcated and administered from independence, is considered, if the law of winner takes it all will forever be used or abused.

The Supreme Court has many references for direction in determining whether the popular will of the people of Kenya was ousted. Its decision must be based, not only upon evidence and the law, but international and national public policy. “Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws”, said Plato. The Court must ensure that leaders act responsibly, without circumventing the law.

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Nelson Havi is a partner at Havi and Company Advocates

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Black Votes Don’t Matter: The Shrinking Civic Space of African Immigrants in the US

It is a difficult time to be an immigrant in the US. For those of African descent, theirs is a rare combination of challenges, not only in becoming part of a new nation but also in carrying the baggage that comes with being black in America.

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Black Votes Don’t Matter: The Shrinking Civic Space of African Immigrants in the US
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The United States of America has excelled in projecting an extraordinary image of itself as a free nation with a thriving democracy, where anyone can come and work their way towards a better life through civic participation. However, what the past few years in particular have peeled away betrays a somewhat different truth: that voting in the United States is hard and getting steadily more so. And there’s one group of people who face a particular set of difficulties when seeking to cast their ballot: African immigrants.

Some historic context is needed regarding voting issues within the US. First and foremost, there is a historic precedent of voter suppression in the US that is unequaled within the modern Western world. Much of the targeting of such efforts has directly affected African Americans and people of colour. After slavery was abolished, states would go to incredible lengths to suppress the black vote, including implementing taxes on voting, forcing black people to produce extraneous forms of personal and family identification and making would-be black voters pass vaguely worded and lengthy “literacy tests” in order to cast their ballot. These systems, a part of the infamous Jim Crow laws, were struck down as illegal in 1965 when the country passed the Voting Rights Act.

In the years that followed, those who sought to seek the vote sought out ways to circumvent the law and keep the voter turnout low. Since the latter half of the 20th century, high voter turnout translated to a more liberal result. Take, for example, that a Republican presidential candidate has won the popular vote once since 1988 (George W. Bush in 2004). In the cases of the victories of Donald J. Trump in 2016 and George W. Bush, they skated to victory through the electoral college; a system that traces its roots to suppress the popular vote.

When looking at US politics, it isn’t as much a matter of high voter turnout as it is who comprise the voters that are showing up to vote. The most telling demographic, the group with the highest disparity of aligning with Democrats over Republicans, is African Americans. Hillary Clinton carried the black vote by an 80 point margin – 88 per cent to 8 per cent over Trump in the 2016 election. This margin, coupled with the United States becoming more, not less, diverse has left those seeking to suppress the vote scrambling for answers.

In 2013, efforts to suppress voters gained a major boost when the US Supreme Court overturned section 4(b) of the Voting Rights Act, which outlined that states and districts that had previously been involved in voting discrimination needed pre-clearance of the validity of their electoral processes. The conservative judges ruled this as unconstitutional, that the section “punished” states for past mistakes, not for possible future successes. Justice Ruth Bader Ginsberg dissented strongly, stating that “throwing out preclearance when it has worked and is continuing to work to stop discriminatory changes is like throwing away your umbrella in a rainstorm because you are not getting wet.”

The Voting Rights Act had been brought before court in the wake of a series of issues across the US, primarily having to do with controversial voting ID laws, reports of voter suppression and other forms of disenfranchisement. In a theme that runs across America’s election process, the black community was disproportionately affected.

This brings the issue to focus on African immigrants in the United States. The issue of immigration in the United States has currently brought the federal government to a shutdown for over a month. There is constant rhetoric from the Trump administration targeting illegal immigrants as a major obstacle to the security and economic future of the United States. The issues of building a border wall with Mexico and continuing to provide guaranteed safeties (such as the Deferred Action for Childhood Arrivals programme, which offers protections to the children of illegal immigrants into the US) are being used as bargaining chips at the government level.

A difficult time

It is a difficult time to be an immigrant in the US. For those of African descent, theirs is a rare combination of challenges, not only in becoming part of a new nation, but also in carrying the baggage that comes with being black in America.

African immigrants in the US are a small but rapidly rising group. The increase has been marked since 1970, especially amongst sub-Saharan Africans. According to the Pew Research Center, the number of African-born individuals heading to the US increased nearly 250 per cent between 2000 and 2015, from 881,000 up to 2,060,000. Africans are also the fastest growing demographic among black immigrants, increasing by 137 per cent between 2000 and 2013.

It is a difficult time to be an immigrant in the US. For those of African descent, theirs is a rare combination of challenges, not only in becoming part of a new nation, but also in carrying the baggage that comes with being black in America.

In the US, a major aspect of any voting rights issue is where in the US you’re living. Different states hold different standards, different regulations and varying requirements. When examining how voting standards impacts African immigrants, there needs to be a brief examination of where African immigrants live.

The five states with the highest African immigrant population are California, New York, Texas, Maryland and Virginia. Cities such as Atlanta, Georgia and Minneapolis also have high numbers of such migrants. This is where context becomes even more important; California and New York are known as more immigrant-friendly destinations, and their major metropolitan areas are regarded as “sanctuary cities” for illegal immigrants. New York and Minnesota don’t require a photo ID whereas California may require one for a first-time voter (newly-naturalised US citizens are always first-time voters). Maryland holds a similar policy.

Texas, Virginia and Georgia, on the other hand, are a different matter entirely. Virginia requires a valid photo ID in order for an individual to vote in person. Texas and Georgia are both mired in controversy over the stringent regulations put in place regarding the standards for voter IDs. The state of Texas is currently mired in litigation over the voter ID laws, with opponents arguing that it disproportionately impacts minorities.

In Georgia, where over 70,000 African immigrants reside in the Atlanta metropolitan area, the man who was presiding as the Secretary of State (the office which controls the conducting of elections, a possible conflict of interest) won narrowly and controversially over Stacey Abrams, who would have been the first black woman elected to be a state governor in the US. Abrams repeatedly made claims that there was voter interference, particularly amongst black precincts, where electronic voting was in disarray and reports of voter suppression were rampant. These claims had much of their basis in and around Atlanta, Georgia.

Why does voter ID matter and how does it affect Africans living in America? For starters, the path to US citizenship (which is needed to vote in America) is extremely arduous, long and difficult. The paperwork hoops to jump through are staggering. On average, it takes an immigrant a minimum of five years of continuous residency to become a naturalised US citizen. In cases that need further legal counsel, it can take even longer as the legal side of American immigration courts have become steadily more choked and congested in the new millennium.

Why does voter ID matter and how does it affect Africans living in America? For starters, the path to US citizenship (which is needed to vote in America) is extremely arduous, long and difficult.

For immigrants, the issues surrounding voter ID can often be much murkier. For instance, immigrants can gain driver’s licenses within the United States, which is one of the key forms of identification needed in states with more stringent regulations. This doesn’t mean that immigrants have the appropriate information explained to them regarding the IDs being obtained. The African Advocacy Network of California notes that although driver’s licenses are applied for successfully by immigrants who aren’t naturalised, the fact that they are still unable to vote due to their status isn’t explained to them. This can lead to immigrants attempting to vote, unknowingly engaging in an illegal act of fraud. The penalties for such fraud in the US are harsh. Both illegal and legal immigrants can face deportation if found to be involved in fraudulent voting. Cases of actual voter fraud involving illegal immigrants are incredibly rare, but that doesn’t stop Trump from repeatedly claiming that Hillary Clinton won the popular vote because of millions of “illegals” somehow managing to cast ballots.

Illegal immigrants in Trump’s America

The Obama administration was noted for its strict approach to illegal immigration, deporting hundreds of thousands between 2009 and 2017. That same administration, however, did focus on expanding a programme called the H1-B visa, which encouraged workers from outside of the United States to enter the country to work. Many prominent corporations, including Amazon, Google and Microsoft, heavily leaned on the programme as it eased the transition for professionals to gain a foothold in the US workforce. In addition, the H1-B programme made the path to a Green Card visa (an initial step towards US citizenship) markedly smoother, encouraging immigrants to engage in the process of becoming a citizen.

The Trump administration, on the other hand, has taken a significantly different approach. The current White House passed an executive order titled “Buy American, Hire American” that directly encourages American companies to hire only the most skilled workers from outside of the United States. This will have a long-term impact on the number of H-1B applicants who can head down the path of gaining citizenship.

The Obama administration had an unfortunate track record of harshness regarding immigration, including reopening and examining case files of naturalised citizens (immigrants who gained their citizenship in the US). The Trump White House has, of course, seized on this idea and expanded it. Under this administration, the U.S. Citizenship and Immigration Service (U.S.C.I.S.) has created a new task force to look into cases and possibly “denaturalise” citizens for often muddied reasons, such as making a clerical mistake on a form. In essence, this leaves millions of naturalised United States citizens’ status at the discretion of officials appointed under the Trump administration, one noted for its blatantly anti-immigrant rhetoric.

A prominent path to Green Card visas for African immigrants is the Diversity Lottery programme, which grants visas to citizens from all over the world. Given the administration’s track record, it comes as little surprise that the White House has looked repeatedly into cutting the programme entirely. As egregious as this is, perhaps the repeated ransom holding of the so-called “dreamers” (children of illegal immigrants born in the United States and granted legal protections) is even more insidious. Trump has made a repeated talking point of ending protections for the dreamers, even going so far as to offer continued protection as a bargaining chip for $5.7 billion of funding for a border wall in January of this year.

The Obama administration had an unfortunate track record of harshness regarding immigration, including reopening and examining case files of naturalised citizens (immigrants who gained their citizenship in the US). The Trump White House has, of course, seized on this idea and expanded it.

So how does this apply to African immigrants, specifically? The numbers indicate that immigrants from sub-Saharan Africa are the fastest growing group, and that the vast majority of this immigration has occurred after 1960. This translates into African immigrants having less of an established civic network than other immigrant groups in the US.

Less civic engagement

Less network means less community engagement and less protection for Africans now calling the US their home. This, in turn, translates into issues surrounding social integration facing Africans in America. Those in questionable status are likely to eschew anything to do with getting on the record, including engaging in civic discourse. One example saw the city of San Francisco engaging with members of the African immigrant community to get involved with the local school board elections, despite many holding illegal immigrant status. Illegal immigrants worry about what will happen to their information and whether it will end up in the hands of Immigration and Customs Enforcement (ICE).

This is compounded by the constant shifting and swirling of regulations surrounding immigration within the US. Frankly put, in America, thing currently seem extremely uncertain. Those who would have gained the path to citizenship by being granted immigration visas are suddenly on the outside looking in. Immigrants from Libya, Sudan and Somalia (the three African nations affected under the Trump administration’s travel ban targeting Muslim-majority nations) are suddenly unsure of their status.

Noticeably, despite all of his talk of walls and increased military presence, Trump has not issued a travel ban to a Latin American country. The current administration is seemingly preoccupied with all things immigration, how to stop it, how to grandstand from it, how to flex political muscle by stopping it. In fact, in 2017, despite overall numbers of deportations falling, ICE deported a record number of African immigrants, more than double of the total from 2016. There were reported instances of poor treatment and abuse of deportees by ICE agents. While the numbers are comparatively small, increases in deportation can push African immigrant communities even farther outside of the democratic process. What was the number one country for African immigrant deportations from the US? Somalia.

Less network means less community engagement and less protection for Africans now calling the US their home. This, in turn, translates into issues surrounding social integration facing Africans in America. Those in questionable status are likely to eschew anything to do with getting on the record, including engaging in civic discourse.

Ilhan Omar, herself a Somali immigrant to the US, is now a first-term Congresswoman from Minneapolis, Minnesota. Her election is an indication of a potential future of US politics: that African immigrants can find a voice in politics, in part due to the rallying of their communities. She’s become an outspoken advocate for the Somali community in Minnesota while continually deriding the Trump administration’s anti-immigration policies.

Since her election, Omar has been a frequent target of scathing criticism from the conservative media and the Republican Party, who have even claimed that some of her pro-Palestine comments are blatantly anti-Semitic. While her election to the US Congress is historically significant (she’s the first African-born refugee in the history of the United States Congress), Omar is still just one member of Congress, one voice for an ever-growing population that seems ever-more targeted by executive orders of the Trump administration. Think of it this way: Omar wouldn’t be able to enter the US under the travel ban of Muslim majority countries passed down by Trump.

In essence, this message to newcomers to the US is: DON’T BOTHER GETTING ENGAGED BECAUSE THE CONSEQUENCES COULD OUTWEIGH YOUR EFFORTS. To those emigrating to the US from Africa, this messaging can appear even more insidious, as Adoubou Traore (who himself emigrated from the Ivory Coast), the director of the African Advocacy Network in San Francisco outlines: “Many Africans have inherent doubts about the legitimacy of elections, they’re a headache, their experience makes them not believe that their voices matter. When there is no guarantee that their information won’t be subject to being exploited, from their view: what’s the point?” There isn’t much that would prevent them from holding such views in America. It becomes a community question of why organise if doing so can only lead to more headache?

With issues surrounding racism against black people in America being dissected and moved further towards prominence in national dialogue, it would, at least on the surface, seem as though the communities of African Americans would provide a steady ally for Africans adjusting to life in America. Unfortunately, this is often not the case. There is a noted divide between Africans and black Americans, one that many coming to the US find difficult to bridge. Some of this gap is historically entrenched, some of it is due to the truly lacking breadth of coverage in the US education system regarding African history and culture. The awkward truth is: Africa as a topic in the US is regarded as a monolithic punch line to a bad joke, and is hardly rendered an after-thought in terms of democratic engagement.

In terms of vulnerability to less-than-democratic interests, there are myriad of groups in the United States that could use additional legal and outreach protections. Practically anywhere in America that can’t be categorised as white and suburban finds itself victim to voter suppression efforts. In the US context, the black community is systematically targeted the most.

Laws are seemingly rolled out in force yearly in dozens of states, implementing further restrictions and using scare tactics, lies and intimidation to influence local and national elections with a conservative slant.

The unavoidable truth is that Africans in the US find themselves at an ugly modern crossroads: the centuries of subversive efforts to reduce the so-called “urban” vote at a crossroads with the modern iteration of all-American xenophobic fervour. Though growing fast in population, the democratic influence has not kept stride.

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Death in Vienna: The Death of Erich Rebasso

In the last days of 2008, Erich Rebasso, an Austrian lawyer, sent a letter to the main Vienna headquarters of the Federal Criminal Police, the country’s top law enforcement agency. Its purpose was unusual — the father of four young children was blowing the whistle on himself.

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In the last days of 2008, Erich Rebasso, an Austrian lawyer, sent a letter to the main Vienna headquarters of the Federal Criminal Police, the country’s top law enforcement agency.

Its purpose was unusual — the father of four young children was blowing the whistle on himself.

“I deeply regret having been used for criminal purposes and I am willing to submit the matter to the required criminal review,” Rebasso’s five-page confession concluded.

But it had all come apart. Rebasso admitted he had been used to launder tens of millions of dollars. He explained that, for over a year, he had been accepting payments from Russian criminals and had sent the funds to other bank accounts at their instruction. Then 45, Rebasso specialized in advising Russian clients on how to do business in the West. He had an excellent reputation as a fast, reliable, and discreet partner, and he spoke Russian fluently.

As it turns out, those criminals were using companies that were part of the Troika Laundromat. The massive financial scheme revealed in OCCRP’s latest Laundromat investigation had been put together by Troika Dialog, then Russia’s largest private investment bank. Some of the accounts Rebasso wired to belonged to two of the system’s core offshore companies: Industrial Trade Corp. and Nixford Capital Corp.

Between December 2006 and February 2008, Rebasso used 150 individual transactions to send almost US$ 96 million to laundromat accounts at Ukio Bankas, a Lithuanian bank.

Many of the reasons specified for the transfers made little sense for a law firm. Along with trades involving “fruits and vegetables,” “consumer goods,” and “electronic goods,” Rebasso is even listed as buying “frozen herring” from companies with Ukio bank accounts. More likely, the description was a red herring aimed at Ukio’s compliance department.

Rebasso’s own Austrian bank accounts were held at Raiffeisenlandesbank Niederösterreich-Wien (RLB). Though the bank investigated his large transfers, it appeared to take no further action for two years — at which point it finally pressed him to stop.

The massive financial scheme revealed in OCCRP’s latest Laundromat investigation had been put together by Troika Dialog, then Russia’s largest private investment bank

Rebasso’s confessional letter had little effect. While police looked into the matter, it was two years later when they informed him that they had stopped the proceedings because they believed any potential crime had happened outside their jurisdiction and been committed by foreigners.

Two years after that, Rebasso was dead.

The Sheremetyevo Fraud

According to his statement, Rebasso’s involvement in the money laundering scheme began on a visit to Moscow in November 2006 where he was introduced to Viatcheslav Dremin, a Russian businessman. Dremin told him that he provided financial services to Russians who needed to transfer funds abroad. But the official system for sending money across borders was very bureaucratic, he said, and he needed to speed up the process. He wanted Rebasso to act as his trustee in Vienna to help him move the money faster.

The lawyer accepted. Soon, two Vienna bank accounts belonging to his Austrian company, Schulhof Investigation (later renamed Sostegno), began receiving large sums from companies Dremin represented, along with instructions on where to send them. In every instance, he received his directions via an anonymized email address.

Rebasso worked on behalf of three insurance companies registered in Dagestan, a troubled North Caucasus republic within the Russian Federation.

At least some of the money appeared to be of criminal origin.

One of the companies Dremin represented, National Insurance, was directed by Russian businessman Maxim Vedenin. In 2011, Vedenin would be sentenced to 19 years in prison for robbery and the murders of two prostitutes.

Prior to that, Vedenin’s company had received money from a widely-known fraudulent scheme involving fuel at Moscow’s Sheremetyevo airport that OCCRP uncovered in 2012.

Between 2003 and 2008, Moscow’s busiest airport bought fuel through a long chain of intermediaries that grossly inflated its cost. According to court documents, phantom companies earned at least $200 million in unnecessary markups in 2006 and 2007 alone. The Russian government lost more than 1 billion rubles ($40 million) in tax revenue from the scheme. The higher fuel costs also meant higher airplane ticket prices for the travelling public.

A portion of the money generated by the scheme was laundered through the Troika Laundromat. Vedenin’s company, National Insurance, received some of the proceeds, and then sent them on to Rebasso’s company.

The Austrian lawyer then sent the funds into the Troika Laundromat, using it as a money laundering system. Over the same period, between December 2006 and March 2007, he sent $19.4 million to the accounts of Nixford and Industrial Trade Corp. To justify the transfers to the bank, he provided false invoices indicating he had bought “consumer goods” from the Troika Laundromat companies, or was simply paying “for bills.”

All but one of Dremin’s companies have been dissolved, and he couldn’t be reached for comment.

Raiffeisen Looks In

Despite Rebasso’s efforts to mask his money transfers as legitimate trade deals, his own bank began to investigate the financial activity in the spring of 2007.

On March 15, Rebasso’s office received a letter from his bank’s legal department inquiring about a “sharp increase in transaction amounts” on one of his accounts. The bank wanted to know on whose behalf Rebasso was acting.

A few days later, Rebasso responded in a letter, explaining that he was handling “foreign payments” for three Russian insurance companies. He also provided their names, their information from the Russian commercial register, and evidence of his business relationship with them.

The bank appears to have been satisfied with Rebasso’s explanation, because afterward, his transfers continued.

(A representative of RLB said the bank could not comment on its clients and that it had complied with all anti-money-laundering obligations.)

A Last Client

In mid-2007, Rebasso’s statement to police says, Alfis Mirgunov, one of the Russian partners in his arrangement with Dremin, got in touch. Mirgunov planned to start his own financial enterprise and wanted Rebasso to open bank accounts in Austria on his behalf. Once again, the lawyer agreed.

He opened three new RLB accounts for his company, Schulhof, to handle the anticipated load. The accounts were denominated in U.S. dollars, euros, and Russian rubles and soon, more money started to pour in. Once again, Rebasso received his instructions from an anonymous e-mail address, this time identified only by a sequence of digits.

In mid-2007, Rebasso’s statement to police says, Alfis Mirgunov, one of the Russian partners in his arrangement with Dremin, got in touch. Mirgunov planned to start his own financial enterprise and wanted Rebasso to open bank accounts in Austria on his behalf. Once again, the lawyer agreed.

Over two months near the beginning of 2008, Rebasso wired $68.3 million in 106 individual transfers to a bank account owned by Vantrel Invest Ltd., a New Zealand–registered shelf company.

Vantrel doesn’t appear to be a Troika Laundromat company; rather it is an intermediary that sent millions on to the Laundromat. (Vantrel’s bank account was held at Ukio Bankas, where many Laundromat companies held their accounts.) Documents related to the transactions said they were to buy mobile phones, though this explanation is almost certainly another fiction.

In his confessional letter, Rebasso told the Austrian police that he stopped working for the Russians in 2008. It isn’t known how much money he took for his services.

“I ended this activity at the end of February,” he wrote. “Among other reasons, primarily because the scope overwhelmed my control options.”

His hesitation appeared to be only part of the truth.

In fact, that month, Rebasso’s Austrian bank, RLB, had had enough. His transactions had apparently triggered another serious review, and senior executives told Rebasso he would need his own banking license to continue such large transfers.

The Finlist Fraud

Though he had stopped working with his Russian partners, Rebasso’s troubles were just beginning. He appeared to have become an unwitting facilitator of a fraudulent investment scheme.

According to his letter, in June 2008, Rebasso started receiving emailed complaints from ordinary Russians who said their savings had been stolen.

Rebasso described the correspondents as “rather simple-minded, not very wealthy people who were baited with internet ads.”

Apparently, the victims of the scheme had been offered what appeared to be lucrative investment opportunities through a platform called Finlist Forex Found. Then, without Rebasso’s knowledge, they were instructed to send their money to the accounts of his Austrian company, Sostegno.

Rebasso said the Russian fraudsters provided the investors with fake documents bearing his forged signature (some of these were shared with him by the angry correspondents). When the money arrived in his accounts, Rebasso sent it on without being aware of its origins.

Now the victims were furious, demanding repayment of money he had already sent on to the Laundromat.

Rebasso said the Russian fraudsters provided the investors with fake documents bearing his forged signature (some of these were shared with him by the angry correspondents). When the money arrived in his accounts, Rebasso sent it on without being aware of its origins

Rebasso got in touch with Mirgunov and asked what was happening. The Russian told him he would fix the problem and reimburse anyone who had lost money. But he never did, and by the end of the year, Rebasso sent his letter to the Federal Criminal police.

The Beginning of the End

The police forwarded the case to the public prosecutor’s office in Vienna. Nothing appeared to happen. On Dec. 3, 2010, two years after his complaint, Rebasso was notified that police had ended their case. It had been dismissed because the public prosecutor decided the case was outside Austrian jurisdiction. “Foreign acts of foreigners,” the statement read.

Rebasso’s own story was nearing its end.

In late July 2012, as he walked from his office to his Mercedes SUV in an underground parking lot, he was ambushed by two men. His car was later found empty in a different location, and shortly after his disappearance, his family received a demand: The kidnappers wanted a 435,000–euro ransom. After no deal was reached, Rebasso’s body was found three weeks later in a forest near Vienna. Austrian authorities concluded that he had been suffocated, probably while he was taken into a headlock.

Soon afterward, two former Moscow police officers were arrested and charged in connection with the ransom demand — but not for Rebasso’s kidnapping and murder. They were sentenced to eight and nine years in prison, respectively.

It’s still unclear who ordered Rebasso’s murder and why, though media and police speculated that victims of the investment fraud had hired the officers to recover the money.

More than six years later, the exact circumstances of Rebasso’s death are still unclear.

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The Troika Laundromat: How Vast Offshore Network Moved Billions With Help From Major Russian Bank

The Laundromat wasn’t just a money laundering system. It was also a hidden investment vehicle, a slush fund, a tax evasion scheme, and much more.

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The Troika Laundromat: How Vast Offshore Network Moved Billions With Help From Major Russian Bank
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At first blush, Ruben Vardanyan and Armen Ustyan have nothing in common beyond their Armenian roots.

Vardanyan is a wealthy Russian banker who once led Troika Dialog, the country’s largest private investment bank. He’s spoken at the World Economic Forum in Davos and spent tens of millions of dollars on philanthropic projects in his native Armenia. Ustyan is a seasonal construction worker who shares a chilly apartment with his wife and parents in northern Armenia when he isn’t renovating flats in Moscow.

Ustyan’s name and a copy of his passport appear in the bank documents for an offshore shell company that played a role in Troika’s system. The company was one of at least 75 that formed the complex financial web, which functioned from 2006 to early 2013. Over that period, Troika enabled the flow of US$ 4.6 billion into the system and directed the flow of $4.8 billion out. Among the counterparties on these transactions were major Western banks such as Citigroup Inc., Raiffeisen, and Deutsche Bank. The dozens of companies in the system also generated $8.8 billion of internal transactions to obscure the origin of the cash.But Ustyan’s signatures on documents he says he’s never seen draw a direct line to Troika — and to a financial Laundromat that shuffled billions of dollars through offshore companies on behalf of the bank’s clients, many of whom were members of Russia’s elite. The system enabled people to channel money out of Russia, sidestep restrictions in place at the time, hide their assets abroad, and launder money. It also supplied cash to Russian President Vladimir Putin’s friends and powerful oligarchs, and enabled criminals to mask the illicit origins of their cash.

(Citigroup didn’t respond to a request for comment on this story; Raiffeisen declined to comment, citing client confidentiality; and Deutsche Bank said it had “limited access” to information about Troika client transactions and couldn’t comment on specific businesses for legal reasons.)

At the time, Vardanyan was Troika’s president, chief executive officer, and principal partner. He enjoyed a reputation as a Western-friendly representative of Russian capitalism, known for working to improve the country’s business environment and for co-founding the Moscow School of Management Skolko

As with the previous Laundromats, many of the large transactions were made on the back of fictitious trade deals. The bogus deals were invoiced variously as “goods,” “food goods,” “metal goods,” “bills,” and “auto parts.” All the invoices included in the leak were signed by proxies and sent from Troika.ru email addresses. Meanwhile, employees at Troika were setting up the opaque financial system — dubbed here the Troika Laundromat because of its resemblance to previous money laundering schemes uncovered by OCCRP.

This portrait of the operation emerges from a trove of leaked banking transactions and other documents obtained by OCCRP and the Lithuanian news site 15min.lt, and shared with 21 media partners.

As a whole, the data set includes over 1.3 million banking transactions from 238,000 companies and people, as well as thousands of emails, contracts, and company registration forms. This analysis of Troika’s network is based on a subset of the data.

In an interview, Vardanyan said his bank did nothing wrong and that it acted as other investment banks did at the time. He stressed that he couldn’t have known about every deal his enormous bank facilitated for its clients. Reporters found no evidence that he was ever investigated or accused of any wrongdoing by authorities. His signature was found on only one document in the entire scheme, in which he gives a loan to a Troika Laundromat company.

Vardanyan described the system as a private wealth management service.

Referring to the constellation of offshore companies that comprised the Laundromat, he said: “Those are technical service companies of Troika Dialog clients, among them, mine.”

“It could be called a ‘multi-family office,’” he said. “A similar practice still exists at foreign banks. Most of their clients work through international companies. I repeat: We always acted according to the rules of the world financial market of that time … Obviously, rules change, but measuring a market in the past by today’s laws is like applying modern compliance standards to the time of the Great Depression. You’ll agree that this distorts the true situation.”

Asked about the fictitious trade deals, Vardanyan said Troika Dialog’s revenue topped 2 trillion rubles from 2006–2010 ($63–85 billion, depending on currency fluctuations) and that he “couldn’t possibly know about all the deals in a company of this size.”

Though such practices were considered business as usual in Russia at the time, specialists note that systems like the Troika Laundromat can have serious repercussions.

The schemes stunt national economic development, undermine human security, and diminish the quality of life for people left behind, said Louise Shelley, director and founder of George Mason University’s Terrorism, Transnational Crime, and Corruption Center and author of the book “Dark Commerce.”

“Money laundering countries, particularly in the developing world, are losing enormous amounts of capital that are needed for infrastructure development, education, health, [and] the development of new businesses, of entrepreneurship,” Shelley said. “With this much money lying overseas, you can do all sorts of malicious things. You can interfere in electoral processes. You can help pay for fake news.”

Criminal Services

The Laundromat wasn’t just a money laundering system. It was also a hidden investment vehicle, a slush fund, a tax evasion scheme, and much more.

Troika’s clients also used it to buy properties in Great Britain, Spain, and Montenegro; to acquire luxury yachts and artwork; to pay for medical services and World Cup tickets; to cover tuition at prestigious Western schools for their children, and even to make donations to churches.

In addition, the Troika Laundromat enabled organized criminal groups and fraudsters to launder the proceeds of their crimes. OCCRP and partners have identified several high-level frauds perpetrated in Russia that used Laundromat companies to hide the origins of their money.

Troika’s clients also used it to buy properties in Great Britain, Spain, and Montenegro; to acquire luxury yachts and artwork; to pay for medical services and World Cup tickets; to cover tuition at prestigious Western schools for their children, and even to make donations to churches.

One of these schemes, known as the Sheremetyevo Airport fuel fraud, took place from 2003 to 2008 and artificially inflated aviation fuel prices while depriving the Russian state of more than $40 million in tax revenue. The scheme led to a hike in plane ticket prices. More than $27 million was sent by companies involved in the fraud to Troika Laundromat accounts. Vardanyan has not been implicated in the scheme and said he had no knowledge of it. In 2010, two years after the fraud ended, Troika Dialog began consulting for the airport along with Credit Suisse.

A second significant criminal inquiry tied to the Laundromat, from which $17 million ended up in the system, involves a tax avoidance scheme allegedly perpetrated by several Russian insurance companies. A man named Sergei Tikhomirov was accused of concluding false service contracts with the insurers as a pretext for having them send him large sums of money, which his accusers say he cycled through several accounts before depositing it abroad or cashing in. A portion of the money ended up in the Laundromat. (Tikhomirov did not respond to phone calls seeking comment.)

Roldugin didn’t respond to an email requesting comment, and Vardanyan said that he knew of the cellist, but was not aware that he had any business dealings with Troika.In a third case, at least $69 million went to companies associated with Sergei Roldugin, a Russian cellist and one of Putin’s best friends, who became famous after his vast unexplained wealth was revealed by OCCRP, the International Consortium of Investigative Journalists, and other media partners in the Panama Papers project. Some of the money that Roldugin’s companies received from the Laundromat originated in a massive Russian tax fraud exposed by Sergei Magnitsky, a Russian lawyer who died in jail after revealing it.

The Troika Laundromat enabled organized criminal groups and fraudsters to launder the proceeds of their crimes. OCCRP and partners have identified several high-level frauds perpetrated in Russia that used Laundromat companies to hide the origins of their money.

Companies involved in the fraud exposed by Magnitsky moved more than $130 million through the Troika Laundromat. In fact, hundreds of millions of dollars went into and out of the Laundromat for unknown purposes.

Vardanyan said he was not aware of any of these transactions.

“Understand, I’m no angel,” he said. “In Russia, you have three paths: Be a revolutionary, leave the country, or be a conformist. So I’m a conformist. But I have my own internal restraints: I never participated in loans-for-shares schemes, I never worked with criminals, I’m not a member of any political party. That’s why, even in the ’90s, I went around with no security guards. … I’m trying to preserve myself and my principles.”

Vardanyan and his family were among those who received money from the Laundromat. More than $3.2 million was used to pay for his American Express card, went to accounts belonging to his wife and family, and paid school fees for his three children in Great Britain.

Asked about these sums, Vardanyan said the offshore companies Troika created serviced his own companies in addition to the bank’s clients.

Troika as Capstone

The Troika Laundromat is unique among the Laundromats that have been uncovered in recent years in that it was created by a prestigious financial institution.

Like all investment banks, Troika handled stock and bond issuance, initial public offerings, and acted as an underwriting agent. It also had a strong relationship with the local office of Citibank Inc., with up to 20 percent of Troika’s new investors coming via the American behemoth. That made New York-based Citibank Troika’s biggest “external agent,” according to a 2006 interview with Troika co-founder Pavel Teplukhin. (Citibank didn’t respond to requests for comment.)Established in the early 1990s, Troika Dialog became Russia’s largest private investment bank. It operated under Vardanyan’s leadership until 2012, when it was purchased by Sberbank, the nation’s largest state-owned lender.

The Troika Laundromat is unique among the Laundromats that have been uncovered in recent years in that it was created by a prestigious financial institution.

Other major international banks, including Credit Suisse and Standard Bank Group, did significant business with Troika as well.

Starting in 2006, Troika employees began putting together the pieces of the Troika Laundromat.

Four essential elements are needed to build a functioning Laundromat: a bank with low anti-money laundering compliance standards; a maze of secretive offshore companies to hold accounts at the bank; proxy directors and shareholders for both the companies and the accounts; and the so-called formation agents that can quickly create, maintain, and dissolve the offshore companies as needed.

The bank orchestrated all of these components of the Troika Laundromat, in addition to directing the money flows and fake trade deals that made up its operations.

The pivotal mechanism was based on trade: Shell companies created bogus invoices for non-existent goods and services to be purchased by other companies in the system. The practice provides a fig leaf of legitimate economic activity that makes the transactions appear less suspicious to regulators.

Al-Qaida founder Osama bin Laden used a similar system to move money around the Middle East, she said.“You’re disguising an illegal payment by pretending that it is linked to a shipment of goods,” said Shelley, the George Mason corruption expert. “The trade-based system is one of the most central parts of money laundering in the world today.”

If Troika was the capstone of the Laundromat, its cornerstones were three British Virgin Islands-based shell companies: Brightwell Capital Inc., Gotland Industrial Inc., and Quantus Division Ltd. Brightwell’s first known transaction was on April 12, 2005. Gotland was established on Feb. 17, 2006, and Quantus followed six months later on Aug. 23.

An analysis of these companies’ banking records reveals how they put the Laundromat together: Starting in 2006, they made numerous small payments to a formation agent called IOS Group Inc. to create the dozens of companies that comprised the complete Laundromat. IOS didn’t respond to requests for comment.

The three cornerstone companies then continued making payments to IOS ranging from 40 to almost 5,000 euros over almost six years to keep the entire network operating. Over that span, the total reached over 143,000 euros.

Quantus, for example, paid formation and maintenance fees for the British Virgin Islands-based Kentway SA. This company was later used, among many others, to send millions of dollars to Sandalwood Continental Ltd., a company connected to Sergei Roldugin, the cellist, and one of Vladimir Putin’s oldest friends.

Quantus’ involvement with Kentway demonstrates the many ways in which the Laundromat companies were interconnected. In this case, after first helping establish Kentway, Quantus then funded it with money that Kentway forwarded to Roldugin’s company.

The Bank

To direct the flow of funds through the Laundromat, Troika needed a commercial bank to host accounts for the companies involved. And it needed that bank to avoid looking too closely at the contracts and trades Laundromat businesses used to justify moving money from one offshore company to another.

Troika chose Lithuania’s Ukio Bankas for the job. (The Lithuanian lender would later be seized by the country’s National Bank in 2013 for engaging in risky deals and failing to follow regulators’ orders.) Ukio is known to have set up accounts for 35 companies used in the Troika Laundromat, and likely more.

Because Lithuania wasn’t yet using the euro, Ukio needed correspondent accounts at European banks, such as the Austrian Raiffeisen or the German Commerzbank AG, to handle euro-denominated transactions. Those two lenders and many other large European and U.S. financial institutions accepted Laundromat money, though they did sporadically inquire about the nature of some transactions. After prodding by one of the correspondent banks, for example, some Ukio compliance officers made inquiries about Laundromat payments that didn’t make commercial sense.

“What is the essence of this transaction? We have a contract (attached), but to be honest, I don’t really get what’s happening,” one officer wrote, adding an unhappy face, in relation to a payment that went to a company associated with Roldugin.

By this point, the money had already left Ukio’s accounts.

Asked why Ukio was chosen as the banker for the offshore companies Troika created, Vardanyan said it was just one of about 20 banks Troika used around the world.

The Armenian Proxies

A central figure in many of the transactions involving the Laundromat companies was Armen Ustyan. Far from being an investment banker, Ustyan, 34, works seasonally as a construction worker in Moscow.

Ustyan said he had never heard of Dino Capital SA, the Panama-based Laundromat company whose Ukio bank account was registered using his signature. A copy of his passport was attached, but Ustyan insisted he had no idea how it got there. Ustyan’s signature can be found on contracts and banking paperwork in the Troika Laundromat along with those of a few other Armenians. Wearing an old military jacket and hat, he sat down with reporters this January in his cold living room to answer questions about high finance.

At his mother’s request, he wrote his signature on a piece of paper and concluded that the one associated with Dino Capital had probably been forged.

The Armenian said he knew none of this, though he did recall a slim connection to Troika Dialog: While in Moscow looking for work, Ustyan stayed with a Russian Armenian whose brother he said worked for the investment bank and helped him find employment. In addition to having his signature associated with Dino Capital’s bank account, Ustyan is also listed as an attorney authorized to sign contracts on the company’s behalf, and his signature appears on at least $70 million worth of financial agreements.

The Moscow address is indeed that of Nerses Vagradyan, a Russian citizen of Armenian descent. Nerses’ brother, Samvel Vagradyan, is a director of a Russian company that received millions of dollars from Brightwell, a core Laundromat company. A Samvel Vagradyan is also mentioned on Vardanyan’s website as a donor to the banker’s charitable causes. It’s unknown whether Samvel really worked for Troika.

Neither of the Vagradyan brothers could be reached for comment. Ustyan said he doesn’t believe they used his identity.

Another Armenian front man in the Laundromat appears to be Edik Yeritsyan. His identity was used to register an account at Ukio for the Cyprus-based Popat Holdings Ltd. This company was involved in Laundromat transactions worth millions of dollars.

Yeritsyan told OCCRP that he lost his memory three years ago after a car accident and doesn’t remember some parts of his life. However, Ustyan said that he and Yeritsyan lived together in the same flat they were renovating in Moscow.

This article was first published by The Organized Crime and Corruption Reporting Project (OCCRP) a global network of investigative journalists.

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