Parex Bank fraud at London Stock Exchange

This is the false document that Parex Bank filed with the London Stock Exchange in May 2010.

The document claims that all Parex shareholders have equal status.  However, in reality the European Bank for Reconstruction and Development (EBRD) had a higher status because it had a secret “put option” negotiated with the majority shareholder, the Latvian government.

This is the most likely explanation why, when Parex split into “bad bank” Parex and “good bank” Citadele, the only minority shareholder receiving Citadele stock was the EBRD.

Sadly, the false filing is unlikely to result in legal action.  The British Financial Services Authority (FSA) knew about fraud and money laundering crimes at Parex for many years and chose to take no action while Parex borrowed hundreds of millions of euros in London.  That money disappeared and the loans were paid back by the Latvian government using bailout money borrowed from the European Union.

This story has been completely censored in the Latvian media.

pdf snapshop from 20 March 2012:

false London filing

link:

http://www.rns-pdf.londonstockexchange.com/rns/8408L_-2010-5-13.pdf

EBRD fraud explained in letter

This letter by John Christmas to the British Serious Fraud Office (SFO) explains a multi-billion-euro fraud crime committed by the European Bank for Reconstruction and Development (EBRD) against all of the people in the world.

Specifically, the letter explains the “put option” fraud when the EBRD bought Parex Bank stock from the Latvian government.

This fraud has been censored in the Latvian media.  Some attachments to the letter used to be at dissident website Kargins.com, but that was later censored by the Latvian government.

EBRD fraud letter

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

Inguna Sudraba, Parex Bank, Southern Bridge

Inguna Sudraba was a member of the Parex Bank Credit Committee from 2003 to 2004 and therefore was responsible for (1) making undisclosed-related-party loans, (2) making loans that exceeded the bank’s lending limit, and (3) acting as credit committee for secret subsidiary Extro Bank of Russia.

In 2008 and 2009, the Latvian people learned that half of the loan portfolio of Parex was bad, thus indicating severe problems with the Parex Credit Committee.

Was this the end of Sudraba’s career?  No!  Now in 2012, she is the Latvian State Controller (Auditor)!

Sudraba, working as State Controller, cannot find any corruption in Latvia.  For example, Parex arranged financing for the “Southern Bridge” in Latvia.  Latvian taxpayers will pay 1,000 million euros for a bridge that is worth 300 million euros.  Sudraba cannot figure out where the other 700 million euros went.

Latvian newspapers keep naming Sudraba as a wonderful person who should be President or Prime Minister in the future.  The articles never mention that she was on the Parex Credit Committee.

Southern Bridge

Valery Kargin, Viktor Krasovitsky, Ernst & Young, undisclosed compensation

Soon after the Parex Bank nationalization in late 2008, the Latvian media revealed several large and fraudulent deals between Valery Kargin and Viktor Krasovitsky’s families and the bank.  This was a rare time of honest reporting by the media.

The “auditors” at Ernst & Young must have known about all of these deals.  However, they signed Parex annual reports containing false statements that the Oligarchs received no compensation from the bank.

Latvian authorities refuse to prosecute the perpetrators in all of these cases.

One headline story was about the fleet of luxury cars transferred from Parex in early 2008.  The transfer occurred when the bank was still reporting profits every quarter and therefore before the surprise request for a bailout in late 2008.  The implication is that the quarterly reports were fake and the Oligarchs already planned to give bank liabilities to the taxpayers in early 2008, but wanted to keep the luxury cars.

Another headline story regarded subordinated loans from the Oligarch families to the bank, done for the apparent purpose of compelling the Latvian government to pay huge amounts of money to the Oligarchs after the handover of bank liabilities.

And, if that wasn’t bad enough already, the article below describes an unreported reciprocal loan/deposit deal that existed for many years.  It was revealed in December 2008 that Kargin and Krasovitsky each borrowed 28 million lats (twice as many dollars) from Parex and used it to make deposits at Parex at 36% percent interest.  The apparent motive was to transfer millions from the bank to themselves without reporting the compensation to creditors and minority shareholders and without paying taxes, since interest income was not taxed.

pdf snapshot from 20 March 2012:

Delfi looting article

link, if not yet censored by Latvian authorities:

http://www.delfi.lv/news/national/politics/kargins-un-krasovickis-aiznemusies-no-parex-56-miljonus-latu.d?id=22584768

 

Banco Santander robbed buying Extro Bank?

One of the items from John Christmas’ Parex Bank whistleblowing list from 2004 was that Parex secretly owned a bank in Russia.

Christmas claimed that Parex owned and operated Extro Bank.  For example, the Parex Credit Committee approved the loans that Extro Bank extended.  Latvian State Controller Inguna Sudraba was on that committee.

The fraud claim is backed up by an email written by Parex vice president Gene Zolotarev.  The claim is also backed up by a Skype conversation (below) with former Parex manager Christa Rubstein.  She also confirms in the conversation that Parex paid employee compensation illegally.

Even though three witnesses wrote that Parex owned Extro Bank, the auditors at Ernst & Young did not care at all and ignored the huge fraud.

Therefore, Parex was able to sell Extro Bank to Banco Santander.  Santander is one of the largest banks in Europe and has millions of shareholders in Spain and the United Kingdom.

According to emails (below) from a private investigator who contacted Christmas, Banco Santander got “robbed” in the purchase.  The loss could have been 40 or 50 million euros.

Law enforcement is not interested at all, as usual.  Also, the media is not interested.

Continue reading

Declaration by John Christmas, Parex Bank whistleblower

John Christmas was the whistleblower from Parex Bank.  He gave fraud information to Ernst & Young in 2004.  He gave fraud information to the Latvian government in 2005.  He was terrorized with threats and fled from Latvia.  Ernst & Young and the Latvian government ignored the information.

The Parex fraud grew much larger and caused the Latvian Financial Crisis in 2008.

Now in 2012, there still has never been any investigation of the whistleblowing by Latvian (or European) authorities even though the fraud occurred in Latvia (and Europe).

This is a declaration written by John Christmas in January 2010.  The declaration was written at the request of Varu Tautai.  A translation (with a few errors) used to be online at VaruTautai.lv.  Most of the information in the declaration has been censored in the Latvian media.

One note:  In January 2010 when the declaration was written, it appeared that the FBI and United States Department of Justice were not going to use the information that they received from Christmas in October 2007.  However, in April 2010 it was revealed that the information was used in the USA versus Daimler settlement.  The FBI was back in communication with Christmas immediately after the announcement of the settlement.

Declaration

BaFin, Deutsche Bank, Parex Bank

Parex Bank whistleblower John Christmas provided fraud information to the German regulator BaFin in May 2006.  BaFin gave the information to the Latvian authorities even though Christmas explained that they already had the information.

BaFin could have confirmed that some of the fraud information was true in a few hours.  However, BaFin chose to do nothing.  As a consequence, Deutsche Bank will lose millions of lats.  Also, German taxpayers are bearing some of the burden of bailing out Latvia.

The email below shows that BaFin received information about Parex from Christmas and gave the information to the Latvian authorities.  The article below shows that Deutsche Bank owned some of the 52.8 million lats (twice as many dollars) subordinated debt of Parex.

pdf of email from BaFin to Christmas:

BaFin email

pdf snapshot of Deutsche Bank article from 11 April 2012:

Deutsche Bank Baltic Course

link to Deutsche Bank article if the Latvian government hasn’t censored it yet:

http://www.baltic-course.com/eng/finances/?doc=25008&underline=dnb+nord&ins_print

Mizuho Corporate Bank and Parex Bank

This email indicates that Parex Bank whistleblower John Christmas provided fraud information to Mizuho Corporate Bank in 2005 and the relationship manager at MCB reacted by getting angry.

MCB decided to lend much more money to Parex after learning that the bank’s financial statements were false.  The total amount of syndicated lending increased to approximately 800 million euros and the London office of MCB organized most of it.

When the assets of Parex Bank disappeared in 2008, the Latvian government forced Latvian taxpayers to repay the syndicated loans instead of letting MCB suffer the loss.  This decision was the direct cause of the Latvian Financial Crisis.

The Latvian media is completely silent about this issue.

Mizuho Corporate Bank