Written evidence submitted anonymously (IEF0021)

Report

on “dirty money” and fugitives

from the Republic of Moldova and seeking hideout in the United Kingdom

 

To the Foreign Affairs Committee of the United Kingdom inquiry on “dirty money”

 

Summary

        For many years the United Kingdom was a hideout place for Moldovan’s corrupt officials' assets. On many occasions leaked documents and investigative journalists revealed Moldovan politicians and high level public employees and their families lavish lifestyle in the UK.

        According to the KROLL report on “Billion dollar fraud” from Moldovan banks, the United Kingdom was one of the countries where many of the resources landed or transited through shell companies.

        To the attention of the Foreign Affairs Committee inquiry there are cases of three Moldovan fugitives currently hiding in London and using the UK as an assets hideout: Veaceslav Platon, Gheorghe Cavcaliuc and Constantin Botnari.

 

        Veaceslav Platon, former Moldovan MP, is considered one of the masterminds of the “Laundromat” scheme that facilitated the transfer of more than 20 billion of Russian “dirty money” to Europe. More than 500 million of them are believed to be in London. As he is being searched by Interpol, numerous reports show that he is hiding in London.

 

        Constantin Botnari, former MP and one of the closest affiliates of the moldovan oligarch Vladimir Plahotniuc. Despite not owning official business assets he had a lavish lifestyle. Now is being prosecuted for owning multiple identities and fake ID’s. In 2021 he sold his lavish properties in Moldova and  issued a video message stating that he’s hiding in the UK and is afraid of political persecution. In leaked documents, investigative journalists revealed that shell companies of Plahotniuc were used to pay for the education and life of Botnari’s family in the UK.

 

        Gheorghe Cavcaliuc, former deputy head of the National Police Inspectorate, currently is listed in three criminal cases related to overstepping professional duties, forging criminal cases and corruption allegations. He is currently being searched by Interpol for a criminal case related to calling for violence. Investigative journalists revealed on many occasions Cavcaliuc undeclared assets. In 2021, using his Romanian citizenship, and while being searched by Interpol, Cavcaliuc registered an LTD “Success for You” in the United Kingdom.

 

        These individuals, despite fleeing the Republic of Moldova, are currently using their influence and resources to interfere in the political life and destabilization of the country.

        All of them have a trail of scandals and allegations of fiscal evasion and non declaration of assets, corruption and using political power for personal interest. All of them were closely connected and had crucial roles (at different periods in time) in Vladimir Plahotniuc’s oligarchic structure.

        All three of these individuals currently use UK’s regulations to hide from Moldovan justice and to hide their assets. All of them invoke political persecution from Moldovan authorities.

        This report includes a brief on Vladimir Plahotniuc, Moldovan fugitive oligarh, as law enforcement institutions from Moldova are putting in the efforts to localize and summon to justice on open criminal cases. In this context, considering both that Plahotniuc used UK based companies for his financial operation and UK’s capabilities and strategic partnerships in countering money laundering, this report draws attentions to the potential efforts to be made in order to support Moldovan law enforcement in localizing Plahotniuc hide-out as well as his illegal financial opperations.

 

 

 

Introduction: 

 

        Current report is compiled based on numerous investigations of independent journalists, and anti-corruption NGO’s from the Republic of Moldova. The subjects of these investigations through the years exercised a significant influence on the justice sector, police, government and business and are believed to prejudice the state budget through corruption schemes, favoritism and law obstruction.

 

        After the change of the political regime in the Republic of Moldova these subjects left the Republic of Moldova for the United Kingdom, at this point. An assumption is to be made, that the profits of many years of their corruption and law obstruction activities are being kept in the United Kingdom and are being used among other things for disrupting rule of law in the Republic of Moldova to this day.

 

        Cases of Veaceslav Platon, Gheorghe Cavcaliuc and Constantin Botnari present in brief their profile, the biggest controversies and allegations against them and their activity in the United Kingdom.

 

        Report draws attention to some major flows of illicit capital from Moldova to UK, as well. Such as “laundromat scheme” and “billion dollar fraud”.

 

        Author of the report: [name]

 

  1. Veacelav Platon

1.1. Profile;

Veaceslav Platon is a Moldovan businessman and former Member of Parliament (2009 - 2010). In Moldova he is often labeled “The main bank raider in CIS”. At different points in time he owned stakes in “Investprivatbank” (1994), “Banca de Economii”(2011), Victoria Bank(2011), Moldova-Agroindbank (2013 - 2016), Moldindconbank (2017) as well as in insurance companies.

In 2014 investigation by investigative journalists at  Rise Moldova and OCCRP, Veaceslav Platon was presented as one of the key player in a scheme of laugering more than 20 billion dollars from Russia to EU state, some of them through UK companies and proxies, infamous Laundromat scheme.

In 2016 he was arrested in Kiev and was extradited in a controversial manner, with a private jet, to the Republic of Moldova. In 2017 he was convicted to 18 years in prison for partaking in billion dollar banking fraud, official accusation was for scams and money laundering in particularly large proportions. In 2021 he was released from jail, controversial release led to an investigation against the prosecutor general who withdrew all the charges against him labeling them as forged.

In august 2021, Moldovan National Interpol Office requested Interpol’s Lyon Office to  issue a red notice for arrest and extradition for Veaceslav Platon. This came after he ignored the Prosecutors Office summons for interrogation in a criminal case. By january 2022 no follow-up from Interpol’s Lyon Office was received for the arrest and extradition request.

 

1.2. Controversies and relationship with the UK;

Veaceslav Platon is linked to two major corruption cases in the Republic of Moldova, all of them linked in a way or another with the United Kingdom.

        Laundromat Scheme. It’s a complex system for laundering more than $20 billion in Russian money stolen from the government by corrupt politicians or earned through organized crime activity. It was designed to not only move money from Russian shell companies into EU banks through Latvia, it had the added feature of getting corrupt or uncaring judges in Moldova to legitimize the funds. The state-of-the-art system provided exceptionally clean money backed by a court ruling at a fraction of the cost of regular laundering schemes. It made up for the low costs by laundering huge volumes. The system used just one bank in Latvia and one bank in Moldova but 19 banks in Russia, some of them controlled by rich and powerful figures including the cousin of Russian President Vladimir Putin (“Rise Moldova”). Through the years there were many investigations revealing Platon’s key involvement in the scheme, in 2021 both Moldovan Security Service and Service for Preventing and Combating Money Laundering from Moldova confirmed the existence of direct links between Platon and Laundromat scheme. According to the Guardian, the scheme continued, in a 2017 article it revealed how vast amounts of money from the Laundromat scheme flooded the UK and how UK banks partook in the process (“How 'dirty money' from Russia flooded into the UK – and where it went”). The article acknowledges Veaceslav Platon as one of the main architects of the scheme.

        Banking Fraud

In April 2017, the magistrates of the Chisinau District Court, sentenced Veaceslav Platon to 18 years in prison with execution for fraud and money laundering in particularly large proportions (Art. 190 and 243 of the Criminal Code of the Republic of Moldova). According to the original version of the investigation, the companies controlled by Platon through his people received non-performing loans, which were subsequently extinguished from the financial means of the Banca de Economii. Platon allegedly withdrew 800 million lei from the Bank's reserves. Prosecutors initially demanded 23 years in prison for the businessman.

In 2021, prosecutor general Alexandr Stoianoglo, withdrew all accusations against Platon, he was released and fled the country to the United Kingdom. One month later prosecutors requested a 30 day preventive arrest for Veaceslav Platon, but he didn’t respond to the summons. His controversial release led to a criminal case against the prosecutor general and a number of the Prosecutor's Office as well as judges involved in his release.

 

  1. Constantin Botnari

2.1. Profile

Constantin Botneri was the Secretary General of the Democratic Party of Moldova and is considered the right hand of Vladimir Plahotniuc. He was an  MP  of the Democratic Party of Moldova in the period of  December 2014 to March 2016, after previously being the chief of staff of the parliamentary group of the party. In February 2019 he was elected MP but resigned shortly in june 2019 when Vladimir Plahotniuc lost reigns of power and fled the country.

 

Officially Constantin Botnari is not associated with any companies in the Republic of Moldova. However, investigative journalists on many occasions revealed his lavish lifestyle and properties. In 2013, he bought and, during his term as an MP, lived in a luxurious house of over 300 square meters. Value of the building is estimated at over 170 000 euros. After he fled the country, in August 2021 he sold his luxury house.

 

2.2. Controversy and Harboring in the UK

In January 2022, following information that Constantin Botneri had been announced in an international search, he appears with a video message stating that, since 2019, he is in the UK with his family and is "open" to cooperate with the investigation, although he claims that he was not summoned in any criminal case.

On the same day, the Prosecutor's Office for Combating Organized Crime and Special Cases (PCCOCS) issued a statement stating that Botneri had been summoned to attend a court hearing. According to the PCCOCS, because he is evading the law enforcement officers, the politician was announced in an international search.

Botnari is being investigated for using fake ID cards and travel passports, in violation of legal provisions. As well as overstepping his legal competences and exercising pressure on public employees for forging legal documents.

Investigative journalists from RISE Moldova wrote in 2020 that a shell company controlled by oligarch Vlad Plahotniuc paid for the tuition fees of some of Moldovan politicians' children. Two of Constantin Botnari's children also benefited from offshore money. It is about 60 thousand euros, which covers part of the costs of studies in the UK.

 

  1. Gheorghe Cavcaliuc

3.1. Profile

Gheorghe Cavcaliuc is formerly deputy-head of the National Police Inspectorate and Head of the Special Investigation Unit of the National Inspectorate for Investigations. Later one, was called Direction nr.5 and was a police direction that was involved in illegal persecution and phone tapping of politicians, namely opposition representatives during Plahotniuc control of power.

He left his position in 2019, after Plahotniuc fled the country. In 2020, Gheorghe Cavcaliuc started his own political party called “PACE”. In the last presidential election of 2021 his party received a score of 1.2%.

 

3.2. Controversy and Harboring in the UK

In 2021, shortly before the parliamentary election, Gherorghe Cavcaliuc fled the country while being accused of hooliganism and calling for violence. Later on in 2021 two other cases were opened against him, for forging criminal cases against opposition representatives (Verbitchi & Petic cases, related to forged rape accusation and arms trafficking) and overstepping his authority as a deputy head of National Police Inspectorate.

In August 2021 Cavcaliuc announced that he is in the UK and will be launching a private enterprise “Success for you” LTD, meant to create jobs for Moldovan in the UK, the company was closed two months later.

Moldovan Office of Interpol requested his search and extradition to Interpol, but no official Interpol mandate for arrest and extradition was installed at this moment.

There are many allegations that Cavcaliuc was one of the main responsibles for intimidation efforts done by Plahotniuc against opposition and media as well as one of the main coordinators of smuggling of alcohol, drugs and anabolics through Moldova to Europe.

Investigative journalists revealed a substantial disproportion of his assets and incomes as well as hidden properties in Bucharest, Romania.

 

 

  1. Vladimir Plahotniuc

4.1. Profile;

Vladimir Plahotniuc is a controversial moldovan oligarch. He started building his business organization during communist times, however there is little public information about him before he stepped into politics. In 2010 Vladimir Plahotniuc was elected as an MP and soon became prime deputy speaker of the Parliament, a position created specifically for him that he held till 2013.

In 2016, Vladimir Plahotniuc became officially the President of the Democratic Party of the Republic of Moldova. After 2014 elections, Plahotniuc scored 3rd result score, however soon secured a comfortable majority through a number of MP’s from Liberal Party, Liberal Democratic Party and Communist Party, who announced support for the PDM’s government, later on most of these MP’s joined Democratic Party or smaller puppet parties controlled by Plahotniuc.  It was widely acknowledged that this happened after massive bribes to MP’s. In 2022, four former MP’s were detained based on an initiated criminal case related to the bribery of the MP’s.

Beside political involvement, since 2011 Plahotniuc controls the biggest media holding in the Republic of Moldova (General Media Group). Beside that, he was owner and shareholder in a number of business holdings, the biggest ones were OTIV Prime Management and Finparinvest, that had shares in banking business, hotel business and a number of other industries. Also, after securing political control in the Republic of Moldova, it is widely acknowledged, based on journalistic investigation, that Plahotniuc through shell companies and political appointees controlled several major state enterprises such as MetalFeros (state monopoly on scrap metal), Moldelecom (state owned telephone company), MoldovaGaz. Currently, there are a number of criminal cases related to this.
Overall, Plahotniuc is considered one of the main architects of the Billion Dollar Fraud in the Republic of Moldova, for which is now being persecuted and is being searched by national law enforcement agencies. There are a countless number of allegations related to his control over judiciar sector, and prosecution offices in Moldova. As well, there is a number of pieces of evidence linking him to the Laundromat scheme.

Plahotniuc lost power after the 2019 election when didn’t manage to form a majority in the Parliament, due to protests and opposition of a parliamentary majority controlled by the Democratic Party. He fled the country in june 2019 and soon after has been put under investigation. Moldovan authorities sent requests for identification, detention and extradition to Interpol and a number of states where Plahotniuc may presumably hide. Plahotniuc is being charged with a series of accusations, among which are creation and management of a criminal organization, scam and money laundering in large proportions and money laundering organized by a criminal organization in large proportions. 

 

4.2. Links to the UK

During the last 10 years, a number of journalistic investigations revealed that Plahotniuc used the UK as a harbor for his assets and his companies in UK for his financial operations.

        In 2016, investigative journalists from Rise Moldova revealed that Plahotniuc affiliated UK companies were used for financial operations between communist oligarchy and the son of former president Vladimir Voronin, Oleg Voronin.

        In 2020, Ziarul de Garda, the biggest investigative newspaper in Moldova, revealed how Plahotniuc used a UK based shell company to control and profit from state owned MetalFeros company in Moldova. According to the investigation, Plahotniuc managed to deplete MetalFeros of more than 30 million euros using UK companies.

        In 2019, was revealed that  under a fake Czech identity, Plahotniuc registered a company in the UK

        In 2021, according to a number of investigative reports and close affiliates of Vladimir Plahotnoiuc, UK shell companies moved substantial amounts of money related to the banking fraud.

There is substantial evidence of Plahotniuc and his affiliates using United Kingdom regulations for their financial operation and money harboring. Considering the latter one, brief examples, any help supporting Moldovan law enforcement efforts to identify and stop Plahotniuc’s deeds is highly needed.

 

 

References

  1. https://www.rise.md/final-de-mandat-milionul/
  2. https://www.zdg.md/investigatii/ancheta/dosarul-metalferos-episodul-vladimir-plahotniuc/
  3. https://www.rise.md/articol/documente-relatia-offshore-plahotniuc-voronin/
  4. https://www.zdg.md/stiri/stiri-justitie/magistratii-eu-emis-mandat-de-arestare-pe-numele-lui-cavcaliuc-in-dosarele-petic-si-verbitchi/
  5. https://www.rise.md/english/the-russian-laundromat/
  6. https://www.rise.md/video-bancherul-din-umbra/
  7. https://www.zdg.md/stiri/stiri-justitie/dosarul-verde-de-briliant-fostul-ef-adjunct-al-igp-actual-preedinte-pace-gheorghe-cavcaliuc-audiat-i-recunoscut-in-calitate-de-banuit-pentru-doua-capete-de-acuzare/
  8. https://www.moldova.org/pentru-ce-a-fost-condamnat-si-cum-a-fost-achitat-veaceslav-platon-explicam/
  9. https://www.reuters.com/article/uk-moldova-fraud-insight-idUKKCN0QF1KA20150810
  10. https://www.theguardian.com/world/2017/mar/20/how-dirty-money-from-russia-flooded-into-the-uk-and-where-it-went
  11. https://www.occrp.org/en/daily/5263-us-10-billion-transferred-out-of-russia-illegally-in-2015-moldova-remains-hub

 

Mention: In order to received a more detailed information on the cases described an interviewed with the representatives of investigative journalists and law enforcement authorities from the Republic of Moldova is highly recommended

 

 

 

 

 

 

 

 

 

 

 

 

March 2022