Russia shrugs as Troika Dialog is entangled in a money laundering investigation

Hello! This week our top story is the fascinating case of Maria Baronova, who went from a being a Putin admirer to a passionate opposition activist and has now taken a job at RT, the state-owned network. We also take a look at new laws that are likely to stifle freedom of speech online, the money laundering charges against investment bank Troika Dialog and how a Russian prankster duped U.S. officials and Bloomberg over ‘Maduro’s wallet’.

Russia shrugs as Troika Dialog is entangled in a money laundering investigation

What happened

The big news this past week was the publication of the OCCRP investigation of a network of offshore companies used by investment bank Troika Dialog to transfer more than $4.8 billion out of Russia between 2006 and 2013. While the share price of several European banks named in the report fell sharply and official investigations have begin in several countries, in Russia there has been practically no reaction.

• Recipients of the money allegedly laundered by Troika included, for example, companies owned by Putin’s friend Sergei Roldugin, while companies sending the money included offshores identified by the late Sergei Magnitsky.
• On the third day after the publication of OCCRP’s investigation, Troika founder Ruben Vardanyan commented on Facebook. According to Vardanyan, the investigation was confused and information was used out of context. He stressed that in the 1990s “the entire country was one big start-up” and there was no finance industry. Troika, he said, didn’t live by “the laws of the jungle”, but rather strove to create a civilized environment.
• The official reaction was one of apathy. Putin’s press secretary Dmitry Peskov said it was not a question “on today’s agenda” and it should be investigated by the financial authorities. They have not commented and are unlikely to launch an investigation.
• Russia’s largest bank, Sberbank, which bought Troika in 2012, when the money laundering was supposedly still happening, denied any involvement. In the OCCRP investigation, which will see more installments, Sberbank is only mentioned once – as the “giant state-controlled bank” that bought Troika Dialog in 2012 from Vardanyan and his partners for more than $1 billion.

Why the world should care

The official reaction in Russia to the OCCRP report doesn’t leave much doubt: there will be no formal investigation into Troika Dialog. However, the reputation of Ruben Vardanyan, a respected Russian self-made banker, was dealt a serious blow. The impact of the case raised concerns about the controversial practices of other respected Russian business executives,.which have yet to be uncovered.

“It’s not propaganda”: a Khodorkovsky ally became a top manager at RT

What happened

It’s difficult to imagine a person with Maria Baronova’s biography working at RT. She took part in anti-Kremlin protests in 2011-12, participated in elections as a member of the opposition’s coordinating committee, corresponded with billionaire Mikhail Khodorkovsky while he was in prison and then became a coordinator for Khodorkovsky’s organization, Open Russia.

• Baronova’s views have always been odd: she said in an interview (Rus) that in the early 2000s she loved President Vladimir Putin and the vitriolic pro-Kremlin historian Sergey Kurginyan. And she considered (Rus) Ukraine’s Orange Revolution to be a U.S. project. But later she turned into a very vocal opposition figure. She participated in all the major protests, including those on Bolotnaya Square in May 2012, which ended up with many protesters being jailed. Baronova herself was released after signing an agreement not to leave the country. In 2016, Baronova put herself forward as a candidate for the Duma but lost the election and fell out with opposition leader Aleksei Navalny.
• Baronova defends her move to RT with the same passion she once used to criticize the government. In her words, she has been doing one thing her entire life: helping people and making her country better. She was supposedly limited in her job choices because of her “excessive toxicity” (i.e. association with the opposition, particularly Khodorkovsky).
• While she wrote on Twitter in 2013 that RT “lies about Russia”, she now refuses to answer questions about whether this is still the case and says she agrees with the channel’s editorial policy. RT, in her words (Rus), is not involved in propaganda, but rather in “communication with society.”
• At RT, Baronova will be in charge of a charitable project named, ironically, after a song by the legendary perestroika-era rock group Kino. The idea behind the project is that viewers can donate money directly to the bank cards of those in need (RT journalists will check if their stories are true). Many philanthropy specialists have criticized the idea, but Baronova isn’t bothered. The main objection is that journalists might not be best qualified to evaluate what aid is required, and that those who receive the money might not know how to spend it most effectively. Moreover, such donations may help generate nice stories, but they don’t improve the system, which is what charities are for. Baronova herself says that the project is designed to help those who fall through the cracks.

Why the world should care

Baronova is well known in liberal circles in Moscow, and her move to RT has provoked large amounts of bafflement and anger. Her motives may remain opaque, but her story is a reminder that opposition to the current regime is not necessarily a zero-sum game.

It is now illegal to publish ‘fake news’ or criticize the government online

What happened

This week, the Duma passed two new laws limiting freedom of speech. One punishes those publishing fake news, the other punishes those spreading defamatory information about the authorities. There is nothing in either law about how information will be classified as defamatory or fake, nor about the mechanisms of enforcement. It is also unclear how many ‘fake news’ items the law enforcement agencies will be able — or willing — to identify.

• According to the new law, if communications watchdog Roskomnadzor accuses an online media outlet of spreading fake news, the organization must immediately delete the information in question, or face a ban. News aggregators and traditional media – print, radio and TV – are not affected. However, bloggers and ordinary social media users will not find it easy: for spreading fake news they could be blocked without warning. And that is not all. For spreading fake news, individuals face a fine of $450 to $1,500 and, for repeat offences, up to $4,500. If the fake news leads to the death of a person or “large scale disruption to society” the fine can be up to $6,000. Companies can be fined up to $22,0000.
• Fake news will be identified by the General Prosecutor’s Office “on the basis of news reports and the nature of the events.” The law suggests categorizing “fake” information as that which threatens the lives or health of people, disrupts the social order or threatens to impact the work of credit organizations and industry. This all provides huge scope for interpretation and raises the question of the how online media outlets will work with sources: how can they prove information from anonymous sources isn’t fake (particularly if the information casts the authorities in a negative light)?

• The law about criticizing the government is no more specific. The “defamatory information” it punishes includes “insults to human dignity” and a “clear lack of respect for society, the state, state symbols, the constitution, and government bodies.” Fines for such offenses vary from $400 (for first time offenders) to $600 (for repeat offenders). Repeat offenders can also get up to 15 days jail terms.
• For now it’s unclear how the new laws will work. But similarly vague laws have been interpreted very loosely. A recent law “on likes and shares” has seen cases over a “like” on a photo critical of Russian military action in Ukraine, and for sharing a meme about Muslim women whose hijabs get in the way of them eating noodles. At first the law was supposed to carry a prison sentence, but, just before it was passed, Putin altered it so that first time offenders can just pay a fine and only repeat offenders can be jailed.

Why the world should care

We have written several times about attempts by the Russian government to copy the Chinese model and build ‘sovereign internet’ in Russia. If they are successful, not only will Russia cut itself off, but the world will have little idea of what is going on. For now, the great Russian firewall only exists in officials’ dreams. But laws limiting freedom of speech online help Russia move closer to this goal just as much as more technical measures.

Maduro’s ‘secret wallet’ turned out to be a Russian prank. Both Bloomberg and the Venezuelan opposition fell for it.

What happened

Last week, Bloomberg reported on the existence of Venezuelan President Nicolas Maduro’s ‘secret wallet’ citing opposition representative Carlos Vecchio (who is responsible for relations between Juan Guaido’s government and the U.S.). Vecchio claimed that Maduro holds millions of dollars stolen from the state in funds controlled by “Russian of Kazakh heritage” Nurlan Baidilda. A week later, it emerged that Baidilda doesn’t have any such funds, Maduro doesn’t have such a wallet, and the entire story was a prank by two Russians.

• Several days after Bloomberg published its piece, The Bell learned (Rus) that Baidilda is a citizen of Kazakhstan, not Russia, and it was impossible to find his fund – most likely because it never existed. Instead, Maduro’s money manager turned out to be a teacher of Livespring-style business courses and a Kazakh social media star. On his social media accounts, Baidilda tells tall tales about how he studied in the “U.S., Europe and Cambridge”, consulted Gazprombank (the bank denies this) and for up to $1,500 can teach attendees of his seminars how to win state contracts. He saw the allegation about his ties to Maduro, but called it “noise”.
• The next day, it emerged that not only was Baidilda’s fund fake, but the entire story was invented. Vladimir Kuznetsov, better known as the pranker Vovan (he has impersonated dozens of celebrities, from Elton John to John McCain) said he was the one who had spread the story.
• In mid-February, Vovan, together with another prankster, contacted the office of the U.S. special representative in Venezuela, Elliot Abrams. One of the pranksters introduced himself as the president of Switzerland, Ueli Maurer (the recording of the conversation is here). He said that they had found accounts controlled by Maduro and the Venezuelan state oil company, PDVSA, in Switzerland  – more precisely, in Limpopo Bank (the Limpopo is actually a river in Africa and the setting of a famous Russian fairy tale). Abrams asked that the accounts be frozen, “Maurer” asked for proof of the illegal origins of the funds. Then Abrams, as proof, sent him the U.S. sanctions list with the names of 100 Venezuelans, including Maduro.
• Next, Vecchio began to correspond with “Maurer” and questioned him about whether he was able to locate the accounts belonging to Maduro himself. “Maurer” replied that the money was in Baidilda’s funds (NurlanBaidilda Ltd). Later, the pranksters explained that they chose Baildilda “because of his never-ending adverts on social media”. They supposedly couldn’t block the accounts in Switzerland because there wasn’t enough evidence so “Maurer” advised Vecchio to go to the press.
• Vecchio was keen on this idea, asked “Maurer” for a draft statement so as “not to make a mistake” before giving an interview to Bloomberg. When he received a draft of Bloomberg’s article in advance of publication, he also sent it to “Maurer”. The article itself was published on February 25.
• When this all became known, Bloomberg updated its article, which now says Vecchio is not sure of the data he presented. At the same time, pro-Kremlin media outlets in Russia – the pranksters spoke to state-owned Rossiya 24 – used the case as a propaganda weapon, emphasizing how Bloomberg was cooperating with the U.S. authorities.

Why the world should care

One could waste years and years in the fight against fake news, but have zero impact. This is a case in point: the key to the prankster’s success was not Kremlin support, but, rather, the carelessness of their victims. As long as senior officials and respected media agencies continue to fall for relatively simple tricks, the chance of winning the battle against fake news is slim.

Peter Mironenko

Anastasia Stognei contributed to this newsletter. Translation by Tanja Maier, editing by Howard Amos.