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SHAKING HANDS WITH THE DEVIL: Kenyans’ views on the Raila-Uhuru pact

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SHAKING HANDS WITH THE DEVIL: Kenyans’ views on the Raila-Uhuru pact
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On March 9, 2018, at around 1.00 pm, Kenya’s tepid political weather experienced a sudden and powerful jolt when President Uhuru Kenyatta, the country’s elected president, and his political opponent, Raila Odinga, the so-called “People’s President”, were shown walking together and shaking hands on the stairs of Harambee House. The fiercest protagonists of the recent bare-knuckle political contest had met and were photographed at the seat of government offices, smiling and walking side by side.

On seeing Raila’s entourage enter the Office of the President, Njee Muturi, the Deputy Chief of Staff, is reported to have told Junet Mohammed (one of the politicians who had accompanied Raila): “When I see you people here and being welcomed like this, I am not even sure my job is safe anymore.” The others who accompanied Raila on this unexpected visit were Raila’s daughter, Winnie Odinga, Paul Mwangi, his legal advisor, and Andrew Mondoh, a former Permanent Secretary in the Ministry of Special Programmes, a ministry created during the coalition government of Mwai Kibaki and Raila Odinga.

“Our future cannot be dictated by the forthcoming election,” stated President Uhuru Kenyatta as Raila stood beside him. The next general election is slated for 2022 – barring a constitutional crisis or political tsunami. “Prosperity and stability…and the well-being of our people” is what should dictate that future, said the president. Raila, echoing Uhuru’s statement, said: “My brother and I have therefore come together today to say this descent stops here,” It was instructive that Deputy President William Ruto was not a witness to the handshake that brought to an end a bitter rivalry that began five years ago during the 2013 election.

Many Kenyans across the political divide welcomed “the handshake” even though at least half the country was still nursing wounds precipitated by the 2017 elections that had deeply polarised the country: the “Jubilants” vs “ the Nasarites”, the Kikuyus/Kalenjins vs Luos, the centrists vs secessionists, the pro-establishment vs the anti-establishment. Although the National Super Alliance (NASA) opposition coalition is made up of a conglomerate of ethnic communities, the Jubilee Party and the government had politically profiled NASA as a Luo affair in the lead-up to both the August 8 and October 26 elections last year. This was evident in the violence that was visited upon Luo youth by the state, especially in the lakeside town of Kisumu.

Many Kenyans across the political divide welcomed “the handshake” even though at least half the country was still nursing wounds precipitated by the 2017 elections that had deeply polarised the country.

In the years to come, body language experts will study the video clips of the Uhuru/ Raila handshake and unravel what was going through the protagonists’ minds and what their bodies were communicating to each other and to the outside world.

Raila’s first stop after the handshake was at the Kondele ghetto suburbs in Kisumu, and not, as would have been the norm, at the sprawling Kibera slum in Nairobi, home to his most fanatical and loyal urban support base. Many of the Luo youths who were killed by the state’s paramilitary machinery were from Kondele, a bastion of militant Luo youth.

John Okoth from Kondele called to tell me: “Baba [the moniker given to Raila by his supporters] came over this evening and gave us assurance that families that lost their sons would be compensated. He begged us to listen to him. But I can tell you the youths are still in a militant mood.” Okoth said that not everyone in Kisumu was convinced or happy or even knew how to react to the handshake. “The people are confused and divided about it. Their one big question is: So after the beatings by the state’s violent apparatus, the killings of youth, then the handshake comes. That is so confusing.”

The unanticipated handshake has spawned conspiracy theories; many believe that there was a secret pact between the two whose contents may never be known. “As long as it is only a few Kenyans who were privy to the events that led to the handshake, we will for sure never know what actually transpired between Uhuru and Raila,” said a National Intelligence Service (NIS) officer who knows both leaders well.

Talk within the corridors of power suggests that the relationship between President Uhuru Kenyatta and his deputy, William Ruto, has been frosty recently. An incident that took place at Harambee House on the day of the great handshake could be a pointer to this ostensible mutual distrust. As journalists were waiting for President Uhuru Kenyatta and Raila Odinga outside the building, the Recce Squad that guards the building noticed a lone policeman also hanging around. Some of the Recce paramilitary approached him and asked him: “Na wewe ni nani na unataka nini? Kwa nini unaoneshana bunduki? Toka hapa mara moja, tusikuoane hapa tena” (Who are you and what do you want? Why are you exposing your gun? Get out of here). Apparently, the policeman had his pistol holster strapped on. The policeman walked away quietly.

Another theory is that Kalonzo Musyoka, Musalia Mudavadi and Moses Wetangula – Raila’s co-principals in NASA – had planned to defect to Jubilee on the Saturday before at Sugoi, Ruto’s Eldoret home. The plan was to welcome them with fanfare in Ruto’s local political base, which would send the message to Uhuru, Raila and Ruto’s Kalenjin constituency that Ruto was on top of his game and, in a manner of speaking, had hit the ground running. If this theory is true, dismantling the assiduously crafted opposition coalition would have been a feather in Ruto’s cap. The high-profile defections would have sent a message to Raila that he was now truly on his own and that it was time for him to pack up and retire. To President Uhuru, the message would have been different: “Look, I have started consolidating my base and troops – you will have no choice but to support me in 2022.” To his Kalenjin people, it would have indicated that Ruto was still their best bet for capturing State House. (Indeed, the day after the handshake, Ruto made a trip to Uasin Gishu County, probably to reassure his base that all was well.)

In such a scenario, the handshake then would have been a presumptive strike meant to forestall and pre-empt Ruto before he upstaged both President Uhuru and Raila. “Both Uhuru and Raila are agreed on one thing – Ruto would not be good for this country. He is a warlord, a destructionist who doesn’t mean well for the country,” claimed the NIS officer who cannot be named because he is not authorised to speak to a journalist.

“The handshake was a zero-sum game,” he said. “There were clear winners and losers and it does not take much guesswork to know who won and who lost.” Since the handshake, Ruto has been agitated and frantic while his base, the Kalenjins, have been confused, said the NIS man. After calming his base, Ruto quickly headed to the coast region, a stronghold of Raila’s Orange Democratic Movement (ODM) support outside the western region, to incite and offer political promises to those he knew had also been stunned by Raila’s move.

“Both Uhuru and Raila are agreed on one thing – Ruto would not be good for this country. He is a warlord, a destructionist who doesn’t mean well for the country,” claimed the NIS officer.

“Handshake or no handshake, we will not hand over the leadership of this country to the lake Nilotes” said Farouk Kinuthia, a 56-year-old Kikuyu who, although startled by the political rapprochement, hoped it would, at the very least, result in a better business environment. A “tenderpreneur” whose major business is cutting deals with respective national ministries’ bureaucrats, Farouk decried how business had dried up and how the last payments tenderpreneurs like him had received were in April 2017. His interpretation of the handshake was that President Uhuru’s best option in the prevailing circumstances had been to “tame the shrew”. “Raila is a wily politician who must be kept at close quarters, as we observe him and get to know what could be his real intentions. We still intend to vote for William Ruto in 2022.”

Members of the ethnic Kikuyu community, to which Uhuru belongs, know that without a Kikuyu-Kalenjin alliance, the fate of Kikuyus in the Kalenjin-dominated Rift Valley is at stake. Memories of the post-election violence in 2007/2008 that targeted Kikuyus in the Rift Valley still haunt them. The union of Ruto and Uhuru prior to the 2013 elections was motivated not just by the fact that both politicians faced crimes against humanity charges at the International Criminal Court, but that they belonged to communities that have been at war since the 1990s, when President Daniel arap Moi, a Kalenjin, orchestrated ethnic clashes between the Kikuyu and the Kalenjin.

“The Kikuyu people were both shocked and relieved with the handshake. Shocked because the Kikuyu who have over time become politically intolerant of any opposition to their Uhuru Kenyatta and in essence to any force opposed to Kikuyu political dominance, did not anticipate him patching up with Raila, a man Uhuru had fought tooth and nail to retain the presidency – at whatever cost,” said a Central Kenya politician who is well acquainted with  both President Uhuru and Raila. “Already torn between throwing their support behind Deputy President William Ruto and finding their own [Kikuyu] successor to President Uhuru, the Kikuyus are at a crossroads politically. With an exiting President Uhuru, who constitutionally cannot run for another term, and with a presumed ‘political debt’ hanging over them that they owe Ruto, the Kikuyus are faced with unprecedented political uncertainty for the first time,” said the politician, who served in President Mwai Kibaki and Prime Minister Raila Odinga’s coalition government between 2008 and 2012.

“Uppermost in their minds, is how they will secure their political insurance once President Uhuru is gone. Split between settling a debt (grudgingly and however painful it is) and charting their own political path – meaning finding a Kikuyu politician to back for the presidency come 2022 – the Kikuyus will welcome any political move that will free them from their anxieties and from skipping a debt that was painfully imposed on them.”

Groups of Kikuyu men and women in Kiambu and Kikuyu towns in Kiambu County were categorical that the handshake did not now mean “that we [Kikuyus] can hand over the reins of power to Raila,” and by extension, to the Luos.” They reminded me of the prophesies of Mugo wa Kibiro, a great Kikuyu seer, some of which are related in Jomo Kenyatta’s anthropological treatise, Facing Mt Kenya. “Ruriri rwa Gikuyu ni rukanyarirwo in karuriri kanini kwa ihida, no nimagacokerio utongoria wa bururi”. In essence, they were saying that Mugo had prophesied that the Kikuyu would be dominated by a small tribe for a while. In their chauvinistic interpretation of the seer’s vision, that “small tribe” referred to the Tugen, former President Moi’s ethnic community. But after that, the Kikuyu would retake the leadership of the country and would not again cede it.

“Does it mean now we are friends with the Luos?” asked a middle-aged Kikuyu businessman. “It is really already too late for anyone to tell us to vote for a Luo. Raila’s name is too besmirched politically among the Kikuyus for them to even contemplate voting for him. The Kikuyu people cannot trust him. This position has been entrenched by Uhuru Kenyatta himself who told us that if Raila assumes the presidency, he will come for us.” The businessman said the handshake had introduced a new variable, but he was still convinced that many Kikuyus would rather vote for Ruto in the absence of not having one of their own candidates.

“With an exiting President Uhuru, who constitutionally cannot run for another term, and with a presumed ‘political debt’ hanging over them that they owe Ruto, the Kikuyus are faced with unprecedented political uncertainty for the first time,” said the politician.

Following the second presidential election of October 26, 2017, among the most economically hard-hit Kenyans were the Kikuyus. Their businesses have hit rock bottom and a majority of their youth are jobless and remain unemployed – a trend that even the political elites are concerned about.

A friend who is a stockbroker and who works for a securities firm surprised me when he told me that his firm had to move from their posh offices in downtown Nairobi because business was really bad. Many Kikuyus have invested in stocks and bonds; some of them have been trading for the last 50 years. Between August 2017 and March 2018, a mzee from Murang’a, who has been trading in shares since 1966, told me times had never been so bad and hard. He claimed to have lost millions of shillings in six months.” On the day of the Uhuru-Raila handshake, the shilling appreciated against the dollar, suggesting that the market was responsive to the political détente.

A Central Kenya politician said that the NASA-instigated boycott of products and companies associated with Uhuru Kenyatta and his Jubilee party had threatened to destabilise many of the businesses operated by Kikuyus around the county, be they long-distance buses that travel to western Kenya and the coast region or retail shops that sell Brookside Dairy products and Safaricom accessories. In just one short month, the blockade had inflicted a serious “profit dent” on Brookside Dairy Ltd (President Uhuru Kenyatta’s family-owned business), especially in western Kenya and some parts of Nairobi.

Even today, as I write, it is not easy to find a retail outlet in western Kenya that openly sells Brookside milk. Peterson Njenga, a tax consultant from Kikuyu town who has been doing some work in western Kenya recently, told me. “Once I asked for Brookside milk from a kiosk and the shopkeeper looked at me like I had asked for salmon fish,” said Njenga. “I was quietly informed the milk is an ‘illegal’ item in that part of the world. It almost sounded like it was contraband. I got the impression that shopkeepers stocked Brookside Dairy products at their own risk.”

But the Kikuyus are not resting easy just yet. A more worrisome question that is being discussed in hushed tones is: What if Raila swallows Jubilee the way he swallowed KANU [President Moi’s party that ruled with an iron fist for 24 years)? This is the talk in Kikuyu-owned restaurants, eating joints, social gatherings and homes. “This man Raila has a way of calming things down. Look the country is a lot less tense and at peace. But what is he up to? Does anybody for sure know? His ulterior motive must be checked and countered,” they say.

After losing to President Moi in 1997, when he contested the presidency for the first time on a National Democratic Party (NDP) ticket, Raila joined the ruling KANU party soon after. However, midway, when Moi was furtively crafting his successor within the party hierarchy, Raila broke ranks with some of his closest loyalists when he settled on a neophyte Uhuru Kenyatta as KANU’s presidential candidate, which necessitated an open revolt.

Raila, who led the rebellion, marshalled support internally and wrecked KANU’s stability, which has seen the party never recover to date. NDP’s symbol was a tractor while KANU’s was a cockerel. “Has the cockerel crowed again ever since it was swallowed by the tractor? Our people, let us be cautious with this handshake, even as we welcome it,” said an elderly Kikuyu. The mzee said that after the cockerel’s crow was choked, KANU was confined to Baringo area and pretty much nowhere else. (Baringo is President Moi’s ancestral home.)

Joseph Kamotho, the then the Secretary-General of KANU, was so riled by this merger and his deposition from his influential seat that he publicly berated his boss President Daniel Moi for the first time, something that he had never done since Moi politically rehabilitated him in 1989, after the “Sir” Charles Njonjo traitor saga in 1983, which led to the sacking of Kamotho. In an interview I had with Kamotho thereafter, the Moi loyalist told me: “Moi will one day come to regret KANU’s dalliance with NDP.” Kamotho was, of course, upset because his powerful party position had been taken away by his political nemesis, but it is also true KANU was never the same again after the entry of Raila and NDP.

A more worrisome question that is being discussed in hushed tones is: What if Raila swallows Jubilee the way he swallowed KANU?

Yet, overnight, in a space of 24 hours, Raila’s narrative among the Kikuyus – of being a political dinosaur – had changed, at least on the Kikuyu-language Kameme and Coro FM stations. (The former is owned by the Kenyatta family and the latter by the national Kenya Broadcasting Corporation (KBC) that had spent the better part of the campaign period lampooning Raila Odinga as a man whose sell-by date had expired.) During the weekend of the handshake, the stations’ respective political commentators and presenters were extolling Raila’s old age as a political virtue and his stature as that of a sage. “Niwamenya Raila niwe uranyitereire Opposition….eta muthuri wina experience ki siasa, niekuhota kutaraniria na Uhuru maundu makonie thirikari.” (You know Raila was the fulcrum of the Opposition…as an elder statesman, experienced in the art of politics, he will work very well with Uhuru in shaping the government.) The stations were effusive with praise for Raila’s political mastery, discovering suddenly that within the NASA fraternity his ODM party was the most popular and influential, with the most MPs even in areas that were not traditionally considered ODM zones.

“Raila is revered almost like a deity,” said a group of Luo elders to me. “Even when he does something we the Luo people do not understand immediately, we cannot publicly berate him. We will complain among ourselves and that is it.” In fact, some Luos from Nairobi told me tongue in cheek: “We had the tyranny of numbers when it came to the youths killed in the aftermath of both elections – we endorse the handshake.”

Not so fast, says Steve Owiti, a businessman from Nairobi. “Raila has been lured into the belly of the beast,” said Owiti, who is still seething with anger. “He never seems to learn from his political mistakes. We have faithfully stuck with him through thick and thin, we have been beaten and killed on his behalf, we have sacrificed time and money as we gave him our unfettered support, only for him to go and shake the devil’s hand. Is Raila now telling us that it is okay for the votes that we usually give him to be perpetually stolen and do nothing about it?” posed Owiti. He told me he would never vote again – not for Raila, not for any politician.

On a more sober and practical note, Otieno Ombok, a peace and conflict resolution practitioner, told me that western Kenya had been hit with hard economic times since August 2017 and that the pact between Raila and Uhuru was necessary to revive the economy there. “I was in Siaya County in the festive month of December and believe it or not, there are homes that did not have food even on Christmas Day. Five months of street demonstrations had meant that there were no meaningful economic activities that took place since the contested August 8 elections.”

“Raila has been lured into the belly of the beast,” said Owiti, who is still seething with anger. “He never seems to learn from his political mistakes. We have faithfully stuck with him through thick and thin, we have been beaten and killed on his behalf, we have sacrificed time and money as we gave him our unfettered support, only for him to go and shake the devil’s hand.”

Something else had taken a turn for the worse: “When NASA called for the economic boycott on Bidco Oil, Brookside Dairy and Safaricom companies, Safaricom kiosks selling airtime cards and accessories closed shop in the whole of western Kenya; the little income generated by these retail trading was no more,” said Ombok. “Coupled with a ‘resist’ mood that had pervaded the region, especially in the Luo counties of Kisumu, Migori and Siaya, the people were in for real economic hard times.” Around this time, Luo youth brought down two Safaricom masts in Migori County in November 2017, an incident that was not reported in the mainstream media. “Despite threatening economic meltdown in their own counties, the youth, who were ready for more destruction and war, had no choice but to welcome the handshake,” pointed out Ombok.

A security expert working in the Office of the President, who cannot be named because of the nature and sensitivity of his work and because he is not authorised to speak to journalists, told me: “What we saw on March 9 … is quintessential Raila. In 1997, after he ran for the presidential seat for the first time and came fourth on an NDP ticket, he formed an alliance with the ruling party KANU. He collapsed NDP, joined KANU, became its powerful Secretary-General and was even made a powerful Minister of Roads. After the 2007 general elections, which resulted in post-election violence, and after many people were killed, Raila, in a much publicised truce, shook hands with Mwai Kibaki and was made a Prime Minister, albeit a non-executive one. Now he has again shaken hands with Uhuru. In all three instances, the ruling elite have understood one overriding logic: Raila is better off peeing outside from inside, rather than peeing inside from outside.”

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Mr Kahura is a freelance journalist based in Nairobi, Kenya.

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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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