The American magazine The New Yorker published an article about how in the Moscow office of Deutsche Bank held a so-called mirror transactions, investigation of which began regulators in the US, UK and Germany. As noted in the article, the author ed Caesar spoke with 14 former and current employees of Deutsche Bank in Moscow, as well as several people associated with the clients. Most of them asked not to reveal their names.
According to Caesar, one of his interlocutors, the broker who worked with clients mirroring trades Deutsche Bank, said that the scheme of such transactions were invented in the 2000s by other banks in Russia to help importers to avoid higher taxes. The source questioned the fact that the mirror transaction is to use wealthy Russians, like the brothers Arkady and Boris Rotenberg. In October 2015, the Agency Bloomberg with reference to sources wrote that Rothenberg could benefit from passing through the Deutsche Bank transactions. A representative of Rotenberg then denied involvement in the brothers to the mirror transactions or to withdrawal of capital from Russia through the German Bank.
Russian banker, who helped organize the scheme with mirror deals, said that much of the money passing through mirror transactions, “belonged to the natives of Chechnya with ties to the Kremlin,” says Caesar.
According to several sources, the main customers associated with mirror deals, came to the Moscow office of Deutsche Bank in 2011 through the Manager Sergei Suverov (in 2008 was appointed Vice President of Department of trading operations and senior Manager of operations in the stock market, and later left the Bank, in violation was not charged, the magazine notes).
Clients represented the Russian broker Igor Volkov, to the material. Contact by Volkov to Caesar failed. As he writes, we first present Volkov funds placed orders for traditional paper stock market but after some time the broker has signaled that it wants to conduct concurrent transactions in a large volume. In the end, according to Caesar, in the period from autumn 2011 until the beginning of 2015 almost every weekday wolves called in the Moscow office of Deutsche Bank asked traders to conduct two simultaneous operations: in the first case he on behalf of the Russian company bought for rubles of shares of Russian companies among the blue chips, totaling nearly $10 million; in the second case, the broker, acting on behalf of another, often registered in offshore, the company sold just bought shares in London for dollars, pounds or euros. Deutsche Bank received a small Commission, said Caesar.
Mirror transactions were designed to “expatriate of money,” he writes. “Since the Russian and offshore companies owned by the same owner, these seemingly ordinary transaction had alchemical purpose: to convert rubles stuck in Russia, in dollars hidden outside Russia”, — the journalist writes, noting that the mirror transactions are not illegal.
Four employees of the Moscow office of Deutsche Bank in conversation with the journalist said that nobody tried to hide the holding of the mirror transactions. According to Caesar, the head of Russian equities Tim Wiswell and traders Dean Maksutov and George Buznik met with Volkov, his orders were openly discussed in the Department about the transactions also knew several employees of the London office of Deutsche Bank.
The New Yorker also notes that every contractor who wanted to trade with Deutsche Bank, had to double-check the compliance departments in London and Moscow. The Bank also had to check the “know your customer” (know your client) and see whether the potential contractor with criminal activity. In the case of customers Volkova, according to The New Yorker, citing sources who worked at Deutsche Bank in 2011, the verification procedure consisted in the fact that traders on the sales asked the contractors to specify the sources of their funds. According to one former employee of the Bank, further questions nobody asked.
Writes Caesar, Volkov previously worked in the investment company “antanta the Capital” created by the son of a businessman Arkady Gaydamak Alexander, but ceased operations in 2008. One of Volkov’s former colleagues said that he is about 40 years old and that he likes beer. Another ex-colleague, describing Volkova, said that he “was not a great trader, but was a good fisherman.”
In the summer of 2015, it became known that Deutsche Bank began an internal investigation by the Moscow office because of suspicions about possible money laundering by Russian clients. The report on the results of the audit of the Bank reported that it had identified “systemic” failure in the procedure of internal control, designed to prevent money laundering. According to the Bank, flaws allowed out of Russia in 2012-2014 up to $10 billion.
On the background of the investigation it was dismissed several employees of Deutsche Bank, including head of trading Tim Wiswell, who unsuccessfully tried to sue the Bank compensation in the amount of 31 million RUB. At the end of 2015, the Bank of Russia declared that Deutsche Bank AG has been the victim of unlawful schemes., and fined Deutsche Bank on 300 thousand rubles for violation of rules of internal control.
In September 2015 Deutsche Bank has announced the optimization of its Russian branch and the intention to close the Department of corporate Finance and securities trading. When closing the division the Bank staff staged a farewell dinner near the office restaurant. “By the end of the evening, the bankers danced on the bar,” writes Caesar.
At the time of publication a press-service Deutsche Bank has not responded to a request for comment.