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By John Helmer, Moscow

The Central Bank of Russia’s plan for saving two of Russia’s leading non-state retail banks, National Bank Trust (aka Trust Bank, NBT) and Otkritie Bank, is unravelling because the two key witnesses to the wrongdoing which caused the banks to collapse are now under investigation for alleged wrongdoing themselves.

On February 20 in London,  Benedict Worsley, Otkritie Bank’s lead witness against the former administration of Trust Bank, was charged in the UK High Court with breach of trust, unlawful profiteering and taking bribes from Otkritie Bank.

Proceedings by the officials of the two banks and the Russian Deposit Insurance Agency  in Moscow, London, New York and Cyprus have been reported on this website since October 2015. What began with the failure of Trust  turned into the failure of Otkritie.  And what appeared at first to be a loan recovery and liquidity problem became one of the largest bank bailouts by the Central Bank —   or raids on public funds, depending on what the accounting evidence is still to reveal. More than $4 billion is at stake.  What has happened to this money is still unaccounted for.

No executive or official of Otkritie Bank or the Central Bank has so far agreed to answer the questions reported in this story archive. Part of the record of what they claim can be read though their lawyers’ briefs and depositions in records of the UK High Court and the New York State Supreme Court.

The last report published on the case appeared two months ago. Then the news was that Vadim Belyaev, chief executive of Otkritie Bank and the key figure in the takeover of Trust Bank,  had left Russia and taken up residence in the UK. He was reportedly  under investigation by the Central Bank administrators of Otkritie and the Deposit Insurance Agency; he had run away, as reported here.    

Left: Vadim Belyaev; right, Ilya Yurov.

In that article, the former chief executive and control shareholder of Trust Bank, Ilya Yurov, provided direct testimony inculpating Belyaev, Otkritie Bank and its shareholders, the Deposit Insurance Agency and the Central Bank. According to Yurov, “the whole issue of the ‘rehabilitation’ of Trust Bank was engineered maliciously by Vadim Belyaev and his colleagues from Otkritie in a conspiracy with top executives of the Deposit Insurance Agency (DIA) and the Central Bank of Russia (CBR). Their one purpose was fraudulent — to funnel all the DIA and CBR financial support to the sole benefit of Otkritie’s shareholders,  and to extract as much cash and assets from Trust as possible for the benefit of the same shareholders.”

“The character and size of Otkritie’s fraud are now clear to everybody,” Yurov added. “The Otkritie holding company purchased full shareholding and operational control over Trust Bank for around $140,000 (Rb10 million) in April 2015. Since then, as of the end of August 2017, they funneled not less than $4 billion (Rb228 billion) of long-term state funding — including $2 billion (Rb126 billion) which had been provided by the Central Bank as ‘financial support’ to Trust Bank. Instead, this money went to the benefit of the Otkritie holding by itself. In addition to these astronomic sums of money, Otkritie stripped assets from Trust by compelling Trust Bank to pay about $700 million (Rb40 million) for purchase of equity in Otkritie Bank just days before the collapse of Otkritie.”

Benedict Worsley, a British citizen, has been identified in the reporting to date, and in the High Court records, as a material witness in the allegations Otkritie Bank have laid against Yurov. Litigation continues on these allegations in the UK and Russia.   

Last week Worsley was charged by Yurov for having violating agreements between them since 2009, and betraying Yurov’s trust in the management of Yurov’s private office. Otkritie has suborned Worsley, Yurov alleges, for a cash salary of $32,500 per month, starting in December 2015; a bonus of $125,000; and a bounty of “between 1.5% and 4% of the net value of any assets [belonging to Yurov] recovered by the Second Defendant [Otkritie Bank] from third parties.” For the full Particulars of Claim lodged in court, click to open

Worsley’s reward from Otkritie, according to the court papers, required him to disclose tthe documents he was holding on Yurov’s affairs, including personal emails, SMS and other telecommunication texts, financial accounts, bank statements and asset details of companies which Worsley had been managing for Yurov or Trust Bank  He was also required to testify against Yurov in courts where Otkritie was litigating.  

In addition to salary, bonus and bounty, Worsley agreed with Otkritie that he “was entitled to be reimbursed all travel (including business class flights and four-star hotels).” The court documents say this involved travel  to London, Dubai and Cyprus. They don’t distinguish between four-star and five-star hotels, though this is independently reported to involve fresh flowers in the hotel rooms and the availability of valet parking.  

Otkritie Bank also promised Worsley it would obstruct investigations of him  by criminal prosecutors in Russia, the UK or the US, and “shall not notify [sic] any public prosecutor, regulator and/or money-laundering authority regarding any alleged unlawful conduct committed by [Worsley].”

The Otkritie Bank agreement with Worsley was signed on November 17, 2015. Signing for the bank was Belyaev’s deputy, Dmitry Popkov. At the time Popkov was also a director of the Trust Bank’s board. He appears to have lost his job at Otkritie last December and his seat on the Trust Bank board. 

Left: Benedict Worsley; right, Dmitry Popkov.

The charges against Worsley are civil, not criminal.  He is accused of breaching “obligations of trust and confidence and without the consent of the Claimant [Yurov]…[and] unlawfully made use of the Claimant’s confidential information…Further, the First Defendant [Worsley] has unlawfully made secret profits and/or accepted bribes for himself by unlawfully entering into an agreement with Second Defendant [Trust Bank].”

Worsley was identified in a filing by an Alfa Group associated company last December as a resident of the UK.

Source: https://beta.companieshouse.gov.uk/company/07053243/officers

He has identified himself in corporate filings known as the Panama Papers and in media reports as a resident of France, with a home at Vallabrègues,  and a property he operates as a holiday rental at Durfort, 80 kilometres west  of Nimes.

The published files from the Panama Papers identify one of Worsley’s French addresses as associated with several other company names.  The Cyprus evidence reveals more than a hundred company names.

Source: https://offshoreleaks.icij.org/nodes/12169630

Last week’s High Court papers say Worsley is “a businessman carrying on business from premises [at’] Al Faseel, Fujairah, in the United Arab Emirates.”

Worsley was asked at his current email address to clarify what money he had received from Otkritie Bank, as claimed in court. He was also asked to respond to the allegations that he took bribes from Otkritie to betray Yurov.  He refused to answer on the record.

Worsley’s value in Otkritie’s prosecution of Yurov will be wiped out if the High Court rules in Yurov’s favour, and grants his request for an injunction to prevent the information Worsley has sold to Otkritie from being admissible in proceedings against Yurov. 

Mikhail Zadornov, the Central Bank and Deposit Insurance Agency appointee now heading Otkritie Bank, was asked to clarify whether the bank has claims for wrongdoing against his predecessor Vadim Belyaev; what he knows about Belyaev’s whereabouts; and whether he is cooperating in the bank’s investigation of its losses. The Central Bank and the General Prosecutor were asked the same questions. They all refuse to say.

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