Exclusive
Status: 11.04.2022 6:01 p.m
German authorities want to freeze the assets of Russian oligarchs – but have to find them first. The journalist consortium ICIJ uses data from the Pandora Papers to show how the shares were parked in tax havens.
The confidential data reveals the true owners behind hundreds of shell companies. The documents now released shed light on the offshore businesses of more than 800 Russian citizens, including numerous oligarchs and more than 42 billionaires who have parked their wealth in tax havens.
Eleven of these billionaires are already on international sanctions lists. The data is part of the Pandora Papers, a very large one Data leak from shadow financial centers. The International Consortium for Investigative Journalists (ICIJ) evaluated the Pandora Papers together with numerous media organizations around the world and published the results last autumn. In Germany, journalists from NDR, WDR and “Süddeutsche Zeitung” (SZ) involved in the research.
Urgent change of ownership
“The oligarchs are well aware that they are vulnerable to sanctions and have taken steps to ensure their assets are as difficult to identify as possible,” said Tom Keatinge, director of the Center for Financial Crime and Security Studies in London. “If governments don’t also target the proxies and shell companies that support these elites, the sanctions are worthless.”
One who appears in the now-released dataset is Russian oligarch and businessman Alexei Mordashov. Among other things, he is the main shareholder of a Russian gold mine operator and – with assets of more than 20 billion euros – is considered one of the richest Russians in general.
In addition, the entrepreneur held more than 30 percent of the shares in the German tourism group TUI for a long time. When the sanctions against Mordashov were decided on February 28, Mordashov shares quickly changed hands. They are now held by Mordashov’s holding company Unifirm.
“Pandora Papers”
The “Pandora Papers” are a huge data leak from the world of shadow financial centers. The data reveals the real owners of more than 27,000 offshore companies. The data includes politicians, the super-rich, oligarchs, criminals and celebrities. The 11.9 million confidential records include letters of incorporation of shell companies and trusts, emails, statements of accounts and other documents.
The data was evaluated in secret research by more than 600 journalists from 117 countries. Media such as the Washington Post, the BBC, Radio France, ORF, El País and Aftenposten were involved. In Germany, journalists from NDR, WDR and SZ on the data leak.
The data set was leaked to the International Consortium for Investigative Journalists (ICIJ) by an anonymous source. The ICIJ shared the data with the partner media and coordinated the research. The ICIJ has already led global research into shadow financial centers, including the “Panama Papers”, the “Paradise Papers” and the “Luxembourg Leaks”.
The confidential documents come from 14 offshore providers, i.e. from companies that help their customers to set up shell companies, trusts, etc. Letterbox companies are often legally based in countries that stand out internationally for their weak money laundering controls, non-transparent financial practices and particularly low tax rates.
Owning a shell company is not illegal. Offshore companies can also be used for legal purposes. Such company constructs are often used for money laundering, tax evasion or tax planning.
Partner takes over shares
Without further ado, however, Unifirm was passed on to a new owner, Ondero Limited, a shell company registered in the British Virgin Islands. Who Ondero might belong to was the subject of speculation for two weeks, because it is not so easy – even for criminal investigators – to find out who owns companies in the Virgin Islands.
The Russian oligarch Mordashov is considered one of the richest Russians ever.
Image: picture alliance/dpa/TASS
However, a majority owner of Ondero would have had to make himself known, as required by the German Securities Act. For weeks no one reported officially. However, the Pandora Papers reveal who is behind the shell company: Marina Mordashova, Alexei Mordashov’s partner and mother of his three children.
Possible investigations against Mordashov
As the ICIJ and WDR, NDR and SZ sent an inquiry to Mordashov and asked about Mordashova’s role at Ondero, the oligarch’s life partner was suddenly reported to the German travel group TUI and the German authorities as the new owner – and thus as a significant shareholder of TUI.
The public prosecutor’s office in Hanover is examining investigations into suspected circumvention of EU sanctions. Upon request, Mordashov stated that he had always carried out all his business in accordance with the applicable laws.
Oligarch involved in the largest German gas producer
In addition to Mordashov, the Russian oligarch Mikhail Fridman also holds shares in German companies. According to Forbes, he is also one of the richest Russians. Fridman’s Holding LetterOne has a 33 percent stake in Wintershall Dea, Germany’s largest gas producer. The remaining 67 percent belong to the DAX heavyweight BASF.
The oligarch Fridman holds significant shares in large companies, including German corporations.
Image: picture alliance/AP Photo
Fridman became rich by founding the Russian industrial and financial group Alfa Group. Born in Ukraine, Fridman was one of the first oligarchs to take a clear stand against Russia’s war of aggression. However, it didn’t help him: the EU sanctioned him because of his “close relationship with Vladimir Putin.”
Still co-owner despite resignation
According to the EU, his Alfa Bank should benefit from the Kremlin’s decisions: “Vladimir Putin rewarded Alfa Bank’s loyalty by supporting the bank’s foreign investments,” says the EU’s official justification for the sanctions. Fridman, now 57, resigned as a director of LetterOne after the sanctions came into effect.
However, according to the Luxembourg company register, Fridman continues to appear as a co-owner in at least nine companies from the group. One such firm, LetterOne Investments Holdings, reported assets of more than $13 billion in 2020. Overall, Fridman held shares in at least 67 companies in Luxembourg.
Shell companies in British Virgin Islands
As the Pandora Papers show, dozens of shell companies were set up for Fridman in the British Virgin Islands, for example to invest in real estate or oil. One of the shell companies had assets totaling $1.8 billion in 2016. Another company that Fridman was involved in opened an account with Deutsche Bank’s private banking division in Zurich, which held nearly $15 million as of May 2018.
Such companies and accounts are very difficult to find for EU countries – neither Switzerland nor the Virgin Islands are particularly willing to provide information. When asked, Fridman said the account at Deutsche Bank had now been closed.
Fridman also admitted that he continued to be a beneficial owner of LetterOne, but that his shares were frozen by the sanctions. As a result, he can no longer receive dividends. LetterOne confirmed this when asked and informed the ICIJ, WDR, NDR and SZ that all communication with him has been stopped and that he no longer has control over the investment group.
Oligarch feels treated unfairly
At the same time, when asked, Fridman emphasized that he considers the sanctions against himself and his assets to be “completely unfair” because he was in no way involved in Russian politics, discussed any political issues with Vladimir Putin or ever met him personally .
Oligarchs also need helpers – for example, to move their assets to tax havens, to administer shell companies or to change owners. And the Pandora Papers Russia also show that: In many cases it was the auditing company PWC that landed Russian oligarchs as customers. The auditors looked after Fridman’s letterbox companies and a large part of Mordashov’s “Unifirm” company empire in Cyprus. PWC has already withdrawn from Russia and divested its Russian subsidiary.
But most of the Russian customers – corporate customers as well as oligarchs – are looked after by PWC in Cyprus. The company said it was currently in the process of “terminating existing relationships with sanctioned individuals and companies.”
