The trial of the former head of Gazprombank’s Swiss unit and three colleagues got underway in Zurich on Wednesday morning, who are charged with failing to raise the alarm over financial transactions made by a cello-playing confidant of Vladimir Putin.
(Bloomberg) — The trial of the former head of Gazprombank’s Swiss unit and three colleagues got underway in Zurich on Wednesday morning, who are charged with failing to raise the alarm over financial transactions made by a cello-playing confidant of Vladimir Putin.
The chief of Gazprombank Schweiz AG, two senior executives at the bank and a client relationship manager neglected to carry out proper due diligence between 2014 and 2016 into Sergei Roldugin’s finances and connections, according to the Zurich prosecutor’s indictment. Roldugin is a “close friend” of the Russian president and godfather to Putin’s daughter, and the bankers should’ve scrutinized if he was was the real beneficial owner of Gazprombank accounts belonging to shell companies in Panama and Cyprus, the prosecutors said.
The four, three of whom are Russian and one Swiss, “continued the business relationship unacceptably, although they themselves had serious doubts about the correctness of the information about the beneficial owner,” according to prosecutors. They are seeking a seven-month suspended sentence with two years of probation for the men, who can’t be identified under Swiss law.
Lawyers for two of the accused denied in court any wrongdoing, while lawyers for the two other defendants said they had nothing further to add beyond their colleagues.
The client relationship manager took the stand first.
“If a musician owns some 30 million francs in assets, shouldn’t you confirm if they really belong to them?” asked Sebastian Aeppli, the presiding judge.
The manager said he’d prefer not to comment.
Gazprombank Schweiz’s CEO then was questioned. He declined to answer anything about a 2015 internal bank report into the two shell companies, however said more broadly he rejected the allegations.
“It’s the first time I’ve been in a court in my life,” he said and hoped his appearance would bring a positive end to the affair. A conviction “would be the end of my career and mean huge damage to me and my family.”
For Switzerland, long a hub for rich Russians looking to stash their wealth, the trial is a test of local prosecutors’ willingness and ability to punish what they believe to be financial wrongdoing amid a war that has upended traditional Swiss neutrality. Foreign critics have argued that Switzerland doesn’t do enough to crackdown on financial crime domestically and sometimes even targets whistleblowers for prosecution instead of the perpetrators and enablers.
The case also puts the spotlight on the role of Roldugin and others as conduits of the vast fortune Western governments say Putin accumulated over his nearly quarter-century in power. The cellist was among those in Putin’s circle that the European Union sanctioned a year ago after the invasion of Ukraine.
“Roldugin is responsible for ‘shuffling’ at least $2 billion through banks and offshore companies as a part of Putin’s hidden financial network,” the EU said at the time, citing a 2016 report from the International Consortium of Investigative Journalists.
‘Putin’s custodian’
The U.S. Treasury went further last June, calling Roldugin “a custodian of President Putin’s offshore wealth.”
The Kremlin has previously acknowledged that Putin is a friend of Roldugin, who recognizes the work he has done for Russian music, but denies any financial improprieties.
That 2016 report, known as the Panama Papers, prompted Swiss banking regulator Finma to investigate Gazprombank’s Swiss unit, which concluded in 2018 that the bank had “serious shortcomings” in the measures it took to combat money-laundering. Gazprombank had failed to carry out adequate economic background checks on its clients, Finma decided at the time as it prohibited the Swiss bank from accepting new private clients until further notice.
Gazprombank Schweiz still has its banking license but is currently in the process of winding down which it began last year following Russian’s invasion of Ukraine, the bank chief testified.
(Adds comments from trial starting in fourth paragraph)
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