US House Finance Committee Chair Rep. Waters Plans Oversight Of Deutsche Bank/ Bank Of Cyprus

This past week of March 2, 2019, the Democratic Party US House Fiance Committee Chairman Maxine Waters has announced the committee’s plan to conduct oversight hearings into the connections of the republican President Donald J. Trump with Deutsche and Bank of Cyprus.

The below is a synopsis of what I had already researched about this subject and posted on a prior blog, dated March 17, 2017.

Review regarding the smoke surrounding our republican President Donald Trump’s connections to Russia:

1.) Deutsche is our president’s largest creditor.

2.) Deutsche Bank has already been fined millions of dollars for laundering Russian dirty monies to the tune of $10 billion dollars via various methods and entities including the Bank of Cyprus.

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WILBER ROSS/ JOSEF ACKERMANN

3.) The head of Deutsche Bank during this dark period, Josef Ackermann became the chairman of the Bank of Cyprus in 2014.

4.) The largest shareholder of the Bank of Cyprus, Dmitry Rybolovlev is the same Russian oligarch who purchased the president’s Palm Beach home in 2008 for the inflated price of $95 million to $100 million dollars when it was appraised for about $60 million dollars.

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Dmitry Rybolovlev

5.) Around the time that the Russian oligarch Dmitry Rybolovlev purchased the president’s property in Palm Beach in 2008, the president was suing Deutsche Bank in 2008 over a $40 million loan that came due. He claimed that the 2008 downward spiral in property values, due to the US recession was as an “Act of God” which absolved him from having to honor this obligation. Somehow this whole incident was taken care of and Deutsche Bank has continued to loan the president monies.

6.) Coincidentally, the newly confirmed Commerce Secretary Wilbur Ross became the Vice Chairman of the Bank of Cyprus in 2014. He has stepped down from this role.

7.) “The Bank of Cyprus has a lengthy history of laundering Russian dirty monies which has supposedly been corrected. However, a 2/2/17 EUobserver article by Andrew Rettman reports the following:”

“Pieter Omtzigt, from the christian-democrat CDA party, put forward the criticism in a letter, on Saturday (January 30, 2017), to a financial crimes unit in The Council of Europe in Strasbourg.”

“Recent developments in Cyprus in relation to the Magnitsky case have shown the failure of Cyprus to apply money laundering legislation in practice,” he said.”

“This case is a litmus test for whether Cyprus is now really paying attention to proper controls or whether it is only paying lip service to recommendations.”

8.) Finally, the reason that the esteemed US prosecutor, Preet Bharara may have been fired by the White House in March 2017 could be because he had been in charge of criminally pursuing Deutsche Bank for its Russian money laundering schemes.

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Deutsche Bank Frankfort

The following are cliff level notes regarding Deutsche Bank.

On 8/29/16 Ed Caesar of the New Yorker penned the following detailed report on Deutsche Bank, “DEUTSCHE BANK’S $10-BILLION SCANDAL”

Excerpts:

“Almost every weekday between the fall of 2011 and early 2015, a Russian broker named Igor Volkov called the equities desk of Deutsche Bank’s Moscow headquarters. Volkov would speak to a sales trader—often, a young woman named Dina Maksutova—and ask her to place two trades simultaneously. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented. Usually, the order was for about ten million dollars’ worth of the stock. In the second trade, Volkov—acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands—would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Both the Russian company and the offshore company had the same owner. Deutsche Bank was helping the client to buy and sell to himself.

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Igor Volkov

At first glance, the trades appeared banal, even pointless. Deutsche Bank earned a small commission for executing the buy and sell orders, but in financial terms the clients finished roughly where they began. To inspect the trades individually, however, was like standing too close to an Impressionist painting—you saw the brushstrokes and missed the lilies. These transactions had nothing to do with pursuing profit. They were a way to expatriate money. Because the Russian company and the offshore company both belonged to the same owner, these ordinary-seeming trades had an alchemical purpose: to turn rubles that were stuck in Russia into dollars stashed outside Russia. On the Moscow markets, this sleight of hand had a nickname: konvert, which means “envelope” and echoes the English verb “convert.” In the English-language media, the scheme has become known as “mirror trading.”

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Birmingham

“Mirror trades are not inherently illegal. The purpose of an equities desk at an investment bank is to help approved clients buy and sell stock, and there could be legitimate reasons for making a simultaneous trade. A client might want to benefit, say, from the difference between the local and the foreign price of a stock. Indeed, because the individual transactions involved in mirror trades did not directly contravene any regulations, some employees who worked at Deutsche Bank’s Russian headquarters at the time deny that such activity was improper. (Fourteen former and current employees of Deutsche Bank in Moscow spoke to me about the mirror trades, as did several people involved with the clients. Most of them asked not to be named, either because they had signed nondisclosure agreements or because they still work in banking.)”

“Viewed with detachment, however, repeated mirror trades suggest a sustained plot to shift and hide money of possibly dubious origin. Deutsche Bank’s actions are now under investigation by the U.S. Department of Justice, the New York State Department of Financial Services, and financial regulators in the U.K. and in Germany. In an internal report, Deutsche Bank has admitted that, until April, 2015, when three members of its Russian equities desk were suspended for their role in the mirror trades, about ten billion dollars was spirited out of Russia through the scheme. The lingering question is whose money was moved, and why.”

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Bremen

“Deutsche Bank is an unwieldy institution with headquarters in Frankfurt and about a hundred thousand employees in seventy countries. When it was founded, in 1870, its stated purpose was to facilitate trade between Germany and other countries. It soon established footholds in Shanghai, London, and Buenos Aires. In 1881, the bank arrived in Russia, financing railways commissioned by Alexander III.”

“In 2007, the bank’s share price hit an all-time peak: a hundred and fifty-nine dollars. But as it grew fast it also grew loose. Before the housing market collapsed in the US, in 2008, sparking a global financial crisis, Deutsche Bank created about 32 billion dollars’ worth of collateralized debt obligations, which helped to inflate the housing bubble. In 2010, Deutsche Bank’s own staff accused it of having masked 12 billion dollars’ worth of losses. Eric Ben-Artzi, a former risk analyst, was one of three whistle-blowers. He told the Securities and Exchange Commission that, had the bank’s true financial health been known in 2008, it might have folded, as Lehman Brothers had. Last year, Deutsche Bank paid the S.E.C. a fifty-five-million-dollar fine but admitted no wrongdoing. Ben-Artzi told me that bank executives had incurred a tiny penalty for a huge crime. “There was cultural criminality,” he said. “Deutsche Bank was structurally designed by management to allow corrupt individuals to commit fraud.”

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Eric Ben-Artzi

“Scandals have proliferated at Deutsche Bank. Since 2008, it has paid more than 9 billion dollars in fines and settlements for such improprieties as conspiring to manipulate the price of gold and silver, defrauding mortgage companies, and violating U.S. sanctions by trading in Iran, Syria, Libya, Myanmar, and Sudan. Last year, Deutsche Bank was ordered to pay regulators in the U.S. and the U.K. two and a half billion dollars, and to dismiss seven employees, for its role in manipulating the London Interbank Offered Rate, or libor, which is the interest rate banks charge one another.”

“In April, 2015, the mirror-trades scheme unravelled. After a two-month internal investigation, the three Deutsche Bank employees were suspended. One was Tim Wiswell, a thirty-seven-year-old American who was then the head of Russian equities at the bank. The others were Russian sales traders on the equities desk: Dina Maksutova and Georgiy Buznik. Afterward, Bloomberg News suggested that some of the money diverted through mirror trades belonged to Igor Putin, a cousin of the Russian President, and to Arkady and Boris Rotenberg. The Rotenberg brothers own Russia’s largest construction company, S.G.M., and are old friends of Vladimir Putin. They are on the U.S. government’s list of sanctioned Russians, which was compiled in response to Putin’s aggression in Ukraine. According to the U.S. Treasury, the Rotenbergs have “made billions of dollars in contracts” that were awarded to their company by the Russian state, often without a transparent bidding process. (Last year, S.G.M. was awarded a contract worth $5.8 billion to build a twelve-mile bridge between Russia and Crimea.)”

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Tim Wiswell

“In June, 2015, with pressure from shareholders intensifying over the mirror trades and other scandals, the co-C.E.O.s of Deutsche Bank, Anshu Jain and Jürgen Fitschen, announced that they would resign. They were replaced by John Cryan, whose remit was to clean up the bank. That September, he announced the impending close of all investment-banking activity in Russia. When the Moscow investment bank shut down, in March, the remaining employees threw a “going out of business” dinner at a restaurant near the office.”

“Many current and former employees of Deutsche Bank cannot quite comprehend how the equities desk in a minor financial outpost came to taint the entire institution. The ostensible function of the Moscow desk was straightforward: it bought and sold stock for approved corporate clients—mutual funds, brokerages, hedge funds, and the like. The desk had about 20 employees, and included researchers, who analyzed financial data; sales traders, who took calls from clients about buy and sell orders; and traders, who executed the orders.”

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Wall Street

“According to a former employee, before the crash of 2008 the desk’s yearly profit was nearly three hundred million dollars. In the years after the crash, profits plunged by more than half. In this environment of diminishing returns on normal stock-market activity, the Moscow equities desk was looking to find fresh revenue streams.”

“Many businesses in the Russian Federation avoid taxes by using offshore jurisdictions, such as Cyprus, for their headquarters. Rich Russians, meanwhile, often funnel their private fortunes offshore, in an effort to hide their assets from the capricious and predatory Russian state. Frequently, this fugitive money is invested in assets such as property: on Park Lane in London, or Park Avenue in New York. (Boris Rotenberg’s wife, Karina, told the Russian edition of Tatler that the family has 3 main houses: one in Moscow, one in Monaco, and a “dacha” in Provence, where she keeps horses.)”

Vladimir Putin (AP Photo/Andrew Harnik)”The impact of this capital flight is felt at both ends of its journey. Research published last year by Deutsche Bank’s own analysts suggested that unrecorded capital inflows from Russia into the U.K. correlated strongly with increases in U.K. house prices and, to a lesser extent, with a strengthening of the pound sterling. Capital flight also has weakened Russia’s tax base and its currency. In 2012, Putin began a “de-offshorization” program, urging businesses and oligarchs to keep their headquarters and their fortunes at home. Two years later, after Russia’s incursion into Crimea led to sanctions from the European Union and the U.S., Putin declared that offshorization was illegal. But as the ruble and the economy foundered many Russians felt even more eager to remove their money. Mirror trading was an ideal escape tunnel.”

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“According to people with knowledge of how mirror trades worked at Deutsche Bank, the main clients who were engaged in the scheme came to the bank in 2011 through Sergey Suverov, a sales researcher. Suverov left the bank soon afterward. (He has not been charged with wrongdoing.) Igor Volkov, the Russian broker, became the clients’ primary representative. Initially, the accounts that Volkov handled—funds based in Russia and overseas, with such bland names as Westminster, Chadborg, Cherryfield, Financial Bridge, and Lotus—placed conventional stock-market orders. But Volkov soon made it clear to his contacts at Deutsche Bank that he wanted to make a large volume of simultaneous trades.”

“What did Deutsche Bank know about the companies that Volkov represented? Each new fund that wished to trade with Deutsche Bank, known as a “counterparty,” was subjected to a “double check” by compliance departments in London and Moscow, to insure that papers were in order. Evidently, all the counter-parties passed both internal reviews. The bank was also required to complete a “know your client,” or “K.Y.C.,” assessment, and determine if the client had any taint of criminality. Deutsche Bank did little to interrogate the source of funds—including those behind Westminster and other Volkov clients.”

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“The Russian equities desk generally had 4 sales traders who took calls from clients. Two were American, and 2—Maksutova and Buznik—were Russian. The sales traders reported to Tim Wiswell, the American in charge of the Russian equities team, and to Carl Hayes, an executive in London. Two other managers—Batubay Ozkan, in Moscow, and Max Koep, in London—oversaw the desk.”

“Maksutova and Buznik were allocated the equities desk’s Russian clients. Maksutova was assigned the clients represented by Volkov. Colleagues say that she knew few personal details about Volkov.”

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“In 2009, top managers at Antanta Kapital formed Westminster Capital Management, which became one of the first major mirror-trade clients. As a Deutsche Bank employee put it, Volkov was Westminster’s “execution guy.” Volkov also began executing mirror trades for several other companies.”

“Four employees at Deutsche Bank in Moscow recall that nobody tried to hide the scheme. Wiswell, Buznik, and Maksutova all met with Volkov, and his orders were discussed openly on the desk. Colleagues also remember that Hayes asked both Buznik and Wiswell about the mirror trades. Few conversations relating to the trades, however, were likely retained by Deutsche Bank’s internal monitoring systems. Within the office, conversations about the trades typically occurred face to face, and videoconferences with colleagues in London were not recorded.”

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“Several Deutsche Bank employees in London knew about the mirror trades, even though the orders were taken in Moscow. The London office executed half the transactions. The trades were also documented by a computer system, called DB Cat, which catalogued every trade made by the bank. Hayes and Koep, the supervisors in London, could call up trading receipts on their computers.”

“Although many people at Deutsche Bank knew about the mirror trades, not everybody was happy. In late 2012, Maksutova, the sales trader, went on maternity leave, and Buznik temporarily worked with Volkov. Buznik became uneasy that Volkov was executing identical buy and sell orders, and twice asked to meet with Wiswell to discuss the propriety of mirror trading. Wiswell, colleagues say, looked after Volkov’s accounts personally. Wiswell assured Buznik that the trades were legitimate, and Buznik did not share his concerns with other managers.

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“The apparent willingness of counterparties to lose money again and again, a former manager at Deutsche Bank told me, should have “sounded an air-raid alarm” that the true purpose of the mirror trades was to facilitate capital flight.”

Link for entire report: Deutsche Bank’s $10-Billion Scandal – The New Yorker

2 comments

  1. Gronda, as we have discussed, it is real simple. After six bankrupticies, US banks would not lend Trump money. So, he went to a bank that was laundering money. And, then another one. Further, the Russian oligarchy would launder money investing in US real estate. And, lo and behold they did business with Trump.

    So, when Trump says he does not have business with Russia, he is lying pnce again. He does not want people to follow the money. Keith

    Liked by 1 person

    • Dear Keith,

      That’s what I find so confusing with the GOP lawmakers’ reticence to confront the problem that exists, in having a president being dependent on Russian financing for all his projects.

      It’s a well known fact that Russia is managed like a mob organization. Just like the mafia owns someone who owes them monies, Russia owns folks who are dependent on Russian financing. This is the very definition of what a compromised US citizen looks like, but the republicans went and pushed for his presidency.

      Hugs, Gronda

      Like

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