Four bankers including the former boss of Gazprombank’s Swiss unit sought to demolish allegations they neglected their duty to raise the alarm over financial transactions made by a cello-playing confidant of Vladimir Putin.
(Bloomberg) — Four bankers including the former boss of Gazprombank’s Swiss unit sought to demolish allegations they neglected their duty 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 are standing trial in Zurich charged with failing to carry out proper due diligence between 2014 and 2016 into Sergei Roldugin’s finances and connections.
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.
But lawyers for the four men attempted to lay out holes in prosecutor Jan Hoffmann’s indictment, while also denying in court any wrongdoing by their clients.
The statute of limitations for the offense of lack of due diligence in financial transactions is seven years and given the four defendants have not been charged with offenses before March 8, 2016, the proceedings should be discontinued, they argued.
The indictment refers to the four defendants generically, failing to acknowledge their different roles, fails to “describe in sufficient detail who knew what when and who did or did not what and when” and is therefore insufficient, according to a briefing circulated to media attending the trial.
Roldugin was specified as the beneficial owner of the companies in forms submitted each time an account was opened on their behalf, the lawyers said to rebut allegations the bankers’ due diligence was sloppy.
Lastly, to make an assumption that Roldugin was just an ordinary musician for whom such a fortune was unusual and that should have raised a red flag makes no sense, they argued.
“If one follows the prosecution’s own logic and position, Sergey Roldugin is not just any cellist and conductor but also a Kremlin favorite who obviously had access to special financing possibilities that allowed him to accumulate substantial wealth,” they wrote.
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 Hoffmann. He is seeking a seven-month suspended sentence with two years of probation for the men, who can’t be identified under Swiss law.
Earlier on Wednesday morning, the client relationship manager took the stand.
“If a musician owns some 30 million francs in assets, shouldn’t you confirm if they really belong to them?” the presiding judge Sebastian Aeppli asked him. The manager said he’d prefer not to respond, and declined to answer further questions about the case.
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.
(Updates with details from the legal defense from fourth paragraph)
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