Germans Bust Russian Money-Laundering Gang

by Ulrika Lomas, Tax-News.com, Brussels

28 August 2001

The German authorities last week announced the busting of a German-Russian money laundering ring. Subsidies worth $7m given by the Russian state for the construction of a bottling plant for mineral water and food manufacturing plants were embezzled in 1995 using bogus companies, according to the Federal Office of Criminal Investigation in Wiesbaden and the public prosecutor's office in Bremen.

The main defendant has been under lock and key in Bremen since 1999 because of other cases of fraud, attempted money laundering, and armed robbery, as well as tax evasion. In the new case, the 40-year-old man is accused of five counts of money laundering as well as of aiding and abetting the embezzlement of money to the disadvantage of a Russian company.

The group is said to have forged the contracts and received the full amount for the plants, which, however, cost only half the money. The main defendant is believed to have used his contacts with a senior administration official in a region in Caucasus who was responsible for assigning the subsidies.

The defrauders moved their their criminal profits across a number of international financial centres. The main defendant allegedly transferred some $825,000 to his own accounts in Germany and Spain. Other tranches of the money seem to have been moved through Luxembourg, where the authorities have blocked about $1.5m.

The suspected mastermind of the gang entered Germany from the Russian Federation in 1994 and holds a German passport. According to the investigators, he is an "authority among criminals" and maintains close business and private contacts with leaders of Russian criminal organizations. Sounds perfect to be the finance minister of one of the small central european republics that are learning to deal with the EU Commission.

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