A former KGB agent sent an email to Parex Bank whistleblower John Christmas. While reading about connections with the “Russian mafia” and smuggling “nuclear component,” remember that Parex is fraudulently funded by the EBRD and has been “audited” for many years by Ernst & Young and PWC. Latvian taxpayers should wonder why the highest spending priority of the Latvian government in all of Latvian history was bailing out the shell-company deposits at Parex. The email below is being posted with the permission of the author.
Date: Sat, 26 Jan 2013 08:34:11 +0000
Subject: RE: Latvian State Police – referral by Luke Harding
Many thanks for your emails, which I found out to be very interesting. In relation to possible exposure of Parex: First of all, apart of yourself, I have completely different background (not financial one) and therefore, my knowledge about Parex an, particularly about its two “main gurus” – Kargin and Krasovitsky – is based on slightly different info. I was familiar with both these ‘geniuses’ since the time when Parex was not a largest bank in Latvia, but when it was a small currency exchange company. At that time, I came across to knowledge that they were heavily involved into money laundry (including ‘legalisation’ of so-called soviet communist party’s secret assets) ops conducted by both the Russian organised crime and Russian security services illegally operating in Baltic region. For instance, I am aware that Parex (Kargin and Krasovitsky) actively used for these ops certain ‘commercial’ firms which were in front of the Russian security services. In addition, I am aware about one illegal deal with participation of Parex (provided cash), when the specific amount of the nuclear component has been smuggled through the territory of Latvia to the West. Secondly, all my further intel I have received regarding Parex, due the nature of my ex-espionage work, was related to that similar “business”. For instance, I am aware they used for their illegal operations some offshore “bank” located in Republic of Nauru, as well as I am aware about one shadowy deal with issuing a fictitious bank guarantee (by Parex Bank) to the representatives of Russian mafia in the amount of 50mlns USD in 1997/98. Based on all the above, I am afraid my expertise about Parex is quiet specific and differ from your own intel. In the given circumstances, please, feel free meeting me so we can discuss the possible effective way whether and how can we work together in the future.
Boris Karpichkov from London
Here is an article about Mr. Karpichkov:
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:
Parex Bank used to have a subsidiary called VIP Avia. In the early 2000’s, consultant ABN AMRO advised Parex not to have this frivolous subsidiary, the function of which was providing private jets for the Parex oligarchs.
Parex did not react by selling the subsidiary. Instead, Parex changed its balance sheet to show VIP Avia as a loan to an unrelated party instead of a subsidiary.
This reaction was illegal. However, Latvian authorities refuse to prosecute the responsible people from Parex and Ernst & Young.
John Christmas blew the whistle on this fraud in 2004/2005. Dienas Bizness newspaper published an article about this fraud in 2009.
pdf snapshot from 18 March 2012:
DB VIP Avia
link, if not yet censored by Latvian authorities: