Head of state-controlled VTB Bank Andrey Kostin – the person is not poor. He first disclosed his income back in 2014, telling German journalists that he had earned 240 million rubles. Kostin then strongly denied the amount of income of $ 37 million, which he counted by Forbesby calling it “complete nonsense”.
This statement of the state banker turned out to be true: three tens of millions of dollars is nothing compared to assets worth a hundred million. “Important Stories” publishes an investigation by the Center for Corruption and Organized Crime Research (OCCRP) about the relationship of the head of VTB to offshore firms with Russian and foreign property worth more than $ 100 million. The big list of assets has it all: houses, premium apartments, investment companies and even an expensive hotel in Austria. The property was controlled through an offshore network run by Costin’s confidant, Eric White, the son of a prominent Canadian communist.
The son of Canadian communist Burt White, Eric moved to the Soviet Union as a boy in 1966 and was educated at the Interdom boarding school for children of foreign communist leaders. These are almost all the scarce publicly available details about his life. The memoirs of the late Father White are only a glimpse mention about his birth. After leaving school in 1973, White Jr. stayed in Russia to study history at Moscow State University. Then he moved to Canada and went into business.
Eric White is not a public person. Most of the information about him personally is connected with Interdom. Education in this boarding school, apparently, influenced his whole life. On the school website there is a 2010 White interview in which he spoke a little about himself.
“My father was a correspondent for a Canadian communist newspaper accredited in Moscow. Now I work in business in Russia and Cyprus. <...> I believe that any country that claims to be a world power must have an international children’s school in which children from all over the world would study. <...> It is not necessary that there be a political background here, as it was in Soviet times. <...> It can receive children from disaster areas, who, growing up in Russia, then, as in the case of our interhouse, will disperse all over the world. These will be people for whom Russia is a second home. They will no longer be able to listen to lies about this country, <...> they will always have a warm attitude towards this country, they will be a voice of influence in society in support of the country in which they grew up.
The government should be interested in this for the sake of future relations with many countries. Here, in Russia, they give a good education, and people, returning to their countries, get good posts in leading state institutions, they become influential people, and they have influential friends. Do you understand?
White became a citizen of Cyprus in 2015, having bought a luxury villa near Limassol, on the south coast of the island, as part of a citizenship by investment program. On the wall at the gate of the villa there is a playful inscription “The Whyte House”, in consonance with the White House (White House) – the official residence of the President of the United States.
White’s Cypriot house is right next door to the house owned by the deputy head of the former VTB subsidiary in Cyprus, RCB Cyprus, Vladimir Popov. A significant share of RCB, as you know, back in 2009 unexpectedly turned out to be with its top managers. Sources connected with VTB then said that in fact this Cypriot bank had moved away from the state-owned VTB and went to Kostin’s people. As it turned out, some companies associated with Andrey Kostin, from an offshore network managed by White, received millions of dollars in loans from RCB Cyprus.
“White could have acted as Kostin’s confidante,” said Tamara Makarenko, a business intelligence analyst with extensive experience in investigating oligarchs, after reviewing the materials collected by OCCRP. She notes that property ownership schemes suggest such an idea. And that the oligarchs used similar schemes to hide their assets.
Kostin had reasons to take care of the property that he had accumulated over the long years of work as a state banker: he had long located under US and European sanctions and risks losing its foreign assets if they are discovered by EU or US authorities.
As it turned out, the winery and estate had been in the hands of Eric White for years. White’s offshore firm Vargas Properties controlled the Russian company that owns both the house and the winery. This March, shortly after Russia’s invasion of Ukraine triggered another round of sanctions against prominent Russians (including Kostin himself), ownership of the property was transferred to a Russian company whose owner was not disclosed.
One apartment was given to her by a top manager of VTB, and the other was presented by the state bank itself. But there was an intermediary in the transfer of the apartment from VTB to Kostin’s girlfriend. A year before Asker-Zade received the apartment, the property was transferred to an offshore company registered in the British Virgin Islands, Erelson Investments.
As it turned out, this company belonged to Eric White. And another of his offshore firms acted as an intermediary in the transfer of the Moscow residence from VTB to Kostin himself. The State Bank transferred ownership of a luxury three-story townhouse in Moscow to Whyte’s Laroy Enterprises in 2006. In October 2015, she handed it over to Kostin. The following year, he sold the townhouse to Angerston Holdings in Cyprus. By the way, for this deal, Angerston received a $7 million loan from the now former VTB bank in Cyprus, RCB Cyprus. As we have already noted, the Cypriot bank soon sailed away from the state-owned VTB and went to people close to Kostin.
Cypriot anti-money laundering expert Anna Stylianou told OCCRP that before the tightening of rules in 2018, many wealthy Russians gave their property to Cypriot companies, which provided anonymity and the opportunity to avoid paying taxes.
“Real estate rental income could be presented as income from dividends [компании] in Cyprus and, therefore, was not taxed, ”explained the expert. Cyprus has been popular in this regard also because, until last month, it did not have a public database of ultimate beneficial owners. “Hiding Russian property was easy,” Stylianu concluded.
According to numerous media reports, the Tannenhof is owned and operated by married couple Axel Bach and Judith Volker, who the media say completely rebuilt it in 2011. In a 2017 interview, Bach revealed that the unexpected legacy helped him “realize his philosophy” of hospitality, implying that he used the windfall to buy the hotel. “The notary was looking for me for a year and a half and asked what I would do with all the money now!” Bach recalled.
Another article published the same year reported that Bach and his wife had sold an estate in Italy to buy a hotel. According to former hotel chef James Baron, staff were also told that the establishment was owned by Bach and Volker.
However, Austrian and Cypriot corporate reports say that between 2010 and 2015, the Tannenhof hotel was owned by a Cypriot entity held by VTB. Whether the bank created this structure in the interests of any client was not disclosed.
The US and EU imposed sanctions against VTB in 2014. And the following year, the ownership structure of the Tannenhof changed. Prior to the imposition of sanctions, the hotel was owned through the ITC Consultants (Cyprus) company created by VTB.
But in 2015, ownership passed to other Cypriot firms – Cahulia and Aktien Enterprises. Their owners were not disclosed. That all changed last month when – after years of pressure from the EU, Cyprus released a register of beneficial owners. Eric White turned out to be the owner of Aktien Enterprises.
OCCRP, 7/28/2022, “A native of Canada manages assets associated with VTB Bank and Andrey Kostin, including luxury real estate in Europe”: However, a law has come into force in Austria requiring all companies to declare their ultimate beneficial owners. The Tannenhof likely exploited a loophole by stating that any Austrian company owned equally by two shareholders does not have a beneficial owner. Around the same time the law was passed, Cahulia Ltd sold 50 percent of the hotel’s holding company to another Cypriot firm, Aktien Enterprises Ltd, for a nominal $584, thus keeping the same stake. As a result, the register of beneficial owners in Austria does not show who actually owns the Tannenhof Hotel – only the directors are listed there. — Inset K.ru
In 2013 and 2014, White’s “related party” Landshut bought $38 million in shares from CIS Opportunities Fund, an investor in the economies of the former Soviet republics. In January 2014, the fund bought a stake in Burger King’s Russian franchise for $25 million, according to corporate documents.
White’s offshore companies are also linked to Kresorco Enterprises, which owns the Russian Hoff furniture and home goods hypermarket chain. The Cypriot Volkeburg associated with White’s structures reportedly acquired a 20 percent stake in Kresorco in 2011, according to reports. As of 2020, this stake was valued at $62 million.
Another Cypriot company, IFG Fund AIFLNP VCIC, a subsidiary of Solozhentseva’s structure, acquired a stake in the Russian KFC franchise in 2018. And in 2021, Ozon.ru shares worth $49 million and a stake in the Russian retail chain Fix Price during its IPO.
Whether White still serves Kostin’s money and other assets or works simultaneously for himself and various wealthy people, helping them manage their property, could not be clarified. White, Kostin, and VTB did not respond to OCCRP questions about real estate, investments, and the offshore network.
In March 2021, in his “Congratulations from Cyprus”, addressed to the former pupils of the Soviet Interdom, White could not resist mentoring rhetoric:
“Life is not easy <...>. To be successful, you need two things – work and luck. Luck helps, but you have to work,” he taught.
Grabbing a couple of acres of land adjacent to the site is a well-known country tradition. Larger landowners can afford to grab a larger piece – a hectare, or even a couple. The head of VTB Andrey Kostin is a Crimean summer resident. The holdings of the companies associated with him in Crimea are extensive. First, there are vineyards. The farm is called Alma Valley, and, as Open Media wrote recentlythis winery is one of the largest (270 hectares).
The fact that the companies that own the winery are associated with the head of VTB, earlier media reported with links to their own sources. Indirectly, the connection can be traced through the documents. The operating company of the winery is Invest Plus. She belongs “East Investments”, which is owned by an offshore company from the British Virgin Islands. East Investments also owns Forian Co., which Andrey Kostin owned directly in 2015–2017. Kostin himself has always denied any connection with the winery.
As Baza found out, Invest Plus, in addition to its legal possessions, actually seized land of 0.8 hectares, which is in regional ownership. Moreover, he captured along the perimeter of his site, on each side (on the one hand – 40 acres, on the other – 5, on the third – 30, on the fourth – 1). Such data is contained in the state register of inspections.
The company must correct the violation by June 26, then Rosreestr will re-check. Also, the company has already been fined 105 thousand rubles.
In the spring of 2018, the media reported that the Crimean winery Alma Valley won three silver medals at the annual International Wine & Spirits Competition, which takes place in London. And in February 2019 Roskachestvo called Alma Valley products – the best red wine. But, despite the prestigious awards, the company’s financial success is much more modest: according to SPARK-Interfax, over the past five years, East Investments has never made a profit. So in 2019, the net loss amounted to 204 million rubles.
Alma Valley vineyards are not the only real estate owned by firms associated with the head of VTB on the Black Sea coast. In 2017 reportedthat the Invest Reserve company (a subsidiary of Invest Plus) bought vineyards in Sevastopol – more than 1,000 hectares.
In addition to vineyards, there are places for recreation. In 2015, the press service of VTB reportedthat Kostin travels to the Crimea from year to year to rest at the dacha, which is owned by the Forian company (recall, then Kostin owned it personally). This company owns a plot in the town of Foros with an area of 4511 sq. m by the sea.
Neighboring area of 19.5 thousand square meters. m is owned by East Investments. Another plot nearby (12.4 thousand square meters) belongs to the SPB-Fort-Sich company, which is also owned by East Investments. Plus a plot of 7.9 thousand square meters. m) is on a long-term lease from East Investments.
All these plots are located nearby, on Terletsky Street, they all have the same category of use – for a hotel. Two sites are located at the address of the former pioneer camp. It was reported that it was converted into a boarding house and got the beachwhich was closed to the public.
Representatives of VTB and East Investments did not respond to Baza’s inquiries.