Rossiya Bank

Communist Party ownership

On August 23, 1990, a secret memorandum from Vladimir A. Ivashko, who was Gorbachev's deputy general secretary, was issued to organize the transfer of CPSU funds, CPSU financing and support of its operations through associations, ventures, foundations, etc. which are to act as invisible economics.[2][3] Bank Rossiya was one of the hundreds of entreprises that CPSU financiers used to funnel the party gold away.[5]

In 1990, the CPSU committee of the Leningrad Oblast became Rossiya Bank largest shareholder (48.4%),[6][7] but after the coup attempt in August 1991 the bank's activity was frozen on 2 September 1991 as it was CPSU-related.[5][13] It was the first commercial bank to hold accounts for the foreign economic operations of both the regional committee of the CPSU and the local management of the KGB.

In December 1991 its activity was resumed, as the shares had been redeemed on 29 December 1991 by some member ventures of the Leningrad Association of Joint Ventures, shares of which were held by Vladimir Yakunin, Yuriy Kovalchuk, Mikhail Markov, Viktor Myachin, Andrei Fursenko, Sergey Fursenko, Yury Nikolayev.[13]

JV Neva Chance

The Austrian Russian joint venture JV Neva Chance received funds from the Revival of St. Petersburg Foundation, which was co-founded by Anatoly Sobchak and its CEO Alexander Margolis .[19][20] A Los Angeles branch of the St. Petersburg Foundation was established by Mark Davidovich Lvovich (b. Soviet Union), also known as Mark Neumann , who founded and headed the California firm Trada that received several hundred thousand dollars of "funds of UNI-REM" which Sergei Bagaev , a colleague of Anatoly Sobchak at Leningrad University, headed.[22] Leon Weinstein , an assistant to Neuman at the Los Angeles branch, and his wife Gulnara Afanasyeva were active with the St. Petersburg Foundation when it sponsored Sobchak's visit to Los Angeles.[22]

JV Neva Chance established thirty companies including JV Casino Neva.[19]

Putin's capital support from Leningrad casinos

Beginning in 1991, Vladimir Putin was St Petersburg's chairman of the supervisory board for casinos and gambling and, in 1993, began issuing gambling licenses in which shares were gained by the city of St Petersburg in the company Neva Chance which owned the first St Petersburg casino AOZT Casino because it had the same address and phone numbers as city hall, but later it became JV Casino Neva and opened on 19 August 1991.[23][24][25][26][27] In 1992 or 1993 it changed its name to Laguna, then in 1997 to Admiral Club or more simply known as Admiral.[26] According to the Yakuza Kinichi Kamiyasu[32] who supplied slot machines with cash prizes to St Petersburg casinos in the 1990s from his Stockholm, Sweden, company Dyna Computer Service AB which was a subsidiary of the Masimichi Iida owned Osaka firm, Dyna Company Ltd.,[33] the criminals Gennady Petrov ,[34] Alexander Malyshev ,[35] and Sergey Kuzmin operated the casino through a Vladimir Putin issued license in order to establish JV Petrodin in 1991.[26] JV Petrodin, which Kamiyasu owned a 35% stake and Gennady Petrov and Sergey Kuzmin owned a 65% stake through their company BXM, used the money from the casinos to provide capital for Bank Rossiya.[26][27][36][37]

Capital outflows from the Soviet Union and Russia

In March 1992, the Yeltsin government contracted Kroll Associates to track down and find very large sums of money that had been removed from the Soviet Union prior to the August 1991 putsch on the Russian White House.[38] In 1992, First Deputy Prime Minister Yegor Timurovich Gaidar said, "Last year saw large-scale privatization by the nomenklatura, privatization by officials for their own personal benefit."[39] Gaidar called the Communists and KGB officials criminals and that a "a vigorous search" for the money trails from state-owned capital had flowed abroad virtually unchecked before the collapse of the Soviet Union in the summer of 1991.[38] On March 15, 1992, the Russian government froze all capital outflows from Russia.[38] On April 4, 1992, Yeltsin issued “The fight against corruption in the public service” decree to provide for maximum transparency of officials and their institutions by providing a listing of their financial obligations, liabilities, securities, income, bank deposits, real estate holdings and their personal property and to prohibit officials from owning businesses.[40] In April 1992, Kroll Associates began their investigations with Joseph Serio heading the Kroll Associates efforts in Moscow. Also, Joseph Rosetti, the vice chairman of Kroll Associates, was in Moscow to assist.[38] The Kroll Associates determined that more than $14 billion in 1991 real dollars had been transferred from Switzerland to New York prior to the August 1991 putsch.[39] Also, the Communist Party of the former Soviet Union along with other government agencies, such as the KGB, had transferred more than $40 billion in 2014 real dollars out of the country. The assets of the Vnesheconombank were frozen during the investigation.[39] However, numerous transactions occurred to bypass the capital flow restrictions often with the British Barclays Bank in Cyprus acting a money laundering center for public officials from Saint Petersburg and Moscow.[39] According to Valery Makharadze, the government's chief inspector, many joint stock companies were formed to provide an illegal means for capital outflows from Russia, such as the Leningrad Association of Joint Ventures and KOLO.[39] Numerous officials became wealthy Russian oligarchs including numerous former KGB officials, prominent Communists such as Oleg Belyakov and other former Communists who headed the party Central Committee department that dealt with the defense industry, as well as Leonid Kravchenko, who was the former head of the state television and radio company.[39] Jules Kroll, the head of the Kroll Associates, uncovered hundreds of illicit transactions with massive capital outflows.[41] This outflow of capital from the Soviet Union and Russia directly contributed to severe economic conditions in Russia during Boris Yeltsin's second term, leading to its collapse, and resulting in the age of Vladimir Putin as the President of Russia.

During the Putin administration

As of January 1, 2005, its major shareholders were Yuriy Kovalchuk with 37.6%, Nikolai Shamalov with 9.7%, Dmitry Gorelov with 9.7% and Alexei Mordashov's Severstal group with 8.8%.[6][7][13] As of 2006, its major shareholders were Yuriy Kovalchuk (30.4%), Dmitry Gorelov (12.58%), Nikolay Shamalov (12.58%), JSC Transoil CIS (9.54%), JSC Severstal Group (7.15%), JSC Accept (3.93%) – owned by grandson of Vladimir Putin's uncle Michael Shelomov,[42] JSC Relax (3.65%), "Assistance to Business Initiatives" Non-Commercial Enterprise (3.08%), Russian Federal Property Fund (2.93%).[43]

On December 28, 2006, Fitch Ratings assigned the bank negative ratings (Long Term issuer Default rating B−, Short Term rating B, National Long Term rating BB− (RUS)[44]). As a subsidiary of the bank, ABRos Investment Company, had signed a non-transparent deal aiming to buy a considerable share of the Ren TV Media Holding (see below).[45] During the 2012–13 financial crisis in Cyprus, more than one third (26.3 billion rubles) of Rossiya Bank's total cash (85.4 billion rubles) was frozen in Cypriot accounts.[46] On June 28, 2013, its major shareholders were Yuri Kovalchuk 30%, Dmitri Gorelov and Nikolai Shamalov 10.5% each, Gennady Timchenko 8%, Gazprom about 16%, Alexei Mordashov 6%.[46] In October 2021, Svetlana Krivonogikh had a 3% stake in Rossiya Bank.[47]

The U.S. government has characterized Rossiya Bank as Putin's personal cashbox. The Pandora Papers leak revealed that the bank built a network of shadow companies that kept offshore wealth for Russian elites.[48]

Sanctions

On March 20, 2014, the United States Government Office of Foreign Assets Control added Rossiya Bank to the Specially Designated Nationals List (SDN) as part of sanctions taken in response to the annexation of Crimea by the Russian Federation, placing restrictions on US trade with the bank.[49][50][51][52] Visa and Mastercard stopped processing the bank's payment as a result.

In response, Vladimir Putin announced that he would open a ruble-only account with Bank Rossiya and would make it the primary bank in the newly annexed Crimea as well as giving the right to service payments on Russia's $36 billion wholesale electricity market – which gave the bank $112 million annually from commission charges alone.[53] Bank Rossiya also announced plans to expand into the Crimean market, becoming the first major Russian bank to do so.[54]

As of January 2019, Rossiya Bank has become the most important investor in Russia's development of its annexation of Crimea during the ongoing Russo-Ukrainian War.[55]

On February 22, 2022, British Prime Minister Boris Johnson announced sanctions against five banks, including Rossiya Bank.[56] Additional sanctions prohibiting correspondent banking relationships were imposed in December 2023.[57]