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MYSTERY OF THE MISSING SERVERS: Were The August 8 Elections Predetermined?

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On September 30, 2017, the NASA quartet – Raila Odinga, Kalonzo Musyoka, Musalia Mudavadi and Moses Wetangula – held a press conference to alert Kenyans on a pressing issue they considered to be a hot-button election matter. The media briefing was about an IT company called OT-Morpho that had become something of a technological ogre to many Kenyans.

Looming large but shrouded in mystery, Kenyans only came to learn about the company after the Supreme Court of Kenya overturned the victory of Uhuru Kenyatta and his Jubilee Party in the August 8, 2017 elections. The thrust of the Supreme Court’s majority judgement rested in part on finding fault with the technological malpractices that clouded or interfered with the transmission of votes by the Independent Electoral and Boundaries Commission (IEBC)’s server. OT-Morpho was the French company that had been outsourced by IEBC to man the server and to ensure the correct transmission of tallied votes.

The statement read by Musalia Mudavadi, NASA’s national campaign chairman, said in part: “We are aware the KSh2.4 billion awarded sum is way above the KSh800 million that IEBC’s technical committee recommended. Kenyans should be excused if they were to conclude that the offensive amounts are being paid as a bribe to OT-Morpho for a shady job of using technology to tilt elections in favour of Jubilee in the same way it did last month.”

The thrust of the Supreme Court’s majority judgement rested on finding fault with the technological malpractices that clouded or interfered with the transmission of votes by the Independent Electoral and Boundaries Commission (IEBC)’s server. OT-Morpho was the French company that had been outsourced by IEBC to man the server and to ensure the correct transmission of tallied votes.

The key words Mudavadi used are bribe and shady job. The statement also claimed that “the two (OT-Morpho and Jubilee) have pulled another expensive fraud on Kenyan taxpayers even before the IEBC and OT-Morpho can address numerous questions regarding irregularities and illegalities in the August 8 elections.” The third key word is fraud. OT-Morpho has recently allegedly been involved in less than honest dealings in other parts of the world.

The NASA statement also accused OT-Morpho of being “firmly part and parcel of a criminal enterprise that has hijacked the Kenya electoral system with the sole aim of profiteering and frustrating the democratic ambitions of the people of Kenya.” Criminal enterprise are not charitable words to describe a global company that prides itself as a leader in the world of technological expertise and products. But has the company been charitable in its provision of its supposedly world class services?

On September 28, IEBC’s Chief Executive Officer Ezra Chiloba re-negotiated another deal with OT-Morpho to oversee the electronic transmission of the presidential results in the fresh election. (This new deal was the core theme of NASA’s press conference two days later). In its judgement, the Supreme Court said that a fresh election should be held within the constitutionally mandated 60 days from the date of the judgement.

Chiloba’s point of departure on once again contracting the French firm was that there was limited time between then and October 26, 2017 (the new date slated for the fresh elections. The initial date was October 17, 2017) to look for another IT firm to replace OT-Morpho. “The Commission held a series of meeting with OT-Morpho on the level of support we required for the fresh presidential election. This culminated into an addendum to the contract that was signed on Thursday (September 28, 2017) evening after negotiations were concluded as per the procurement law”, said Chiloba on September 30, 2017 to the media.

This new contract immediately was criticized by the opposition NASA coalition. The contract amounting to KSh2.4 billion “for an election involving only one position and two candidates is not only outrageous, but an act of fraud and deliberate theft of public funds and bribery,” said the NASA statement.

Two weeks earlier, Raila Odinga had asked the French government to investigate the Paris-based company and its alleged connection with IEBC officials who he claimed “acted in complicity and connived to undermine the will of the people of Kenya.”

Two weeks earlier, on September 8, 2017, in a protest letter to the French Embassy in Nairobi, NASA Presidential candidate Raila Odinga had asked the French government to investigate the Paris-based company and its alleged connection with IEBC officials who he claimed “acted in complicity and connived to undermine the will of the people of Kenya.”

He also requested the government to expose two alleged OT-Morpho employees, Laurent Lambert and Axel Gaucher, who allegedly helped some IEBC officials to gain unauthorised access to the electoral commission’s servers. In the letter, both were referred to with their respective titles: Lambert is said to work as head of Project Kenya, while Gaucher works as head of analytics at the same organisation.

OT-Morpho was tasked with providing two electronic systems that were to identify the Kenyan voter and consequently transmit election results from the 40,000-plus polling stations to a central tallying centre. Evidently, that did not happen. Raila, the NASA presidential candidate and the leading opposition figure in the August 8 general election, was quick to accuse the IT company of, “failing to comply with the prescribed format of results management data.”

Stung by criticism by the leader of the opposition and castigated by the Supreme Court for its electronic transmission system, OT-Morpho’s Chief Operating Officer, Frederic Beylier, in a terse statement on September 15, 2017 said: “We have conducted two in-depth audits of our system with the support of external and reputable companies. We refute any allegations of piracy or fraudulent intrusion into our system.” Beylier added that the internal audit done on their equipment did not find any foul play.

On election day itself, OT-Morpho supplied 45,000 Kenya Integrated Election Monitors (KIEMs) tablets that are used to identify voters biometrically and the Results Transmission System (RTS) software. Hence, while OT-Morpho was tasked with the provision of tablets, the transmission of encrypted data from KIEMs kits to the IEBC server was the work of three local mobile network companies, namely, Safaricom, Telkom Kenya and Airtel.

It is alleged that IEBC sub-contracted the French company to create a parallel system that gained access to the mobile network operators’ data, re-routed the data to Paris, then purportedly re-sent the figures to the IEBC server. According to people in the know, the reason why IEBC defied the Supreme Court’s order of opening its server to the judges’ scrutiny is that the server could be empty or with data that is not palatable to the public, hence lending credence to the allegation that the August 8 general election’s results were predetermined and preset.

So how is it that OT-Morpho was involved in electronic transmission? Bob Collymore, Safaricom’s Chief Executive Officer, in responding to Raila’s September 26, 2017 criticism of the company’s alleged culpability in abetting the electronic transmission malpractices, defended his company by stating: “In accordance with the contract with IEBC, all mobile companies connected their Virtual Private Networks (VPNs) and transmitted the data to the IEBC cloud servers. It was the IEBC’s responsibility to transmit results from its servers to the tallying centres (emphasis added).

This apparent “clarification” about IEBC being solely responsible for transmitting results to the tallying centres came about as a result of NASA pointing out that: “KIEMs kits were using two SIM cards. From contract provided by IEBC during scrutiny, the total SIM cards procured from the three mobile network operators combined “totalled 58,000 or thereabouts”. That is how the Safaricom position statement read by Bob Collymore, the Chief Executive Officer (CEO) put it on September 27, 2017.

This included the satellite phones. If two SIM cards were fitted in each KIEMs kit, you would have to divide the total by two. So basically only 29,000 KIEMs were fitted with SIM cards in this case. That means that only 29,000 KIEMs transmitted results.” It is noteworthy that Safaricom does not dispute that only 29,000 KIEMs were fitted with the dual SIM cards, which possibly explains why 11,000 Form 34As were not filled by IEBC’s returning officers.

It is at this point that OT-Morpho comes in. It is alleged that IEBC sub-contracted the French company to create a parallel system that gained access to the mobile network operators’ data, re-routed the data to Paris, then purportedly re-sent the figures to the IEBC server. According to people in the know, the reason why IEBC defied the Supreme Court’s order of opening its server to the judges’ scrutiny is that the server could be empty or with data that is not palatable to the public, hence lending credence to the allegation that the August 8 general election’s results were predetermined and preset. (The Elephant is on record on having written to the OT-Morpho public relations consultant Julien Tahmissian, to comment on the allegations levelled against the French company, but our email request went unanswered.)

Acting and talking tough, Beylier responded by saying that his company was going to sue unidentified people in France and Kenya for damaging “our reputation and honour.” Guns blazing, he warned: “We do not intend to become the scapegoat of the political situation in Kenya. We do not accept the reputation of OT-Morpho and its employees is tainted in any way by these allegations. This has to come to an end.”

In an interesting twist of events, Beylier had earlier pointed out on September 19 that the French firm had not signed a new contract with IEBC. Speaking to Alastair Leithead of the BBC’s Focus on Africa, he said: “We don’t have contract with them (IEBC) for the next election yet.” (He was then referring to the new election date of October 17, 2017, before it was moved to October 26, 2017.) “If we had the contract by now – and assuming that the Supreme Court does not recommend any technical change in its ruling – we would need up to the end of October to reconfigure our systems for the repeat election,” he added.

Beylier said the company was willing to open its system for scrutiny by an independent body under the authority of IEBC. But less than a fortnight later, when the chairman of the electoral commission, Wafula Chebukati, asked the company to open the servers before the upcoming fresh presidential election, OT-Morpho’s Vice President for Middle East and Africa, Olivier Charlane, promptly wrote to the commission, vehemently opposing the suggestion.

Posturing and seemingly on the offensive, Beylier said the company was willing to open its system for scrutiny by an independent body under the authority of IEBC. But less than a fortnight later, when the chairman of the electoral commission, Wafula Chebukati, asked the company to open the servers before the upcoming fresh presidential election, OT-Morpho’s Vice President for Middle East and Africa, Olivier Charlane, promptly wrote to the commission, vehemently opposing the suggestion.

“OT-Morpho would respectfully warn IEBC that opening access to servers, databases and logs prior to the election might open security weaknesses. We would rather recommend that access to server and databases be provided after the Election Day. Anyhow, logs will be shared on a daily basis with IEBC. Agents should be allowed to review them at IEBC premises only,” wrote Charlane.

Like Chiloba, OT-Morpho now ducked the issue of opening itself to an external audit, arguing that there was limited time for that kind of exercise. In the letter to Chebukati, Charlane pointed out that considering the short time left to the date of the fresh polls, it was impossible to conduct a dry-run of results transmission. “Even though OT-Morpho was and remains willing to support such a dry-run, IEBC has to realise that conducting such an operation is hogging the RTS (Results Transmission System) system for four days, so as to prepare test, run and clean the system.”

In reply to Chebukati’s terse memo to OT-Morpho on the issue of clearly displaying all the form 34B from the constituencies, Charlane said the firm would find it technologically impossible to do this given the bulky nature of the forms.

“In the current planning and considering the recent delays in receiving the SIM cards to start the KIEMS (Kenya Integrated Elections Management System) kits production as well as the latest IEBC requirement, we fear we have no room any more for such operations,” opined Charlane. In a roundabout way, what Charlane was saying in not so many words is that nothing should be done to compromise or interfere with OT-Morpho’s supposed data security.

Why would a company with such a huge reputation in digital technology and identification systems offer such flippant excuses for not accepting a reasonable request from a client? OT-Morpho’s website describes the company as, “the acknowledged expert in identification systems.” OT-Morpho used to be known as Safran Identities and Security (Morpho) until May 2017, when it sold its digital security unit and morphed into Advent International, owner of Colombes, France-based Oberthur Technologies SA and renamed the company OT-Morpho.

Deepak Kamani, was the one engaged in the passport deal, which NARC’s new corruption boys had expanded to include visa and border controls. Who was the supplier? Francois Charles Oberthur of Paris, France, then the world’s leading supplier of Visa and Mastercards.

Before Safran merged with Oberthur Technologies (OT), it dealt with supplies of systems and equipment in aerospace, defence and security. The company also sold aeroplane engines, helicopters, launch vehicles and missiles, landing and braking systems, nacelles on board electrical systems, optronics, avionics, identity documents, biometric equipment, smart cards explosives detection and trace analysis.

While Oberthur Technologies SA mainly dealt with security services, the company provided payment technology, smartcards, identity protection, authentication mechanisms conditional access management solutions. OT similarly had clients in the finance, telecom, digital and transport sectors globally. With the morphing of the two companies, they naturally combined and expanded their client base.

Dogged with scandals, in September 2012 Safran Morpho was fined the equivalent of KSh52 million (about US$520,000) for bribery by a Paris court. The company had bribed Nigerian public officials to win a contract for the provision of 70 million identity cards between 2000 and 2003. The deal was worth 170 million euros. After being slapped with the fine, Safran said that it was “deeply attached to strict respect of anti-corruption rules.”

Yet, even with this knowledge, an IEBC official was quoted at that time saying: “The deal with Safran is almost complete. It is only a matter of time.” Meaning, it is already too late to pull back. Someone must have smelt big money. Was this why the IEBC was ready to enter into negotiations with a company that had been implicated and fined in a corruption deal?

Not too long ago, IEBC had itself been caught up in a similar scandal, which was cheekily baptised “Chickengate”. The Chickengate scandal was about a UK-based security printing company that had bribed IEBC and Kenya National Examination Council (KNEC) officials to win their respective ballot paper and certificate tenders. Smith and Ouzman, based in Eastborne, Sussex, became the first company to be convicted under the Prevention of Corruption Act of 1906. Investigations found that Smith and Ouzman had paid bribes amounting to £433,062 to Kenyan officials. The key suspects were investigated by the Serious Fraud Office in the UK, yet their counterparts in Kenya have yet to face the law, or even be investigated.

When sentencing Christopher Smith, 72, and his son Nicholas, 42, in December 2014, Judge David Higgins said: “The pair were guilty of a premeditated, preplanned, sophisticated and very serious crime.” The offence, which took four years to unravel and which occurred between 2006 and 2010, was dubbed Chickengate because they had codenamed the bribe “chicken” for IEBC and KNEC officials.

Back to Safran Morpho. Safran was arraigned before a federal court of law in San Jose, California on August 14, 2016, for allegedly supplying software deemed to have originated from Russia. The case was filed in San Jose because Safran’s local subsidiary is located there.

Safran used to supply fingerprint identification systems to the Federal Bureau of Investigation (FBI), the US Defence Department and drivers’ agencies in most US states. All that time it described its technology as originating from France. However, two former company executives confessed that the technology was actually developed in Russia. The two former Safran employees – Philipe Desbois, the former Chief Executive Officer of Morpho’s Russian affiliate, and Vincent Hascoet, a deputy director of an affiliate company, Powerjet, in Moscow from July 2012 to May 2014 – told the court that the technology was actually used by Russia’s security agency and could easily be sabotaged in the event of a crisis.

Desbois, who had also served as Safran’s financial representative in Russia, and Hascoet were referred to as “whistleblowers” and “very credible” plaintiffs. In fact, Hascoet was sacked after he raised the alarm over corruption tendencies in the company. Both lived in Russia then.

Through their defence attorney, the duo said that it was “conceivable” that the software contained a “back door” that could enable the Russian government to “override” fingerprint identification devices in such strategic organisations such as the Pentagon, the CIA, the NSA (National Security Agency) and other security areas to gain unauthorised entry.

At the federal court, Morpho and its parent company Safran Group were accused of making “surreptitious sales” of more than US$1billion in Russian technology to federal, state and local governments in the US between 2009 and 2015. The suit said that Morpho and Safran defrauded the US government and the state of California by falsely claiming that their technology was from France, not Russia. In essence, they violated antitrust laws and presented false claims for payment.

The court was told that there existed a confidential 25-year agreement between the French and Russian companies signed in 2008 that included a declaration by the Russian firm Papillon ZAO that stated that its software did not contain “any undisclosed ‘back door’ or other disabling mechanisms.”

In the law suit filed by Daniel Bartley, he noted that the declaration had not been independently verified by either the French firm or any government agency. The point is, although the verification may not have mattered when checking out fingerprint identification technology, like in the issuance of driver’s licences, it would have mattered when it came to matters such as high level security.

“The national security implications are significant,” said Bartley. In agencies that require only cleared people to gain access to secure areas, “such protection could be bypassed if the technology is hacked.”

At the federal court, Morpho and its parent company Safran Group were accused of making “surreptitious sales” of more than US$1billion in Russian technology to federal, state and local governments in the US between 2009 and 2015. The suit said that Morpho and Safran defrauded the US government and the state of California by falsely claiming that their technology was from France, not Russia. In essence, they violated antitrust laws and presented false claims for payment.

In its defence, Safran Group’s US affiliate counterargued that the government agencies exercised “due diligence” in deciding not to intervene in the case. The suit “contains inflammatory and baseless allegations and lacks merit,” said the group. “As leaders of biometric industry for 42 years, we take defence of our reputation and security matters about products solutions very seriously. We are confident that we will successfully defend our case.”

Bartley, in responding to Safran, argued that their statement was “evasive” because it did not address the central claim that the technology in Safran and Morpho products was from Russia.

According to a leaked NSA report of June 5, 2017, Russian hackers gained access to the US voting system. The document talks of how Russian military intelligence, “executed cyber espionage operations against a named US company in August 2016 evidently to obtain information on election-related software and hardware solutions, according to information that become available in April 2017.”

The company in question is suspected to have been Safran. President Vladimir Putin opined that “patriotically minded” Russian hackers may have been behind the cyberattacks during the 2016 US elections.

On September 30, 2017, OT-Morpho rebranded itself to IDEMIA, possibly in an effort to look and sound different as it polishes its image and re-positions itself as a global leader in digital technologies. (The Supreme Court of Kenya had dealt the company a “credibility blow” when it questioned the electronic transmission of the August 8 results.)

It is suspected that this sudden rebranding by the company is not a mere coincidence; it coincides with its signing of a new contract with IEBC. Together with its alleged past scandals, and with the world closely watching its behaviour and performance in Kenya, the company must have been concerned that its global reputation had been tainted. What better way to remain in a competitive and highly lucrative business than to rebrand?

By Dauti Kahura
Mr Kahura is a freelance journalist based in Nairobi, Kenya

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Mr Kahura is a senior writer for The Elephant.

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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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