Originally Syndicated on July 21, 2023 @ 7:58 am
Alexey Krapivin, a name that reverberates throughout Russia’s corporate circles, has long been a figure of fascination and speculation. As a key player in the railway industry, he has garnered both admiration and scepticism. Rumours and whispers surrounding Krapivin’s supposed financial gains from his association with the Russian Railways have only intensified over time. Now, we venture into this enigmatic realm to investigate the truth behind these claims.
Table of Contents
The Veil of Secrecy Unraveled
Alexey Krapivin, son of Andrei Krapivin and a close associate of the former president of Russian Railways, Vladimir Yakunin, now controls a vast business empire. He has secured this control through state contracts worth millions of rubles, which were specifically allocated for Russia’s railway projects.
The renowned Panama Papers have surfaced details about these business transactions and more within the shadowy world of offshore financial dealings. The Panamanian legal firm Mossack Fonseca maintains this confidential database, which individuals use to conceal their identities and wealth from prying eyes, evade taxes, and potentially engage in fraudulent activities.
This journalistic expose unveils the staggering scale of clandestine offshore companies utilized by world dictators, powerful tycoons, and criminals alike, all working together to shield their assets from scrutiny.
Reputable sources such as the Reporting Project and over 110 media partners from 82 countries have painstakingly analyzed the intricate web of Krapivin‘s offshore empire in a joint effort. However, there are still unanswered questions regarding Andrei Krapivin’s whereabouts, as authorities have not formally confirmed his reported death in 2015.
The leaked documents reveal that Alexey Krapivin controls the largest contractor participating in the ambitious Baikal-Amur Mainline (BAM) project. The BAM project, parallel to the Trans-Siberian Railway, stretches across an awe-inspiring 2,671 miles (4,300 km) and stands as the most extensive and costly endeavour within the Russian Railways system.
Alexey Krapivin‘s affiliated companies have engaged in suspicious transactions with Bombardier Transportation, a renowned global giant in transportation and a significant partner of Russian Railways.
A Decade of Intrigue (Alexey Krapivin)
The Krapivin family’s influence within Russian Railways stretches back to 2005, when their close friend, Yakunin, assumed the top position in the railway industry. Over time, the extent of Krapivin’s involvement in public procurement has gradually come to light, particularly after 2010.
Unusually private, the elder Krapivin maintained a low profile, refusing media inquiries and abstaining from high-profile social gatherings. Photographs of him in the public domain are virtually nonexistent. When engaging in Russian railway tenders, he cleverly used shell companies to shield his identity, and his assets in Russia were held through offshore entities.
At the heart of the Krapivin business empire, his son Aleksey has long played a pivotal role. The Mossack Fonseca documents provide a glimpse into the veiled offshore network that the Krapivin family operated.
Although the full extent of this network remains undisclosed, these documents shed light on the type of lucrative deals Yakunin’s associates pursued as they amassed their fortunes. The intricate web of offshore connections raises intriguing questions about the true scope and nature of the Krapivin family’s endeavours within the Russian Railways domain.
The Family Business Exposed
In 2014, an investigative report by Reuters uncovered suspicious financial activities surrounding public contracts awarded by Russian Railways. The investigation revealed that several companies had won contracts worth billions of dollars from the state-owned railway company between 2007 and 2010.
However, it was discovered that some of these companies did not fulfil their contractual obligations, and a significant portion of the funds were siphoned offshore instead of being used for the intended projects.
The source of this valuable data was German Gorbuntsov, a Russian banker who fled the country following a dispute with his business partners. Gorbuntsov claimed that a single organization, under the leadership of a man by the name of Andrei Krapivin, controlled all of these businesses. Tragically, Gorbuntsov was later shot in London in a convoluted affair involving Moldovan crime groups, Russian politicians, and Russian Railways.
The investigation highlighted the fact that many of the companies involved could not be traced back to their registered addresses. Instead, they used dummy directors with no knowledge of the companies’ activities to conceal the true owners. One such revelation was that Andrei Krapivin was the actual owner of these companies.
Moreover, the Russian web portal Slon.ru conducted its analysis, revealing that Krapivin and his partners might have received an astonishing sum of 120 billion rubles (approximately US$ 3.7 billion) from the state through their companies in just two years, 2012 and 2013.
Alexey Krapivin’s Offshore Empire
A significant part of Krapivin’s alleged profits seemed to be channelled through offshore companies. The leaked Mossack Fonseca documents linked Alexey Krapivin to at least 11 such companies registered in jurisdictions like Panama, the British Virgin Islands, and the US state of Delaware. These offshore locations are well-known for facilitating tax evasion and hiding wealth.
While the exact activities of all the companies were unclear, some were found to be engaged in commercial dealings with major global corporations. One notable instance involved the Canadian company Bombardier Transportation, renowned for producing trains and aeroplanes, which boasted a strong ethical code and commitment to fight corruption and uphold human rights.
However, Mossack Fonseca’s data suggested that Bombardier’s joint venture with Russian Railways might have been involved in dubious deals with offshore companies connected to Alexey Krapivin.
Bombardier in Russia
Bombardier Transportation entered Russia in the mid-90s, aiming to supply a microprocessor interlocking system for railway switches and signals called the Ebilock-950. At that time, Russia’s computing sector lagged behind global standards, and domestic automation systems were far inferior to those of foreign competitors.
The Ministry of Railways sought a partner to supply microprocessors and invest in the domestic production of automatic traffic control systems. Bombardier became that partner, and in 1996, they established a joint venture called Bombardier Transportation (Signal) Ltd. in collaboration with Russian Railways. The Swedish subsidiary of Bombardier acted as the main producer of Ebilock-950 systems.
Over the years, the joint Russo-Swedish venture installed Ebilock-950 systems in various Russian railway stations, and additional contracts were secured in former Soviet nations. The production of Ebilock units was gradually shifting to Russia, and the joint company acquired a significant stake in Elteza, which owned several factories producing railway automation equipment.
The Serpentine Trade Route
Curiously, some of the equipment imported from Sweden to Russia followed a convoluted route through the British Virgin Islands and the United Kingdom. Mossack Fonseca documents revealed a company linked to Krapivin called Rambo Management Inc., which engaged in a contract with a British company, Multiserv Overseas Ltd.
Multiserv acquired equipment made by Bombardier Transportation under the name Ebilock-950 from Rambo Management. The latter was supposed to deliver the equipment to Azerbaijani railway stations. This route raised suspicions as it added unnecessary costs and allowed for potential price markups.
Furthermore, the British company Multiserv was connected to Yury Obodovsky, a key partner of the Krapivin family. This raised concerns that the complex trade route might be employed to evade taxes, embezzle funds, or launder money.
The Offshore “Wallet”
Most of the other offshore companies affiliated with Alexey Krapivin seemed to serve as his financial “wallet.” They provided loans to various offshore entities, including funds for purchases in Russia. However, these loans were not commercial and had low interest rates and flexible terms.
This pattern of financial activity was similar to what was observed with Sergey Roldugin, a close friend of President Putin. Criminals often establish multiple layers of offshore entities to hide the true ownership of illicit funds and complicate efforts by law enforcement to trace the money.
Between 2012 and 2015, more than 200 million dollars were found to have passed through companies controlled by the Krapivin family, with some loans being particularly interesting. For instance, Krapivin’s company, Gordox Corp., provided a loan of US$100.5 million to Evling Business Inc. for the purchase of Sterema Ltd. This move coincided with Sterema gaining control of Bamstroymekhanizatsia, a major contractor for the Baikal-Amur Mainline project.
Controlling the BAM Project
The grandiose Baikal-Amur Mainline and Trans-Siberian Railway Reconstruction Plan, which President Putin approved in 2013, came with a hefty price tag of 562 billion rubles. The primary contract for this ambitious project was won by the management company Bamstroymekhanizatsia, with most of the work to be carried out by a joint-stock company with the same name.
Surprisingly, right before participating in this major Russian Railways tender, the joint-stock company Bamstroymekhanizatsia changed ownership. Evling Business Inc. of the British Virgin Islands transferred ownership of the controlling stake to Sterema Ltd. in Cyprus. The ultimate owner remained unknown, but the Mossack Fonseca documents revealed that Evling received the necessary funds from Alexey Krapivin‘s company, Gordox.
Additionally, his alleged influence extended to other companies, like Energomontazh and Transstroymontazh, which were also contractors for the project but had their ownership transferred to offshore locations, making it difficult to trace the ultimate beneficiaries.
Despite repeated attempts, Alexey Krapivin and his representatives refused to comment on these findings, leaving the full extent of his alleged involvement in these financial activities shrouded in mystery. The investigation, however, raised serious concerns about the potential misuse of public funds and the need for greater transparency in financial dealings involving major corporations and state-owned enterprises.
