Trail of Venezuela’s Stolen Billions Leads to Caribbean Luxury Properties
People linked to alleged corruption in Venezuela appear to have invested millions in luxury properties in the Caribbean.
Latvian citizens Erik Vanagels and Stan Gorin should be billionaires if you look at the hundreds and maybe thousands of companies they own or control. But they are not. They are proxies.
Proxies are persons who stand in for the real owners sometimes for a fee or sometimes because their identity has been stolen. Proxies are used to hide the real owners sometimes for legitimate business reasons but more often because the companies are being used for corrupt or fraudulent purposes, to evade taxes or to launder money. Proxy led companies are being used in Eastern Europe in epidemic proportions.
Vanagels and Gorin are not unique. They show up along with a group of other Latvian proxies associated with hundreds of companies many involved in criminal behavior.
Finding out who is behind the Latvian proxies is difficult but knowing something about the proxies can sometimes give clues to the ultimate beneficiary. In the case of many Latvian proxies, that often leads to the former owners of a Latvian Bank.
In October 2008, a New Zealand registration agent made a number of filings to the New Zealand company register, on behalf of companies using Vanagels, Gorin and other Latvian proxies.
The filings notified the register that one Latvian proxy director Inta Bilder would replace another Latvian proxy director Voldemar Spatz for a batch of 18 shell companies owned ultimately by Unihold Ltd, which listed as its director Vanagels.
The paperwork filed by the NZ company services provider still bore the fax headers from the name of the company who ordered the change in proxies. That company was Parex Bank of Riga.
Parex Bank is a name well known in Riga. It was once considered a glowing success in the post-Soviet Latvian banking sector but by October 2008, it was about to become an embarrassment and a massive drain on the Latvian people who paid for its corruption.
Parex board chairman Valerijs Kargins and CEO Viktors Krasovickis had built the bank from humble beginnings as the Soviet Union’s first ever exchange booth in 1991 into the largest bank by capital in the Baltics. In the process they became Latvia’s richest men and influential oligarchs.
Parex’ success was based in large part around the deposits of the new rich in Russia and the former Soviet states. Some were oligarchs, state officials and likely some corrupt businessmen who looted their countries as they turned toward democracy in the 1990s. Some 70 percent of its deposits were on deposit from Russia, Ukraine and other former Soviet states, according to its financial statements. The banks depositors took pains hide their identity behind shell companies, offshore zones with minimal disclosure, and nominee directors.
One month after these tell-tale documents were filed, the global financial storm swept away Parex Bank’s foundations, which were made tenuous by more than a billion US dollars in loans from international markets. Kargins and Krasovickis were forced to sell their controlling stake in the bank to the Latvian state for two Lats.
The new nationalized Parex Bank – now a resolution bank aiming to recover the funds the state invested in the bailout – is currently suing Kargins and Krasovickis for having “enriched themselves at the bank’s expense” through favorable loans and deposits they personally enjoyed at the bank, and for giving false information about the bank’s situation at the time of nationalization.
Kargins and Krasovickis were contacted for this story via their representative Sergejs Bardovskis, but failed to provide any answers to questions as to their connection to the proxies.
John Christmas, a US banker who was brought in by Parex in 2002 to lead the International Relationships Group to strengthen the bank’s international fund-raising operations, saw first-hand the banks operations. Christmas left in 2004 in alarm after what he discovered at the bank. He later went to the state prosecutor but nothing was done. He told reporters from the Organized Crime and Corruption Reporting Project (OCCRP) by email that the shareholders were curiously unconcerned about the complex work of dealing with major international banks, but instead spent their time personally supervising, on a daily basis, the relationships with their wealthy clientele. He remembers one bank manager “often discussed offshore companies on the phone.”
Proxy run companies also used a number of smaller boutique banks such as Trasta Kommercbanka – owned by Igors Buimisters, a former Chairman of the Shareholder Council of JSC “Financial Company Parex Capital Ukraine”. Most of the companies run by the group of proxies have continued to operate even after the bank was nationalized.
Parex’s connection to the proxies goes even deeper and there are clear connections between Parex directors and employees and the proxies.
OCCRP found that many of the proxies had connections to one man in Parex: Gints Poiss, who served as chairman of the Parex advisory board from the early 1990s to 2005, and continued as board member until nationalization in 2008.
Poiss in an interview denied any connection to the proxy network and in an e-mail denied having contact with Kargins and Krasovickis following the nationalization of Parex Bank.
In his role as chairman of the advisory board, Poiss signed off on Parex annual reports along with the Chairman of the Board and the CEO. Poiss, a forester by training, told OCCRP he started in the banking world through a job at the embryonic Latvian National Bank in 1990 as an assistant to its then president Pavils Sakss. Poiss said he got the job largely because he spoke some English. Then, at the time of Latvia’s independence, when the Parex founders were looking to establish a bank, they needed an advisory board chairman with experience in banking and picked Poiss, he said.
Poiss had a low public profile with the bank but a high profile with the Parex Bank corporate basketball team where he served as captain and competed in the annual tournament of Latvia’s Association of Commercial Banks.
The Parex team was coached by his father-in-law Peteris Rauda, and Poiss played alongside his brother-in-law, Martin Rauda, a Parex employee, according to Poiss and members of the Rauda family.
Martin Rauda is also one of the main proxy directors among the Latvian group who serves as director of the Panamanian companies Cascado and Systemo and the Cyprus registered Fynel Limited. These companies in turn control hundreds of other companies. Peteris Rauda also served as a proxy director in the UK before his death in 2003.
Another proxy who played for the Parex team was former semi-pro player Juris Vitmanis, a Parex employee. Daniels Bangers, who played regularly for a different bank in the Association of Commercial Banks league, shares his name and date of birth with another of the Latvian proxies, although he denies that he is the same person.
Parex Bank employees Gundega Emsa and Elina Zenke were also directors of the Panamanian companies Cascado and Systemo at one time, according to the Panamanian registry of companies.
Another former semi-pro player named Uldis Feldmanis also played for the Parex team. Feldmanis is the director of a company called OMI and may have played a role in the proxy system.
And then there was Phillip Burwell, an Irish registration agent. Poiss and Burwell have been friends for 20 years, since the founding of Parex bank according to comments from Burwell.
Somewhere around 2005 Poiss and Feldmanis left the Parex team and turned instead to organizing, funding and playing for an amateur team called simply ‘I.O.S.’ Feldmanis displays certificates of the IOS team’s participation in a 2006 tournament along with medals and trophies. Feldmanis denied to OCCRP that he played for IOS and said that he had simply failed to give the certificates to IOS. However, a website and press clippings from the time indicate he did play for the team.
Team ‘I.O.S.’ shows up not just on Latvian basketball courts, but also in British law courts. In a lawsuit brought by oil giant Royal Dutch Shell against one of its traders accused of taking kickbacks, International Overseas Services or ‘I.O.S.’ is named as a company services provider that set up an offshore company used in the corruption scheme. Erik Vanagels was listed as the director.
International Overseas Services is a Virginia private corporation founded in 1996, which owns subsidiaries in Riga, Kiev and Moscow that sell offshore companies. Latvian company records list, Philip Burwell, or in Irish, Pilip Boireil, as the company’s representative in Latvia. The corporation originally listed as its address Sandford Road in Dublin, Ireland but in 2007 changed it to the same address in Dublin, Virginia in the United States. There is no Sandford Road in Dublin, Virginia.
Burwell (Boireil) also figures as the representative in Latvia of Offshore Management International, a company registered from 1999 until 2003 at the same address as Feldmanis’ OMI.
Feldmanis in an interview said that the initials OMI did not stand for anything. According to testimony in from a 2010 Ukrainian court case, in 1999 through 2003 Parex Bank sent clients needing offshore companies to Offshore Management International registered at the same address as Feldmanis’s company OMI.
According to representatives of post-nationalized Parex Bank, Burwell was director of companies that received loans from Parex before nationalisation that the bank now suspects were hidden loans to the former shareholders Kargins and Krasovickis.
Burwell is registered with the Irish Ministry of Justice as a company services provider, trading as PB Consult, although IOS itself is not registered in Ireland at all. In an interview in Dublin, Burwell acknowledged knowing Gints Poiss for about 20 years and having some common business interests with him, being close to the former Parex owners, and having met most of the proxy directors. But he denied that he currently has any connection either to the proxies or to the company IOS as of 2003.
However, documents show that Burwell signed as president of the Virginia corporation International Overseas Services in 2010.
Invoices obtained by the reporters show that Burwell administers two platform companies in the Parex proxy network – Milltown Corporate Services and Ireland and Overseas Acquisitions, the directors of which are Vanagels and Gorin. Companies with these names and directors have registered successively in Ireland, the British Virgin Islands and Belize, and have served as a platform to set up thousands of other shell companies for clients of the proxy network.
The invoices show a local company services provider, Desmond Kearney, billed Burwell (identified by his email email@example.com) for Kearney’s having administered 17 British companies for Burwell in 2010. The invoices are made out to the IOS Panamanian branch, IOSG Secretaries.
According to the UK company register, all seventeen companies on the invoices have as owners and directors Milltown Corporate Services and Ireland and Overseas Acquisitions, which have Vanagels and Gorin as officers.
OCCRP could not find Vanagels, although reporters were able to find a passport photo. It was possible to track down Gorin at the address in Riga provided in company documents. Gorin, an insurance broker, said he had nothing to do with any of the thousands of shell companies he is linked to, and that he had not signed any papers for them, although he acknowledged the signature was similar to his.
By: Inga Springe, Graham Stack