ICIJ · The International Consortium of Investigative Journalists

The Panama Papers Reading List

Introduction People Data Game
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Former Pakistan PM Nawaz Sharif, Family Members Indicted

The corruption charges were triggered by a National Accountability Bureau report on Panama Papers-related cases involving Sharif and his family members.

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Pakistan PM Disqualified Over Panama Papers Links

The Supreme Court of Pakistan has voted unanimously to disqualify Nawaz Sharif from the prime ministership and has referred his case to the country's top anti-corruption authority for an investigation.

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Panama Papers Wins Pulitzer Prize

The honor is a testament to the enterprise and teamwork of our staff and our partners here in the U.S. and around the world, ICIJ's director says.

Awards and recognition

The Panama Papers project, led by ICIJ and German newspaper Süddeutsche Zeitung working in collaboration with more than 100 media outlets, has been honored with awards and finalist mentions by more than a dozen major international prizes, including:

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Where Are They Now? A Year Later, Mixed Fortunes For Panama Papers Line-Up

One year after the Panama Papers first became an international catchphrase, here’s a globe-hopping update on the people and institutions caught up in the scandal.

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VIDEO: Twelve Months of Investigations, Impact and Outrage

A year ago the Panama Papers dominated newspaper headlines and brought now-iconic images to TV screens around the world. Since then, investigations have continued and outrage has grown.

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Panama Prosecutor Claims 'Solid Case' Against Mossack Fonseca

The law firm at the heart of the Panama Papers affair, sold shell companies and held bank accounts that were used to help conceal bribes paid across South America, a Panamanian prosecutor alleged at a press conference.

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Founders of Panama Papers Law Firm Arrested on Money Laundering Charges

Police in Panama arrested the founders of Mossack Fonseca, the law firm at the center of the Panama Papers scandal, on money laundering charges Thursday after authorities raided the firm’s headquarters as part of investigations into Brazil’s largest-ever bribery scandal.

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Tax Agencies Draw Up ‘Target List’ of Offshore Enablers

Tax agencies from 30 countries convened in Paris this week to take part in the largest ever simultaneous exchange of tax information and to share results and details on thousands of investigations sparked by the Panama Papers.

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Panama’s Revolving Door Shows Global Challenge of Offshore Reform

In a country where top-drawer lawyers move freely between high government posts and law firms selling secrecy-cloaked shell companies, bringing lasting change to the offshore industry is a challenge.

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Journalists Hang Tough in Face of Backlash Against Panama Papers Reporting

Reporters have faced consequences both in nations where media crackdowns are common and also in nations with reputations for high levels of press freedom.

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Panama Papers Have Had Historic Global Effects — and the Impacts Keep Coming

The investigation has produced an almost daily drumbeat of regulatory moves, follow-up stories and calls by politicians and activists for more action to combat offshore financial secrecy.

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BVI Hits Mossack Fonseca With Largest Fine Ever After Panama Papers Investigation

The $440,000 penalty followed a six-month investigation which included on-site compliance inspections and the appointment of an officer to monitor Mossack Fonseca's operations.

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Experts Who Quit Panama's Transparency Commission Produce Their Own Report

Report's authors say that the U.S. and EU have the power to force other nations to embrace transparency reforms by threatening to cut off access to their financial systems.

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Pakistan's PM Responds to Supreme Court Hearing on Panama Papers

Nawaz Sharif defended himself before the nation’s highest court, as opposition supporters celebrated in Islamabad.

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Panama Hires PR Firm Amid Ongoing Panama Papers Fallout

A PR firm is being paid $50,000 a month to help the Panama government, while arrests, protests and more continue around the world.

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Hedge Fund Sues Mossack Fonseca For Alleged Obstruction of Justice in Nevada

Confidential emails revealed in the Panama Papers have opened a new front in a bitter court battle in Nevada involving a hedge fund led by an American billionaire, new court filings show.

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Experts Quit Panama's Transparency Committee Over Lack of Transparency

The committee was established in the wake of the Panama Papers to probe Panama's financial services industry, but now two out of three international members have resigned.

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Continent of Secrets: Uncovering Africa's Offshore Empires

Africa receives $50 billion of foreign aid money annually, but then loses roughly the same amount through illicit outflows. Can you uncover Africa's offshore empires? Play now!

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Secret Offshore Deals Deprive Africa of Billions in Natural Resource Dollars

The Panama Papers show how politicians and mining, oil and gas interests benefit from secrecy and dubious multimillion dollar transfers.

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Secret Documents Expose Nigerian Oil Mogul’s Offshore Hideaways

A dealmaker’s backstage maneuverings are revealed in the Panama Papers as he hung with celebrities while criminal investigators closed in.

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Diamond Mine with Offshore Ties Leaves Trail of Complaints

The Panama Papers reveal a network of shell companies linked to a mining operation that has been accused of environmental harms and unpaid taxes.

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Out of Africa, Into Tax Havens

As visitors come to see what’s in Africa, some safari operators’ profits head offshore.

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Reporters Warned, Inquiries Opened as African Nations Respond to Panama Papers

Mossack Fonseca targeted clients in Africa for business, but now some of those clients have become targets themselves as authorities launch investigations into the Panama Papers revelations.

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Panama Papers Credited As New EU Anti Money-Laundering And Tax Abuse Rules Proposed

The European Commission has announced it will tighten the European Union’s anti-money laundering rules and increase transparency requirements for companies and trusts.

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Venezuela and Panama To Launch Joint Panama Papers Investigation

The joint investigation will be the "first of its kind," and Venezuela's attorney general has hinted at a long list of suspects.

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European Inquiry to Call UK Chancellor, Mossack Fonseca to Testify

A special 65-member Panama Papers committee of inquiry has been created by the European parliament to investigate potential wrongdoing exposed by ICIJ's investigation.

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Mossack Fonseca's US Operations Under Pressure, Island Offices Closed

Panamanian law firm Mossack Fonseca’s local affiliate in Nevada has resigned from more than 1,000 companies and paid a penalty to the state amid investigations on multiple fronts.

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US States Under Pressure As World Pushes For Financial Transparency

Nevada, Wyoming and Delaware are facing growing pressure over their lack of corporate transparency, as the United States and the international community continue to respond to fallout from the Panama Papers.

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The Malefactors of Mossack Fonseca

Meet The Dutchman, the Queen of the South, the Boss of Bosses and other convicted felons and alleged wrongdoers who have benefited from services provided by the law firm.

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Panama Papers Include Dozens of Americans Tied to Fraud and Financial Misconduct

Mossack Fonseca's files include offshore companies linked to at least 36 Americans accused of serious financial wrongdoing, including fraud and racketeering.

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Beyond Panama: Unlocking the world’s secrecy jurisdictions

The 21 jurisdictions covered by the Panama Papers data vary from the rolling hills of Wyoming to tropical getaways like the British Virgin Islands. But all have at least one thing in common - secrecy is the rule.

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Panama Papers Source Offers Documents To Governments, Hints At More To Come

The anonymous whistleblower behind the Panama Papers has conditionally offered to make the documents available to government authorities.

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US Officials React to Panama Papers Disclosures With Get-Tough Proposals

The Obama administration has proposed a national registry documenting the real owners of shell companies and other measures aimed at fighting offshore chicanery.

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Iceland’s First Lady Linked to Offshore Investments

Records in the Panama Papers and the Swiss Leaks leaked files tie the wife of Iceland President Ólafur Grímsson to offshore companies and accounts.

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Coming Soon: ICIJ to Release Panama Papers Offshore Companies Data

The database, to be released on May 9, will likely be the largest ever release of secret offshore companies and the people behind them.

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Cartel-Linked Suspects Arrested After Panama Papers Revelations

Uruguayan prosecutors are seeking to bring to trial at least five individuals detained on suspicion of laundering money for a powerful Mexican drug cartel.

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US Prosecutor Opens Investigation Into "Panama Papers Matters"

ICIJ welcomes the interest from the Manhattan U.S. Attorney's office, but has made it clear it won't be turning over its data or taking part in any investigation.

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Banks Ordered to Provide Info on Panama Dealings to NY Regulator

More than a dozen banks identified in the Panama Papers investigation have been asked to hand over details of their communications with Mossack Fonseca.

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Art held offshore

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Pakistan's PM Leaves Country, Spanish Minister Resigns

Nawaz Sharif faces growing pressure and calls for his resignation, a Spanish minister has stepped aside, and more governments are pledging reform as fallout from the Panama Papers revelations continues.

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Panama Police Raid Mossack Fonseca As Global Fallout Continues

The search of Mossack Fonseca's Panama headquarters comes after a number of raids and official action taken in response to the Panama Papers revelations.

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Global joint investigation to be proposed at special tax meeting

Tax officials from 28 nations met in Paris to develop a strategy for collaborative action based on Panama Papers revelations.

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British PM Announces New Transparency Measures Following Panama Papers Revelations

David Cameron appeared before parliament on Monday to address concerns about his own links to offshore holdings revealed in the Panama Papers, as well as announce reform aimed at boosting transparency.

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The Art of Secrecy

Locked in the files of a Panama law firm are the answers to mysteries involving Van Goghs, Picassos, Rembrandts and other masterworks.

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Panama Papers Spark High-Level FIFA Resignation and Swiss Police Raid

Swiss police searched the office of Europe's top soccer association and a member of FIFA's ethics panel resigned following Panama Papers revelations.

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Leaked Files Offer Many Clues To Offshore Dealings by Top Chinese

Eight current and former members of the Politburo Standing Committee, the country's top decision makers, have relatives with secret offshore companies.

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Spies and Shadowy Allies Lurk in Secret With Help From Offshore Firm

Firm helps CIA operatives and other characters — real or fanciful — from the world of espionage set up offshore companies to obscure their dealings.

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Iceland Prime Minister Tenders Resignation Following Panama Papers Revelations

The prime minister of Iceland said he would resign following mass protests triggered by reports from ICIJ and partners that he had owned an offshore company in the British Virgin Islands with his wife.

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Law Firm’s Files Include Dozens of Companies and People Blacklisted by U.S. Authorities

Global law firm’s customers include suspected financiers of terrorism, nuclear weapons proliferators and gunrunners.

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How Family that Runs Azerbaijan Built an Empire of Hidden Wealth

Documents peel away three layers of secret ownership in a conglomerate and lead to gold mines and overseas real estate.

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Global Banks Team with Law Firms To Help the Wealthy Hide Assets

Leaked records show that hundreds of banks and their subsidiaries and branches registered nearly 15,600 shell companies.

About this project

The Panama Papers is an unprecedented investigation that reveals the offshore links of some of the globe’s most prominent figures.

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All Putin’s Men: Secret Records Reveal Money Network Tied to Russian Leader

Complex offshore financial deals channel money and power towards a network of people and companies linked to President Vladimir Putin.

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Giant Leak of Offshore Financial Records Exposes Global Array of Crime and Corruption

Millions of documents show heads of state, criminals and celebrities using secret hideaways in tax havens.

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Panamanian Law Firm Is Gatekeeper To Vast Flow of Murky Offshore Secrets

Files show client roster that includes drug dealers, Mafia members, corrupt politicians and tax evaders — and wrongdoing galore.

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Leak Ties Ethics Guru to Three Men Charged in FIFA Scandal

Secret documents show how deeply the world of soccer has become enmeshed in the world of offshore havens.

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Iceland’s Prime Minister Ducks Question But the Answer Catches Up with Him

He came to power after the country’s financial collapse while hiding his offshore holdings of millions in bonds from Icelandic banks.

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How the One Percenters Divorce: Offshore Intrigue Plays Hide and Seek with Millions

Firm that practices no matrimonial law nonetheless plays big role when the superrich around the globe decide to split.

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All Putin’s Men: Secret Records Reveal Money Network Tied to Russian Leader

Complex offshore financial deals channel money and power towards a network of people and companies linked to President Vladimir Putin

By

In this story

  • According to analysis, as much as $2 billion has been secretly shuffled through banks and shadow companies linked to Putin’s associates
  • Bank Rossiya, identified by the U.S. as Putin’s personal cashbox, has been instrumental in building a network of offshore companies
  • Dozens of loans, some worth hundreds of millions of dollars, sold between offshore companies for as little as $1 or less

Vladimir Putin and Sergey Roldugin forged a bond as young men. Fast friends, almost like brothers, they cruised the streets of Leningrad, singing and, in Putin’s case, occasionally getting into fistfights.

As Putin rose to power as Russia’s supreme leader and Roldugin made a name for himself as a classical cellist and conductor, the two remained close. Roldugin has performed for Putin and high-profile guests at the president’s official residence and has given media interviews that softened Putin’s fearsome image.

Now a leak of secret documents reveals another, hidden side of their friendship.

The records show Roldugin is a behind-the-scenes player in a clandestine network operated by Putin associates that has shuffled at least $2 billion through banks and offshore companies, an investigation by the International Consortium of Investigative Journalists, German daily Süddeutsche Zeitung and other media partners has found.

In the documents, Roldugin is listed as the owner of offshore companies that have obtained payments from other companies worth tens of millions of dollars. A company linked to the cellist also grabbed secret influence over Russia’s largest truck maker, another snagged a big slice of Russia’s TV advertising industry.

It’s possible Roldugin, who has publicly claimed not to be a businessman, is not the true beneficiary of these riches. Instead, the evidence in the files suggests Roldugin is acting as a front man for a network of Putin loyalists – and perhaps for Putin himself.

Roldugin did not respond to detailed questions. Reporters from the Organized Crime and Corruption Reporting Project, an ICIJ partner, met briefly with the musician after a concert in Moscow last week. Roldugin told them he needed more time to review the questions and determine what he could say.

About 100 financial deals related to the network are described in the leaked documents. They are complex. Payments are disguised in various ways. On paper, shares in companies are swapped back and forth in a day. Documents are backdated. Questionable financial penalties are assessed. The rights to multimillion-dollar loans are sold between offshore companies for $1.

In almost every instance, the result is the same: money and power moves in the direction of the network, to companies and people allied to Putin. The network’s covert deals allowed it to receive money in a variety of ways including hundreds of millions of dollars in sweetheart loans from a bank controlled by the Russian government.

articles/00Russia/160403-russia-05.jpgThe leaked documents come from the files of Mossack Fonseca, a Panama-based law firm that registered some of the Roldugin companies and helped administer the network’s holdings in the British Virgin Islands and other offshore havens.

For years there have been reports – mainly from whistleblowers – about Putin’s secret wealth. A few offshore companies, a palace and a mega yacht have all been said to belong to the Russian leader. Various news organizations have also noted how the people around Putin have become rich. Yet a detailed picture of the hidden financial affairs of Putin’s circle has remained elusive.

The records reveal what until now has mostly been the stuff of rumor: how Putin’s cronies secretly conduct their business. The law firm’s internal files show how minions and proxies created structures to hide and move the secret wealth. The records include email correspondence, bank account forms, loan agreements, share transactions and passport scans. Dates, cash amounts and contract terms are detailed.

Loyalty and long-held relationships help bind the network together. It’s a fraternity of Putin confidants. Many of the men whose interests are reflected in the leaked files are Putin comrades whose history with him traces back decades to St. Petersburg, the city known, before the fall of the Soviet Union, as Leningrad.

There is Roldugin, who is godfather to Putin’s eldest daughter. Then there is Yury Kovalchuk, a banker who forged links with the future president when Putin was a municipal official, and Arkady Rotenberg, a childhood chum who has become a billionaire through state-sponsored construction projects, oil pipelines and other ventures.

Many of the men linked to the network, including Putin, share something else in common besides history. They are connected to the St. Petersburg-based Bank Rossiya, which the U.S. government has identified as Putin’s personal cashbox.

The files make clear that Bank Rossiya built the network. Its employees tended to it, working to create the offshore companies, assigning ownership to Roldugin and others and shepherding the transactions through banks in Russia, Cyprus and Switzerland.

The economic model for how members of Putin’s circle have shared the profits from this network was also established back in St. Petersburg. In the 1990s, Putin and the Bank Rossiya owners created a cooperative for a gated community where they all had houses. The cooperative kept a bank account in common. Each could put money in, and anyone could take it out.

Nowhere in the Mossack Fonseca files is the name of the Russian president, a former KGB spymaster, actually mentioned. Audio recordings and witness accounts show that even when Putin’s closest confidants privately discuss his financial dealings, they use pseudonyms for him or simply gesture to the heavens rather than utter his name.

It’s inconceivable, though, that the network could have existed without the knowledge and support of Putin, said Karen Dawisha, a U.S. political scientist who has written extensively about Putin and his regime.

“He takes what he wants,” said Dawisha. “When you are the president of Russia you don’t need a written contract. You are the law.”

After receiving detailed questions from ICIJ and its media partners, Kremlin spokesman Dmitry Peskov denounced the forthcoming articles in a press conference as “an attack” and “a series of fibs,” according to Russian news services. Peskov reportedly said that the questions concerned offshore companies and “a large number of businessmen Putin had never seen in his life.”

“Denying something numerous times or commenting on something that has no relation to us is just silly,” Peskov told reporters.

Ties of friendship

There is a video on YouTube of Arkady Rotenberg, a former judo instructor who became a billionaire thanks to Putin. He is standing with a group of men. Putin walks past, flanked by his security detail. Rotenberg doesn’t see him coming. Without breaking stride, Putin rubs Rotenberg’s head, mussing his hair, like one would a dog or a child.

Of all those in his inner circle, Arkady and his brother Boris Rotenberg have known Putin the longest. Their friendship dates to the 1960s, when as boys they sparred together in a martial arts club. The ties of friendship grew to encompass business as well.

The European Union and the U.S. government issued sanctions against Arkady Rotenberg in 2014, in retaliation for Putin’s invasion of Ukraine. The U.S. also sanctioned his brother Boris.

The U.S. Treasury noted the two had “amassed enormous amounts of wealth during the years of Putin’s rule” from Russian government contracts, including roughly $7 billion for the Sochi Olympic games. The sanctions document coyly described the reason for the designation as “acting for or on behalf of… a senior official” of the Russian Federation.

In 2013, the year before the sanctions were issued, one of Arkady Rotenberg’s companies received potentially lucrative government contracts to work on a proposed $40 billion natural gas pipeline between Russia and Europe. Around the same time, three anonymous companies made huge payments into the Putin network, records show. Two of the shadow companies, and likely all three, were controlled by Arkady Rotenberg, according to the Mossack Fonseca files.

Loans from these Rotenberg companies totaling more than $231 million appear to have gone to a British Virgin Islands-based company called Sunbarn Limited, created by a manager at Bank Rossiya. The loans had no repayment schedule.

Arkady Rotenberg did not respond to a request for comment.

In the case of the Rotenbergs, the Mossack Fonseca documents suggest hidden business dealings between Putin and his old friends. When it comes to Sergey Roldugin, the documents in the files falsely state that he is not politically connected, obscuring the musician’s role in the scheme.

articles/00Russia/160403-russia-04.jpgThere’s no question that Roldugin and Putin are close. Some publications have called him Putin’s best friend. In the early 1980s, Roldugin arranged a double date on which Putin met his future wife, Lyudmila.

Putin selected Roldugin to be the godfather of his first child, Maria, a sacred role in Russian Orthodox tradition. A photo of Putin cradling Maria, beside his wife and Roldugin can be readily found on the Internet.

Mossack Fonseca and bankers in Switzerland appear to have ignored easily obtainable evidence of Putin and Roldugin’s bonds. Banks are required by law in Switzerland to determine if account holders are connected to politicians to safeguard against improper use of the account. The industry term for this is “politically exposed persons,” or PEPs.

The Mossack Fonseca files contain an application by Gazprombank Switzerland in 2014 to open a bank account for a company in Roldugin’s name. The form explicitly asked whether the owner of the company had “any relation to PEPs or VIPs.”

The answer: “no.”

“The bank had a legal obligation to check these declarations,” said Mark Pieth, former head of the organized crime section of the Swiss justice ministry. “Roldugin is, by his proximity to a serving head of state, clearly an exposed person.”

Gazprombank declined to comment.

In a letter to ICIJ, Mossack Fonseca said the firm has “duly established policies and procedures” to identify and handle cases involving politicians or people associated with them. It said the company considered those cases to be “high risk” and conducts more intense checks and periodic follow ups. “We conduct thorough due diligence on all new and prospective clients that often exceeds in stringency the existing rules and standards to which we and others are bound.”

Roldugin’s friendship with Putin likely landed him in the exclusive club of Bank Rossiya shareholders. In 2010, a Russian news service disclosed Roldugin owned more than 3 percent of the bank.

The cellist told the New York Times in 2014 that “years back” he had needed money and that arrangements were made to get him a stake. What he had to do for those shares was not specified.

The history of Bank Rossiya is all about its shareholders working together cooperatively.

Lake of money

Yury Kovalchuk and Putin turned their attention to Bank Rossiya in 1991, when its largest shareholder was still the Leningrad Communist Party.

At that time, Putin was deputy mayor and the person responsible for attracting foreign investors and forming public-private partnerships.

After the fall of the Soviet Union in December 1991, Putin signed the documents bestowing ownership of the bank on a newly formed joint venture created by Kovalchuk and others, according to Dawisha, author of “Putin’s Kleptocracy: Who Owns Russia?”

“Putin’s function was to make legal what would otherwise have been illegal,” Dawisha said.

Kovalchuk became majority shareholder and board chair of this new version of Bank Rossiya. When the U.S. government sanctioned him in 2014, it described Kovalchuk as one of Putin’s “cashiers.”

In the mid-1990s, Kovalchuk and a few other shareholders of the bank owned dachas a few hours outside of town on the eastern shore of the Komsomolskoye Lake. Putin found the money to buy a property. The men formed a co-operative society to benefit the eight residents of their shared gated community, which was called called Ozero (the Lake).

The Mossack Fonseca files show that the communal principles that defined Ozero continued with Bank Rossiya and its participants more than a decade later.

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About an hour’s drive from the site of the Ozero cooperative is the Igora ski resort. According to local media reports, the high-end resort is Putin’s favorite place to ski. Bank Rossiya publicly helped finance its construction. The wedding of Putin’s youngest daughter, Katerina Tikhonova, took place amid great secrecy on the resort grounds in February 2013, according to Reuters.

Tikhonova married Kirill Shamalov, the son of Nikolai Shamalov, an Ozero cooperative member and original Rossiya shareholder. Within a year and a half of the wedding, the younger Shamalov, barely out of his twenties, managed to borrow about $1.3 billion from Gazprombank to acquire 21 percent of Sibur, one of the biggest petrochemical companies in Russia, a stake that was worth at least $2 billion a little more than a year later, Reuters reported.

A Russian company called Ozon holds title to the ski resort. Bank Rossiya’s Kovalchuk is a co-owner of Ozon. Beginning in late 2009, Ozon received $11.3 million worth of loans from a key offshore company in the Putin network, the Mossack Fonseca files show. The loans carried an interest rate of 1 percent.

One $5 million loan was revised and extended multiple times and was converted to Russian rubles; the exchange rate and new amendments reduced its value and ultimately, the amount owed, the leaked documents show.

A lawyer for Kovalchuk said information about Bank Rossiya was available from pubic sources, adding: “We do not understand why your decision was to address these questions to Mr. Yury Kovalchuk.”

Bank Rossiya did not respond to detailed questions about its role.

War and peace

In early August 2008, Russian troops rolled into Georgia for what would be a five-day war. They traveled on Kamaz trucks. Putin had long been a champion of the company, visiting its factories and even taking a Kamaz racing truck for a spin for the benefit of news cameras.

Five months earlier, the leaked records show, the classical cellist Sergey Roldugin made moves to secretly gain a degree of management control over Kamaz, a company with revenue of $3.51 billion in 2007.

In March 2008, the Mossack Fonseca’s files show one of the Roldugin companies was given a secret option to buy a minority stake in Kamaz through a company called Avtoinvest.

Putin adviser Ruben Vardanyan was board chair and principal owner of the bank that ran Avtoinvest, a big shareholder in Kamaz. In 2008, Vardanyan wanted to consolidate a majority hold on Kamaz, according to press reports, but he needed help. The government of the Russian Republic of Tatarstan held a significant portion of the shares of the company; it had to be persuaded to sell.

As part of the deal, Roldugin’s company obtained a potential say over all aspects of the operation of Kamaz such as “approval of the business plan and budget” and approval over which foreign corporations would be able to invest in the company, if Avtoinvest got its majority.

Roldugin’s company paid $1.5 million for the option and potential rights.

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In return, the agreement found in the Mossack Fonseca files spelled out that Roldugin’s company was expected to lobby for the “project,” which was described as getting Avtoinvest its majority.

By late April 2008, Tartarstan entered into an agreement to sell its shares to Avtoinvest, at below market price, according to press reports.

Putin relinquished the Russian presidency the following month, swapping positions with Prime Minister Dmitry Medvedev, another confidant who had been with him since the St. Petersburg days. Despite the change in title, there was little doubt that Putin retained control.

During his time out of the presidency, 2008 to 2012, Bank Rossiya’s balance sheet ballooned from under $4 billion to more than $8 billion. And the network of Putin associates kicked into high gear.

As Putin was stepping down, Kamaz was booming and making big plans. It announced that it would spend $1.5 billion by 2012 to modernize and double production. Kamaz also began exploring the sale of an ownership stake of up to 42 percent to a foreign buyer, according to press reports at the time.

Then the global financial meltdown hit Russia’s automotive sector hard. Kamaz cut its workweek to four days and slashed production. Roldugin’s company never exercised its option to buy its Kamaz shares. In December 2008, German carmaker Daimler did buy a piece of the company – but 10 percent of it, not 42 percent. To get its slice of Kamaz, Daimler paid $250 million to the Vardanyan investment bank that owned Avtoinvest.

Vardanyan declined to answer specific questions because it involves “proprietary and confidential” information, which he is not authorized to discuss.

“The project was arranged as commercial arm’s length transactions with consultation among legal and business representatives to ensure compliance with existing regulations,” said Vardanyan.

Kamaz did not respond to a request for comment.

Hidden deals

In September 2009, a Mossack Fonseca compliance officer flagged a transaction for $103 million involving a company called Sandalwood Continental Limited. The manager for Bank Rossiya who was arranging the transaction wanted Sandalwood corporate directors – who were stand-ins provided by the law firm – to approve the deal. But its size seemed worrisome.

Sandalwood was the lynchpin of the entire Putin-linked network. One of Sandalwood’s roles appeared to be to borrow money from the Russian Commercial Bank (RCB) in Cyprus, which in turn was backed by Moscow-based, state-controlled bank, VTB. The $103 million began as a loan to Sandalwood from RCB Cyprus.

The owner on paper of Sandalwood was Oleg Gordin, a small businessman with a background in “law enforcement agencies,” according to an RCB bank account opening form found in the files. Gordin also had power of attorney on some of Roldugin’s company bank accounts.

Gordin did not respond to a request for comment.

Between 2009 and 2012, Sandalwood had lines of credit with RCB for about $800 million, according to the files. Sandalwood loaned out about $600 million in 2009 and at least $350 million in 2010.

The loans RCB made to Sandalwood were highly unusual for a bank. They went to a borrower who had no discernible business model that would allow it to pay back the money. The loans carried no security. Most did not require installment payments but instead relied on a promise that the entire amount would be returned after a certain time span.

“The assumption that RCB Bank Ltd is a so-called ‘pocket’ for highly-ranked Russian officials is utterly unfounded and certainly does not correspond to the actual state of affairs,” wrote Michael Maratheftis, head of media communications for RCB, in an email response to detailed questions from ICIJ and its media partners.

Maratheftis said the bank was legally precluded from answering questions about “third parties,” but it has always acted in “a transparent manner.” He said the bank has forwarded ICIJ’s questions to legal authorities in Cyprus for an “independent investigation.”

articles/00Russia/160403-russia-07.jpgSandalwood also functioned as a link in a chain of loan-swapping shadow companies. It assigned the rights to interest payments in the millions of dollars to companies – including one of Roldugin’s, which paid $1 dollar to receive $8 million a year in interest. Two banking experts who reviewed the Sandalwood loan assignments and an RCB loan made to the company said the documents raised multiple red flags and didn’t seem to make economic sense.

“It would appear that tax evasion, fraud and or some other predicate act is underlying these transactions for purposes of money laundering,” said David Weber, academic director of fraud management programs at the University of Maryland and former special counsel for enforcement for the U.S. Office of the Comptroller of the Currency.

RCB’s Maratheftis said the bank “was always in full compliance with the Anti-Money Laundering Regulatory Framework.”

According to an analysis of the Mossack Fonseca data by ICIJ and its reporting partners, about $2 billion passed through the network between 2008 and 2013, most of it through Sandalwood Continental.

Sandalwood also served as a credit card of sorts, lending to more than two dozen associated companies. It lent money to everything from the Igora ski resort’s owner to a hotel near the Finnish border. When Sandalwood loaned to other offshore companies, the repayment terms were sometimes as long as 20 years.

In the case of the $103 million loan, Sandalwood had borrowed it from RCB and immediately flipped the money to a Cyprus company called Horwich Trading.

The Bank Rossiya manager shepherding the transaction wanted Mossack Fonseca’s Panamanian directors to sign the Horwich Trading loan agreement on behalf of Sandalwood quickly. One of the Mossack Fonseca partners suggested that they get a letter indemnifying the law firm first, possibly to avoid being held responsible for the any looting of RCB.

Then Jurgen Mossack, a co-founder of the law firm, chimed in:

“I believe this is delicate,” he wrote in Spanish in an email. He was worried that “we could be witnessing payments of questionable origin and purpose.”

The Bank Rossiya manager explained that the loan was structured to take advantage of a tax treaty between Cyprus and Russia. To gain approval, he provided a letter of indemnity and other materials and created a regular repayment schedule for the loan. It’s the only loan from RCB to Sandalwood in the files that had a schedule of regular repayments. It is also the only time in the files that Mossack Fonseca appears to have objected.

The modifications satisfied Mossack Fonseca. The Panamanians also took comfort from the fact that a Swiss law firm, Dietrich Baumgartner & Partners, helped process paperwork for the Bank Rossiya network.

“As we are working with this client from a reputable Russian bank for some years now, and our legal client of reference is a well-known Swiss law office, I think we can accept the explanations and go ahead,” a lawyer from Mossack Fonseca’s Liechtenstein office wrote.

Deitrich Baumgartner & Partners declined to comment.

A later email detailed the fees Mossack Fonseca charged Sandalwood, which were based on the amount of the loans. For helping to create the paper trail for the $103 million, it earned $2,030.

Media secrets

Mikhail Lesin was intimately involved in the efforts of Putin and Bank Rossiya to control Russian media. As Putin’s first media minister, he oversaw the regime’s propaganda push. Lesin’s government tenure paralleled the growth of the bank’s media empire.

While in government, Lesin played a key role in brokering deals that put critics in the media under ownership that was more closely aligned with the Kremlin. In the wake of these efforts, voices critical of the Russian regime fell silent.

After Medvedev replaced Putin as president, Lesin left the government and joined the nation’s biggest private media group, Gazprom-Media, which Bank Rossiya managed.

Gazprom-Media was only part of the media conglomerate that Bank Rossiya built. Its sprawl has earned the bank’s chairman, Yury Kovalchuk, the nickname the Russian Rupert Murdoch. In 2005, Bank Rossiya bought a stake in a small television network, which Putin then designated as a national broadcaster, greatly expanding its reach and profit. It also took over Ren-TV, muting critical voices and investigations of the government.

Now, the Mossack Fonseca files reveal that there was a secret component to both Lesin and Bank Rossiya’s media dealings. Lesin had a company called Gloria Market Ltd. based in the British Virgin Islands. He created it in 2011, to collect money from advertising, according to a source of funds form found in the Mossack Fonseca files.

articles/00Russia/160403-russia-08.jpgIn the late 1990s, Lesin had helped set up an advertising sales company called Video International that at one point controlled as much as two-thirds of the nation’s television advertising. While Bank Rossiya publicly owned 16 percent of Video International, a Roldugin offshore company created by the bank secretly held an additional 12.5 percent stake, the files show. According to its 2014 bank account forms, the company, International Media Overseas, had annual income of about $10 million from its holdings.

A lawyer representing Video International declined to answer detailed questions, stating the information was non-public in Russia.

Roldugin’s International Media Overseas did more than simply hold media stakes. In 2011, the company entered into backdated share agreements with an offshore firm based in the Cayman Islands. The revenue went to Switzerland where backdating is legal. Identical share amounts were swapped between the parties, offsetting each other, so no actual shares needed to change hands. Instead, the companies agreed to the exchange and then simply paid the profit as if it had actually taken place. In 2011, International Media Overseas gained $463,800 from the deals. Sandalwood Continental netted almost $4 million from these types of transactions between 2008 and 2011, the files reveal.

Crisis management

Putin’s circle of friends and associates are driven by two imperatives: confidentiality and control. They hate risk. Putin has shown he is willing to take aggressive steps to maintain secrecy and protect communal assets.

By December 2011, the financial system of Cyprus, where Sandalwood Continental did most of its business, was in trouble. The country began negotiations with Russia for an emergency loan. Toward the end of that year, Sandalwood, which banked with RCB Cyprus, began to transfer its loans to another British Virgin Islands-based company called Ove Financial.

In 2012, Sandalwood assigned dozens of loans, sometimes in amounts of hundreds of millions of dollars, to Ove Financial for $1 each, sometimes for nothing at all.

Ove Financial also served as one of the shareholders of Mikhail Lesin’s Gloria Market.

Ove Financial banked in Luxembourg, which was safe from the kind of turmoil that afflicted Cyprus. The company also used another Panama-based offshore incorporator called Morgan & Morgan. Complaints sprinkled through the email traffic indicate Bank Rossiya managers were less than happy with Mossack Fonseca’s service because the law firm took too long to move documents or did not prepare them exactly as specified.

The network would continue but without Mossack Fonseca or Sandalwood Continental. As a result, in 2013, Sandalwood shut down.

Putin’s associates made other changes to shore up the network. A new proxy took Roldugin’s place as owner of the company that had been involved in Kamaz. Roldugin hadn’t always been the most conscientious front man. At one point, a Bank Rossiya manager had complained to Mossack Fonseca in an email that it was a challenge to arrange for Roldugin to sign documents. This would no longer be a problem.

Around the same time, the members of the Ozero Cooperative began to transfer some of the massive wealth they had accumulated to their children. And Arkady Rotenberg made his son Igor the owner of some of his secret Mossack Fonseca companies, the leaked records show.

These generational transfers are signs of the rise of a new Russian aristocracy.

The Rotenbergs and other billionaires who have flourished under Putin’s protection are having an impact on the Russian economy.

The top 10 percent of wealth holders in Russia own 85 percent of all household wealth in the country, according to a 2014 Credit Suisse report. Meanwhile, 83 percent of the population has less than $10,000 in personal wealth. Inequality in Russia is so bad it deserves its own separate category, the report stated.

In 2014, Lesin resigned from Gazprom-Media. Russian press reports blamed a conflict between him and Bank Rossiya’s Kovalchuk. Lesin relocated to America, where he allegedly owned millions of dollars in property, holdings that had raised the suspicions of U.S. authorities.

In November 2015, Russian media reported that Lesin died of a heart attack in a hotel in Washington, D.C. Four months later, Washington’s chief medical examiner announced a cause of death that seemed anything but natural. The medical examiner said Lesin died of blunt force trauma to the head and had bruises on his neck, torso and limbs. Police are investigating the death.

How many secrets of the Putin-linked network Mikhail Lesin took to the grave may never be known.

Contributors to this story: Olesya Shmagun and Roman Anin

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