Shady dealings at Swedbank Estonia worth €180 million

Swedbank.

PHOTO: JANERIK HENRIKSSON / SCANPIX / SCANPIX SWEDEN

A small office on the fourth floor of the Rävala Ärimaja in the heart of Tallinn houses one of Estonia’s most successful wholesalers Formus Baltic OÜ. The company that started out in 2008 boasted sales revenue of 716 million kroons (over €45 million) in its first year. Its ambitions did not stop there, however.

“The company’s plans go beyond what it has achieved so far, to continued development, perfection and reinforcing its position,” Formus Baltic’s annual report reads. Those were not empty words. The company’s turnover kept growing over the years that followed; in 2014, it bought a Bentley Mulsanne, worth almost €400,000, and rented it out to someone. Formus advertises itself as a proud member of the Estonian Chamber of Commerce and Industry.

Information available to Postimees suggests that during those years, Formus’ Swedbank bank account received millions of dollars from a company the background of which is shady at best. There were at least 161 transfers over a period of six months that saw a total of $98.7 million land on Formus’ account. All transfers read “CONTR FW 914 DD 15.12.2008 FOR ELECTRONIC EQUIPMENT” under details. The payments were made by UK firm Wireberg Company LLP.

Homeless Latvians’ billions

A look at the first owners of Wireberg should be enough to send alarm bells ringing. They were Ireland & Overseas Acquisitions Limited and Milltown Corporate Services Limited, both registered in the tiny Central American tax haven of Belize. Stakeholders in those two companies are Latvian straw men Erik Vanagels and Voldemar Spatz.

The men are old acquaintances of journalists as their names lie at the heart of dozens of money laundering cases.

Latvian journalists of the OCCRP showed in 2012 how Vanagels and Spatz look like homeless billionaires. Even though they are formally at the head of hundreds, if not thousands of companies managing astronomical cash flow, the two men live a life of alcohol-soaked asocial misery in Riga. It is possible their identities have simply been stolen.

Vanagels and Spatz are classic straw men whose services are employed to create offshore companies that are used to move cash around the world and hide assets or true beneficiaries.

That is why the names often pop up in association with criminal schemes that also include the so-called Magnitsky affair and the Azerbaijani Laundromat.

Former owners of the company that transferred Formus Baltic OÜ nearly $100 million, Milltown ja Ireland & Overseas, are also key players in the alleged money laundering schemes of former Ukrainian president Viktor Yanukovych.

The Independent and The New York Times have both written about how the companies were used by Ukrainian oligarchs and Yanukovych for moving massive sums out of the country.

“It (Milltown – ed.) is an offshore that Mr. Yanukovych and his inner circle have often used,” Serhiy V. Gorbatyuk, Ukraine’s special prosecutor for high-level corruption cases, told The New York Times in an interview.

In Kiev, Milltown and Ireland & Overseas acquired a huge business center sporting a helipad, built during Yanukovych’s time as president. Milltown also played a key role in a tender that saw Ukraine buy two oil rigs for $785 million that experts believed were worth half of that.

Milltown and Ireland & Overseas were no longer listed as owners of Wireberg by February 2012, with Intrahold A.G. and Monohold A.G. taking over the same day. Both firms are registered in the Seychelles.

Local authorities announced a criminal investigation into Intrahold and Monohold in 2014. The financial watchdog in the Seychelles said that the firms are connected to members of Yanukovych’s cabinet and stand suspected of money laundering.

Buzzfeed News reported late last summer that Intrahold and Monohold were created to replace Milltown and Ireland & Overseas in schemes. The former were soon swapped out again, this time for Nevis shell companies Tallberg and Uniwell.

All of it might not mean that Wireberg is secretly Yanukovych’s firm. The only fact in all this is that the people behind Wireberg have used the same “services” employed by others with money laundering ambitions.

Formus Baltic, that did unintelligible business with a suspicious company for several years, is still active in Estonia. While it has not presented its annual report for 2018 yet, tax data suggests the company remains active.

During years when Formus saw tens of millions of dollars from Wireberg, its sales revenue exceeded €70 million. Net profit grew to €7-8 million a year. When Danske Bank’s Estonian branch tied up its non-resident clients’ business after 2015, sales revenue of Formus Baltic was suddenly cut in half and countries the company pursued cooperation with changed. Its recent annual report suggests Formus has €27 million in undistributed profit. Throughout the years, the firm has only employed a few people who have been paid a gross monthly salary of around €2,000 on average.

Reports show that Formus Baltic has been an active borrower. For example, the company borrowed 758 million kroons and paid back 864 million kroons in 2010 alone. Its 2017 annual report lists liquid assets of €27.2 million.

Reports also show that, in addition to Russia, the company has sold nearly €100 million worth of goods to Belize, New Zealand and the UK – countries where shell companies were registered.

For a long time, Formus Baltic OÜ was owned by Dmitri Novgorodsev and a Hong Kong company called Boardwell LTD.

The company moved into the hands of new owners earlier this year. Its current stakeholders are Irina Rubtsova, Natalja Vorobyeval, Svetlana Kransapolski, Vladimir Griškov, Georgy Zyuzin and Anastasia Kuznetsova. Griškov has been CEO of Formus from the first. Postimees tried to contact him.

Griškov could be found at the Rävala Ärimaja but refused to answer questions face-to-face and asked to be sent an email. His reply read that since this is a serious matter, he will need time to look up the information from archives.

Well-known money launderers

Even though sums are biggest for Formus Baltic, it is by no means the only Estonian company with an account at Swedbank to have done business with suspicious companies.

Bank statements at Postimees’ disposal point to over a thousand suspicious transfers to Swedbank accounts of Estonian firms. They concern some 15 companies that have pursued 180 million euros worth of transactions with foreign shell companies. Wireberg has also transferred funds to two other firms besides Formus Baltic.

Swedbank accounts in the Baltics have received money from virtually every company mentioned by Bill Browder’s infamous report of criminal conduct for Danske Estonia, including Jackwell LLP, Unitronic LLP and Everfront Sales LLP.

These are likely the same companies used to move money stolen from the Russian state treasury and have ties to other money laundering schemes.

Documents also mention numerous firms that have never caught the public eye but are run by the aforementioned straw men from Latvia.

Most suspicious transfers have been made to seemingly exemplary companies that remain active today: they pay taxes, move millions in turnover and have dozens of employees to show for it. Almost all have won awards and are members of the Estonian Chamber of Commerce and Industry.

There are also companies that seem completely fake and have never filed a report.

Several foreign shell companies that participated in transactions were first mentioned years ago by the international press and aren’t too difficult to identify.

Considering that the sums moved between banks in this way are colossal, Swedbank’s control mechanisms should have picked up on them.

Postimees asked for a meeting with representatives of Swedbank Estonia on Monday but was turned down by the bank and only received a vague reply. We asked the bank’s Estonian branch for a comment again yesterday, when the scandal had broken in Sweden, but Swedbank Estonia refused to comment, citing stock market regulations.

According to Swedish public broadcaster SVT, extensive and systematic money laundering is suspected to have taken place at Swedbank for nearly a decade in connection with the Baltic units of Danske Bank.

The investigative journalism TV program Uppdrag Granskning said that at least 40 billion Swedish kronor or some €3.8 billion moved between Swedbank and the Baltic units of Danske Bank. 

SVT reported that transfers that fall under suspicion of money laundering took place in 2007-2015. Among some 50 customers are shell companies and corporate customers with no business activity.

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