Informative note on progress made in Kroll investigation

Chisinau, 13 April /MOLDPRES/- The National Bank of Moldova (BNM) has received its fourth formal progress briefing from Kroll on its continuing investigation of a large scale fraud in the Moldovan banking sector, which resulted in the collapse of Banca de Economii SA (BEM), Banca Sociala SA (BS), and Unibank SA (UB), (together, the “Three Moldovan Banks”). 

According to a press release by BNM, the final goal of the investigation is "to identify assets which have been acquired with fraud funds and to attempt to recover these assets through legal processes. The investigation has now progressed to a stage where sufficient information has been obtained to start to initiate the recovery phase of the investigation".

Documents obtained clearly demonstrate the involvement in the fraud of a large group of Moldovan companies working in concert, which were linked to Ilan Shor (the “Shor Group”). At least 75 companies made up this coordinated group. Between 2012 and 2014, significant loan funds were provided by the Three Moldovan Banks to Shor Group companies. These loan funds were predominantly transferred to accounts held at two Latvian banks, before being laundered through a network of approximately 100 related corporate bank accounts in Latvia, the informative note reads.

The majority of these accounts were held in the names of UK registered companies, or companies registered in offshore locations such as Belize, BVI and Panama. Following this complex laundering process, the majority of the loan funds were channeled back to Moldova to pay down existing loan exposures, to create the impression that these were genuine corporate loans and to allow the loan portfolio to grow, whilst approximately USD 600 million was dissipated to bank accounts across numerous jurisdictions.

The tracing exercise is ongoing and increasing in complexity due to the multiple layers of additional laundering that the fraudulent loan funds were subjected to following the core laundering mechanism. Funds have to date have been traced to accounts in multiple jurisdictions, most significantly other Moldovan banks (outside of the Three Moldovan Banks) (USD 185 million), Cyprus (USD 63 million), China and Hong Kong (USD 61 million), and Switzerland (USD 23 million). Approximately USD 200 million has been traced to other accounts at multiple Latvian banks, subjected to further complex laundering of funds.

Approximately 40 individuals have been identified, who either benefited from or facilitated the fraud. Receipts into personal accounts or into companies known to be linked to these individuals amount to approximately USD 50 million. Additionally, it is not clear whether the individuals who received funds were directly involved in the fraud or whether the payments were made as gifts or remuneration for services or goods. The list of supposed beneficiaries must remain confidential to avoid negatively impacting the possibility of future recoveries.

Kroll and Steptoe and Johnson companies have provided the BNM with a strategy for initiating legal action in multiple jurisdictions, with the view of obtaining further disclosure, or recovering assets which have been misappropriated. This is currently under review and is expected to proceed shortly, the BNM said.

(Reporter V. Bercu, editor M. Jantovan)