Bulgarian Companies, Institutions and Politicians in ‘Troika Laundromat’

About EUR 130 million has been wired to Bulgarian accounts from more than 150 offshore companies associated with the “Troika Laundromat” – a money laundering system that has allowed corrupt politicians and organized criminal figures to secretly launder money, evade taxes, hide assets abroad, and carry out other illegal activities. Among the big Bulgarian “beneficiaries” are the Governor of Burgas Region Valcho Cholakov, companies for construction of holiday properties, Russian citizens acquiring real estate in Bulgaria, the coastal Tsarevo municipality and even the Bulgarian Embassy in Moscow. The money has been wired by companies linked to high level frauds, including the infamous Magnitsky case.

Bivol, as a partner of the Organized Crime and Corruption Reporting Project (OCCRP), is involved in the analysis of one of the largest releases of banking information ever, encompassing more than 1.3 million leaked transactions from 233,000 companies and involving over EUR 300 billion, mainly from Ukio Bankas, a troubled Lithuanian bank which was closed in 2013, but also from other banking institutions in the Baltic States. As in previous investigations such as “Russian Laundromat” and “Azerbaijani Laundromat”, the “Troika Laundromat” reveals a system of connected shell companies with offshore incorporation, registered to frontmen. The transactions have been mostly bogus, supported by fake paperwork describing the trade of non-existent goods to bypass money laundering and transfer huge sums of dubious origin from Russia to European countries.

According to the investigation by the OCCRP and its 21 reporting partners from around the world, some of these companies are under the control of Ruben Vardanyan, a Russian/Armenian billionaire, investment banker and former owner of Troika Dialog, once Russia’s largest private investment bank. In an interview with OCCRP, Vardanyan claims he has done nothing wrong and describes his system as a “private wealth management service,” and the offshores as “technical service companies of Troika Dialog clients”.

Nevertheless, behind these “technical services” lies a large-scale criminal money laundering scheme facilitated by weak bank supervision in, both, the Lithuanian banks through which the money has flowed to the European banking system and large correspondent Western banks receiving payments from suspicious offshores without asking questions.

Holiday properties against “consumer goods” and “textiles”

When in 2009, Russian entrepreneur S.R. and his wife bought a luxury apartment in the Black Sea city of Burgas from a private person, they did not pay personally a penny. The amount of BGN 205,000 has been transferred to the seller’s account in four installments by a company named PHARMEL TRADE. The reason for the payments is listed as “for consumer goods”, which has nothing to do with the real deal.

The same company has transferred more than EUR 1.9 million to Bulgaria for the period between July 2007 and November 2010. It has paid hundreds of thousands of euros for transportation services, including aviation charges for Air Traffic Control. In December 2008, it transferred “for consumer goods” over EUR 370,000 to the Bulgarian account of A.B., a wealthy Russian businessman who in 2009 acquired an apartment in the Black Sea town of Sozopol for BGN 285,000. Also in December 2008, two other Russians received in their Bulgarian accounts EUR 383,000 “for textiles” and EUR 390,000 “for clothing”, although they both do not have such a business in Bulgaria. But they have luxury properties on the Black Sea coast.

Other offshore companies from the “Laundromat” have performed similar property payment transactions. For example, not one, but two offshore companies have paid the apartment in the winter resort of Chepelare of Russian national A.K. – OKRA ENTERPRISES LIMITED and CEDALE HOLDING CO S.A. Both have transferred money to the accounts of the major financial distributors controlled by Ruben Vardanyan: GOTLAND INDUSTRIAL BRIGHTWELL CAPITAL INC and NIXFORD CAPITAL CORP.

One explanation for these payments through offshore companies is that wealthy Russians do not want to wire personal money via bank transfers because they probably cannot prove their origin in their native country. Or, if their money is honestly earned, they do not want the Russian authorities to find out that they are acquiring property abroad. Or both. In any case, by resorting to the “technical services” of the “Troika” system, they manage to bypass these problems.

According to the OCCRP and partner media investigations, “spare parts” and “consumer goods” are customary justification for banking institutions, and in many cases, the shell companies also offer fake invoices. In fact, this is laundering of money of criminal origin, and in some cases financial flows can be traced back to the originator.

Dirty money for the partners of the best man of influential Bulgarian politician

Another company that often transfers money to Bulgaria, including payments for apartments, is MEISTER DEVELOPERS. It is well known from a previous scandal involving two hundred million dollars in the Sheremetyevo Airport fuel fraud. The investigation into this theft began on Russian President Vladimir Putin’s personal order in 2009. According to Russian prosecutors, a significant amount of stolen money – over USD 60 million – went to this offshore company.

The same company has paid the apartments in Chepelare of several Russians and has wired nearly EUR 100,000 for mysterious “marketing services” by SLE Group and its subsidiary LS Group. SLE Group of Lachezar Bogdanov and Stanimir Stoyanov “rose to fame” over the “Dunes Gate” scandal and their joint venture with Todor Boyadzhiev, the best man of the Deputy Chairman of the ruling Citizens for European Development of Bulgaria party (GERB), then Deputy Prime Minister and Minister of Interior, Tsvetan Tsvetanov. However, the payments for the marketing services have been made in 2009-2010 – two years before the scandal with the dunes. MEISTER DEVELOPERS has sent in total over EUR 420,000 to Bulgarian accounts.

Companies from the scandal Magnitsky

In 2009, when he was still a lawyer, the local leader of the right-wing Union of Democratic Forces (UDF) in Burgas, Valcho Cholakov, received two tranches from LITON SECURITIES – EUR 54,000 on June 6, 2012 as a payment under a preliminary contract and on July 9 – EUR 141,655 under a contract from May 18, 2012.

Bivol contacted Valcho Cholakov, who said it was a lawyer’s account. He did not want to reveal who this money was intended for, referring to the lawyer-client secret.

LITON SECURITIES is part of the proxy network around DELCO NETWORKS S.A., with which Sergey Roldugin, the Russian cellist of Panama Papers, who is one of Putin’s oldest friends, has financial relations. Putin’s favorite cellist has received money from an offshore company at about the same time it was being used to steal money from the Russian government in the notorious Sergei Magnitsky case, reveals an earlier investigation by the OCCRP. Some of the USD 230 million stolen from the Russian Treasury, discovered by Magnitsky, a Russian lawyer working for Hermitage Capital, have passed through DELCO NETWORKS S.A.. Magnitsky died in custody in 2009 and gave his name to the US Magnitsky Act.

The company EVIAC HOLDING LTD., registered in Belize, which has also laundered money from “Magnitsky”, has been especially active in Bulgaria. It has paid for real estate and various services over EUR 1.5 million. The most intriguing transfer is in the amount of EUR 55,000 for “Petko Arnaudov-municipalityitet Tsarevo Acc to Inv N201006-1 dd 04.06.10” for the “art-spatial registration of a museum exhibition of the Historical Museum of Municipality Tsarevo”.

The account number shows that this has been a payment to the municipality and not to its former Mayor Petko Arnaudov. The town hall of Tsarevo ignored repeated inquiries by Bivol, sent to its official e-mail address, about what were the exact services or sponsorship of the museum, what is “art-spatial registration” and to whom exactly the invoice had been issued. At that time, the Tsarevo museum was managed by Petko Arnaudov’s wife, Yagoda.

Another company that has laundered millions from “Magnitsky” also has transactions to Bulgaria – ZARINA GROUP has transferred EUR 22,000 to the account of H.B.V. in Raiffeisenbank.  The noted reason is a loan agreement.

The former lawmaker from the Bulgarian Socialist Party (BSP) Krasimir Premyanov has received the modest amount of EUR 5,000 for legal services under contract 18/A0877834 from June 24, 2010. They came from DONCASTER LIMITED, which is also financially linked to the “Troika”. Premyanov was not found for comment.

Bulgarian Embassy in Moscow also sold “spare parts” and “consumer goods” to the Laundromat

Among the most bizarre bank transfers that Bivol discovered are the money for the Bulgarian Embassy in Moscow paid by the PHARMEL TRADE companies mentioned above and by INTERWEST ALLIANCE LIMITED.

These are eight transfers totaling USD 408,120.00, which the Embassy has received between February 2006 and November 2007. Two contracts are listed as grounds for the wires – CNTR 167 / SPAR-KY / 01 DD 06.02.2006 FOR SPARE PARTS and PMNT CNTR 072 / SPAR-KY03 DD 20.08.2006 FOR CONSUMER GOODS.

In the same period, INTERWEST ALLIANCE has managed to buy spare parts and apartments for EUR 320,374 in Bulgaria and to spin EUR 6 million to and from other companies from the “Troika Laundromat”.

Bivol sent questions to the Ministry of Foreign Affairs (MFA) about exactly for what spare parts and merchandise our Embassy in the Russian capital has received this money. The press office of the Ministry announced that a probe has been ordered in connection with these data into the bank and the Embassy.

Regarding the investigation “Troika”: OCCRP’s reporting partners on this project were ICIJ, the Guardian, Süddeutsche Zeitung, the BBC, The Globe and Mail, Newstapa, Hetq, investigace.cz, Platform Investico, Trouw, Groene Amsterdammer, Profil.at, El Periodico, Addendum, Bivol, Berlingske, the Finnish Broadcasting Company, 15min.lt, Knack, Novaya Gazeta, and Termedia.

Headline illustration: OCCRP


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