US investigates Latvia and Deutsche Bank

The United States is currently investigating Deutsche Bank for massive Russian money laundering.

Seems that once again, Latvia was involved.  Of course the racket in Latvia that hurts millions of victims in Latvia and Russia could have been stopped years ago since full fraud information about Parex Bank is openly available.

Trasta Komercbanka was a spin-off from Parex, founded by a former Parex representative.

http://www.lsm.lv/en/article/economics/economy/latvian-bank-linked-to-another-russian-money-laundering-operation.a164643/

 

 

 

SEC nails Malta broker linked to Kargin, Parex, Citadele, M2M

Malta licensed broker Exante has been caught by the S.E.C. in a massive fraud scheme.  Although Exante is licensed in Malta, it has an office in Latvia and some employees are formerly from Parex Bank.  Exante has strong relationships with two Parex successor banks Citadele Bank and M2M Bank and employees boasted of meetings with Parex Oligarch Valery Kargin.  The Latvian government is responsible for this new fraud scheme because the Latvian government refused to prosecute Parex for many previous fraud schemes.

http://www.maltatoday.com.mt/business/business_news/56060/maltabased_hedge_fund_involved_in_100_million_fraud

Paul Volcker is the new Jimmy Carter?

From 1972 to 1991, rogue bank BCCI ran a racket using the corrupt government of Panama for protection as it provided deposit services to crooks from Colombia.  BCCI convinced former American president Jimmy Carter to promote them by tricking him that they were not corrupt and they were helping to develop the Third World.  When the bank was shut down in 1991, it was discovered that all of its annual reports signed by Big Four auditors were fake and actually the bank was never profitable because it was booking “loans” which were transfers to crooks who never intended to repay.

Starting from 1993 and still continuing today, rogue bank Parex/Citadele is running a racket using the corrupt government of Latvia for protection as it provides deposit services to crooks from the former Soviet Union.  Citadele has convinced former Federal Reserve chairman Paul Volcker to promote them, and amazingly he has agreed even though the Latvian Prime Minister has (after fraudulently winning the October election) admitted that the Latvia/EBRD/Parex bailout in 2009 was a deception with a secretly reversible share transfer.

How large with the fraud grow?  How many millions of people’s lives will be ruined?  Will Parex/Citadele/Latvia/Volcker be able to surpass the old record set by BCCI/Panama/Carter?

http://www.marketwatch.com/story/ex-fed-chairman-volcker-buys-stake-in-latvian-bank-2014-12-11-64855141

former Parex subsidiary on U.S. Treasury blacklist

On 22 May 2012, the United States Treasury blacklisted Belarussian bank JSC Credexbank as a “Primary Money Laundering Concern.”  We at LawlessLatvia weren’t aware of the Latvian connection until recently.

According to the Treasury, JSC Credexbank processed over $1 billion in shell company transfers in 2010 alone, an amount disproportionate to its size.  Also, JSC Credexbank had shell company ownership itself.

This bank was previously named Northern Investment Bank and was an undisclosed subsidiary of Parex Bank according to John Christmas’ whistleblowing to EY (2004) and the Latvian Prosecutors Office (2005).  Christmas had an internal Parex email stating that Parex secretly owned Northern Investment Bank, but nobody at EY or the Latvian Prosecutors Office cared about that.

If employees at EY or the Latvian Prosecutors Office had done their jobs, they could have stopped the Lukashenko Regime from laundering over a billion dollars.

http://www.treasury.gov/press-center/press-releases/Pages/tg1590.aspx

 

 

United States Senate briefing

Here are photos from the 4 June 2014 United States Senate briefing.  Senator Jeff Sessions gave a talk about the need for rule of law in Eastern Europe.  John Christmas explained the Parex/EBRD/Latvia fraud cover-up, which has been going on since 2009 with no action from prosecutors.  Four anti-corruption NGOs were involved in the event, which will hopefully lead to more media coverage of the problem and a Senate hearing later this year.

me at podium 2

sessions at podium

This is the slide show from Christmas’ presenatation:

slide show

This is the approximate text of Christmas’ presentation:

(slide 1 – dirty money flowing through Latvia)

Good morning, my name is John Christmas and I am here to talk about the offshore banks in Latvia and the disconnect between the mission and the actions of the European Bank for Reconstruction and Development – the EBRD.

I would like to thank the Adriatic Institute for Public Policy, International Leaders Summit, and Global Financial Integrity for organizing this event. Also, I would like to thank all attendees here at the Capitol, and thank Senator Jeff Sessions for his remarks.

(slide 2 – President Berzins and President Putin)

Latvia has an image in the media as a country with Western values which is on the side of NATO and opposed to the Kremlin.

Latvia is a member of NATO and most Latvian people share the values of NATO. But is the government of President Berzins really on the side of NATO?

The economy of Latvia is similar to the model in Russia. Oligarchs with connections to the Russian security services are rich from receiving state assets. Almost everyone else is poor.

Additionally, in the early 1990’s, Latvia became an offshore banking center under the guidance of KGB man Grigori Loutchansky who had a close relationship with Russian Prime Minister Viktor Chernomyrdin.

This early cooperation between the Latvian government and the KGB kicked off a racket for Latvian politicians that is still continuing.

Today, from the seventeen banks licensed in Latvia, fourteen specialize in offshore accounts for clients from Eastern Europe and Central Asia.

This racket has played no small part in the destruction of democracy and capitalism in the region, as national treasuries have been looted by tyrants and their cronies. Already violent revolutions in Kyrgyzstan and Ukraine were closely linked to Latvian banks.

(slide 3 – May 2007 KGB quote)

The largest offshore bank in Latvia for many years was Parex Bank. Here is a quote linking Parex to the Russian security services.

Parex served thousands of non-resident deposit accounts and sister company

International Overseas Services registered account holder companies for other Latvian banks as well, including those used for money laundering in the horrifying Sergei Magnitsky case, which of course you are familiar with because the U.S. Senate passed the Magnitsky Act in 2012.

Parex recruited me in 2002 to be their Western spokesperson to dispel what they called rumors that Parex was the Russian Mafia.

(slide 4 – photo of Mitterrand, EBRD facts)

The European Bank for Reconstruction and Development was established in the early 1990’s and was intended to heal the post-Communist countries of Eastern Europe and Central Asia. It was the brainchild of the president of France, Francois Mitterrand. The 2,150 EBRD employees responsible for $67 billion of public assets have a modern office tower in London, and as taxpayers you are paying their generous compensation and premium rent.

The EBRD was supposed to be a modern-day Marshall Plan. The Marshall Plan succeeded in healing the economies of Western Europe after World War II. However the EBRD has failed at healing the economies of Eastern Europe and Central Asia after the collapse of the USSR.

Although the EBRD has failed, this hasn’t stopped the EBRD propagandists from congratulating themselves for success, and the mainstream media is repeating these false claims. As a result, the EBRD is expanding into the “Arab Spring” countries.

(slide 5 – the USA and the EBRD)

The EBRD is funded by 65 countries.  The United States government owns 10% of EBRD shares, making it the single largest contributor.

(slide 6 – “vitality” comment from annual report and “put option” comment from Nomura)

Now for the specific case which exposes what the Latvian government and EBRD are doing.

In 2004, I blew the whistle on Parex. Latvian authorities refused to investigate. I left Latvia after receiving threats.

Parex grew much larger, always reporting profits. Then suddenly at the end of 2008, the bank was bailed out and mostly nationalized, even though the government had no obligation to do this.

The government turned to the European Union, International Monetary Fund, and World Bank to fund the bailout and inflicted a brutal austerity program on the population.

The government maintained that the Parex was worth book value, however could not find any private-sector investor who would buy it.

That’s when the government turned to the EBRD. In 2009, the EBRD announced the purchase of 25% of Parex stock in a 144-million-dollar deal citing the “vitality” of Parex. Why did the EBRD think Parex was valuable when none of the other potential investors did?

In 2010, a website leaked a report from Nomura indicating that the EBRD had a secret “put option” to sell the shares back to the government. In other words, the stock sale was reversible and therefore fake with the likely objective of falsifying national accounts thus defrauding all creditors of the government.

(slide 7: London Stock Exchange filing)

This is a London Stock Exchange filing from 2010. The filing indicates that all Parex shareholders were equal, which should have included the EBRD plus the other minority shareholders.

In 2010, a new “good bank” called Citadele was spun off from Parex.

The government capitalized Citadele with taxpayer money and gave 25% of Citadele stock to the EBRD.  The other minority shareholders from Parex got nothing and therefore lost their entire investments.  This mysterious transaction could have represented compensation to the EBRD for conducting a false purchase of Parex stock a year earlier, thus backing up the Nomura report.

(slide 8 – Italian and Dutch headlines)

Since 2010, I have encouraged anti-corruption websites to publicize the EBRD fraud evidence since all Latvian newspapers refuse.

My “LatviavEBRD” videos have a quarter-million views on Youtube. 

Also, European journalists Mauro Caterina and Arno Wellens published the allegations

The EBRD refuses to respond and therefore we have concluded that the EBRD must be guilty.

Other journalists have been slow to pick up the story, however they will eventually. Latvia and the EBRD are apparently doing the same thing Enron did in the 1990’s: fooling investors with fake reversible deals.

(slide 9 – Parex and government blame USA)

For now, the mainstream media is repeating pronouncements from Latvian politicians that they have heroically rescued Latvia by bailing out Parex which they say collapsed because of the United States.  Here is language about that from a Parex annual report.

How can the United States be responsible for Parex overstating the value of its assets?  And why should the United States put up with this slander?

The mainstream media is describing Latvia’s austerity program as a success story.  But how can this make sense?  The oligarchs are still in control.  The national debt has doubled. And almost 20% of the population left.  Latvia hasn’t seen an outflow of refugees like this since World War II

(Slide 10 – EBRD fostering)

The EBRD is spreading disinformation as well. For example, it is issuing press releases about fighting corruption in Ukraine while at the same time Citadele Bank is wooing Ukrainian clients offshore.

The EBRD claims that it is “fostering transparency and accountability.” However, the only feedback journalists are getting is “no comment.”

(slide 11 – Poikans)

It is frustrating fighting the EBRD in order to fight corruption. However, I recently gained new motivation.

It is well known that Latvian prosecutors never prosecute large crimes in Latvia, even when foreign countries provide completed cases.

But now, it’s not just about criminals not being prosecuted. Now, it’s about another whistleblower who is getting prosecuted.

The man on the screen is Ilmars Poikans. In 2010, he became the second whistleblower against Parex.

Mr. Poikans is expected to receive an eight-year prison sentence for his “crime” of informing taxpayers about how their money is being spent.

The cruelty of the prosecution is beyond comprehension for me.  It is similar to Russia prosecuting whistleblower Magnitsky instead of the crooks he blew the whistle on.

If you hear a representative of the Latvian government saying how terrible it is that Russia chose to prosecute a whistleblower, please ask: why is Latvia doing the same thing?

If you hear an EBRD employee complaining about the human rights abuses in the Magnitsky case, please ask: why does evidence indicate that the EBRD is covering-up fraud at a bank connected with the case?

(slide 12 – Adriatic Institute logo)

Today begins a new chapter in the battle to expose the Latvian government and the EBRD. My intention is to work with the Adriatic Institute and its partners to publicly demand an explanation from the EBRD.  More information will be on the Adriatic Institute website soon. 

Of course we hope the United States government will support this effort.

(slide 13 – bar chart)

Finishing up, this chart shows the scale of the problem.

The first bar is $20 billion, the size of notorious bank BCCI at the time it was shut down in 1991, in part by Senator John Kerry and Jack Blum.

BCCI was similar to Parex. It specialized in offshore account services except it targeted Colombians rather than Russians and Ukrainians.

BCCI had a captive government, General Manuel Noriega’s Panama, just as Parex and other offshore banks have a captive government in Latvia.

The second bar is $66 billion, the size of Enron at the time it was shut down in 2001.  As mentioned, the Enron fraud was similar to what the EBRD appears to be doing today.

The third bar is $94 billion, which includes all non-resident deposits in Latvian banks today plus the assets of the EBRD today because insiders told me that the EBRD has done deals similar to Parex in other countries.

(slide 14, actor Clive Owen)

This is from the 2009 movie about BCCI called “The International” starring Clive Owen. From this photo, it sure looks difficult and dangerous to shut down a bank fraud.

But the EBRD/Latvia battle can be much easier.  All it takes to expose what is going on is for institutions with authority to demand an explanation.

Thank you.

United States Department of Justice, Daimler, Parex Bank

On 1 April 2010, the United States Department of Justice announced a settlement with Daimler AG of $185 million for paying bribes in Latvia and other countries.

Latvian authorities refuse to prosecute the bribe recipients and intermediaries.

The Latvian media refuses to mention Parex Bank in articles about the Daimler settlement even though Parex financed the transaction.

pdf snapshop:

USDoJ Daimler

link:

http://www.justice.gov/opa/pr/2010/April/10-crm-360.html

 

United States Department of Justice, Daimler, Russia, Latvia

The following document contains some details from the United States Department of Justice case against Daimler AG, dated 22 March 2010.

Bribes to Russian officials went to Latvian bank accounts.

Shortly after the announcement of the Daimler settlement came an announcement that HP also paid bribes to Russian officials through a Latvian bank.  Those bribes were paid to the Russian Prosecutors Office.

Nobody has been prosecuted anywhere for any of these crimes.

pdf snapshop:

Daimler Russia

link:

http://www.justice.gov/criminal/fraud/fcpa/cases/daimler/03-22-10daimlerrussia-info.pdf

United States Department of Justice, Solaris Bus, Gundars Bojars, Viktor Vekselberg

This document from the United States Department of Justice indicates that a company paid bribes to Riga City politicians to sell buses in 2000.

The accusation must refer to the sale of buses from Solaris of Poland to Riga Transportation (formerly Imanta and Talava).  The sale was financed by Parex Bank.

Nobody has been prosecuted.  The names “Solaris” and “Parex” have been censored from all Latvian media articles on the subject.  And, Solaris continues to sell buses to Riga now in 2012.

Interestingly, the Latvian media did determine that former Riga mayor Gundars Bojars must have been involved.  Bojars’ involvement is not surprising since he was also involved in the notorious “Baltic Kristina” deal with Parex.  Nobody was prosecuted in that case, either.

Bojars is currently free and rich.  He is cooperating with Russian oligarch Viktor Vekselberg to construct a new building for the Latvian State Revenue Service.

pdf snapshot:

USDoJ Solaris

link:

http://www.justice.gov/criminal/fraud/fcpa/cases/daimler/03-22-10daimlerag-info.pdf

Riga Transportation, Solaris Bus, Dienas Bizness, Viktors Zakis

Dienas Bizness is one of the oligarch-controlled newspapers in Latvia.

To the credit of DB, they did publish a story about John Christmas’ 2004/2005 whistleblowing against Parex Bank.  However, they did not publish the story until 2007.

The story contains some details of the material fraud at Parex that related to the corrupt sale of buses from Solaris to Riga Transportation.

At the time of this story in 2007, Viktors Zakis was spokesperson for Parex.  He is quoted in the article claiming, falsely, that Christmas’ whistleblowing was investigated and was not truthful.  When Parex handed its liabilities to the Latvian taxpayers in 2008, Zakis became spokesperson for Riga Transportation.

When the United States Department of Justice confirmed that Christmas’ whistleblowing was truthful in its Daimler settlement announcement in 2010, the Latvian media went silent again.  DB refused to link the 2007 story to the 2010 USDoJ announcement.

pdf snapshot from 18 March 2012:

DB Riga Transportation

link, if not yet censored by Latvian authorities:

http://www.db.lv/citas-zinas/vairakus-gadus-censas-pieradit-nelikumibas-parex-204411?cp=1

 

Parex Bank and Solaris Bus fraud explained

It is a great mystery why nobody in Latvia (new managers at Parex Bank, auditors at Ernst & Young and PWC, raters at Moodys and Fitch, Latvian regulators, Latvian law enforcement, etc.) is able to prove that Parex Bank committed a material fraud crime when financing the sale of buses from Solaris of Poland to Riga Transportation since the proof only takes a few minutes using numbers from Parex Bank and Riga Transportation annual reports.

This bus sale included kickbacks, according to the United States Department of Justice.

This is an email written by John Christmas explaining the proof.

Most likely, this loan is now owned by Parex’s so-called “good bank” successor – Citadele Bank.  Obviously, Riga Transportation has no legal obligation to repay this loan and therefore Citadele should announce a 100% loss.

Proof of Parex Solaris fraud