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Massive Investigative Report Documents Kremlin-Linked Shell Companies

The building where the office of Panamanian law firm Mossack Fonseca is located in Panama City, on April 3.
The building where the office of Panamanian law firm Mossack Fonseca is located in Panama City, on April 3.

An international consortium of investigative reporters has documented a vast network of shady money transfers used by close associates of Russian President Vladimir Putin to funnel more than $2 billion into offshore shell companies.

The information was released on April 3 as part of a massive new report called The Panama Papers, examining scores of world leaders and public officials around the world, and a system of money transfers and secretive corporate registries that enable vast sums of money -- often ill-gotten -- to be hidden away from law enforcement and regulators.

Published simultaneously by multiple news organizations in multiple languages, the materials also link companies controlled by the prime ministers of Iceland and Pakistan, the children of Azerbaijan’s president, the king of Saudi Arabia, and many others.

The information stems from millions of e-mails, spreadsheets, corporate records, and others materials leaked from Mossack Fonseca, a Panama-based law firm with representatives in dozens of countries that specialize in setting up shell companies, the report said.

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The leaked data was initially provided to the German newspaper Suddeutsche Zeitung. It was then shared with the International Consortium of Investigative Journalists, based in Washington, which collaborated with media outlets across the world over the course of a year to organize, analyze, and publish the materials.

Scores Of Top Officials Implicated

A total of 140 leaders and public officials appear in the leaked materials, along with more than 210,000 corporate entities. The materials span nearly 40 years, the report said.

In its accompanying text, the International Consortium, known also as the ICIJ, said many of the complex offshore companies and transactions used were considered legal if used by law-abiding individuals and entities.

But, it said, banks, law firms, and others involved in setting up offshore shell companies often failed to fully investigate clients to ensure they were not involved in illegal activity, tax evasion, or corruption.

One of the report’s assertions was that a St. Petersburg musician who is an old friend of Putin’s has amassed a $100 million fortune. The man, an accomplished classical cellist named Sergei Roldugin, owns a 12.5 percent stake in a company that dominates the market for television advertising in Russia, the report said, and Roldugin also holds a 3.2 percent stake in Bank Rossiya.

Bank Rossiya, in turn, is controlled by another longtime Putin friend, businessman Yury Kovalchuk, who, along with the bank itself, is under U.S. sanctions for the Kremlin’s annexation of Ukraine’s Crimea Peninsula in 2014.

The report said Kovalchuk and his bank used an offshore entity in Cyprus known as Sandalwood to receive up to $1 billion in unsecured loans from a state-controlled bank. Those funds were then used to issue high-interest loans back in Russia, and some of those profits ended up in Swiss bank accounts.

Sandalwood also had financial ties to a ski resort in the St. Petersburg region where Putin’s daughter Katerina was married, The Panama Papers reported, and also said Roldugin was a shareholder until 2012.

Russian media have also identified Roldugin as the godfather of Putin’s other daughter, Maria.

Numerous other top-level officials in the Russian government were also implicated by the leaked documents. The wife of Kremlin spokesman Dmitry Peskov, the son of Economic Development Minister Aleksei Ulyukayev, former presidential administration official Ivan Malyushin, Deputy Moscow Mayor Maksim Liksutov, the nephew of Security Council Secretary Nikolai Patrushev, the son of Deputy Interior Minister Igor Zubov, the wife of Pskov Oblast Governor Andrei Turchak, and Chelyabinsk Oblast Governor Boris Dubrovsky were all tied to various offshore companies.

Four members of the Russian parliament were also implicated.

ALSO READ: Panama Leaks Implicate Family Of Azerbaijan's Aliyev

The report’s authors said they sought comment from the Kremlin but were refused. Last week, however, Kremlin spokesman Dmitry Peskov told Russian reporters that foreign reporters were preparing to smear Putin, and he specifically named the ICIJ.

Other heads of state whose names appear directly or indirectly in the report include Ukrainian President Petro Poroshenko, Azerbaijani President Ilham Aliyev, and Kazakh President Nursultan Nazarbaev.