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Insider Reveals Details Of Russia's Greatest Financial Scam

by Lucy Komisar

Russia's Richest Man Arrested, Charged With Fraud
Witness for the prosecution (AR) PARIS -- Russian prosecutors are pouring over thousands of documents related to Yukos oil scandal, the giant Menatep business group and its offshore banking and securities dealings over the past decade.

The papers offer a window on the dramatic rise and fall of billionaire Mikhail Khodorkovsky, the Russian oil tycoon and that nation's richest man. He is now being held in prison following seizure of his oil company Yukos, Russia's largest petroleum exploration and development firm.

Providing the documents is insider Yelena Collongues-Popova, 49, a Russian living in Paris, who claims that she worked for Khodorkovsky associate Alexei Golubovich from 1996 to 2000.

The Yukos tale is a long, complex and controversial one, requiring lengthy and painstaking substantiation. The investigation took over a year and filled 200 volumes of evidence.

Public interest in the Yukos controversy is high, and charges and countercharges, mostly of a political nature, are being flung about so wildly in the media that it essential to focus on the evidence behind the accusations against Khodorkovsky and his partners.

Khodorkovsky, who was jailed Oct. 25 following a raid on his office and the seizure of about half of the company's stock by Russian authorities, has not been convicted of any crime, however, and has repeatedly described his imprisonment as a political strike against him by President Vladimir Putin resulting from Khodorkopvsky's interest in seeking the Russian presidency. Some of that stock was returned, and it is now being traded again on international exchanges. Khodorkovsky resigned at CEO of Yukos on Nov. 2. His shares in the company have been frozen by prosecutors.

Khodorkovsky was charged with seven counts of fraud, embezzlement, forgery and tax evasion. Two ex-bankers have also filed a criminal complaint with the Swiss attorney general against Khodorkovsky, Platon Lebedev, and Alexei Golubovich, accusing them of money laundering and support for a criminal organization.

Golubovich is said to have fled to London, but there is no warrant for his arrest. However, French businessman Roger Kinsbourg, who has lived with Collongues-Popova for 10 years, said that Golubovich has offered to have MVD (Ministry of Internal Affairs) agents meet with his lawyers in London.

On paper, a major shareholder worth hundreds of millions of dollars
Kinsbourg said that the Russian Interior Minister asked Collongues-Popova to come to Moscow in July to testify about the frauds and use of forged documents and tax evasion by Yukos, Golubovich and Russian investors. He said that she would not go, as she believes it to be too dangerous. But, on Aug. 4, she sent the Russian Tax Police six pounds of documents, including corporate papers, trading reports and bank statements from 1996 to 2000, that she says show insider dealing and tax evasion by Golubovich on behalf of himself and the Menatep empire controlled by Khodorkovsky.

In fact, the MVD made her an offer she couldn't refuse. Kinsbourg said: "They said she is an accomplice, and that 'We will try to extradite you to Russia if you don't co-operate.' Yelena is a French citizen, but there are problems if you go to a third country. She doesn't want that. She hasn't been given immunity by Russian prosecutors."

After Collongues-Popova provided the MVD with her documents, the MVD, in return, made available to her papers that show that her signature and identity were used without her knowledge for transactions of Yukos shares. It is a crime to do a stock transfer without knowledge of the owner or through falsification of the owner's signature.

He said, "The MVD sent us documents relating to Yelena receiving shares of Yukos. According to documents she had ownership of zillions of shares and that she transferred them to other entities. But she did not have the shares. A lot of [the transfer documents] were not signed by Yelena. He said the MVD had found papers "with Yelena involved in companies she didn't know she was involved in. It may be that some of those Yukos shares are invalid, because she didn't sign those papers." He said, "We got pages of questions from the MVD: 'Did you sign this, did you sign that?' They asked for fingerprints and a notarized signature."

Kinsbourg explained that, through offshore companies, Collongues-Popova and her son, a former colonel in the Russian special services, had been listed as directors of companies holding hundreds of million dollars worth of shares of Yukos and other Menatep companies.

Kinsbourg showed me numerous such papers. One of them was related to a company named Sequential Holdings. In 1999, Collongues-Popova was a director of Sequential Holding Russian Investor, a shell company that held 12.5 percent of Yukos.

Using similar sounding names to trick banks
Golubovich, with a fortune estimated at $1.3 billion, has been a business partner of Khodorkovsky since 1989, when, according to Collongues-Popova, they formed Bank Menatep. Various companies carrying the name Menatep were formed under several offshore and European jurisdictions. Its successor, Menatep Group, is the holding company of Yukos, and Gibralter-based Menatep is now a controlling shareholder in Yukos. Still another, Menatep Trade House, was reregistered as Russky Produkt.

Kinsbourg said, "His trick was to do companies with similar or partly similar names." He explained that a check sent to one "Russian Investors" could easily be cashed by another. Among the companies was also Sequential Holding Russian Investors, a shell company that held 12.5 percent of Yukos.

Collongues-Popova's connection with the Khodorkovsky empire began in August 1995 in Saint Tropez, on the French Riviera, at the home of Frenchman Bernard Loze. There, she met Golubovich, who was then deputy chairman of Menatep Bank. He said, according to Collongues-Popova, that he had started Menatep with Khodorkovsky in 1989. Loze is a stockbroker and portfolio manager who specializes in the offshore management of fortunes. Today he is a board member of Yukos.

From 1996 to 2000, Collongues-Popova said she ran the offshore operation for Golubovich, who was then financial director of Yukos, the oil company at the heart of the Khodorkovsky empire.

Collongues-Popova worked directly with Golubovich at Menatep Trade House, then a branch of Menatep Bank. She says that at Golubovich's instruction, she set up 30 shell companies to be owned by him and registered in six countries. Kinsbourg says he has bank account documents that list the companies' ownership and many transactions carried out by them.

Collongues-Popova was the director of many of the companies and the owner of Coffee Commodities, which she had earlier set up for her own trading, and of Russian Investor Group of Panama. The latter is not the Russian Investors OAO, which is Golubovich's Moscow brokerage.

Some of the offshore companies held Yukos shares, and Kinsbourg said that Collongues-Popova had held as much as 30 percent of Yukos' shares in shell companies.

Collongues-Popova said she opened accounts "to receive money from other offshore companies." She said, "Significant transactions of stocks of private Russian companies quoted on the Moscow Stock Exchange passed under my signature in the years 1997 and 1998. They constitute the evidence of insider crimes and of infringements of the anti-monopoly laws." She said the companies were also used for "operations of tax evasion and transfer pricing."

Collongues-Popova said she also dealt with Rosprom, Khodorkovsky's chief holding company at the time, and other Khodorkovsky/Menatep companies in operations that involved "the purchase at cheap price and the resale at market or fixed prices of advance industrial material or manufactured goods [such as textiles] in factories belonging to the Menatep Rosprom-Khodorkovsky Group." She said, "These 'back-to-back' transactions were intended to enrich a certain number of people on the profits realized in undervaluing the goods embezzled from the assets of companies controlled by Menatep and resold at full price."

Collongues-Popova said she used offshore companies to effect back-to-back sales of Rosprom-held shares in order to evade Russian taxes. Kinsbourg explained that "they would transfer shares to an offshore company making believe it was real buyer; but in fact it was themselves, and they would roll that to a final buyer."

Kinsbourg said Collongues-Popova moved shares via offshore companies also to escape tax on capital gains for the true owners. He said, "We have papers showing the purpose of this exercise was to escape taxes using Yelena as the foreign investor. She had hundreds of millions of worth of shares. Yelena, her son, and myself -- I accepted to appear to be a shareholder of a tire company -- all this is coming out."

Sent her to Moscow with "a red carpet and chauffeur, a big show"
"They also put the stocks of companies offshore in order to evade the Russian anti-trust law," Collongues-Popova said. The true owners listed her as the owner of stocks also so that the thresholds of participations in the companies by non-Russian residents were not exceeded. She said that was done without her knowledge through a company called Wilk Enterprises Ltd. of Cyprus. She said, "This explains the existence of about 15 offshore companies with Swiss accounts under my signature."

To persuade authorities she was a big foreign investor, her bosses sent her to Moscow with "a red carpet and chauffeur, a big show," she said.

Collongues-Popova noted that "certain 'mysterious' fortunes" grew along with the flight of capital from Russia, particularly at the time of the financial crisis of August 1998, and "supported by fictitious contracts intended to comfort the recipient banks" that "due diligence" had been done in the various bank havens." She said the resulting profits were "concealed in Switzerland, Luxembourg, the United Kingdom, Cyprus and the United States." She said transfers to the "great money-center banks" such as J.P. Morgan Chase, the Bank of New York and Citibank appear on the bank statements of the Swiss accounts under her signatures.

They were, she said, "opaque financial arrangements or the products of trade operations relating to Group Menatep, as well as various Russian companies in which Menatep held participation or by Rosprom." She said money came from Russia, Cyprus (via the Bank Menatep subsidiary of the same name in Nicosia) the United States and London.

Collongues-Popova said that "more than $300 million was forwarded by various Golubovich-connected shell companies to the Swiss bank accounts in 1998." She said she handled transfers to bank accounts set up by Golubovich and his wife for some of these funds.

Kinsbourg said instructions given to Swiss banks were signed by Golubovich but relayed from Russia to Paris to Geneva. "He didn't want to fax direct since faxing direct from Russia to Switzerland is not a good idea."

Kinsbourg says that Collongues-Popova has bank statements that show Golubovich as the beneficial owners of the assets placed by the offshore companies, "We have 100 pounds of bank statements. It's been seized by the French Tax Police. She doesn't want to put herself in a situation where she may be sued for divulging some of the information to third parties."

"The goal was to get [listed] on the New York Stock Exchange"
Since many stock purchases were in the names of shell companies Collongues-Popova had set up, she paid out millions of dollars in transfers in her name. Then in October 1998, the French Tax Police staged a raid on her apartment. The French were looking into connections to the Bank of New York money-laundering scandal, which investigators believed involved Menatep.

Documents they seized showed that Collongues-Popova had paid tens of thousands of dollars for trips and entertainment -- the mark of a rich woman who hadn't paid appropriate taxes.

The French ordered her to pay 15 million euros [over $15 million] in tax and penalties. She sought Golubovich's acknowledgment that the companies were part of his operation. He balked. Instead, in 1999 and 2000, as Collongues-Popova's trouble with the French tax authorities became increasingly severe, Kinsbourg said Golubovich or members of his staff took over her directorships.

In late 2000, responding to a French request through Interpol, Russian police conducted an investigation of Collongues-Popova's affairs in Moscow.

At the same time, Khodorkovsky had to clean up the ownership structure of Yukos, according to Kinsbourg. Kinsbourg said, "The goal was to get [listed] on the New York Stock Exchange. You can't go on the stock exchange saying there's a myriad of offshore company holders, nobody knows who the shareholders are. Nobody's going to invest; not at that level." So, he said, the Khodorkovsky group put together a trust arrangement with Menatep in Gibralter and forged Collongues-Popova's signature in 1998, 1999 and 2000 to transfer the shares held by offshore shell companies, to make official what they already had. He explained that "Yelena was in Paris, and they couldn't send paperwork here back and forth daily, so they just forged her signature without her knowledge." He said one document showed Collongues-Popova with 50 million or 60 million Yukos shares worth $15 a share.

Kinsbourg, however, admits that "we have documents but we can't always reconcile the links. We can't identify whether the shares Yelena controlled through offshore companies ended with those names [of major owners] or the trust. We don't have the chain of transfer. We have a blank between the moment Yelena held millions of Yukos shares in various companies and when you find them later." She does not have paperwork to show which of the shares she transferred eventually ended up in Menatep Gibralter or other jurisdictions. The paper trail goes cold from the time the shares leave her hands, he said.

"The way they operated was to try to make it obscure; even if we have some of the documents, we don't have the continuity," Kinsbourg said. "Only the MVD, which has other documents, can make that reconciliation."

Further, Collongues-Popova controlled offshore companies and accounts only of Golubovich and had no direct dealings with either Khodorkovsky or Platon Lebedev, another Yukos shareholder who has been in prison since July of this year.

Collongues-Popova is seeking to freeze Golubovich's Swiss assets. Kinsbourg said, "Because we have the aggravation with taxes that is his fault, we are seeking to freeze that money to protect it under the "right of retention." She has also filed criminal charges in Switzerland against Golubovich, charging that he forged her signature to get $5 million from a Swiss account she operated for him.

Last year, Collongues-Popova negotiated via Lebedev for a settlement to pay her French taxes and penalty. Kinsbourg said Lebedev expressed concern that the dispute was having a negative impact on Yukos stock. Kinsbourg related: "Lebedev said, 'I want to be middleman for settlement. To prove my good will, I will give you half a million dollars as pocket money for Yelena to pay her bills.'"

Kinsbourg said, "There were over 100 million French francs in taxes; we were not interested in half a million. We refused. Then things got tougher. Yelena said, 'Maybe if I'm not compromised...' They said, 'OK, no problem, we'll give you a straight loan." But then Lebedev withdrew the offer. "They are idiots," said Kinsbourg. "Yelena now is a witness for the MVD."

Lucy Komisar has written extensively about money laundering for many publications, including the New York Times, Washington Post and the International Herald-Tribune

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Albion Monitor November 19, 2003 (

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