Assad’s Money Hidden in Russian VTB Bank

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The US sanctions on Syria and Iran harm Russian business, said Russian Foreign Minister Lavrov last Saturday, after meeting with US Secretary of State Hillary Clinton in the Russian port city of Vladivostok. He pointed out that Russian banks have been particularly affected.

Are Russian banks operating with Syrian money in such quantities that the sanctions could harm them? An email addressed to Mr. Sergey Avakov, Managing Director of Financial Institutions in JSC VTB Bank, is giving at least a partial answer. The following message, originating from a Syrian official mailbox, and revealed to Bivol by a hacker’s group, apparently confirms Lavrov’s words:


ATTN: Mr. Sergey Avakov Managing Director Financial Institutions JSC VTB Bank 
Dear Mr. Avakov,

In reply to your message dated 26.10.2011 please be informed that following your good bank’s proposals, which we have received previously, we have raised the total amount of deposits up to more than EUR 2 bln. Please note that the matter of extending the terms of the Central Bank of Syria existing deposits at the moment remains under consideration. We shall inform you accordingly when any decision in this regard is taken.

Meanwhile, we kindly ask you to open an account in Russian rubles in the name of our bank or provide us with your instructions on the actions that we should take in order to open such an account.

We remain in anticipation of your reply and look forward to expanding our fruitful cooperation.


The message is not dated and the author’s name is not disclosed by the source, thus it can’t be fully authenticated. Such message is not found in the 2.5 mln Syrian emails released by Wikileaks in July, but our source claims it has originated from a security breach in one of the Syrian Internet servers.

Mr. Avakov, reached by phone, refused to answer any questions and directed our reporter to the Press office of VTB. Bivol’s written request for comment sent to the VTB’s press office remains without answer.

However, the message content has been corroborated by later media reports.

Syria and Russia’s “special relationship” has been also investigated by Financial Times.

“While western banks have cut ties with Syria because of sanctions, Russian financial institutions such as VTB, Vneshekonombank, and Gazprombank are reported to be working normally.” FT wrote on July 9.

Financial Times is quoting Mohammad al-Jleilati, then Syria’s Finance Minister, saying in May that Russia had “given us a hand, especially in the financial sphere”.

“Syria’s regime laid plans to use Russian banks as part of an emergency effort to sidestep American and European sanctions on oil and financial transactions, according to Syrian government documents and correspondence reviewed by The Wall Street Journal,” The Wall Street Journal wrote in August.

The report is referring to a cache of documents, appearing to be authentic correspondence between Syrian government officials and certain foreign companies. The WSJ documents span a period from March until early July 2012, six months after the email to Mr. Avakov.

One month after the date mentioned in the email (10.26.2011), three Russian vessels led by the heavy aircraft-carrying missile cruiser Admiral Kuznetsov headed to the Syrian port of Tartus.

At the time of the writing of the email, the EU countries have been implementing sanctions against the Commercial Bank of Syria (October 14, 2011). On February 27th 2012, the EU countries imposed an asset freeze on the Syrian Central Bank.

VTB to buy strategic telecom infrastructure in Bulgaria

The Russian VTB bank (Vneshtorgbank), allegedly holding the Syrian money, has an investment banking arm named VTB Capital, having offices in many European countries. In May 2012, VTB Capital opened a branch in New York. The Russian State owns 75.5% of the company.

On July 30, the Russian newspaper Kommersant reported that the Bulgarian lender Corporate Commercial Bank, CCB, and its Russian peer VTB Capital have agreed to take over debt-ridden Bulgarian telecom company BTC, which operates under the brand name Vivacom.

The deal is expected to be wrapped up in September. VTB Capital, a VTB Bank subsidiary, declined to comment, as reported by

Hong Kong telecom and media tycoon Richard Li’s PineBridge Investments currently owns a 94% stake in Vivacom, while the rest is being offered on the Bulgarian stock market. If all options are exhausted, senior lenders will be able to exit their loan positions after investors pay a total of EUR 617 M.

The Bulgaria subsidiary VTB Capital is headed by former Finance Minister Milen Velchev. Asked by phone about the origin of the money for the Vivacom deal he refused any comments and also directed our reporter to the VTB Press office.

Vivacom inherited the infrastructure of the former Bulgarian state telecom and most of the voice and internet traffic flows through its optical backbones

Circumventing the EU Sanctions?

As a part of the restrictive measures on Syria of the EU countries, in force since April 24 2012, “the assets of the Syrian Central Bank within the EU are frozen and it is prohibited to make funds or economic resources available.” There is a prohibition for Syrian financial institutions to open new branches or subsidiaries in the EU or to establish new joint ventures or new correspondent banking relationships with EU banks. Member States are to restrain short and medium term financial support for trade with Syria, including export credits, guarantees and insurance. No more long-term support.”

However, there are no limitations for Russian banks, holding Syrian money, to invest in Europe, even when buying telco infrastructure, critical for the national security of a Member state, as the Vivacom deal demonstrates.

Bivol sent an inquiry to the Bulgarian State Agency for National Security, to the Commission for Communications Regulations and to European Commissioner for Digital Agenda, Neelie Kroes, to establish if sources of financing for the purchase of Bulgaria’s telecom have been probed, since according to our own data they might be in breach with the embargo.

CCBank – a “bad apple”

CCBank, headed by Tsvetan Vassilev, holds nearly half of the deposits by State-run companies and is widely known as the government’s darling.

In a secret report from Ambassador Beyrle, sent to Washington on in December 2006 and revealed by Wikileaks, the CCBank is ranked “bad apple,” together with 7 others Bulgarian banks, whose practices are repeatedly cited as questionable or shady: “funneling money for known criminals in money laundering schemes and involved in connected lending”.

“The state-owned National Electric Company, which conducts non-transparent electricity sales through middle-men such as Manchev and Kovachki, deposits its funds there. The main shareholder of the this bank is Bromak Ltd., owned by Tsvetan Vassilev, which in 2004 was involved in a controversial privatization deal when it purchased the Sofia State Railway Plant for far lower than its market value.” – Beyrle wrote.

Tsvetan Vassilev is also known as the financier of the shady Bulgarian media empire of mother and son, Irena Krasteva and Delyan Peevski, who own several pro-government newspapers and TV stations.


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