It turns out that hiding Russian money in offshore is not so difficult, shows the history of the British Benedict Worsley, the former manager of the offshore companies of Trust Bank (until the reorganization of 2014 was one of the largest private banks in Russia), which tells WSJ. In the early 2010s, Worsley, who previously owned a recruiting firm and had no financial experience, was able to build a whole network of offshore structures to service bad bank debts and even arrange for the relocation of the former owners of Trust Ilya Yurov, Nikolai Fetisov and Sergei Belyaev to the UK. However, when the partners began to pursue the Russian law enforcement agencies, Worsley immediately gave testimony to them.
Like many other banks, during the crisis of 2008–2009, Trust tried to hide its distressed debts from regulators, for which it had developed a whole scheme. The bank allocated loans to a Cyprus offshore company, which then, using an intricate scheme, spent these funds through various structures and returned them to Trust to service the debt. This allowed the bank to stay afloat for several more years – its reorganization was announced only in December 2014.
An important condition for offshore network operation was the creation of a distance between it and the bank. To do this, the co-owners of Trust needed a mediator who would help manage offshore structures. This man was not supposed to be Russian – European lawyers, sensing Russian money, increased the cost of their services for them.
Yurov decided that Worsley was right for this role, with whom the head of Trust was familiar – the bank had recruited Worsley Central Search to search for managers. Yurov believed that Worsley had many connections with the business community and “from him blew the pleasant spirit of the world aristocracy.” The fact that Worsley did not know anything about offshore and did not speak Russian didn’t bother bankers. In the fall of 2009, Yurov invited Worsley to Moscow to personally discuss the “ secret affair”. The Briton readily agreed to the bankers’ proposal, especially since his company in London had a drop in revenue.
To the surprise of Worsley himself, to enter the world of offshore finance was quite simple. In November 2013, he began working for his new company, Teos Corporate Services. Worsley hired a dozen employees and arranged loans for 250 companies. The Russians have long used Cyprus as a “black entrance to the European financial system,” emphasizes the WSJ, so the appearance of another offshore company did not arouse any suspicion.
The main task of the company was to conceal the bad debts of Trust from clients, regulators, and auditors. Every time when the bank had to service a large debt, bankers assigned Worsley to create new companies for this. The bank issued a loan to them, the proceeds from this transaction went into debt to other companies from Cyprus or the British Virgin Islands, and then the money was returned to Trust to service the original debt.
About $ 4 million were spent on maintaining the whole scheme annually. Many companies offered their services to offshore companies. On tax issues, Worsley was advised by Deloitte experts, KPMG conducted an audit at one of its companies, and the Cypriot branch of the Greek bank Piraeus Bank served accounts for dozens of companies from this network.
In order to disguise the beneficiaries of the entire structure, Worsley opened special trusts on the Isle of Man for bankers, through which they could completely anonymously manage their companies. It was not difficult to carry out all these operations – bankers, auditors, and lawyers were familiar with such structures and did not ask unnecessary questions.
More than a middleman
Worsley has not only created offshore one-day flyouts for Trust shareholders. He also invented various entertainments for them – drove to Stonehenge, organized a boxing match for Yurov. In 2011, he helped Yurov to apply for a visa and transport his family to the UK, receiving $ 50,000 for this.
From the very beginning of their interaction, Yurov and Worsley created the impression of close friends – they spent a lot of time together, traveled, introduced each other to their parents and families. Worsley even converted to Orthodoxy (and Yurov stood next to him and translated the ceremony into Russian).
Despite all this, Worsley himself considered himself a “paid friend” of Yurov. It was hard for non-drinker Worsley to have fun with the Russians, writes WSJ. Inconvenient situations arose, among other things, because of the language barrier.
Bank collapse and relationships
By 2014, Trust was on the verge of bankruptcy. Due to American sanctions, falling oil prices and unprofitable loans, the bank needed about $ 30 million every month to pay off its bad debts. Shareholders even thought to sell the bank, and among possible buyers, they considered Rosneft Igor Sechin. But the bankers did not know what to do with the offshore system in the event of a deal and eventually abandoned the idea. At the end of the same year, the Russian Central Bank raised the rate, but Trust did not have the means to make guarantee deposits. As a result, he came under the control of the Central Bank, which then transferred it to the management of Otkritie Holding and turned to law enforcement agencies with a statement about withdrawing money from the bank. The group “Opening” in the end also came under sanitation.
Despite the fact that its offshore structures no longer serviced Trust, Worsley demanded more support from its shareholders. To transfer funds, he personally asked Yurov when he flew with his son to Cyprus. It caused suspicion to the banker and he asked to give him reports. Looking through the accounts, Yurov found out that about $ 300 thousand were transferred to Worsley’s account in the UAE, and another $ 45 thousand – to the reconstruction of the house Worsley bought in the south of France. Briton denied theft of money. With a similar demand, Worsley turned to all shareholders. “Now I am one of the leading specialists in offshore companies in Europe,” he wrote to the former shareholders of the bank while demanding compensation of $ 750 thousand for closing the network.
Yurov Worsley was still needed but in his legal proceedings. Russian investigators believed that the offshore structure was created to withdraw money from the bank. Worsley’s documents would have helped Yurov prove that he used the structure to keep the bank afloat. But to get involved in a judicial conflict with the banker holding Worsley did not want.
In 2015, the lawyers of Discovery came to Worsley and offered cooperation. The British were asked to help uncover the offshore structure of the former owners of Trust, transfer the assets of Otkritie Bank and provide information about its former partners. The decision was given Worsley is not easy. But when he learned that Yurov was going to sue the “Discovery”, the British decided to change sides. He agreed with the “Discovery” on payments of $ 32 thousand per month during the year, as well as the transfer to him up to 4% of the assets that can be obtained from the offshore structure. Worsley also promised that no charges would be brought against him.
The betrayal of Worsley shocked Yurov. This year, it was announced that the former owner of “Trust” filed against him a suit in the High Court in London, demanded an end to the use of confidential information about his assets, to pay the damage caused by the disclosure of this information and the amount of “bribe” (which, according to him, ” Discovery “bribed Worsley).
Accusations and exile
Otkritie requires Yurov, Fetisov, and Belyaev to compensate $ 830 million, according to the plaintiffs who were withdrawn from the bank. The Russian authorities filed a criminal case against them, accusing them of embezzlement on a large scale using their official position. Yurov and his former partners claim to be victims of a conspiracy. According to them, Otkritie exaggerated losses in the Trust in order to pay its own debts with the help of the proceeds.
The former owners of Trust left Russia at the beginning of the investigation: Yurov first went to Cyprus, then to the UK, Fetisov also in the UK, and Belyaev in the USA. The Yurov family owns several properties in London, its own wine collection and a Turkish carpet for $ 55,000.
Worsley moved to France. He was afraid of revenge from Yurov and even asked Otkritie to increase security in his house. He was also worried that the holding would not fulfill its promises and would stop paying him money. Now he acknowledges that the entire offshore system has collapsed due to a banking crisis. “I found myself at the center of a confrontation between two Russian players,” he wrote in his testimony. No charges were made against Worsley himself.
After Otkritie itself underwent a reorganization in the summer of 2017, Worsley wrote a letter to his former partners, inviting them to mediate reconciliation with Otkritie in exchange for assistance from their side.