The Limassol District Court will hear a landmark bank fraud case when Russian oligarch brothers Dmitri and Alexei Ananyev fight a worldwide freezing order issued in Cyprus in a bid by Moscow authorities to recover €267 mln.
“This case will test the willingness of the Cyprus courts to exercise their powers and provide remedies to help the Russian banks recover their assets,” explained Alexandros Gavrielides, a partner in Skordis, Papapetrou & Co.
The Ananyev brothers, presently living in Cyprus, are being sued by Bank of Non-Profile Assets ‘Trust’, a Russian state-owned bank tasked with restructuring the country’s banking system.
The bank alleges the brothers are responsible for illegal syphoning of significant assets from Promsvyazbank (PSB) and wholly-owned subsidiary Avtovazbank (AVB), the rights under which were subsequently assigned to ‘Trust’ Bank.
‘Trust’ Bank also alleges the brothers and their wives, Lyudmila, and Daria, are responsible for the unlawful concealment of assets to put them beyond the reach of their creditors.
By December 2017, PSB was in a critical condition and in need of financial rescue.
The Russian Central Bank intervened to appoint temporary administrators, who then discovered a substantial ‘black hole’ in PSB’s balance sheet of around €1.5 bln, leading to a bailout and rescue by the Russian state.
In November 2020, ‘Trust’ Bank obtained a worldwide freezing order (WFO) from the Cyprus courts against the brothers and their wives, fearing, based on their previous history of asset dissipation, would continue hiding their assets from the Bank and other creditors, who are suing them.
The Cypriot case is based, among other evidence, on a forensic report by auditors KPMG, submitted to the Cyprus court in November 2020, setting out four schemes through which the bank says more than €267 mln was syphoned from PSB.
While the bank will oppose the cancellation of the asset freeze during the hearing on April 6, it is also continuing its investigations with KPMG.
The case management hearing on the underlying lawsuit to order the return of the missing millions to the Bank is expected to be heard in Cyprus later in the year.
The case also shines a light on Cyprus’s former ‘golden passport’ scheme, whereby Cyprus sold citizenship – and thus the right to live and work anywhere in the EU – to wealthy investors in Cypriot property schemes and government funds.
The scheme was popular amongst Russian and Chinese oligarchs but was unceremoniously shut down in November when the EU threatened to sue Cyprus over how the scheme was operated after a revealing Al Jazeera scoop.
The video newsreel forced two senior politicians, the then-House President and a senior MP, to resign over their seeming involvement to secure ‘golden passports’ in exchange for bribes or favours.
Forbes fame to Limassol ‘exile’
According to the ‘Trust’ Bank court claim, Dmitri Ananyev and his wife, Lyudmila, purchased Cypriot citizenship, thereby EU residency rights in June 2017 – just six months before the collapse of PSB. Shortly after, the brothers became aware of the Russian central bank’s inspection of PSB, which led to it placing PSB into temporary administration.
Alexei and his wife Daria also purchased Cypriot citizenship approximately at the same time as Dmitri and Lyudmila.
Dmitri and Lyudmila reportedly live in a multi-million villa in Cyprus.
Alexei and his wife, Daria, live in exile in a luxurious 800 square metre apartment, spanning the entire fifth floor of one of Vienna’s most famous buildings on the Hoher Markt.
In 2017, Forbes cited the Ananyev brothers as the 58th and 59th richest men in Russia, together worth over $2.8 bln, largely based on the value of PSB.
By 2010, PSB was the ninth-largest bank in Russia and recognised, in 2014, as “systemically important” (in other words, it was on Russia’s list of ‘too big to fail’ banks).