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By John Helmer, Moscow

In fear of  the Central Bank and the General Prosecutor investigating evidence of embezzlement, racketeering and fraud,  Boris Mints (lead image), a collector of  Russian painting of the late nineteenth and the early twentieth centuries, has fled to the UK.  How Mints turned his proceeds into artworks was one of the questions which Mints’s Museum of Russian Impressionism in Moscow was asked this week. Another was what dealings Mints may have had with Yves Bouvier, the Swiss operator of art transaction networks and freeport storages which are now the target of fraud and tax cases in Monaco, Switzerland, and the UK.

Mints is accused in Moscow of creating a pyramid of central city office buildings,  business and shopping centres which he managed through his O1 Group, units of which are registered in Cyprus and the British Virgin Islands. The real estate was estimated to have had market value of between $3.7 billion and $4 billion by the end of last year, except that there were no buyers for anything like that sum.  For background on the collapse of the Moscow real estate market, read this

The financing for Mints’s collection of buildings came from cash subscribed by almost 5 million Russians thinking they were putting their savings safely aside for their future retirement. Mints called his pension group Будущее (Budushcheye), The Future.  Also supporting the pyramid were subscription of funds from partner shareholders and loans of more than $500 million from banks in which Mints was a stakeholder.  When the banks began to topple into insolvency and the real estate lost market value, Mints allegedly used inside knowledge to convert his secured short-term debt into unsecured long-term bonds, and help himself to about $100 million left over.  

As his debts were called, starting late last year, Mints was forced to sell his buildings and his pension funds for a fraction of the obligations he had signed, defaulting on part of the debt.   The losses and write-downs on one side of Mints’s balance-sheet add up to about Rb65.4 billion ($1.1 billion), according to Russian business press reports. On the other side of the ledger, how much he has gotten away without repayment of his obligations is the target of recovery litigation in London and in Cyprus for at least $500 million. Criminal proceedings are reportedly being readied in Moscow.

During 2016  Mints bought Maltese passports for himself and his wife;  entered the UK on these documents; and is now living in an English country estate not far from London.

Mints will turn 60 next month. He was a junior Kremlin official in the last years of the Yeltsin presidency supervising local and municipal government. According to Mints’s resume at a Tel Aviv think-tank he pays for,   he then ran REN TV, a commercial television network in Moscow.  His business career took off in 2004 when he was one of the founding shareholders of the Otkritie Financial Corporation, a stock market jobber turned banker; the most important of his co-shareholders at the time was Anatoly Chubais (lead image, on the wall). Chubais was the head of privatization  during the Yeltsin Administration;  chief of the Kremlin staff when Mints was first appointed; and then director of the sell-off of the state’s electricity holding UES. Chubais also controlled REN TV when Mints was manager.  In parallel with the operations of Otkritie on behalf of Chubais’s projects, Mints established his O1 group for real estate investments dependent on Moscow City approval. To his capital, borrowing capacity, and income stream he added pension funds in 2013.  

Over twenty years, Mints has told interviewers, he bought hundreds of artworks, studying the way in which the value of collections can be protected by offshore registration;  converted into city and  state favours of all sorts; even earn cash at the turnstile. “In private museums in the world,” Mints said in February, “there is significantly more content than in the state [museums]. An example of this is my old friend Ronald Lauder, whose family donated a billion dollars to the Museum of Modern Art collection [in New York]”.


Left: Museum of Modern Art opened at its current location in New York in 1939. Right: Museum of Russian Impressionism opened in Moscow in 2016; for the museum website, click

As Mints’s cross-collateral schemes caved in, a reporter at one of his art show parties noted: “O how generously champagne was poured at the opening. An orchestra was playing. Fine ladies carefully nibbled on gourmet snacks.  Gentlemen were drinking whisky. If only a little nuance didn’t make its appearance just then —   all of this was bought on your pension money. As for the retirees, ask them if perhaps they would prefer their money to be managed differently.”

Early this month, Yulia Petrova, the director of Mints’s museum, attacked the Russian press “for a lot of unverified information from third parties, which should not be relied upon. The museum,” she insisted, “is working in the same mode and does not plan any significant changes.” Days earlier she had responded to speculation that Mints might close the museum and withdraw the artworks to save them from asset freeze, bankruptcy forfeiture, or confiscation on court orders. “Nothing happens with the collection; it continues and will be exhibited…. Until now, there was no instance when the Museum of Russian Impressionism did not pay the bills of its contractors and partners; right now there is also no reason to assume otherwise. We comply with all our agreements and expect the same from our partners.”

The formal claims against Mints so far were summarized in a High Court judgement  issued in London on June 6. The court was acting on behalf of two Cyprus and one British Virgin Island entities owned by Mints; they applied to restrict the recovery litigation against them by Otkritie Bank, now under state administration, to one arbitration proceeding in London. Although the judge ruled in favour of restricting parallel court action elsewhere, the practical effect will be negligible for Mints as criminal proceedings in Moscow, if started, cannot be halted.


Left: caption for the High Court judgement by Justice Sir Stephen Males on June 6; source: http://www.bailii.org/ Right: Justice Males.

For the backfile on the fraud, asset looting, and corruption by Otkritie’s former shareholders, click to open. The former chief executive and control shareholder of Otkritie, Vadim Belyaev, has also fled to London for safe haven. Among the asset thefts Belyaev allegedly arranged at the same time as Mints was executing his bond conversion, here is the story  of Belyaev’s $1.45 billion dollar diamond mine purchase. 

A full dossier of Mints’s dealings as his bank, pension funds and real estate operations all failed can be found in Russian in Ruspress

Ilya Yurov, former chief executive and control shareholder of National Bank Trust, which Belyaev took over with Central Bank assistance in 2015, comments that there was so much asset-stripping by Otkritie insiders, allied with the Central Bank, he is sceptical that pursuit of Mints will prove to be anything but a diversion for the press.  “I see conflict of interest and concealment everywhere.  For example, you will find in the [June 6] High Court judgement that Otkritie Bank was represented by the Steptoe &Johnson law firm. I simply cannot understand how it is possible there is no conflict of interest because the very same Steptoe & Johnson is representing Trust Bank in the UK, and it has been representing Vadim Belyaev and his asset holding in the US. I’m sure that the Central Bank is trying by every possible measure to hide from the public the real character of its long-term cooperation with certain Otkritie shareholders like Vadim Belyaev.”

Russian bank sources say Chubais (right) has been Mints’s patron (krysha) for more than twenty years, and that Mints has repaid the favour. The sources now point to press leaks suggesting that Belyaev, Mints, Chubais, and the three state bankers —  Central Bank Governor Elvira Nabiullina; Sberbank chief executive German Gref; and VTB head Andrei Kostin – are now arguing among themselves in their efforts to find scapegoats for the financial misconduct in and around Otkritie Bank. The sources also confirm their conviction that Mints has lost his pension funds and his Moscow real estate to men working for Igor Sechin, head of Rosneft, so he has no chance of recovering the assets,  state bank credit,  or the security to return to Russia.

In Cyprus this morning, the press office for Mints at the O1 Group was asked to say what assets remain under the ownership or control of O1? What is the value of the O1 Group debts repaid to date?  What is the value of the debts not yet repaid? Finally, Mints was asked whether he has pledged part or all of his art collection as security for any of his debts.  Mints’s spokesman refused to reply.

There are two risks facing the museum’s artworks in Moscow and Mints’s private collection, if it is kept elsewhere. The first is the one Petrova was hinting at: if Mints is bankrupt, what money can the museum rely on to pay its bills, and will the artworks themselves, valued in Moscow press reports between  $25 million to $27 million, be sold up to satisfy Mints’s creditors?

Petrova was asked this week to say what the insured value of the art collection is. She was also asked who owns the artworks in the museum — is the owner registered as a Russian company or person, or is it a foreign owner, such as a foundation?  Valeria Petrushina, head of public relations at the museum, confirmed that Petrova received the questions. There has been no reply.

A Moscow art market source said private galleries in Russia like the Mints museum, have many and varied relationships with the state for subsidies, tax and customs relief; the terms and conditions aren’t standard nor are they public. He said he doesn’t know what arrangements Mints made to register the ownership of his paintings in Russia or abroad. If abroad, other sources say it will be difficult for the pension funds or Mints’s other creditors to arrest them. It may be just as difficult, they add, for Mints to recover them for himself.

In February of this year, Mints acknowledged to a Moscow reporter that he had paid premium prices for his paintings, and that there has been a sharp correction in their value, just as there has been for his office buildings. “The situation in the [art] market is clearly visible.  Collectors are not satisfied with the prices. They have become lower than when people bought the pictures, so that nothing serious now appears [for sale]. For example, if it was sold for $200,000, now you can really sell for 120 or 140. Of course, no one is interested. If they can earn on it, that’s their business. They look for these pictures, make documents, order research — if there is doubt, 30% off the price….I have hundreds of works, there are some things that I liked, I took, bought, put up at home. Then I came to the gallery.” 


Left:: Mints explains to Reuters his museum aims.   He has also told  local media he “has never acquired paintings worth more than $500,000 (that was how much he paid for Boris Kustodiev's Park with a Pond).” Centre: Yulia Petrova, director of the museum. Right: Leonid Shishkin, art dealer with galleries in Moscow and England, who is known to have acted for Mints in many transactions.  

Leonid Shishkin is a Russian art dealer with outlets in Moscow and Surrey, near London.   He is reputed by others in the Russian art market to have been one of Mints’s principal dealers. Shishkin confirms this. His gallery’s “success has earned it the reputation of one of the most esteemed galleries in Moscow,” the Shishkin website says. “For over a decade, the Leonid Shishkin Gallery has held regular auctions, selling works by Russian artists from the 19th Century until modern day.” The website also displays some of its most notable sales;    the highest price reported is £517,000 for a 1922 work by Petr Konchalovsky.

Art market sources suspect that if it turns out that Mints’s art dealings have involved  elements of money-laundering and concealment of fraud, then Mints’s collection may prove to be vulnerable, wherever Mints has registered its ownership.  The story of art purchasing by wealthy Russian collectors through the Yves Bouvier network can be followed here.  

The money trail in art dealings is being opened up by international courts. In a  US federal court ruling in New York issued last week,   Bouvier’s companies  and the Sotheby’s auction house have been ordered to disclose transaction records and correspondence for evidence in criminal proceedings under way in Monaco and Switzerland, and for a compensation claim due to be filed soon in the London High Court.  Dmitry Rybolovlev is the plaintiff and art collector in these cases. Vladimir Scherbakov is also pursuing a case for fraud against Bouvier in Geneva; for more details read this.

This month’s New York judgement also orders Sotheby’s executives to face depositions “on eight topics, including the sale price and market value of the Works, the business relationship between Bouvier and Sotheby’s, and the circumstances under which Bouvier obtained valuations of any of the Works.” Fourteen transactions are covered by the court order. The US judge, Jesse Furman, decided that Bouvier and Sotheby’s will not be  obliged to disclose evidence of “every financial transaction these companies have engaged in with 11 different banks, along with considerable additional financial information, [because this] sweeps far too broadly to be proper for that limited purpose.”

Mints’s art dealings have not surfaced in these court cases, and no wrongdoing has been alleged or reported against Mints and Shishkin in their art transactions. A European art market source says Shishkin has prospered from their relationship; another European art market source says Shishkin’s reputation is that of a “good guy”.

In addition to buying and selling artworks, Shishkin’s gallery says it “offers a wide range of additional services: art consulting, expertise, restoration, framing, export papers, packing and delivery worldwide.” Shishkin was asked this week to say whether he had worked with Bouvier in transportation of artworks and with the Bouvier-controlled freeports in Geneva and Luxembourg for safe-keeping. Shishkin replied: “No” .

Mints himself through the O1 headquarters in Cyprus, and Petrova at the Moscow museum were also asked what business dealings they may have had, if any, with the Bouvier art transportation network or the freeports. They refuse to answer.

 

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