19 Nov 2019
For years, banks in three Eastern European countries were stripped of assets by their owners using a blunt but efficient scheme made possible by Meinl Bank, a venerable Austrian financial institution that lost its license last week.
Hundreds of millions of euros were siphoned out of Ukraine, Latvia and Lithuania, punching holes in state budgets and leaving creditors empty handed, according to a six-month investigation by OCCRP and its Austrian partners, profil and ORF.
At the heart of the scheme was Meinl, which had gambled big — and lost — in real estate before turning to a profitable new business: helping bankers across Eastern Europe siphon money from their own institutions. The business helped keep Meinl afloat but the bank, now called Anglo Austrian AAB Bank AG, may pay the ultimate price.
On November 15, the European Central Bank (ECB) revoked the private Viennese bank’s license.
“The license of Meinl was revoked due to its history and the violation of due diligence over the past few years,” Helmut Ettl, executive director of the Austrian Financial Market Authority, said Friday.
In a statement to OCCRP, the bank said it regrets the revocation decision, which it called unnecessary.
“(T)oday’s decision by the ECB does not change anything; the bank will continue and complete its withdrawal from the banking business as planned,” the bank said, adding that unspecified “legal steps are currently being evaluated.”
Authorities in four countries have confirmed criminal investigations of operations facilitated by Meinl Bank between 2011 and 2015, when hundreds of millions of dollars and euros from other banks flowed through Meinl accounts before disappearing into shadowy offshore companies.
The investigation by OCCRP and its partners found evidence that Meinl helped bankers in Ukraine, Lithuania and Latvia bypass regulations and bans, shifting vast amounts of money out of their banks just before their collapse.
“If you know that your customer is a fake company, shell company, that siphons money abroad… and they knew that. … Meinl Bank knew and never informed no one about these schemes,’’ Valeria Gontareva, former head of Ukraine’s central bank, said in a recent interview. In a statement last week, the bank dismissed Gontareva’s allegations.
“According to our information, Mrs. Gontareva can no longer enter Ukraine, her apartment was searched by law enforcement in September and she is currently suspected of having laundered money on a large scale for both ex-president Yanukovich and ex-president Poroshenko,’’ the bank said. “It is strange … to use such a person with a bad reputation as evidence for an alleged misconduct of (Anglo Austrian Bank).”
Gontareva on Monday said she sees no reason to react to the Austrian bank’s accusations. “Who is Meinl Bank to accuse me?” she said, then called the bank’s comments about her “a stupid joke.”
The Vienna bank job employed a form of international financing called back-to-back loans, through correspondent accounts other banks set up at Meinl. Such accounts are mainly used to facilitate international trade and make payments in different currencies fast and simple. But at Meinl, some accounts were allegedly set up to benefit the banks’ owners.
Typically, banks in places like Ukraine would guarantee a Meinl loan to an offshore company with opaque ownership or a direct tie to the banks’ owners. The “borrower” would then default, prompting Meinl to invoke the guarantee and recoup the money from the originating bank.
Left to pay the bill were ordinary bank customers and, ultimately, states with national deposit guarantee systems. Ukraine, where some 100 banks were placed under state supervision and closed in 2014 and 2015 due to questionable accounting practices and suspected money laundering, was hit particularly hard.
The Ukrainian Deposit Guarantee Fund (DGF) estimates that 14 banks used corresponding accounts at Meinl to move US$385.6 million and 75.7 million euros that disappeared during the Ukrainian financial crisis.
Banks in Lithuania and Latvia, meanwhile, lost some 54 million euros that went offshore via Meinl Bank.
While Ukrainian banks lost more money, the Baltic banks present the clearest record of how the Vienna bank job worked.
On December 16, 2011, Russian banker Vladimir Antonov entered London’s Westminster Magistrates Court to fight extradition to Lithuania, where he was accused of stripping his own bank of assets. A few weeks earlier, Meinl Bank had helped Antonov take some 11 million euros from Snoras Bank through back-to-back loans to his Belize shell company, Melfa Group, after the Bank of Lithuania banned all loans to Antonov or his businesses.
Documents show Meinl also helped Antonov pump assets to Melfa from two other banks he owned: Krajbanka in Latvia and Konversbank (later City Commerce Bank) in Ukraine.
Using Meinl, Antonov shifted some 113 million euros to his offshore company, according to documents obtained by profil and OCCRP.
Antonov was known for his passion for fast cars, which included hyper-expensive Spyker sports cars owned through his bank and investment in the Dutch sports car manufacturer. His Snoras bank made a surprise appearance in Formula-1 racing as a Renault F1 team sponsor in 2010.
But race fans didn’t know that Antonov’s banking empire was running on fumes. Both Snoras and Latvijas Krajbanka would fail by the end of 2011.
Prior to 2011, Snoras enjoyed a cozy relationship with Lithuanian regulators. The daughter of Kazimieras Ramonas, the central bank’s head of supervision, was a Snoras employee. Moreover, Ramonas attended the wedding of the son of Antonov’s Lithuanian partner. Ramonas was sacked shortly after Snoras collapsed and was convicted of abuse of office, though he won acquittal on appeal last year.
But even under Ramonas’ watch, the central bank was tightening its grip on Snoras. “The Bank of Lithuania has imposed sanctions on Snoras bank as early as January 2011, banning the bank from issuing loans to its principal shareholders and companies under their control, since Snoras failed to properly assess the credit risk it was undertaking,” Vytautas Valvonis, former director of the Supervision Service of the Bank of Lithuania, told OCCRP in August.
Snoras’ subsidiary, Latvijas Krajbanka, had similar lending limits.
“There was a ban in power, issued by the Financial and Capital Market Commission. It was forbidden to issue any loans to non-resident companies (such as Antonov’s Melfa Group),” Latvian prosecutor Igors Gerasimins told OCCRP.
So Antonov turned to Meinl to help wring money from his failing banks, according to documents obtained by profil.
A SIMPLE PLAN
In July 2011, Alexander Antonov, Vladimir’s father and a Snoras supervisory board member, visited Vienna to meet Meinl deputy chairman Peter Weinzierl and Jacob Mitbreit, a representative of Meinl’s Russian desk.
According to an Austrian court ruling obtained by profil, Alexander Antonov “indicated his interest in (a) trust loan transaction where Meinl would serve as trustee” with “banks owned or controlled by the Antonov family” responsible for repaying the debt.
Vladimir Antonov and Martins Zalans, a Latvijas Krajbanka board member, made their own trek to Meinl a month later. The bankers agreed to set up the trust loan mechanism that Antonov used to shift assets from his Eastern European banks.
The plan, as later described by banking regulators and by Meinl Bank itself, was simple: Meinl would make loans to Antonov’s Melfa Group that would be secured by deposits from Antonov’s banks – 11 million euros from Snoras; 43 million from Krajbanka. Antonov’s Konversbank also kicked in 59.3 million euros.
By Šarūnas Černiauskas, Vlad Lavrov and Michael Nikbakhsh, OCCRP, 18 November 2019
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