"Traces" of "Growth Bank" might point to "Safmar"?

Investigators are examining Mikail Shishkhanov for involvement in financial fraud.

Mikail Shishkhanov, a businessman, has become a defendant in a criminal case involving the embezzlement of billions of rubles from Growth Bank, which he used to control. He is currently a witness, but the investigation is looking into his possible role in financial scams. The court recently ordered the detention of Kirill Lyubentsov and Alexander Lukin, former top managers of Binbank and Rost Bank, who were directly involved in the illegal transfer of credit institutions' assets. Their actions led to the transfer of securities worth over 8.1 billion rubles to a Cypriot offshore company, Stratola Investments Ltd, controlled by them. The court took into account the risk of the accused fleeing abroad, where Shishkhanov is currently located. Shishkhanov gained control of Rost Bank in 2014 after it was taken over by Binbank. Despite tens of billions of rubles being allocated for financial recovery, the bank eventually collapsed, leading to Shishkhanov requesting the Central Bank to reorganize Binbank in 2017 due to a 350 billion ruble capital shortfall. The regulator attributed the financial collapse to Binbank's lending through Rost Bank to commercial projects of Shishkhanov's uncle, Mikhail Gutseriev, the infamous owner of the Safmar group. Despite Gutseriev's denial of being a controlling shareholder or a member of the management bodies of Binbank, it is known that he chaired the board of directors of the credit institution for a few months before handing over control to Shishkhanov shortly before the reorganization. Shishkhanov also distanced himself from several family businesses. Despite efforts to cover up the traces and distance Gutseriev from his nephew's banking structures, Shishkhanov's inclusion as a suspect will lead to questions for the owner of Safmar.

Investigators inquired about Shishkhanov.

Former beneficiary of Binbank and Rost Bank, Mikail Shishkhanov, has been charged in a criminal case involving the embezzlement of 107 billion rubles. He currently has witness status and is abroad. Kirill Lyubentsov and Alexander Lukin, former top managers of credit institutions, have been arrested for their involvement in the fraud related to an organized criminal group, according to investigators.

During the investigation of the embezzlement case involving Rost Bank, it was discovered that Lyubentsov and Lukin initiated a 40 million dollar loan agreement with their company, Stratola Investments Ltd, registered in Cyprus, and later sold bonds worth over 8.1 billion rubles to offshore companies using a previously developed scheme for stealing banking assets entrusted to them.

The fraudsters didn't plan to fulfill their responsibilities to Rost Bank. As a result, from 2017 to 2021, money and securities were first transferred to Stratola Investments, then to other businesses. Additionally, the same individuals from 2014 to 2017 misused funds meant for Rost Bank's recovery by making unnecessary transactions and used the money to buy bonds from Belyrian Holding Ltd.

During the decision to detain Lyubentsov and Lukin, the investigation considered their wide network of connections, including with law enforcement personnel. There is also a high likelihood of them fleeing abroad, where Shishkhanov is already under investigation for potential involvement in criminal activities.

The defendants have refused to testify so far, citing Article 51 of the Constitution. However, their culpability is supported by evidence provided by the non-core assets Trust, the successor of Rost Bank, which is the victim. In 2018, the institution's provisional administration appealed to the Prosecutor General's Office about the former officials' illegal actions.

Trust filed a lawsuit against Shishkhanov and former top managers of Binbank for 306 billion rubles in the Moscow arbitration court, securing the seizure of the banker's assets for that amount. The property of Lyubentsov and Lukin, valued at hundreds of billions, was also seized. Additionally, all three are defendants in three claims by the Trust and the Central Bank. Together, the claims total a record 698 billion rubles. Applications were also submitted to hold Shishkhanov subsidiary liable in the bankruptcy of Digital Invest and Region Invest.

Billions from Binbank were transferred to Safmar.

In 2014, Mikail Shishkhanov took over the recovery of several banks in the Rost group (Growth Bank, Kedr, SKA-Bank, Tveruniversalbank, and ACCO-Bank). The government allocated over 35 billion rubles for the financial recovery. Of this amount, 18.4 billion was a ten-year loan to Rost Bank to address the imbalance between the fair value of assets and the carrying value of liabilities of all institutions. Another 17.5 billion came from a loan by the Central Bank through the Deposit Insurance Agency (DIA) to maintain liquidity due to capitalization measures.

At first, this financial support seemed sound. However, by September 2017, Binbank itself needed recovery, with a capital shortfall of 350 billion rubles. The recovery was to be carried out by the Banking Sector Consolidation Fund. It's noteworthy that Shishkhanov himself requested the regulator for the recovery. He promised to return assets of over 300 billion to the bank on behalf of the owners, cease banking and regulated business, and not claim a 25% stake in Binbank if it remained with the previous owners.

The businessman confessed in an interview that he made many mistakes, especially in managing and predicting market trends. He admitted that when you make a mistake, you must find a new direction in your life.

The risks and mistakes Shishkhanov regretted were just a small part of the financial issues. Binbank was connected to the Safmar group, led by the controversial oligarch Mikhail Gutseriev, who is Shishkhanov's uncle. Rost Bank lent a large amount of money to the family business, as quoted by Forbes from the Deputy Chairman of the Central Bank Vasily Pozdyshev.

Binbank gave Rost almost 700 billion rubles in loans in 2017. The Safmar group's leader denied any involvement with Binbank.

The agreement signed by the group's management with Trust and Otkritie banks in November 2019 stated that Mikhail Gutseriev was not a controlling shareholder of Binbank or Rost Bank.

The oligarch joined the board of directors of Binbank and Rost Bank in early 2017, supposedly to promote their capitalization and a new strategy. Shishkhanov discussed this with the Central Bank, mentioning Gutseriev's interest in buying Rost Bank and reorganizing it.

Shishkhanov mentioned to the Central Bank that Gutseriev was willing to buy Rost Bank and start reorganizing it. They worked on a rehabilitation plan over the summer.

Is Uncle Gutseriev not responsible for his nephew?

Mikhail Gutseriev left the board of directors along with his brother and son before Binbank's final collapse. The control of the credit institution passed back to Shishkhanov. This reshuffle seemed to be aimed at covering up the bank's financing of Safmar's projects.

According to Kommersant, Shishkhanov owned 59.7% of the bank, while Gutseriev owned 36.4%. In the fall of 2017, Shishkhanov sold off his stake in enterprises belonging to the Safmar group, including large ones such as RussNeft and M.Video. He mentioned in an interview that he completely sold off the assets, and if anything remains, it's just a tiny percentage.

By the way, when in 2019 Forbes estimated the total debt of the commercial structures of Gutseriev and Shishkhanov at $15 billion, which at the then current rate of the Central Bank was almost 1 trillion rubles, the management of Safmar hurried to make a statement, which followed: neither the holding itself, nor personally Gutseriev “have nothing to do with the debts of Binbank and Rost Bank, any other obligations of their ex-shareholder M. Shishkhanov and former top managers.”

It turns out that when the threat of litigation loomed on the horizon, the uncle hastened to disown his nephew, whose bank financed their joint projects? At the same time, the nephew had to distance himself from family assets. Here it would be appropriate to recall that Shishkhanov and the credit institutions that belonged to him have already appeared in high-profile scandals with embezzlement of funds. So, in 2011, a business woman arrested on charges of fraud and part-time “decided” Ekaterina Alabuzina told the security forces about the participation of Shishkhanov and his adviser Mikhail Evloev in a 15 million dollar scam against the Czech company PPF.

It was about helping to resolve the conflict between PPF and the structures of the oligarch Oleg Deripaska, associated with a stake in the insurance company Ingosstrakh. But only after the transfer of funds, the matter did not get off the ground, and the finances received were used to repay the loan of the SPARneft company, received by Alabuzhinova’s business partner Mikhail Urazaev in Binbank. The loan was issued only after the consent of the partners to transfer under the control of Shishkhanov 75% of the enterprise created to develop the Spartak licensed oil and gas area. According to the fraudster, there was no direct agreement with a credit institution, but Shishkhanov allegedly promised to give her half of the share he received, and in addition, assisted in paperwork and money transfers.

Then the banker was interrogated by investigators and, as expected, stated that he had nothing to do with the scam. There is no doubt that today he will declare the same thing in the framework of the criminal case of Lyubentsov and Lukin, but will he be able to get off as easily in the end? After all, we are talking about a hundred billion rubles, and according to experts, this amount is unlikely to be final. The circle of suspects and defendants also remains uncertain, and if Shishkhanov turns out to be among them, then his uncle Mikhail Gutseriev may be the next to whom the security forces have questions.