Posted on Apr 11, 2018
Major Russian oligarch, Alexander Nikolaev, continues to evade both the EU and the US Treasury Department sanctions lists on business entities and persons. the individual in question is a co-owner of a firm operating illegally in the Russian occupied Ukrainian peninsula of the Crimea, which the sanctions target, writes Phillipe Jeune for EU Today.
His primary business associates are already on the list, however, because Nikolaev himself is not, sanctioned entities and persons can do business using him as their front.
Nikolaev, amongst other things, is co-owner of a major Russian alcohol production firm, Alliance 1892, and distribution firm Trade House 2A.
The other owner of Trade House 2A, Boris Titov, is on the sanctions list.
A distillery and production plant which Nikolaev uses in Ukraine, the Novy Svet plant in occupied Crimea, is illegally owned and operated by Yury Kovalchuk, who is currently under sanctions.
This has created the opportunity for Titov, Kovalchuk, Trade House 2A, and Alliance 1892, as well as others distributing through Trade House 2A, or those who can simply funnel money through Nikolaev, to evade sanctions meant specifically to target businesses operating on illegally seized properties in Russian occupied Ukraine, by simply operating through him and any other ad hoc front entities he has established.
EU and US sanctions are simply not effective if named parties can operate through other parties and fronts in this way: Nikolaev also appears to be running a money laundering operation - a development bank, the owner of which, Roman Trotsenko, has been under investigation for precisely that offence
Trotsenko is also on the US Treasury department's sanctions list.
Background and details
After 2014, when Russia illegally annexed Crimea and provoked armed clashes in eastern Ukraine, the international community reacted with various political and economic sanctions.
Another of the enterprises included in the EU sanctions list is NovySvet, actually stolen from Ukraine when Crimea was annexed.
A close look at this enterprise reveals a number of interesting details.
At the end of January, the US Department of the Treasury sent to Congress the ostensibly public part of the Kremlin report – a list of Russian officials and businessmen against whom US sanctions may be applied.
One of the figurants of this list is the billionaire Yuri Kovalchuk, who at the end of 2017 acquired NovySvet: the official distributor of NovySvet products in Russia is the company Trade House 2A, which was founded in 2016 by two leading Russian alcohol companies – the largest Russian champagne producer Abrau-Durso and one of the largest producers of cognac Alliance 1892.
Abrau-Durso is a family enterprise of the Presidential Commissioner for Entrepreneurs’ Rights, Boris Titov (his son runs the company). Titov also appears on the sanctions list of the US TreasuryDepartment.
The first affair involving Mr. Nikolayev occurred in December 2013, when the Russian Central Bank revoked the license from a certain 'Project Financing Bank' for money laundering. Mr. Nikolaev was formerly a member of the board of directors of this bank, and informally represented the interests of the real owner of the bank, Roman Trotsenko, who has been implicated in a number of dubious operations and is indeed on the US sanctions list.
The history of the revocation of the license from the bank turned out to be highly questionable – the state-appointed provisional administration found that accounts and other information had been completely erased from the servers: Nikolaev knows how to cover his tracks.
Finally, the alcohol company Alliance 1892 that most recently belonged to Nikolayev, again found itself in the epicentre of the scandal in early March, when Russian security officials conducted searches at the company's office in Moscow.
As reported by Russian media, the reasons for this are remain somewhat unclear, but two specific details lead to suspicions that they were connected with Nikolaev himself.
Firstly, the search was conducted by the employees of the Administration for Economic Security and Combating the Corruption, who are the elite of the Russian police, specializing in unraveling the most complex financial schemes of the underworld.
Secondly, Alliance 1892 has still not commented publicly on these events – apperently, the owners of the company simply have nothing to say in public.
According to Russian law enforcement agencies, there appear to be two possible reasons:
The first relates to the case of embezzlement of money from government agencies within the framework of the bankruptcy of the taxi company Asap at the suit of the state-owned company VEB-leasing.
Alexander Nikolaev is the main beneficiary of Asap through the offshore Awendale Resources Inc., which is controlled by him, and is registered in Seychelles.
Nikolaev owns (alone or with partners) a whole network of offshore companies around the world. Among them:
Peregrina Ventures Limited (Cyprus),
Pilgrefin B.V. (Netherlands),
Poitiers Enterprises Limited (Cyprus),
Les Boissons Royales (Republic of Seychelles),
Awendale Resources Inc (Republic of Seychelles),
Melward Investments Limited (Cyprus),
RRR Holdings Limited (Cyprus),
SAS Distillerie Tessendier Fils (France),
Tropic of Capricorn (Republic of Seychelles),
Aggonar Holdings Limited,
Lakvero Holdings Limited (Cyprus),
Esperodal Holdings Limited.
The second reason is tax evasion in the production and sale of alcohol products and the laundering of money obtained via criminal means. Here is just one of the court decisions http://vsrf.ru/stor_pdf_ec.php?id=1582862 regarding the concealment by Alliance 1892 of taxable profits in the amount of more than 159 mln rubles (more than $2.7 mln USD).
Interestingly, Nikolaev maintains some business interests in the US.
In particular, at the end of 2017, on behalf of one of his companies, with the assistance of a New York law firm, a lawsuit was lodged in the United States District Court for the Southern District of New York to force the disclosure of information in accordance with Section 1782 of Title 28 of U.S Code. This section allows parties to obtain information from any person or company who is in the jurisdiction of the federal district court, without reference to an international treaty or other international agreement.
In this case, deliberately false information about existing criminal and arbitration proceedings in Russia, in which Nikolaev's company allegedly acts as an aggrieved party, was used and appended to the application. During the trial in the US court, Nikolaev demanded disclosure by large banks, including American banks such as Citibank N.A. New York, Deutsche Bank Trust Company Americas, Bank of America N.A.
Thus, Mr. Nikolaev, using the American system of justice, obtained the information under false pretexts - filing a frivolous suit which allowed him access to otherwise protected information - which he was interested in at the expense of unsuspecting American lawyers and judges.
The question arises: why a person involved in so many scandals, owning a large business, connected with three persons on the sanctions lists and obviously having considerable influence, still remains active?
Perhaps it is time for the EU and US authorities to pay attention to him, conduct the necessary investigation and also include him on the sanctions list?
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