The colour of Russian money part 21: Gene Zolotarev, Parex’s Golden Boy
The boyish, chubby figure in sunglasses in the linked in photo smiles against a backdrop of the American flag, his shirt buttons open to expose his chest. He looks like a straight talking all American guy. But Gene Zolotarev who now runs a Swiss investment firm was born in Estonia and is the former Vice chairman of Parex Bank which collapsed in 2008. Zolotarev, whose name derives from the Russian word for gold, claims now that he had no idea that the bank would go belly up. In an article in the Baltic Times, a publication which he also owns, in September 2010 he stated that “almost everyone I meet asks me if I and my team (most of who resigned at the same time) knew the bank would collapse. Of course not. But we certainly knew the storm was coming and, perhaps, better than others, understood its impact on the markets, banks and lives of ordinary people of the Baltic Tigers.” He bailed from the bank in February 2008 as he cheerfully admits “just before the crisis… leaving unsuspecting commercial bankers and regulators to deal (unsuccessfully) with the liquidity crunch, leading to bank collapse, currency collapse, regional financial and social catastrophe.”
However Zolotarev, certainly understood the bank’s questionable balance sheets and its weak financial position. On 18 August 2003 he hit the send button on an e mail that revealed the bank’s financial statements were fraudulent. The message was a grudging acknowledgement that Parex must admit to its links with firms that were its “de facto subsidiaries” to the regulator. John Christmas, one of the recipients of the e mail, would ultimately blow the whistle on the bank’s fraudulent activities. He notes that “the e mail shows that all four vice presidents and the head of accounting knew that Parex’s financial statements were false. The bank did not have permission to own some of these firms. They were funded with loans from Parex that were accounted for as loans to unrelated parties. The total volume of these loans was greater than the bank’s equity.”
Two of these undisclosed subsidiaries the Northern Investment Bank in Belarus and Extro Bank in Russia would subsequently be the focus of criminal investigations. On 22 May 2012 the Belarusian bank later renamed Credex was accused by the US of money laundering and sanctioned. The bank had allegedly paid $1bn to bogus companies and it was owned by a Swiss firm Vicpart Holding SA which was allegedly a front for the chairman of the bank’s board, Sarkis Simovaryan. The bank denied the allegations and, after its ownership was formally revised the sanctions were lifted in 2016. Extro Bank was sold to Banco Santander which lost millions of dollars on the deal because the Russian bank, like Parex, was a financial phantom.
Despite being in negative equity as early as 2003 Parex continued to issue loans, often to its owners or firms they controlled. The bank was the heart of a web of shell companies, which exists to this day and acts as a vehicle for mafia and Russian intelligence slush funds. It functioned as a vehicle for funds for “High Net Worth” individuals from Russia, Ukraine and the CIS. A crucial part of its operation was a Swiss subsidiary, AP Anlage & Privatbank, which was specifically created, according to Kargins, to conceal accounts held by CIS clients from prying eyes in the EU. AP Anlage & Privatbank survived the collapse of Parex and was incorporated in Citadele, which was a new company established on the ruins of Parex.
Zolotarev, although he denies any knowledge of Parex’s criminal activities, was a close associate of the bank’s owners, Valerijs Kargins and Viktors Krasovickis. After he left Parex he established Maximus Capital S.A in 2009. The firm, which is also registered in Latvia as of 2010, is a “Swiss-based asset manager to the HNW-individuals from Russia, Ukraine and CIS.” This superficially seems similar to Parex’s business model but there is no suggestion of any link to criminal activities. However there were some interesting attendees at an investment conference organised by Maximus Capital in Riga on 16 March 2018. The Intelligent Solutions Group, a Belise registered firm specialising in offshore services for high net worth clients in the CIS was one of the delegates. The company hawks ready-made shell firms in jurisdictions ranging from Scotland to the Seychelles. These companies can be used for a variety of purposes. One entity possibly sold by ISG is linked to a Donetsk based Ukrainian oligarch involved in fuel trading. Another of their shell companies is connected to a Georgian involved in the privatisation of a mining company. The company also offers to assist its clients to secure “citizenship by investment” in a range of countries. These include Malta whose own offer of passports for cash was being investigated by the journalist Daphne Galizia when she was assassinated by a car bomb. Pafilia Property Developers which offers CIS clients the opportunity to invest in real estate in Cyprus and acquire EU citizenship was also present. The NTL Trust a St. Kitts registered firm with an office in Riga similarly offers investment and passport acquisition services turned up. Crypto Asset Management a Russian firm specialising in the shadowy area of digital asset management was in attendance. A firm called Vortex supposedly from the UK was present even though there is apparently no such firm with a UK registration. The company, however, has a website, and its two person team, Etienne Botes and Victoria Roberts, are also on Maximus Capital’s investment board. Vortex appears to be a fund and may be the trading name of the UK registered Liquid Alternatives Partners whose four officers include Botes and Roberts. One of the other “officers” is a US registered firm SerendipEquity which specialises in funds of hedge funds… its senior team includes Botes and Roberts who are listed under the heading “Liquid Alternatives.” …
The former Latvian PM Valdis Birkavs symbolised the Latvian establishment’s endorsement of rich CIS citizens looking to stash their cash outside of their own countries.
Maximus Capital SA is, like some of these firms, bidding for high net worth clients in the CIS who want to place their assets outside of the EU and their own countries. This is of course a perfectly legitimate area of business. However, can the firm guarantee that all of these people have acquired the funds placed with them legitimately? Should a man who by his own admission helped initiate “bank collapse, currency collapse, regional financial and social catastrophe” be running an investment firm?
Stephen Komarnyckyj is a PEN award winning literary translator and poet whose work is published by Kalyna Language Press and features on the PEN World Bookshelf. You can e mail him on stevekomoffice(at)zoho.eu
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