Date: 2/15/2021
Author: Kent Moors, Ph.D.
Something I learned quickly after decades of intelligence work was to follow the money. In some instances, I would later collide with that truism personally.
As I wrote recently in a Classified Intelligence Brief “Spy Tales” entry (“From a Meeting Outside Port Lucaya to a Standoff Outside Baku,” January 27) , Marina and I for years had owned property in the Bahamas.
During that period, I also invested in local projects there. One was acquiring a position in a yacht club venture. What happened next was eye opening. “Customers” started showing up to buy units in the club’s residential facilities, some of them wanting to acquire several at once.
Well, that sounded like good news, especially if you had been recently shoved onto a board overseeing the location’s financing and budget. There was only one matter that caused some personal concern.
Most of these multiple purchases did not require finance. They were transacted in cash…often carried into the office in an attaché case or suitcase. In other words, cash transactions as in actual piles of currency.
Many were made by Russians or agents representing Russians. Some would then rapidly flip. Others would rarely if ever be used. Their collateral value, it seemed, was already being put to work elsewhere for different purposes.
Under Bahamian law at the time, it was illegal to inquire into the source of funds being used in a property purchase. In short order, real estate in the Caribbean had become a preferred way of laundering all types of shady money.
These days, the approaches are more sophisticated. But in many respects the venues remain the same.
Several pieces have appeared in publications like The New York Times, The New Yorker, and New Republic chronicling the use of real estate investments as a primary element in Russian money laundering.
To me, this sounds quite familiar.
This certainly is a matter of interest to law enforcement officials intent on tracking suspect money. However, it also has a bearing on more domestic US political matters.
Of primary interest in the publications mentioned is the central position of buildings which are or were in the Trump portfolio: Trump Towers in New York, Chicago, Miami (Sunny Isles), and Panama; the Taj Mahal in Atlantic City; the Soho project; and locations elsewhere where apparently the Trump name had been simply rented.
In each case, according to the publications, the Russian “money trail” had a heavy imprint.
Well, our interest this morning involves the energy connection in what is a complicated web of Russian money moving globally. I had discussed ramifications from some of this in an analysis I wrote for private global investment associates a few years back. At the time, I wrote the following (below is a portion of the report with particular parts related to specific investment targets excised for our use in this CIB) :
I want to focus today on the use of energy financial proceeds in ways that have nothing really to do with energy and everything to do with advancing a nationalistic political agenda.
I have run into several examples of such activity over the past decade. These have been put forward by major oil producers intent on providing leverage using proceeds from international sales as a way of furthering non-energy policies.
In each case, there have always been two common elements. First, these situations involve a government funding off-budget projects with redirected proceeds from foreign oil or gas sales. Second, that “non-booked” money would be run through foreign financial entities controlled by the home government.
….
Russia is one of the primary producing countries that has been financing projects and external operations off budget. Anecdotal evidence (supported by personal contacts who follow such matters closely) point toward a significant chunk of oil and natural gas export proceeds lodged abroad without ever first moving through central budgetary accounts.
In all, about 40 percent of government expenditures for the entire range of domestic and international activities conducted by the Kremlin are run off budget, the clear majority paid for by oil and gas revenue not accounted for in any traditional accounting manner.
The point sources for both the retention of proceeds abroad and the disbursement of funds are based in London and Switzerland.
….
But there is now a new wrinkle.
Gazprom, the largest Russian company and the world’s largest provider of natural gas, runs much of its export contracts through Gazprom Marketing and Trading (GM&T). GM&T is headquartered in London, with offices also in Houston, Manchester, Paris, Singapore, and Zug (Switzerland). This last office is at the same address as the administrative center for both Nord Stream and Nord Stream II – the natural gas pipelines between Russia and northern Germany. Nord Steam II is now in the crosshairs of enhanced U.S. sanctions.
On the oil side, Russian state major Rosneft has financial firms in several locations abroad, notably in Switzerland and Ireland – the main being Rosneft International Finance Ltd, (RIFL). It has been involved in a series of unusual bond and credit issuances and is already under U.S. sanctions.
The Kremlin has extensively used both GM&T and RIFL, as well as a network of holdings serving as conduits for the use of export sales proceeds from both companies. Among other interests, these holdings include financing outlets designed to invest in real estate.
Here is what my intel sources have been telling me:
Beginning almost a decade ago, first Gazprom and then Rosneft employed intermediary interests to provide funding for real estate ventures in the U.S. and elsewhere connected to targeted U.S. individuals. These included a high nine-figure eleventh-hour bailout of a major high rise in Chicago, along with other high-end residential and high-profile office projects located in New York City; Jersey City, New Jersey; and a Palm Beach, FL mansion, among other sites. All of these had the Trump name on them.
The investments were funneled through Russian high net worth individuals who served as either venture silent partners or actual purchasers of all or some of the holdings involved. All funds were Gazprom and/or Rosneft export sale proceeds or had those proceeds used as collateral in the deals.
Well, the subject matter has extended since I wrote the above. Here is what my sources have been adding over the past several weeks.
First, when it comes to money movement in general – and real estate investment in particular – what had initially been a network of private individual money launders (some high-net-worth global players) – has been transformed into a labyrinth of LLCs. Many of these are located within the nations where the transfers are to take place.
Second, principals of these limited liability corporations are disproportionally Russian nationals, often residing outside Russia. Several the LLCs are run from the same address, often little more than a mail drop or an attorney’s office. Further, “parent organizations” in the hierarchy tend to be domiciled in Cyprus or other locations to which Russian funds have easy access.
This structure is hardly new. As I noted in another recent CIB Spy Tales story (“Shadow Banking on Cyprus and a Death in San Francisco,” February 3, 2021), a previous assignment had identified 148 shell companies registered at three residential addresses in San Francisco. None had any business operations or employees but controlled significant funding flows.
Each one of them had a Russian or Ukrainian national as party of record. The issue then was some strange (and huge) acquisitions of stock in newly privatized aeronautical and defense contractors back in Russia. The focus today is real estate.
Third, my sources have confirmed a matter which is known to US investigators. LLCs having a direct connection to investments in real estate properties of political interest in the US have as principals those who are, or are related to, figures in the management of, or have at one time been employed by, this place:
This is the headquarters of GM&T at 20 Triton Street in London, a location I know quite well. It is from here that Gazprom structures finance for future consignments of Russian national gas exports. After a deal with international oil and commodities trader Swiss major Glencore, it now does collateralization of oil/gas deals in other market sectors. These sectors include real estate.
Gazprom has for years been rumored to have Vladimir Putin as a “silent beneficiary.” Meanwhile, Putin is long suspected of having a financial position in Glencore. Both have been used as corporate venues for Russian policy.
When the proverbial material hits the rotary oscillator, outlets moving Russian energy proceeds or finance will have a preeminent position in the extension of “off budget” proceeds into investments elsewhere that have little or nothing in common with oil and gas.
One other aspect to keep in mind. As the proceeds from the initial minority privatization of Saudi oil behemoth Aramco move into a wider international circle of investments (through the Saudi Public Investment Fund), I expect a similar development to emerge.
When this application of creamed off oil and gas sale proceeds first arose, I said in print that “if we consider what the revenue ends up buying, the idea of an ‘energy investment’ can easily expand to include everything from Hilton hotels to UK football clubs – with some foreign political influence purchased along the way.”
Nothing has changed.
Dr. Kent Moors
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Dr. Kent Moors served the United States for 30 years as one of the most highly decorated intelligence operatives alive today (including THREE Presidential commendations). After moving through the inner circles of royalty, oligarchs, billionaires, and the uber-rich, he discovered some of the most important secrets regarding finance, geo-politics, and business. As a result, he built one of the most impressive rolodexes in the world. His insights and network of contacts took him from a Vietnam veteran to becoming one of the globe’s most sought after consultants, with clients including six of the largest energy companies and the United States government.
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