Andrey Borodin’s Letter to the General Prosecutor

To Y. Y. Chaika,
General Prosecutor of the
Russian Federation

CC:
M. V. Kuzovlev,
OAO Bank of Moscow

A. A. Alyukayev,
administrative receiver,
ZAO Premier Estate

REPORT

The Russian Interior Ministry Investigations Department is investigating Criminal Case #89816 against me, Andrei F. Borodin, with charges brought under Part 4 of Article 159 of the Criminal Code of the Russian Federation. In my earlier complaints and reports made to the General Prosecutor’s Office of the Russian Federation, I have repeatedly pointed to the unlawful and groundless nature of my criminal prosecution, as well as to numerous violations committed by the investigators.

I have repeatedly turned to the General Prosecutor’s Office of the Russian Federation and the Investigations Committee of the Russian Federation with reports concerning individuals from the top management of the VTB Bank and the Bank of Moscow, because their actions bore signs of crimes related to bribe giving, receipt of financial assistance, non-receipt of funds from the sale of Moscow Government shares by the state budget and commission of other unlawful acts. Those reports are currently being considered by law-enforcement agencies of the Russian Federation.

In addition to reports made earlier, I must request that prosecution react to the following circumstances, which are under prosecutorial jurisdiction pursuant to the Federal Law “On prosecutor offices of the Russian Federation.”

As part of Criminal Case #89816, a representative of the Bank of Moscow made an absurd and groundless civil claim the amount of which was later also groundlessly increased by the Bank of Moscow and now surpasses 50 billion roubles. The Bank of Moscow seeks to collect the amount as joint responsibility of the defendants, including me (A. F. Borodin).

That claim includes the 12.76 billion roubles given by the Bank of Moscow as loan to ZAO Premier Estate secured by property belonging to Premier Estate.

The groundless and absurd nature of said claims of the Bank of Moscow is directly connected with the absurd and groundless nature of the charges against me that the investigators have formulated and is per se a subject to be contested and challenged under criminal-procedure legislation.

The deal where the Bank of Moscow issued a loan to ZAO Premier Estate is in full compliance with civil law, including in the portion concerning collateral, because it was duly secured by the pledge of property owned by the debtor: a land plot, cadastre number 77:07:0013002:1000, located in Moscow between Lobachevskogo Street and Matveyevskoye railway stop (old cadastre number 77:07:0013002:51). The value of the land plot was far in excess of the loaned amount. Thus the interests of the creditor bank were fully protected in case the debtor failed to repay the loan.

Nonetheless, representatives of the Bank of Moscow have not limited themselves to bringing a civil claim under Criminal Case #89816. From the publicly accessible card file of commercial cases, I know that the Bank of Moscow has turned to the Moscow Commercial Court seeking the bankruptcy of ZAO Premier Estate. On 10 December 2012 the Moscow Commercial Court placed ZAO Premier Estate under supervision. The claim of the Bank of Moscow in the amount of 13,747,861,738.16 roubles has been included in the creditors’ claims register.

The above amount is made up of 13,548,849,635.72 roubles of the principal debt and 199,012,102.45 roubles of penalty.

Aleksandr A. Alyukayev, member of NP SRO AU Razvitiye, Individual Taxpayer’s Number 771501041807, registration number in the consolidated register of administrators 141, address for correspondence: 105005, Moscow, Box 145, has been appointed provisional administrator of ZAO Premier Estate.

On 16 May 2013, the Moscow Commercial Court pronounced ZAO Premier Estate bankrupt, and bankruptcy proceedings opened. The same individual, Aleksandr A. Alyukayev, was made administrative receiver.

On 27 November 2013, the Moscow Commercial Court granted a request of the administrative receiver that bankruptcy proceedings with respect to ZAO Premier Estate be extended by six months.
The Moscow Commercial Court has set a hearing of the administrative receiver’s report on the results of the bankruptcy proceedings for 23 April 2014.

The cited circumstances, reflected in judicial acts of the Moscow Commercial Court, point to the fact that bankruptcy proceedings are being conducted by administrative receiver Alyukayev with respect to ZAO Premier Estate, as a result of which the company’s property and other assets may be alienated.

The Federal Law “On bankruptcy” establishes the powers of the administrative receiver, grounds and procedure for the sale of the property of the debtor organisation and peculiarities of the legal status of the creditor whose claims are secured by the debtor’s pledged property. What matters for the results of bankruptcy proceedings with respect to a debtor organisation is the price of the debtor’s property being sold as well as abidance by legal requirements in its determination.

Information about actions of the administrative receiver and participants in the bankruptcy proceedings with respect to the property of ZAO Premier Estate, including the land plot with cadastre number 77:07:0013002:1000, located in Moscow between Lobachevskogo Street and Matveyevskoye railway stop (old cadastre number 77:07:0013002:51), which was used as security on the loan issued by the Bank of Moscow, is lacking in open access.

Its market value, which the investigators have been trying to determine in the course of the investigation of Criminal Case #89816, has not been determined so far. The investigators have more than once requested relevant expert assessments; however, expert conclusions concerning the land plot’s value have been contradictory and would cause doubts, for which reason the investigation team is now conducting on its own initiative a repeated expert assessment.

These circumstances point to the possibility of the wrong determination of the value of a land plot not only as part of an investigation of a criminal case but also as part of bankruptcy procedure. As a result, a situation may be created artificially where pledged security will be claimed but the Bank of Moscow’s claim will not be satisfied, due to a groundless underestimation of the land plot’s value.
Not excluded is also an intentional misrepresentation of the land plot’s value, for the purpose of influencing the results of bankruptcy proceedings concerning ZAO Premier Estate. Such a misrepresentation will lead to a violation of the rights of creditors and budget interests of the Russian Federation and acquisition of said land plot by interested persons at a wittingly low price.

As for the value of the property – the pledged land plot – it is necessary to note yet another important circumstance.

According to Annex #3 to Decree #751 of the Government of Moscow of 26 November 2013, specific indicator of cadastre value of the land plot whose cadastre number is 77:07:0013002:1000, located in Moscow between Lobachevskogo Street and Matveyevskoye railway stop (old cadastre number 77:07:0013002:51), is currently equal to 48,495.50 roubles per square meter, due to which the cadastre value of the land plot amounts to 26,777,208,065 roubles.

Alienation of this property at a price below the cadastre value will inevitably mean commission of unlawful actions in bankruptcy proceedings in the interest of persons interested in property gain under the pretext of bankruptcy proceedings for ZAO Premier Estate, will largely harm the state budget and forms corpus delicti under Article 195 of the Criminal Code of the Russian Federation (unlawful actions in bankruptcy proceedings).

According to the Federal Law “On prosecutor offices of the Russian Federation,” the offence prevention function is one of the functions of prosecutorial bodies and may be executed by applying measures of prosecutorial reaction, such as warning (Article 25.1 of the Federal law “On prosecutor offices of the Russian Federation”).

Prosecutorial bodies now have a chance to prevent commission of offences in the course of bankruptcy proceedings for ZAO Premier Estate with the participation of the Bank of Moscow and other interested persons.

Based on the above, I am requesting that you:
1. Conduct a verification of the circumstances of the bankruptcy of ZAO Premier Estate on report by the Bank of Moscow and activity of the administrative receiver – for the purpose of preventing alienation of the debtor’s property (a land plot) at a wittingly low price, below the cadastre value, determined by an authorised state body.
2. As a result of the verification, take measures of prosecutorial reaction for the purpose of preventing offences and crimes.
3. Inform my representatives about the results of the verification: Attorney M. S. Dolomanov, Dolomanov and Partners, Office 9 4/17 Pokrovskiy Boulevard, Building 1, Moscow 101000; Attorney D. V. Kharitonov, Gridnev and Partners, 2/32/65 Sadovaya-Kudrinskaya St. Moscow; and Attorney V. R. Oganesyan, Law Firm #5, 6/9 Sredniy Karetnyy Pereulok, Building 1, Moscow 127051.

Sincerely,

A. F. Borodin
17 January 2014

Commentary by Andrey Borodin: VTB people and all sorts of officials in Russia have on many occasions stated that the security on the loan to Premier Estate (which set off a series of criminal cases in the process of a raider takeover of the Bank of Moscow) fails to cover the loan (about 13 billion rubles) and is almost worthless. Now, the current cadastre evaluation of the pledged land says that it is worth some 27 billion roubles, i. e. more than twice covers the company’s debt. Continue reading

Statement by Andrey Borodin

Mikhail Zadornov, chairman of VTB 24, informed the media a few days ago that a number of banks in Russia are close to bankruptcy, including some of the top-50 banks. What is interesting in his statement is not that Mr Zadornov acted as though he was a Central Bank spokesman, to whom talk like that would be pardonable, and even not that his statement is yet another one in the list of evidence of unfair competition by Russian state banks, especially now that licenses are recalled almost daily. What is interesting is what state bank representatives (in this case, Mr Zadornov) always keep silence about. One must understand that, without unceasing state support, they would have been close to bankruptcy among the first. Thus, over the past year alone VTB 24 has been issued 40 billion roubles in the shape of a subordinated loan from its parent VneshTorgBank, and in the near future the bank is planning a 200 billion emission, which will also be funded (directly or indirectly) from the state purse.
Of course, it is good to be managing a bank to which the state provides regular (and, in essence, gratuitous) assistance to cover losses and keep it afloat. However, in that position it is impossible to talk objectively about the quality of the banking sector.
By the way, Russia has an NGO “ARB” which on its official website states that it “expresses interests of the Russian banking community.” Judging by its list of significant events and current projects, the interests of the banking community for it end where those of state banks begin. I have no other explanation for the lack of any reaction from ARB to Mr Zadornov’s statement and those of other state-related people.

Statement by Andrey Borodin

I welcome the British Government’s decision to grant me political asylum. I have always maintained that the allegation made against me and the charges brought by the Russian Federation are without foundation and are politically motivated. I am reassured that the British Government in granting me refugee status have recognised that the criminal charges levelled against me by the Russian authorities are baseless and without merit.

A. Borodin’s letter to State Duma Deputy S. Gavrilov

To S.A. Gavrilov
Chairman,
Committee for Property Issues,
State Duma,
Federal Assembly of the
Russian Federation

Dear Mr Gavrilov,

I have learned with great interest from the media about your initiative on holding a session of the State Duma committee that you chair to consider information and materials of law-enforcement agencies, the Deposit Insurance Agency and the Accounting Chamber of the Russian Federation allegedly concerning misappropriations in the Bank of Moscow. I strongly welcome your initiative and am prepared to provide any possible assistance in its implementation. Continue reading

The ‘Magnitsky List’ could be the only way of fighting for Russian citizens

DailyMail Online

In recent years events connected with Russia and Russian citizens have become a regular feature in the British media. Unfortunately, the frequent appearance of such headlines is not a result of strengthening of friendship and collaboration between the two states. Often these reports accompany scandalous trials in British courts, violation of human rights in the Russian Federation, and so on. For instance, today the Magnitsky Legacy round table sessions are taking place in the Parliament building in London. All this attests to the fact that the Russian justice and law-enforcement systems are in a deep crisis and leave no hope for fair decisions based on compliance with legal provisions or, at least, human rights. Continue reading

Statement by Andrey Borodin, Founder and Former President of the Bank of Moscow

LONDON, October 29, 2012 PRNewswire

- Borodin calls recent accusations a “pack of lies”

“Last week the Russian Ministry of Interior and unnamed sources in Russia sought to create the false impression that various authorities outside Russia have newly commenced investigations or frozen assets belonging to me. The allegations are false and are clearly aimed at countering the evidence that the Russian authorities are pursuing an illegal and politically motivated witch hunt against myself. Continue reading

Statement by Andrei Borodin

Last Friday a program called “Anatomy of protest – 2” was aired on the Russian government TV channel, NTV.  The program suggests that I am giving, or have offered, financial support for a Russian political opposition movement to seek a change of government using unlawful and undemocratic means.  The allegation is untrue: I have never advocated or believed in the use of unlawful or undemocratic methods for pursuing political change.  The absurd suggestion that the opposition and its sponsors intend to seize power by force in Russia serves the interests of the government that owns NTV and pays its employees. Continue reading

Statement by Andrei Borodin

To Mr S.M. Ignatyev
Chairman, Central Bank,
Russian FederationMr A.V. Bortnikov
Director,
Federal Security Bureau (FSB),
Russian Federation
STAMP: Accepted,
Bank of Russia
06 Sept 2012 //signed//

REPORT

It has become known from information that appeared in open sources in May 2012 that Mikhail Valeryevich Kuzovlev, President and Chairman of the Executive Board of OAO Bank of Moscow, has been a citizen of the Republic of Cyprus as of 2008.

I am bringing to your attention the fact that Mr Kuzovlev failed to disclose the information about his having foreign citizenship in the documents submitted for the position of Senior Vice President of OAO Bank of Moscow in February 2011. When he gave concurrence to his election to the Board of Directors of OAO Bank of Moscow, Mr Kuzovlev also failed to disclose the information about his Cypriot citizenship. Being well aware of the fact that work in the position of member of the Board of Directors and Senior Vice President of the bank involved knowledge of information amounting to state secret and having wittingly concealed his connexion with a foreign state, Mr Kuzovlev misled the bank’s top management in February 2011, including myself as President of OAO Bank of Moscow. As a result, when subsequently the candidacy of Mr Kuzovlev was considered for the post of member of the Executive Board of OAO Bank of Moscow by the Central Bank of the Russian Federation, the decision was made without taking into account the information about his foreign citizenship. Continue reading

Statement by Andrei Borodin

The Moscow Commercial Court has appointed for 4 September the main hearing on a claim seeking to invalidate the transaction in which the Moscow-government-owned stake in the Bank of Moscow was made part of the authorized stock of the Central Fuel Company (CFC) with its subsequent sale to the VneshTorgBank (VTB). The claimant, a Mr Devyatkin, demands that the transaction and all its legal consequences be cancelled.

It was clear from the start that the legal arrangement was a sham transaction, only called to conceal the real essence of the deal. The sale of the stake in the Bank of Moscow owned by the Government of Moscow can only happen under privatization legislation, with all the restrictions that it imposes. The sale must happen on an open auction, and a company partially owned by the state cannot be a buyer. If you abide by law, you cannot sell the city-owned stake in the Bank of Moscow to the arbitrarily chosen VTB for an arbitrarily chosen price. Continue reading

Andrei Borodin’s original answers to Vedomosti questions

Q 1. Why do you think you have been listed among the most dangerous criminals?

A.: As I have been saying in my previous interviews, in reality, government financial assistance was provided to the VTB Group, which had taken over the Bank of Moscow, not to the Bank of Moscow itself. The Bank of Moscow was in a good financial condition and did not need financial rehabilitation. Serious buyers, independent from the state, had been interested in buying a stake in the bank. But the special operation of its takeover implied a distortion of the real state of affairs, for the VTB raiders to be able to pocket not only the fifth-largest bank, but also 295 billion of government assistance free of charge. Do you think VTB wants to recognize that publicly? And if it does not, then it needs a covering operation: the bank was allegedly embezzled and the principal villains were my colleagues and partners and I.

VTB representatives act proceeding from the assumption that somebody has to be held accountable for the government money taken; if they recognize everything and accept the assets at their just value, then they will have police interrogations in store for them. And self comes first. Continue reading