Switzerland: A haven for Russian money? | DW Documentary

February 2022 The horror in Ukraine the war has returned to European soil the reaction is immediate less than 24 hours after the invasion sanctions are imposed on Russia the oligarchs today announce new sanctions against some of the richest business elites in Russia now the world is targeting the extravagant yachts an Unprecedented sanctions are imposed on the economic heavyweight Russia Putin is the aggressor Putin chose this war and now he and his country will bear the consequences one by one Billionaires close to Putin are being tracked , their yachts and planes are confiscated and their

money

is frozen, except for the plan to work the

money

must be completely frozen the slightest crack and everything could collapse do you want to be the country that can be used to avoid those sanctions Is Switzerland this crack this lagoon is the Alpine Nation doing enough? to freeze Russian assets the criticism has intensified since the beginning of the war when they adopted the sanctions they took it calmly and did the minimum just to avoid criticism there have always been black sheep and dishonest people who have falsified documents or issued certificates false but these are isolated cases: are the sanctions in Switzerland really ignored or are the accusations false?

We have investigated and thanks to an unprecedented data leak we have been able to learn more about the billions managed on behalf of the Russians in Switzerland. At first sanctions meant seizures. Yachts worth millions were left stranded in ports, but could this end? A war lawyer and asset manager DJ Bodka says the measures are purely symbolic a yacht is something very ostentatious such a huge and environmentally destructive machine captures people's imagination everyone thinks it's cool we have confiscated a ship but it is the beginning of a nightmare: the ship is in the port with a crew of 30 people that must be maintained by the state that confiscated it to make a difference, you have to target the assets, the finances behind the war, but freezing Russian billions is much more complicated than confiscating some yachts The love affair of the oligarchs with Switzerland is well known and did not start yesterday two examples Victor Vexel with an estimated net worth of 7 billion dollars is one of the main shareholders from the group of early fraudsters and has avoided sanctions in the United States second It is Gennady Timchenko, co-founder of the Gunvor oil company.

His villa on Lake Geneva was confiscated by the Swiss before the sanctions. Switzerland had been very attractive to the Russians. The image of Switzerland is fabulous. Exceptional on all levels. A very beautiful and especially hospitable country. For those who have monetary stability and neutrality, what more could we wish for when the RSS collapses? Switzerland was a great place to open accounts and the oligarchs understood this very quickly and began to use Switzerland as a center for their businesses, especially financial ones at first. They were happily welcomed The laws were different The banks were less apprehensive They trusted the Swiss and wanted to copy the rich Westerners That's why they wanted to buy beautiful airplanes Villas, yachts and collections to emulate the Western billionaires The Timchenko family has been in Geneva since the beginning from the 2000s a stroke of luck for the Swiss gened timchenko is the son of a member of the army, has a villa in col a very exclusive community in the canton of Geneva and is also generous with the Nava Foundation in a classical music festival in the foundation and bodmer they also support the svet hockey club these are the main activities of the timchenko family in Geneva but everything ended with the start of the war Gennady timchenko left Switzerland and his accounts have been frozen like those of around a hundred Other oligarchs are not all close to Putin, but on February 24, the day of the Russian invasion, their destiny changed.

About three dozen people had gathered at the Kremlin. Vladimir Putin basically told them what he had said on television a few hours earlier and they were speechless. certainly not pleasantly surprised they were completely dumbfounded some were surprised when Vladimir Putin called the meeting on the 24th they knew very well that everyone would be affected by Western sanctions looking back we can now say that Putin gave them a poisonous gift over the months from the list The number of sanctions has become longer and longer. Who ends up in them and why that is not decided in Switzerland, but in Brussels we met with the Belgian Didier Reers, former EU Commissioner for Justice and Rule of Law.

He had been pursuing Russian assets since the start of the war. For one thing, if we want to stop war financing, we must not only act very quickly but also hit very hard: we must hit those who are directly involved in war financing: the oligarchs and a whole range of entities, but above all to the Russian economy and the Russian army, these sanctions are not the only ones that worry me, the freezing of assets of oligarchs and organizations, but also sanctions directed at specific sectors with export and import strips of Russian products, whose objective is hit the economy and activities of the Russian military industry at the center the objective is to exert pressure to end the war for neutral Switzerland it was not easy to accept the sanctions imposed by Brussels according to D reinder It took 4 days of uncertainty and secret negotiations To prevent Switzerland from becoming the Weak Link in Europe it is completely normal for an independent state not to simply copy the European sanctions, the biggest risk was that the implementation would be seriously delayed, but fortunately that did not happen regardless, Switzerland imposed the sanctions quickly, the second challenge was to avoid many actors such as lawyers, notaries and banks help to evade sanctions having a legal text a nice piece of paper is not enough we must ensure that the document is effective the criticisms are diplomatic but have been evaded reasonable sanctions since the outbreak of war in February 2022 a Swiss asset manager was detained before he could fly on a private jet with 500,000 euros in cash for a Russian client in April 2023 a Swiss company imported $44 million of gold Russian through Dubai a loophole in sanctions are these isolated cases that we take A closer look with the help of two colleagues more familiar with the financial world we begin with the data breach detected on Darket in February 2023.

Hackers Russians briefly put thousands of highly confidential emails and banking documents online. This data did not originate from a bank. but rather a company that manages billions and is based in the heart of Zurich. Its name is PHA Port, official sponsor of the T Open tennis tournament. To see all these opportunities. Unlimited. The sport is a mix of old traditional Swiss banking and very modern and transparent technology. I see it as an instrument to open a door for many banks to many solutions for the client we have access to both private and public markets that very few companies in this world would have also offers their services directly in Russia very common by pH we were qualified as clients heavyweight Russians and a company that works with the main banks in Switzerland.

These data are very interesting, but the avalanche of information is too much for us. We traveled to Germany to meet with two data breach experts, journalists Frederick Ubaya and Basa. Obaya works in Munich and wrote a Pulitzer Prize-winning book on the Panama Papers. A dozen employees will help them analyze the mountain aorta data over the next few months. They will be helped by journalists from France, Germany and Switzerland, who we have not heard of before and that is. Actually, what makes it so interesting to us is that it seems like Finina Port is a much smaller company than a lot of well-known companies and otherwise it seems like they're kind of flying under the radar and not being under as much scrutiny as the big guys. players in Switzerland, so it seems like they might be dealing with clients that the big players don't want to touch anymore because they are under too much surveillance, the leak is 1.2 terab of data, we see a lot of Mals and documents and bank details, so even if the hacker group is really bad and aggressive and it seems like that, still, if there is information that the public needs to know, we will publish it as the First Step that links the names of the sanctioned people with phop port client list, but no matches found, rules are followed, Zurich-based company does not manage assets of oligarchs subject to sanctions, but we discovered Russian money directly related to war financing, data includes relatives of One one.

Alexander Pomaro, director of a state company called Mvu Canal, specializing in wastewater treatment, this senior official is a close friend of the deputy mayor of Moscow. People close to him have been awarded numerous lucrative public contracts worth more than €50 million. The value of the contracts is too high and this could explain why the family is so rich. The daughter and the girlfriend, and both have the largest accounts, the investigation team in Munich discovered how the Pam Moreno family was able to steal their money. now managed by phop Port returning to Europe is complicated but more than 46 million were in the family's Swiss accounts at the end of 2022 no sanctions were imposed on Pon Moreno's daughter and lover but the origin of the money raises doubts that should be a red signal right, you have millions of US dollars and you have someone working in a state company, you have money leaving Russia and that guy who runs a company St on and his relatives, with their pockets full, they did not see the problem or decided just look.

On the other hand, the problem is that Alexander Peno's company is not only active in the wastewater sector, but Canal is also active in the occupied Ukrainian territories. We discovered that the company offers its employees financial incentives to fight in Ukraine. At VC we contact hundreds of men through social networks. and Equipment have been sent to the front according to this video published by the company phop Port rejected our interview requests. They told us in writing that new discoveries often lead to investigations against their clients, but there are more surprises in Switzerland our team of journalists. discovered an email sent just a week after the attack in Ukraine, two Russian clients wanted to store 40 gold bars worth a total of 5.6 million in a safe deposit box at the Saffra Sarene bank in Zurich.

The managers of the phop port considered this transaction to be clumsy and alerted the authorities, the client could be accused of trying to evade the sanctions they wrote, however, phop Port approved the transaction and the bars were transferred when asked, the bank said that the clients have residence permits from the European Union and are not subject to sanctions, we cannot refuse this type of transaction since the gold belongs to third parties we are subject to confidentiality and a violation would have criminal consequences no current or former clients will is affected by sanctions if Switzerland is helping track Russian billions for Scott Miller the US ambassador to Ban the answer is clearly no, he is a former banker and was the first to denounce Switzerland's attitude towards LAX in some cases 10 ago or 15 years.

I imagine we probably have a lot of work to do together to continue to identify trusts, companies and other entities that have been set up to hide beneficial ownership interest in some of these assets words are followed by deeds April 2023 a tough letter signed by all ambassadors of the G7 and the European Union was sent to the Federal Council a diplomatic slap in the face we are also concerned that law enforcement officials are blocked from investigating illicit financial structures produced by lawyers acting as financial intermediaries we call on the Swiss government to take additional measures we share the concern that these loopholes could damage the reputation of Switzerland and, uh, you are brave people in Ukraine, so the State Secretariat for Economic Affairs announced the opening of 30 criminal proceedings for possible evasion of sanctions in Switzerland against its director Helen buer artia, former ambassador the accusations were unjustified the manner was not the best we had to read in the newspapers that we would receive a diplomatic letter It is difficult to understand that they give us certain explanations and tell us that Switzerland must do better, but people forget that These are people who have enormous resources, in the same way that we control a private plane that could be linked to a person on a sanctions list, we are immediately contacted by a law firm that goes on and on saying why this is not the case, that the plane belongs to company XY and not to Mr.

Witnesses here, the pressure increased in July. 2023, when a US Senate committee took up the issue, the focus of the hearing Switzerland's alleged failings, we haveseen the Russian economy survive better than we thought and part of that has been dirty money laundering in Switzerland, a global conflict between dictators. Bill Browder's testimony set things in motion Browder, a British citizen used to invest in Russia but is now an activist, the Swiss are allowing the Russians to have access to that money to kill the Ukrainians and we should do something to shut that down and If the Swiss are not willing to do it voluntarily then we should put pressure on them, they were not willing to return the Nazi gold to the Jewish people until Congress got involved and Congress has power here and the Swiss respect that and sometimes when the People don't behave well, we have to give them an incentive to behave well and that's why I think we're all here and that's where you can play a role, thank you, but are these accusations justified?

Let's look at the figures that Switzerland has frozen at around 7.5. 1 billion francs and 17 villas is not bad compared to the 9 billion frozen by the US and the 24 billion frozen by the EU, however, given the total amount of Russian assets deposited in Switzerland, which is estimated at 150 billion, the seizures are ridiculous. This figure is what generated controversy and attracted the attention of Americans. Where did the estimate come from and why wasn't more Russian money frozen? to understand you have to go to Zurich we met with the Swiss Bankers Association an organization that represents more than 260 member banks the association was the first to calculate the value of Russian deposits in March 2022 the State Secretariat for Economic Affairs SEO had not yet collected Any data we did is an estimate: our estimate of 150 billion was based on all cross-assets of Russian clients that are registered in Swiss banks.

These are all Russian customers with a Russian passport or other nationalities, such as another passport or multiple passports, regardless of whether they live in Switzerland or Russia on the other, and they used different data, they only include Russian citizens with the corresponding Russian passport and do not include the corresponding assets in the custody account. We include this and estimate 150 billion. That is the big difference, a simple difference in calculation, but when it comes to freezing assets the organization said it is difficult to do more the banks are strictly complying with the sanctions and will continue to do so the sanctions have not yet ended and to a large extent continue and the corresponding sanctions on the banks have been implemented accordingly the bankers who cited This figure calculates all Russian assets, but it must be taken into account that not all Russians are criminals and not all Russians are on the list.

Honest people also have money in Switzerland and that may be where the misunderstanding comes from. There has been talk of sums of money. 100 billion 150 billion even if we do an excellent job we will never reach those figures and I'm sure some are disappointed and think we

haven

't done our job but I also find it a little frustrating but for some just the tip of the Swiss iceberg. The politician Baptist Horney knows the situation well, he is a lawyer and member of the Legal Affairs commission and he is angry about the lack of controls. I am not saying at all that the people who work at the Secretary of State for Economic Affairs are incompetent, they do their job very well. well, but the Secretariat lacks a wide range of skills that are not part of its jobs, neighboring countries in the US have now set the task of gathering personnel from similar authorities from private banks or people who specialize in the trade in raw materials, etc., with everyone with that concentrated experience we can discover the complex structures that allow sanctions to be evaded.

It is about stopping the flow of money to Russia to finance the war. I think we could show a little more goodwill. of will or lack of control one thing is certain end the war and rebuild Ukraine the United States and Europe are looking for every last billion from Russia the sanctions list could be even longer Switzerland is under pressure because for years it has had a reputation for hoarding illegal money from Russia in 2000 The banks said they were putting the past behind them, there were no more scandals, but as our investigation continued, a completely different picture emerged.

Two PHA Port clients caught our attention. The first, a heavyweight in Russian politics, Leon Ryman, former minister of telecommunications and advisor to the president from 2008 to 2010 in this country. In the photo he can be seen from behind, in front of the former German chancellor. At the time he was becoming a client of Phena Port and more than €30 million ended up in his Zurich accounts, but in 2006 a Zurich court found Ryon guilty of money laundering and personal enrichment. We are talking about someone who has been part of the Russian kleptocracy for years, who was very close to Vladimir Putin and was involved in a series of scandals reported in the media.

You cannot ask a financial authority to know something that no one knows in this case. He didn't have to look far to understand that he is a very problematic person. He actually treats this customer like a normal customer, even though all information indicates otherwise. The former Russian minister was a client of OFA Port until at least the end of 2021, the company denies any wrongdoing and said he is investigating the background of his clients and the origin of the assets he manages. The second problem client is a billionaire who was convicted of fraud in Russia in 2019 for sneaking assets from an insurance company where he works. on the international list of wanted persons, but this Russian managed to open several accounts in Switzerland under two different names and identities.

The case is particularly interesting because he is wanted by the judiciary in Russia and several lawsuits have already been filed against him for fraud, especially in In the insurance sector, the amounts at stake are also surprising: in total almost 45 million have entered in phop Port accounts, which raises the question of whether phop Port should have notified the Swiss. We showed these cases to a former employee of Track, the French financial intelligence unit for security. The reasons why he asked to be made unrecognizable, but his reaction is very clear: it is not illegal to have two passports, but two passports with two names, which raises questions.

A normally diligent expert shouldn't have let that go. You cannot treat this as a standard procedure situation, especially since we are not talking about amounts of a few thousand euros, you have to be very careful based on these documents. I think in each of these cases he should have alerted the authorities, much more detailed questions should have been asked of the clients. about the origin of the funds and should not have been satisfied with verbal explanations from clients, but instead demanded informative documents. Yes, even an asset manager should have been suspicious based on the documents you provided.

None of the Russian clients we encountered during our investigation would comment in an email fport told us that it is the client's decision under which legal name they wish to open their bank accounts and claimed to be unaware of cases where clients have declared different nationalities to banks or authorities, the company added that the The person in question is no longer a client and phop Port cannot open a bank account and only provides financial advice, but the company's role went far beyond that March 2022, shortly after the start of sanctions, fport sent this email to a Russian client with options to obtain a residence permit or passport at short notice at the estimated cost of 7,000 Swiss francs for Hungary to 150,000 for the Caribbean island of Grenada in plain language the cost to evade sanctions sanctions do not apply if a Russian citizen resides in Switzerland or has another European citizenship: this is a way to evade sanctions.

We managed to ensure that no more passports were issued since the outbreak of war. This applies to Cyprus, but Malta also decided to stop all procedures for Russian and Belarusian citizens, but that is not enough. We have to do it. ask ourselves if what was done in the past is a problem, if it is appropriate to question passports that were issued in the past and then we can also look at other groups, there are many people with dual citizenship and action may also need to be taken. At this point, phop Port explained that it is not uncommon for a client to be interested in moving to other countries.

Phop Port then refers them to specialized companies or provides appropriate advice, but this is common behavior among asset managers. We also look for answers here. The profession holds its main annual meeting just outside Ban at the Intell and Congress Centre. 300 asset and trust managers met. The event included discussions about new yachting regulations and big money with experts from all over Switzerland. We were not allowed to enter with our camera, except for one. from the organizers a trustee from Geneva was willing to answer our questions how it worked with the Russian families simple things like residency and citizenship permits had to be clarified coordinate with other professionals such as banking lawyers and asset managers to understand what scope there is It was especially at the beginning, the difficulty of course is keeping up to date and complying with the ever-changing rules.

It's not easy to know more, but one woman agreed to speak openly with us about another aspect of her profession. Cive Weier does not manage bank accounts. she manages the art collections of Villas Yachts' private jets and knows all the ins and outs. When the war started there were many questions, what do we do now? What's happening? There was actually a bit of panic. The task was to interpret the newly imposed regulations. You know about the lists, you know you have to be careful, but our job is always to find solutions because today is war, yesterday was Co, the day before yesterday it was the Americans and we don't know what tomorrow will bring us, but we always have to try to find.

Solutions and rule compliance, above all we look for people who can confirm that the solution is good, but that is not always easy. CE clients had residence in Monaco and often held multiple passports. Some financial advisors will always have good ideas to adapt and slide. Through sanctions, the US Treasury Department has begun to sanction Swiss financial experts who find solutions to hide money. Russells is also considering cracking down on anyone who evades or attempts to evade sanctions. She is committing a crime. Her assets can no longer be frozen. be confiscated, that is very important, the property can become state property and the money can go to Ukraine.

We try to take this approach not only in relation to Russian oligarchs or Russian organizations, but we also try to involve legal and tax advisors, lawyers, notaries and banks, if they are involved in strategies to circumvent sanctions, if this can be proven, it can result in criminal convictions and confiscations and we call on the Swiss Confederation to move in the same direction and ensure that it not only looks at whether there are people subject to sanctions. Switzerland should roll up its sleeves and better monitor the activities of all those who may be working to maintain Russian money out of the reach of sanctions against the oligarchs and their entourage. have not obtained unanimous approval a man is fighting against what he calls the absurdity of sanctions Alam bonda is a lawyer in Geneva he rarely speaks to the media sanctions represent four things in particular inefficiency Injustice illegality and idiocy first of all they are ineffective I remember that there have been sanctions against Cuba for 60 years sanctions against Iran for 30 years sanctions against North Korea for 20 years Venezuela exists Belarus there are sanctions everywhere this obviously does not lead to the desired regime change secondly these sanctions are unfair Who is affected? is the population, 95% of which has nothing to do with the outbreak of war in Ukraine or other countries, ultimately these sanctions come back to us in the form of inflation and in the form of electricity prices that affect low-income households. idiot because they affect again he defends the richest people in Russia who he refers to as oligarchs a term that he finds problematic problem I have a problem with the term oligarch because it is not legally defined that is my problem not that I don't do it I like the term is that I don't understand what it means legally and if you don't have a definition you can't effectively defend yourself, you can't present an argument because you don't know what you're being accused of. what they really accuse you of having a fortune close to power what they accuse you of and how that is defined the only way to break the sanctions is to go to court in the US this is mission impossible, but in Switzerland and Europe it was In battle for one of his clients based on the Geneva Canon, his Villa was not extremely luxurious but his client had to leave in a hurry.after being sanctioned wait this is a sanction a Swiss sanction here you have a citizen who defines himself as a Russian citizen, the problem is that he has Swiss citizenship, but that was not indicated.

He has dual citizenship of Switzerland and Russia. He grew up in Switzerland. He went to school in Switzerland. He pays his taxes in Switzerland. He is Swiss. That is the first point. there is second class citizenship in Switzerland, the second point, will you be officially notified? Will you be informed of the imposition of sanctions in an official letter? Well, not at all, just put your name on the Internet and how do you find out? He finds out from his bank that he has blocked his account. He finds out from the press and his reputation is seriously damaged overnight.

You can no longer pay your bills. You can no longer pay your children's tuition. You can no longer use your credit card. no I don't even have a Swisscom subscription anymore, it's death and there's nothing you can do. The third point is that it is written in English, English is an official language, the national languages ​​are German, French, Italian and Roman, but not English, but what is your client really accused of? oh I will tell you that he is the son of and yes it is in English wa I am also the son of my father that is ridiculous the client's father has been personally honored by Vladimir Putin they say that the father must be a criminal it must be a criminal war, but no What is the father accused of manufacturing oil pipelines and selling them to Gazprom and Rosn?

That's like accusing a locomotive manufacturer of selling its locomotives to SBB. That is absurd, he was not the one who decided to invade Ukraine, therefore, the sanction against this Swiss citizen is null and void, the sanction is not valid and we must have the courage to admit that the Swiss judiciary will have the final decision , but the chances of success are slim, we have international organizations that discuss each name and explain why we put that name on the list. In fact, there are not only people who are directly linked to the Putin regime, but they are always people whose companies are parent companies or investment funds.

They are financing the regime in one way or another and then you will probably find one or two people unfairly included in the entire list, it is a crisis, an emergency situation, but in 99.9% of the cases they are not people who personally know Putin and they are going to have a glass. vodka with it, obviously, it is the owners of the Russian assets who are invested in the war in Ukraine. Alam biond is not in favor of war, but he is convinced that sanctions destroy our rule of law until the question is raised whether his clients can be removed from sanctions.

The list has been clarified. You have to request permission from the State Secretariat of Economic Affairs for each payment of the frozen accounts that immobilize the administration's resources and prevent investigations from being carried out. My team had to respond to 20,000 queries in the form of emails and phone calls often calls Deadline companies asking if this or that agreement was possible, it was an exceptional situation, but now, unfortunately, we are already in the second year of this terrible war and now we will surely have the strength and more resources in time to carry out the investigation. State Secretariat intensifies controls with additional staff The number of evasions discovered in Switzerland could increase in the future.

We remind you that at the moment we have not yet been informed about any process against phop port.