Vitaly Malkin

Rossiysky Kredit

At the start of the 1990s, the financial sector was developing and Malkin and Ivanishvili decided to set up their own bank. The partners in “Agroprogress” registered the “Rossiysky Kredit” bank in the summer of 1990. Six months later, the bank received authorization for foreign currency transactions and started retail business with its clients. From 1991 to 1994 Malkin was Chairman of the Board. He then became the bank’s CEO in 1994 and held that post until 2000. From 1990 to 2003, Malkin was Chairman of the Supervisory Board. Malkin was the bank’s commercial face, with a 33% shareholding, and Ivanishvili was the executive director, with 67%. Template:Citatio Needed

The luxurious M.A.Morozov mansion on Smolenski Boulevard, Rossiysky Kredit’s hallmark, appeared much later, thanks to V. Malkin. The bank obtained a long-term lease for the building with the help of Artur Chilingarov, advisor to the President of the Supreme Council, a deputy in the Duma at the time, whom Malkin had known since 1975. Originally, the Supreme Council planned to arrange a house of receptions in the Morozovs' mansion, but there was not enough money to restore the monument. The M. Morozov's private residence was restored at the expense of the Rossiysky Kredit bank. From 1993 to 1996, the partners invested 6 million dollars in the restoration of the building and arrangement of new office space.

Malkin was the public face of Rossiysky Kredit. All bank management duties were carried out by Ivanishvili, while V. Malkin for the most part performed representative functions. "I mainly dealt with the relations of the Rossiysky Kredit with the outside world", admits V. Malkin himself. Vitaly Malkin could boast of friendship with many Russian politicians of the highest level such as Alexei Kudrin and German Gref. "Everyone liked to be friends with Malkin, because he never asked anyone for anything," - said B. Ivanishvili in 2005 about his former partner.

When, on the eve of the 1996 presidential election, the so-called “Semibankirschina” (group of nine Russian oligarchs who played a major role in Russia’s political and economic life) was formed, Malkin became a supporter of President Yeltsin. He went to meetings with Boris Yeltsin, whereas his partner, Ivanishvili, preferred to stay away from the spotlight. In May 1996, on behalf of the presidium of the Coordination Council of the Round Table of Business in Russia V. Malkin signed a statement in support of Boris Yeltsin’s second term as president.

Rossiysky Kredit was badly affected in the 1998 crisis, but unlike most large banks, it survived. In 1998, Bidzina (Boris) Ivanishvili, along with his partner Vitaly Malkin, acquired a stake in Impexbank, which became a bridge-bank for arranging payments for retail depositors.

In 1999, the Rossiyskiy Kredit Bank became the first commercial bank to start paying out money to all its ruble depositors and part of the foreign currency depositors. Rossiyskiy Credit was due about 80 million dollars to depositors . "We are preparing to ensure that every depositor, regardless of whether he was in court or not, received his money", Vitaly Malkin said in an interview with Kommersant. Rossiysky Kredit was the only major commercial bank, fully settled its debt and paid all the funds in full to individual depositors. "The restructuring of Rossiysky Kredit is the only case in the world practice when a private company responded to debts that arose from the fault of the government," B. Ivanashvili noted in an interview.

The bank was restructured and, in 2003 paid back all its creditors. Malkin and Ivanishvili spent nearly 200 million dollars of their own assets to meet all their obligations. There have been rumors that the bank was used by criminal Chechen groups to launder their money and transfer it offshore through accounts at Rossiysky Kredit to Citi Bank, Bank of New York and other large American banks, but this has never been proven. At the start of 2006, the Austrian banking group Raiffeisen bought Impexbank for 550 million dollars, integrating it into Raiffeisenbank.

In 2005, after the division of assets, a minority stake (28.74%)in the East Siberian Oil and Gas Company (VSNK)was passed into Malkin's hands. The main owner of the VSNK at the time was Yukos (70.78%). In July 2007, Rosneft bought out Yukos's stake in VSNK, valuing the company at 1.26 billion rubles (a little less than 50 million dollars). In 2011, “Rosneft” bought out Malkin’s stake.

The Senate

On 1 January 2004, Malkin was elected member of the Russian Federation Council for the Republic of Buryatia. His term was renewed on 19 September 2007 and again on 18 May 2012.

At the Federation Council, Malkin worked on the Commission for Natural Monopolies (January – June 2004), the Industrial Policy Committee (2004–2007), the Federation Council’s Activity Guarantee Control Commission (2004–2007), the Commission for Cooperation with the Court of Auditors of the Russian Federation (2004–2007), the International Affairs Committee (since 2007), the Commission for Youth and Tourism (2007–2011) and the Commission for Physical Culture, Sports and the Development of Olympism (2008–2011). From 2010 until his resignation, Malkin remained Vice President of the Federation Council’s International Affairs Committee.

In 2005, Malkin registered in Ulan-Ude and began paying taxes in Buryatia. “The idea came to me to pay my taxes in the Republic,” the Senator said. Malkin was convinced that the money would be more useful for the region than for the capital, where several wealthy taxpayers were already registered. Malkin then decided to concentrate on developing the agricultural districts in the Republic of Buryatia. In 2007, the Senator changed his registered address to the village of Kyren – administrative center of the Tunkinsky District, then again in 2010, to the territory of Tegda in the Khorinski district of the Republic of Buryatia. Malkin actively worked on drafting and adopting laws regulating inter-ethnic relations in the Russian Federation. After the Bair Sambuev murder in 2009 in Moscow, which was clearly racially motivated, a murder that rocked public opinion, Malkin sent letters to Dmitri Medvedev, President of Russia, and to Vladimir Putin, Head of the Government, as well as to the Attorney General and to the Minister of the Interior, demanding their opposition to inter-ethnic discord. In his letter, Malkin proposed that a Federal Law be drawn up and adopted urgently to improve inter-ethnic relations. As Vitaly Malkin pointed out, the fight against neo-Nazis was not being conducted effectively, leading to an escalation in violence and an increase in inter-ethnic strife, undermining the foundations of the Russian State. On 21 October 2009, Malkin met with Sergey Mironov, Chairman of the Federation Council, to discuss this question. During their meeting, they agreed to organize a conference on the problem of inter-ethnic relations and the fight against extremist and xenophobic manifestations and to invite representatives from the Ministry of Internal Affairs and the Attorney General’s Office of the Russian Federation, and city officials from Moscow, Saint Petersburg and Voronezh.

In March 2013, Malkin resigned from his position in the Federation Council after the anticorruption blogger, Alexei Navalny, published revelations that later turned out to be erroneous: Navalny claimed that Malkin held Israeli nationality in violation of Russian law. Actually, Malkin had voluntarily given up his Israeli nationality in August 2007 as the Russian law on dual nationality had changed to forbid civil servants from holding another nationality, Mr. Malkin, as a Senator, decided to keep his Russian nationality only. “The detailed reasons for my renunciation are the following: Russian law does not allow me to hold a second nationality, while I had declared my candidacy to become a member of the Russian Federation Council” (declaration of renunciation under article 10a of nationality law 5712-1952). It wasn’t until 11 November 2014, or a year and a half after the end of his term as Senator, that Mr. Malkin got his Israeli nationality back. So at the time of Navalny’s supposed revelations, Mr. Malkin did not hold dual nationality. Navalny also claimed that Malkin had property abroad that he had not mentioned in his financial statements, notably 111 apartments in Toronto, Canada, and a 16-million-dollar apartment in the Time Warner building in New York, United States. Once the initial accusations had been made public, others followed in the Russian media concerning Malkin’s finances, his possible French nationality and a supposed attempt to obtain Canadian citizenship in the 1990s. Malkin vigorously denied all the slanderous accusations claiming that he was connected to organized crime, and stated that he was the victim of a smear campaign, but he ended up having to resign, saying it was necessary because, “This was the first step in protecting the government against these attacks.” Since then, proof has come forward showing that the New York apartment mentioned by Navalny and which was the focus of all the media attention did not actually belong to Vitaly Malkin.

Era Foundation

Malkin created the Era Foundation in 2004 for charitable purposes. This foundation is located in Buryatia and works on several missions at the same time – aid to children (“Children are our future”), support for Buryat national culture, support for the Buryat community (“The Little Homeland”), aid for the elderly – “Aid to veterans”, “Culture and sports”, cultural development (“Heritage”), “Teaching and science”. The Era Foundation has also developed a program for helping veterans of the war in Chechnya, granted many scholarships to deserving students, and helped a large number of needy orphans. The Era Foundation has also contributed to restoring the Buryatia National Library. Vitaly Malkin has his own special philanthropic method: he personally makes sure that the funds allocated actually go to the causes and people targeted. He personally draws up projects and supervises progress on each step of the work, making sure that proper use is made of all funds.

Fondation Espoir

After a trip to Egypt, Malkin became aware of the existence of female genital mutilation practices. He was shocked to learn that in certain regions of Africa, 98% of the female population were victims of excision. He then had the idea to create a foundation to actively fight this problem. For this foundation to undertake effective international action, he called upon UNICEF and the Fondation de Luxembourg to set up a dedicated program that was able to train doctors, perform preventive operations and treat mutilated girls. The Fondation Espoir was thus born.

The first stage in the Fondation Espoir’s program will last 5 years, with a budget of 5 million euros fully financed by Mr. Malkin. As this program was promoted by UNICEF and the Ethiopian government, the program’s budget was increased by the United Nations and the Ethiopian government and, at the end of 2016, UNICEF announced that it was pleasantly surprised by the effectiveness of Mr. Malkin’s philanthropic methods: in three years, more than 2,200 girls had received care, doctors had been trained and large-scale awareness and prevention campaigns had begun to have an effect in the two regions of Ethiopia where this practice is most prevalent. UNICEF stated that more than 20,000 people, including 2,243 religious leaders, had been trained in the prevention of female genital mutilation (UNICEF report, 15 June 2017).

"Angolagate"

As a banker, Malkin was involved in the debt restructuring process between Angola and Russia.

Malkin was one of the organizers of the reimbursement of the Russian debt by the Angolan government. Malkin, along with Arcadi Gaydamak and Pierre Falcone, was also a shareholder in Abalone Investments Ltd, whose headquarters was located in the British Virgin Islands. Malkin was said to have organized his bank to launder some 700 million dollars in this affair. According to some people , there are documents that prove that Malkin was paid 44 million dollars through Abalone Investments Ltd., of which he had a 25% shareholding .

Mr. Malkin’s name was mistakenly confused with the so called “Angolagate”, however he was quickly cleared by the legal authorities who did not find any proof of his role in this affair, and neither the French legal system nor the Swiss legal system brought any charges against him for money laundering or for arms trafficking . The investigating magistrate in Geneva, Christine Junod, requested the withdrawal of penal sequester on Mr. Malkin’s assets on 13 July 2004 (decision under reference PP No. P/171/2002). The Attorney General of Geneva, Daniel Zappelli, established that “Abalone did [indeed] open an account with the Swiss Bank Corporation (SBC) in Geneva” but that only “Pierre Falcone and Arcadi Gaydamak [were designated] as the beneficial owners [of said account]” . Mr. Malkin therefore only testified as a witness and no charges were brought against him.

Mr. Falcone was indicted for money laundering, supporting a criminal organization and corrupting foreign public officials. The courts established that, for his misdeeds, Mr. Falcone had notably used a company in which he was a shareholder, Abalone Investment Ltd (in which Mr. Malkin was also one of the shareholders). In 2009, Pierre Falcone's case was abandoned by the French courts because they were found guilty of trying to judge an affair that did not concern the French State . Other proceedings against him are ongoing.

Arcadi Gaydamak’s role in Angolagate, on the other hand, was quite real: on 27 October 2009, the Criminal Court of Paris found Mr. Gaydamak guilty of illegal arms sales, misuse of company assets, tax fraud, influence peddling and money laundering. He was sentenced to six years in prison. He took refuge in Russia, but is being sought under several international arrest warrants issued by judge Philippe Courroye .

The "Canadian affair"

According to the National Post (Canada), Malkin was denied entry to Canada in May 2009 after a 15-year legal dispute

On 26 August 1994, an attorney in Canada presented Malkin’s application for permanent residence in the business category. In 1995, Malkin met with a visa agent at the Canadian consulate in Detroit; he presented his three companies in Moscow, including the Rossiysky Kredit bank, in which he held a 21% stake. He also had major investments in Hong Kong, Israel and the United States. He said that he planned to launch an investment bank in Canada, an export company, and to pursue the development of his real estate acquisition program. He had already purchased two buildings and was negotiating for a third one. The Canadian Security Intelligence Service then asked an agent to interview him the following year. The immigration agent rejected Malkin’s request in 1997, claiming that he did not meet the criteria of a businessman .

In what was to become a model, Malkin appealed the government’s decision before the Federal Court. He won his appeal and obtained a new hearing with the immigration services. Three years later, still without a response from the Canadian authorities, he turned to the court to force the government to issue a ruling. A Canadian visa agent questioned Mr. Malkin in Moscow in 2005 before refusing him entrance. After a second appeal, Malkin was awarded a new hearing with the immigration services, which once again refused, using the ongoing Angolagate case and alleging Mr. Malkins involvement in the said case, and citing presumptive criminal associations: money laundering, the illegal arms trade and the illegal diamond trade during the Angolan war. After the French judge decision, it was clear that their charges were groundless and that Malkin had no connection with this case.

In November 2012, Malkin was finally able to go to Canada on a private visit. During his visit, he met with Canadian public, cultural and Jewish associations, notably with the CEO of B'nai Brith.

Corsica

In 2005, Malkin entrusted the management of his fortune to a Luxemburg banker, Pierre Grotz (born on 3 October 1960). The banker started by negotiating the purchase of several airplanes and properties in Paris and London for his Russian client. With this trust-based relationship, he recommended that his client purchase an exceptional holiday resort in Corsica – Hôtel Casadelmar, which had just opened in Porto-Vecchio. This 5-star hotel, where Nicolas Sarkozy, Minister of the Interior at the time, stayed regularly, was located near the most beautiful beach on the island, Palombaggia. Actually, the banker was maneuvering in a scam to embezzle nearly 30 million euros for himself, as the purported seller at the time of sale was not the real owner of the property being sold. In a legal decision dated 15 February 2017, the Court of Appeal in Aix-en-Provence (decision no. 28/2017) took note of a "breach of trust" and "conspiracy to defraud" organized by Pierre Grotz, with complicity from Jean-Noël Marcellesi, Antonio Perini, Patrice Lescaudron, Jean-François Giudicelli, Yves Bayle and Olivier Couriol. Malkin is still awaiting full compensation for the damages incurred.

Parliametary investigation

After the suspicious death of Sergei Magnitsky, Vitaly Malkin volunteered to head an official delegation from the Russian Parliament to the American Congress. He wanted to set up a bilateral committee to investigate Magnitsky's death.

In July 2012, the Russian delegation headed by Malkin arrived in Washington. They had many meetings with members of Congress and influential American politicians, including the director of the Library of Congress of the United States of America, James Billington, and Senator John McCain, the Republican candidate in the 2008 Presidential election. Alongside Malkin, the delegation included Senators Valeriy Shnyakin and Alexander Savenkov.

The delegation's main aim was to propose that the American Senators jointly investigate the real circumstances surrounding Sergei Magnitsky's death and the role of each player in the misappropriation of public funds. As part of the preliminary Parliamentary investigation carried out by members of the Federation Council, for the first time all the departments involved in the process provided information: the Attorney General's Office, the Tax Department, the police and the Inquiry Committee.

On the basis of the documents received, the Senators drew up a brief presenting the entire story. The appendixes included 32 pages of copies of the evidence presented and detailed diagrams of the purported transfers of funds abroad which, according to the investigation, were used by the employees at the investment firms. "These invaluable documents had never been published anywhere," Malkin stated at the time.

During the investigation, it was proved that, after the illicit actions at the Hermitage Capital Management foundation and their tax machinations, Russia's budget lost nearly 230 million dollars. The Hermitage foundation, where William Felix Browder was executive director, was handling securities transactions for the Russian Federation. The organizations set up by Browder (Saturn Investment Ltd, Dalniaya step Ltd, Makhaon Ltd, Parfénion Ltd and Rilend Ltd) illegally used tax deductions designed for companies employing disabled people and, after using forgeries, received an income tax refund. S.L. Magnitsky, auditor at Hermitage Capital (who worked for Firestone Duncan) was fully aware of the tax fraud, as he had helped set up the fraudulent system used by W. Browder and had drawn up fraudulent tax returns. On 24 November 2008, Magnitsky was indicted for complicity in tax fraud. In response to these accusations, Browder claimed that he had been a victim of the corruption of the Russian authorities. W. Browder's version of the facts was not borne out by the documents in the investigation.

The Russian delegation headed by Vitaly Malkin was supposed to propose to the American Congress a collaboration in the investigation to shed light on the transfer of funds to the United States, then to understand the circumstances surrounding Magnitsky's death. There was also the question of retrieving several hundred million dollars in taxes and funds illegally funneled off. The Russian Senators were convinced that the fight for human rights and the fight against white-collar crime, money laundering and corruption were priorities for the international community, and that the United States would give their legal assistance in the search for and capture of the criminals, as well as in elucidating what happened to Russian money. As Malkin pointed out in his interview with Voice of America, "...the American party was unable to gain a clear view to get to the bottom of the crime behind the conflict." It was a question of separating the investigation into the death of Sergei Magnitsky from the Hermitage Foundation investigation.

The Russian delegation's actions brought about a reaction from Browder In response to the accusations, Browder once again accused the Russian authorities of corruption and presented Malkin as a criminal. In his interviews, Browder claimed that the Senator had slandered Magnitsky, his "murdered friend", by defending Russian agents involved in corruption. In his statements, Browder accused Malkin of involvement in arms trafficking with Angola in the 1990s and connections with international organized crime. He claimed that the fact that he had been barred from entering Canada was proof of this. Browder even requested that Canada promulgate a "Magnitsky law" and toughen measures against people "guilty of similar crimes".