Thursday, November 22, 2012
THE RUSSIAN ROULETTE
THE DAGENS NAERINGGSLIV
September 17, 2012
On the Run.
Vitaly Arkhangelsky begun his career of billionaire in Norway. Now, he starts from scratch. He fears for his life.
THE RUSSIAN ROULETTE
With a Norvegian starting capital, Vitaly Arkhangelsky built a shipping empire in Russia. The ruined ex-billionaire is now on the run, and Interpol is looking for him. He says that he has been robbed by the bank and by powerful politicians.
Text of Eskil Engdal, photos of Kristine Nyborg and Linda Næsfeldt
Nice, London, Cambridge
Vitaly Arkhangelsky arrived in St Petersburg by the last plane. The billionaire businessman came back from a weekly business meeting in Moscow. That happened in October 2005, about one p.m. Arkhangelsky asked his usual driver to come to pick him up in a green Ford with his company’s logo on the doors, Oslo Marine Group. It took only half an hour to drive him to his house on the seashore out of St Petersburg. Once the city left behind, the forest became denser, the road narrower. In the ray of lights he saw a dark-colored Mercedes S600 stopped in the middle of the road to block the way.
5 men jumped out of the car, they wore masks and were armed with pistols. They came up to Arkhangelsky, pulled him out of his car, dragged him into the forest, knocked down his strong corrective spectacles and threw him down on the ground. He only saw his aggressors’ beards and heard them shooting into the air. They said they were going to kill him.
Dazzling success: If, at that crucial instant, Vitaly Arkhangelsky’s life passed before his eyes, that could be summarized as follows:
He was born in 1975, the same year when his grandfather, mathematician Leonid Kantorovitch received the Nobel Prize Award in economics.
Arkhangelsky graduated from the St Petersburg State University as major. The brilliant student received a personal scholarship from Boris Eltsin. In 1993, he entered a High School of economics in Trodheim, Norway, where he studied famous Norwegian marks such Tine, Stratos, Lysholmer and, supported by the Norwegian Research Council, he worked on the comparison of insurance business in Norway and in Russia.
After his doctorate in finance, he collaborated with Storebrand insurance company and other Norwegian companies.
“If they killed me, that would have too much echo in the press”. Vitaly Arkhangelsky, businessman.
He started business with a small Norwegian company Oslo Marine Consult As.
Arkhangelsky’s idea was to conquest insurance brokerage market in the sphere of shipping and to become a leader in Russia. Arkhangelsky had a dream to restore a powerful Russia. He tried to convince Norwegian ship-owners to bank on this country, but these partners refused to follow him in the “Wild East”.
Alone, with borrowed funds, he continued his project. Among his clients, there were such Russian giants as Yukos and Gazprom, he opened offices in London, in Hiroshima and in Stutgart.
Financial press described him as fearless and terribly dynamic man chasing the dream of maritime revival of St Petersburg. He gained control of port terminals in the city as well as in Vyborg, a town located to the west. In a very short period of time, a solid thirty-years-old man became one of the stars of this new generation of Russian businessmen. He was a billionaire, he managed an empire of 15 companies in the sphere of shipping, insurance and finance. His objective was to create a fleet of 40 vessels and, in the future, to gain control of 5 Russian ports.
At present, however, he was laying on the wet ground in the forest near St Petersburg and fearing for his life. His aggressors did not kill him, they just left him covered with blood and his nose broken. Wounded and distraught, he groped his way home and he finally thought that the nightmare was over. But that has only started.
Russia is among the most dangerous countries for business. A Russian insurance institution considered last year that 15% of people detained in national prisons were businessmen.
Most of them are there because of competitors who use corrupt courts to deprive them of their companies. According to the Russian Chamber of Commerce and Industry, every year, 8000 Russian companies are subjected to investigation or judicial pursuits at the initiative of their rivals who try to appropriate them or to put them out of the way. This phenomenon is calls « Raiderstvo », and it works as follows: rival or bureaucrats notice a successful company and, with the help of corrupt judges or tax inspectors the company is sued for a minor law infringement. The director is arrested, the company confiscated, liquidated and its property and all the assets are put at an auction. All the means are good to get the result: false documents, use of police forces and special services as well as media in a defamation campaign and attacks intended to exhaust the victim’s forces.
“Transparency International” considers that one third of companies are likely to be subjected to such raids which are carried out with the help of “bent cops”, bureaucrats and the police who misuse the law to rob companies.
Prices are even published in Russian press for those who would like to destroy a company.
It costs from USD 20.000 to 50.000 to make to police open an investigation, a descent to the office costs USD 30.000, a favorable judgment costs from USD 10.000 to USD 200.000.
The ex-President of Russia Dimitry Medvedev recognized that despoliation of companies was the most important threat to the economic growth of the country; he called this « legal nihilism » and added that his Motherland’s economy was based on raw materials and an epidemic corruption. At present, Russia is considered as one of the most corrupt countries in the world.
Ruined or killed
Persecutions for political reasons or to deprive people of their companies to the benefit to corrupt state officials is a usual thing in Russia.
Thousands of men are victims of these raids and those who try to resist are imprisoned. Many others are ruined and thrown out into the street. Some are simply killed, - says in his interview in London to the Norwegian Dagens Næringsliv (DN), Lev Ponomarev, the former member of Russian Parliament and one of the leaders of Russian democratic movement.
Ponomarev tested the anger of the regime himself: he was arrested, beaten, encountered all sorts of obstacles. The President Obama talked about the persecutions suffered by Ponomarev during the meeting he had with Dimitry Medvedev.
- Behind each raid, there stands a civil servant of any level and real conspirators using judicial system to frighten their victims or to put them in prison. In prison, the victims are tortured, are when they are finally broken, they give their companies and their assets to their persecutors, - says Ponomarev.
Russian prisons are full of businessmen. That is the case of the former owner of Yukos Oil company Mikhail Khodorkovsky who had been the richest man in Russia. He wrote in a letter from prison: “In prison, I met a lot of people whose business had been ruined as mine was. The greed displayed by the raiders coming from the state authorities is scandalous. Still now, I cannot understand how the officials may do such things, but this is the truth. In all these cases, the state institutions are used for personal enrichment”.
In the afternoon, the weather is good and the sky is blue. Vitaly Arkhangelsky sits on the beach in Nice. He wears a light summer shirt, he drinks wine and observes airplanes which take off all the time from the airport of the Côte d’Azur. He had an eye surgery and does no more need his strong glasses – in case if he is imprisoned again.
He talks about his trips in Norway on the Coastal Express ships, an excursion to the plateau of Røros, about numerous nationals celebrations of May 17 he attended, about his studies in Norwegian universities.
Several years ago, with his wife, he owned a fortune of about 8 billion Norwegian crowns (about 1000 millions of euros), the most part of which has now been siphoned to what he calls «a large-scale fraud» performed by «gangsters» who are supported by Kremlin.
- All this started with this assault. I was a public man, I supported local politicians, I was a member of various commission and in numerous committees.
After having been assaulted in 2005, he went to the head of the police of St Petersburg, and the latter advised him to pay every month a huge amount of money to a private security company owned by one of his friends. I declined the offer and created my own security service. Then, the police started assaulting my offices, they seized computer servers and documents, interrogated my employees, arrested my chief accountant and kept her in custody during two days, and the chief engineer was kept in custody during 5 days. My business partners began to worry. Certain people decided that the pig became fat enough. It was the time to kill, - Arkhangelsky says.
On the run: In 2008, Oslo Marine Group was worth one billion euros. Vitaly Arkhangelsky and his wife were its only shareholders. Then, the financial crisis happened and, in several months, 25 most rich Russians lost, all together, 230 billion of dollars. Arkhangelsky found himself in a difficulty. He failed to pay a loan borrowed from the Bank of St Petersburg. According to him, he was then forced to cede the shares of his two biggest companies to the bank for peanuts. Arkhangelsky asserts that the shares should have been transferred back to him once the debt was paid. Instead of this, he and his management team were kept aside. Descents of the police became more and more frequent, weapons became heavier and heavier, and a special forces unit even occupied one of his port terminals.
The bank refused any loan to him. Arkhangelsky asserts that the company’s value was much higher than the amount of the debt.
- It never came to my mind that the intention of the bank was to take control of these companies. If only I could suppose that this was the first step of the conspiracy against me, I would immediately go to the police, - he says.
After that, Arkhangelsky filed a claim against the bank for misappropriation of his companies. He won in the first two instances, but lost the third one.
Arkhangelsky is convinced that the judgment against him was a «job» ordered by a close colleague of Vladimir Putin in St Petersburg. Arkhangelsky openly financially supported the opponents of the governing political regime. He also asserts that the raid unlawfully exercised against his port terminal had been ordered by people connected to the bank.
One day, Arkhangelsky was informed by a police agent that the police authorities of St Petersburg were looking for any reason to arrest him. In a hurry, he fled to Austria, then to Bulgaria, and finally he settled in a flat in Nice where he used to spend his holidays. His wife feared to be taken hostage after the escape of her husband, she fled Russia by taxi.
Corrupt tax authorities: «Despoliation of companies, together with corruption, is the most important problem in Russia. Production industries, factories, estates and land plots are the first targets of raiders. But also state-owned companies, waste collectors, fuel distribution centers, oil pipes, private banks, TV channels, radio stations, port terminals, agricultural lands, hotels and resorts, agricultural quotas, military tanks and munitions are, by definition, targets of raiders’ attacks”, - writes a researcher, Ararat L. Ospian in his book “Corporate Raiding Russian Style».
According to the American management consultant Alexander Settles the apparition of banks among active raiders is a new and growing phenomenon in Russia. Settles thinks that the insiders in banks and financial institutions help raiders to select and then to acquire businesses encountering financial difficulties. Raiders benefit from these companies’ assets while the debts achieve to ruin the former owners. Settles asserts that the banks also work with corrupt officials in tax authorities to put pressure on the targeted companies. A quite frequent method is to employ the police and security services to take possession of the company’s documents which will be then falsified and used to transfer the company to the raiders.
After his escape in France, Vitaly Arkhangelsky was accused of fraud and money laundering. His personal accounts were frozen; his assets in Russia and Bulgaria valued of 20 million of dollars were seized. The bank also pretends that his wife and he are personally responsible for an unpaid loan of USD 90 million.
A Chess Party in Oslo: November 2009; Vitaly Arkhangesky observes, from Bristol hotel where he resides in Oslo, the policemen who came to seal manhole hatches before the arrival of the President Obama who was awarded the Nobel Award of peace and comes there to receive it. Arkhangelsky came to Oslo to meet the legendary chess champion Garry Kasparov who is also critical to Russian régime. They spent several afternoons together in Oslo. Then, Kasparov published in his blog articles about the destiny of the shipping magnate.
- This contact with the enemy of the regime aggravated my situation even more. Just after Kasparov published an article about my case, the Russian police put my name on the federal list of wanted people, - tells us Arkhangelsky.
In this chess party, the next step of Russia was to declarer me out-of-law putting my name on the Interpol list. On the way to a conference in London, he was arrested and put in prison. During 11 days, he shared a cell with a Bulgarian drug dealer. Due to the possibility of numerouse (during the same day) withdrawals from his wife’s credit card and to money lent by friends, he managed to collect the necessary EUR 300.000 and was released on bail.
- “The Bank of St Petersburg organized a real judicial harassment against Mr Arkhangelsky all over the world. The reason for this is that he continues struggling the bank and unlawful methods used by corrupt Russian officials”, - says Arkhangelsky’s French Counsel Nadejda BIDAULT.
Twice, France refused to extradite Arkhangelsky to Russian authorities, and both times for the reason that he would not be granted fair trial in his own country. His name remaining in the Interpol red notice, he may not leave France.
- I am the first businessman who was granted a refugee status in France, - he tell us.
The Bank of St Petersburg denies all Arkhangelsky’s accusations.
The Powerful Enemies: Challenging Russian authorities may be fatal. In 1998, the former lieutenant-colonel of Russian secret services Alexander Litvinenko said that he had received orders to kill the ex-billionaire and Putin’s opponent Boris Berezovsky as well as to kidnap and beat up well-known Russian businessmen.
Boris Berezovski, who once helped Putin to climb to power and to the highest authorities, and whose fortune was evaluated at USD 3 billion, has survived to several murder attempts.
Alexander Litvinenko found terrible death in London, poisoned with radioactive substance polonium 210. Boris Berezovsky is still alive, exiled in London, and Russia requests in vain his extradition for economical crimes.
Last summer, Vitaly Arkhangeslsky et Boris Berezovski wrote an article together in the French «Libération» newspaper.
«Since the British authorities granted political asylum to Boris Berezovsky, One should not be surprised to see, in the future, numerous businessmen, Counsels and journalists looking for asylum in France”, - declarer the two authors of the article. «Russia uses international arrest warrants against businessmen whose successful companies are subjected to raids initiated by corrupt groups. This is a misuse of the system which, on the contrary, was created to chase criminals. This facilitates the job of the mafia”, - write Vitaly Arkhangeslsky et Boris Berezovski.
Assassination Attempt: In March of this year, the banker German Gorbuntsov was in front of the door of his flat in Canary Wharf in London. Gorbuntsov is one of the last «businessmen on the run» who arrived in London. While he is dialing the entrance code, he feels a violent pain in his diaphragm With six bullets in his body, he managed to cross the door, and this prevented his masked assassin from the “insurance” shot. According to Russian press, criminal raiders forced Gorbuntsov to give them his part of 100 billion of Norwegian crowns (approximately 136 million euros) in the Industrial Credit Bank. The “transfer” was performed when 4 members of the Moscow criminal gang threatened Gorbuntsov’s wife and forced her to sign the act of transfer of shares. After that, Gorbuntsov filed with the police and the FSB multiple complaints in which he declared that his feared for his life. And he fled to London. The same week when he was wounded by bullets in the center of London, he was supposed to request political asylum and to be heard as a witness in a case of assassination attempt against another Russian financier.
Gorbuntsov survived to this murder attempt. In the hospital, in his bed, he was interviewed by a journalist from the «Daily Mail» and he asserted that the assault was connected with “someone closely linked with people of Putin’s closest circle”.
The human rights activist Lev Ponomarev commented this event in an open letter sent to the High Court of London which should judge the case between Vitaly Arkhangelsky and the bank.
«There is a number of persons whose existence is unwanted by the Russian regime. Think about Sergey Magnitsky and about his abominable death in prison because he publicly revealed the truth about the traffics. This is also the tragic death Alexander Litvinenko in London, which revealed criminal acts of the FSB and the KGB. This is a murder attempt against German Gorbuntsov who had just informed Russian intelligence services about the details of another murder attempt. All this shows that Vitaly Arkhangelsky is in danger because of his struggle against corrupt officials and raiders», - writes Ponomarev.
The Gangsters: Vladimir Bukovski says he is sick.
- Old wound has opened.
When he felt himself well and wrote poems criticizing the regime, he was imprisoned and the diagnosis of «anticommunist suffering» was put on him. He was detained in a psychiatric asylum, fed by force and under drugs. After 13 years spent behind these walls, he was handcuffed and transported to the West, where he was exchanged against a Chilean communist leader. Since then, he lives in Cambridge. In 2008, the restless opponent of Kremlin tried to become a candidate for the Russian presidency.
- The Occident should understand well that, today, Russia is not a law-governed society. What is called Justice in Russia is just the contrary. It is corrupt, arbitrary, tyrannical and oppressive. Western legal institutions should stop collaborating with Russia authorities.
Otherwise, the Kremlin will continue violating all the rules of international cooperation.
«The bank has done only what it was entitled to do. Any bank in the same situation would do that”
( Jeremy Winter, Counsel of the Bank of St. Petersburg )
It will continue to use Interpol, extradition agreements and civil claims in justice to chase its political opponents, or to despoil people. Arkhangelsky case is the latest example of this”, - he says.
During the elections in Russia in 1991, Bukovski’s candidacy to the position of Boris Eltsin’s vice-president could appear reasonable. By the way, he was a consultant for big foreign companies planning to install an establishment in Russia.
-There was also corruption under Eltsine’s regime, but, since he was not a great control monster, it was also possible to do business in an honorable way. Today, one should be in a team with Kremlin gangsters. Under Putin’s regime, criminal groups, the KGB and the ministry of foreign affairs have merged. Corruption is now centralized, - he says.
Bukovski also says that even economic criminals should not be extradited.
- Russian prisons are as horrible as they were at the time of Stalin. People die there, they are subjected to torture. That is why I am against extradition to Russia.
Less than one per cent of cases investigated by Russian justice result in a release.
- The current regime is completely schizophrenic. In their discourse, they are anti-occidental. On the other side, they send their children Western universities and their money to Western banks. They do not dare to keep their money in Russia, fearing that it might be taken away. .
Vladimir Bukovski starts laughing. He laughs long and hard.
Struggle for Millions – When my Russian friends come here, they look at me almost as if I was homeless. I drive an inexpensive car, I drink inexpensive wine and I do not eat caviar, - says Vitaly Arkhangelsky.
His everyday life is an exhausting struggle to recover his fortune. According to him, pieces of his former empire have been sold to companies domiciled in tax paradises for a small portion of their real value. In November, he obtained a favorable judgment in BVI which froze an amount of more than USD 100,000 belonging to the CEO of the Bank of St Petersburg. The litigation continued in British courts. The Bank obtained a freezing order against Arkhangelsky for € 52 million.
- I do not have this money, - says Arkhangelsky who filed an appeal against this judgment.
«Vitaly Arkhangelsky is a victim of one of the most powerful dynasties in Russia, a dynasty which is deeply connected to Kremlin and to Putin in person. Judges in any litigation against Arkhangelsky would be subjected to pressure to make decisions compliant to wishes of the dynasty and the Kremlin”.
These words belong to the British Professor William Bowring. He is one of the rare occidental experts in Russian laws. During several years, he was an advisor of the British Minister of foreign affairs and of the World Bank as well a witness in a series of cases concerning extradition to Russia. He is also the expert summoned to provide evidence in the litigation between the Bank of St Petersburg and Arkhangelsky.
- «No rich businessman can be sure to keep what he has, all the more so as he enjoys a slightest support and protection of the Kremlin and the people close to the regime. There are a lot of exemples in Russia. A relationship which looks solid and secure for the moment may disappear in a second. That is why all the businessmen who believe to have powerful friends in politics built a security network. Russian businessmen fear for good reasons that someone may turn against them and that their fortune may be confiscated, and this makes them hide their money in complex offshore schemes”, - Bowring says.
Incredible Assertions: The Bank of St Petersburg asserts that it is a victim of defamation campaign.
- «At a time, Vitaly Arkhangelsky organized a media campaign against the Bank of St Petersburg and Alexander Saveliev. The truth is that this is done for purely commercial purposes. Arkhangelsky provided personal guaranties for a loan granted by the bank to several of Oslo Marine Group companies.
Since these companies failed to pay back the loans because of the economical crisis, the bank put all the efforts to maintain its rights to the assets of Arkhangelsky’s companies. Arkhangelsky argues that this security measure is a fraud or a confiscation, but this is untrue. The bank has only done what it is entitled to do, as any bank would do in this situation”, - writes the Counsel of the bank Jeremy Winter of Baker & Mc. Kenzie LLP to the Dagens Naeringsliv.
«The bank also filed a claim against Arkhangelsky with a Russian court with regard to his personal guarantee. Then the bank tried to obtain the exequatur of the Russian judgments in France and in Bulgaria. To try to avoid his obligations, Arkhangelsky pretends that he had not signed these guarantees. This is his argument to affirm that the bank submitted forged documents to the court. This is not true. But the guarantees are», - he writes.
Trials between the bank of St Petersburg and Vitaly Arkhangelsky continue in several countries.
Back to Norway : - Every night, - says Arkhangelsky.
- Every night I dream that I come back to St Petersburg and that I’m arrested. I am having this dream since three years.
Recently, Arkhangelsky’s apartment was assaulted by an unknown individual. Sometimes, in the evening, the spouses discuss what to do in case of attempt upon their lives.
- These are difficult discussions, - sais Arkhangelsky.
- When I was a student, my great dream was to become rich enough to be able to live in Trondheim. I thought it was the best place in the world. I might probably come back to Norway and become an advisor for international companies willing to bet on Russia. Or teach how to survive the economic crisis, - he says.
- My struggle is not really for money. I want the dignity of my name to be restored. In the meanwhile, there is nothing to do but to drink wine and think about how difficult the life may be, - he says with a laugh.
He goes upstairs to his flat in a luxurious complex of the Mediterranean Palace on the Promenade along the beach of Nice. In this flat, intended to be, as he calls it, his «Champagne apartment», now all his family of 5 lives.
On the ground floor of the famous complex, there is the biggest casino of the city, - he says.
- I do not gamble in a casino.
- I play Russian roulette.