Russian tycoon’s link to alleged corruption in leaked files raises questions for Tory ministers

A Russian-born oil tycoon whose firm has made huge donations to the Conservative party secretly co-owned a company once accused of participating in a massive corruption scheme, according to leaked files seen by the Guardian.

Viktor Fedotov, 74, a reclusive executive with a mansion in Hampshire, made at least $98m (£72m) from an offshore financial structure that appears to have funnelled profits from the accused Russian company via multiple tax havens.

Documents in the パンドラ文書 suggest Fedotov and two other men made fortunes from the company in the mid-2000s, around the time it was alleged to have been siphoning funds from the Russian state pipeline monopoly Transneft. He appears to have used some of the money to buy a $34m private jet.

The accusations of fraud – which are strongly denied – against the Russian contractor Fedotov co-owned were contained in a confidential Transneft report. After the report was leaked, the resulting allegations were questioned by senior Russian officials including the then prime minister, Vladimir Putin, who said the matters had been investigated and no criminal offences had been committed.

Lawyers for Fedotov strongly denied all accusations of fraud. 声明の中で, they said he was too unwell to comment on the “false allegations” but denies any allegation of wrongdoing.

しかしながら, a Guardian and BBC Panorama investigation revealing Fedotov’s secret ownership of the Russian company, and files that suggest he generated a fortune from the structure that owned it, could prove explosive for Boris Johnson’s government.

Fedotov is now the majority owner of Aquind, an entirely separate UK company that is seeking ministerial approval for an undersea power interconnector between Portsmouth and Normandy in France. The £1.2bn proposal is regarded by officials as a “nationally significant infrastructure project”. A decision on whether to allow it to proceed is due within weeks.

Aquind’s project has already been mired in controversy, amid local opposition and complaints over the company’s donations to and links with the Conservative party. Alexander Temerko, who is a friend of the prime minister, ボリス・ジョンソン, and a co-owner of Aquind, has together with the company donated £1.1m to the Tories.

Three Conservative ministers have already had to recuse themselves from the decision-making process over the Aquind undersea cable because of their links to the company. There is no suggestion Temerko had any knowledge of the possible origins of Fedatov’s wealth.

Aquind’s lawyers said the allegations against the Russian company co-owned by Fedotov came from a wholly unreliable report. In a lengthy statement, Aquind said the accusations were completely false.

Ministers will now have to consider whether there are questions to answer over the sourcing of Fedatov’s investment in Aquind, and whether any money the Tory party received from the firm may be linked in any way to alleged fraud.

The company co-owned by Fedotov that was accused of involvement in corruption is Vniist, which was a contractor on Transneft’s massive Eastern Siberia-Pacific Ocean (Espo) pipeline project.

Allegations of fraud in connection to the pipeline project date back to 2008, when the state pipeline monopoly’s newly appointed president, Nikolay Tokarev, went public with concerns about financial irregularities involving the prior management of Transneft.

二年後, the Russian opposition activist Alexei Navalny, then a 34-year-old lawyer, went further and revealed what he alleged was a huge embezzlement scheme perpetrated by Transneft’s previous management and multiple contractors on the pipeline project. Navalny estimated the fraud cost the Russian taxpayer $4bn.

“They stole,” Navalny wrote on his blog at the time. “They overstated prices. They connived with contractors to cheat.”

To support his claims, Navalny published a confidential 2008 report that an internal working group at Transneft, which was by that time led by Tokarev, had compiled at the request of Russia’s audit chamber – a body responsible for monitoring federal budgets.

The leaked report alleged that “a scheme was artificially created” to benefit contractors on the pipeline project who “did not perform” any work yet received “unreasonably high payments” from the state-owned company. The findings appeared to echo Tokarev’s earlier public admission of concerns.

Among the multiple contractors identified in the internal report was Vniist. The report did not identify who ultimately controlled Vniist but alleged, on the basis of two case studies, the company had siphoned as much as 3.8bn roubles – at the time around $140m (£80m) – from Transneft.

Specifically, the report alleged Transneft had “no objective need to conclude a contract with Vniist” and the involvement of the company in the Espo project was “unjustified and economically unprofitable”.

当時の, Navalny’s leak of the report made headlines around the world and thrust him further into the spotlight as an outspoken anti-corruption campaigner. The report was referred to the Russian interior ministry and prosecutor general and the growing controversy elicited responses from senior Russian figures.

The head of Russia’s audit chamber, Sergei Stepashin, reportedly said in November 2010 that while Transneft did misuse some funds, Navalny’s calculation about the scale of the alleged fraud was incorrect. “There was no $4bn embezzlement," 彼は言った. Two months later, Tokarev accused Navalny of “propaganda” and also said the blogger’s calculation about the scale of the alleged fraud was based on a flawed extrapolation.

When no charges materialised in the Transneft case, Navalny accused authorities of covering up an alleged fraud. That accusation was rejected by Putin, who in September 2011 前記: “If there had been anything criminal there, I assure you people would have been behind bars long ago.”

Aquind’s lawyers said the response from the Russian authorities and other evidence they had uncovered demonstrated the Transneft report was a “wholly unreliable” document. They said Transneft had a commercial motive for making allegations against Vniist, a company it later brought a number of largely unsuccessful legal actions against over a series of contractual disputes.

In the decade since he leaked the Transneft report, Navalny has been a thorn in the side of the Putin regime, which he accuses of poisoning him. 彼がいた imprisoned this year in Russia in relation to a case of alleged embezzlement that he said was politically motivated.

Vladimir Ashurkov, the director of Navalny’s Anti-Corruption Foundation, who worked in 2010 with the activist to investigate the Transneft case, said they were largely unable to determine who benefited from the alleged corruption – which did not result in any criminal charges. “It wasn’t easy," 彼は言った. “The majority of it we couldn’t attribute to anyone in particular.” No criminal prosecutions ever resulted.

にとって 10 年, the identity of the ultimate owners who controlled Vniist has remained a mystery. It is a question now seemingly answered by the Pandora papers.

Leaked documents suggest Vniist was secretly owned by three Russian businessmen. One was Vladimir Fedotov. The other two were executives of Transneft – including the state company’s then president, Semyon Vainshtok.

Lawyers for Vainshtok acknowledged he had a “beneficial interest as an indirect shareholder in Vniist”. しかしながら, they said he was not a director of Vniist and denied any involvement in awarding the Espo pipeline contracts. They said the allegations of fraud in the Transneft report were “unfounded” and made for “political purposes”.

“The allegations against Mr Vainshtok were made more than 10 years ago and are entirely without foundation,” his spokesperson 声明で言った. “When the allegations were made, they were fully investigated and confirmed as untrue by all the relevant authorities … which found no wrongdoing and no grounds for further investigation.”

Vainshtok’s lawyers also did not expressly dispute his and Fedotov’s secret offshore stakes in Vniist, which are revealed in the Pandora papers.

Files show that in June 2003, two months before Transneft signed its first contract with Vniist for the Espo project, Fedotov, Vainshtok and the other Transneft executive each established New Zealand trusts, naming themselves and their family members as beneficiaries.

Within two years, the three trusts – settled on the same day with the help of the same London accountancy firm – came to control a labyrinthine offshore structure that stretched from the British Virgin Islands (BVI) to Russia via shell companies in Malta, Luxembourg and the Netherlands.

According to a document prepared by an adviser to the trusts, the purpose of the structure was clear. The men “had common business interests in a range of Russian companies, including in particular a valuable interest in Vniist”.

Documents suggest that through layers of shell companies the trusts held a 75% stake in Vniist and majority stakes in four other Russian companies.

Two leading QCs who reviewed the documents told the Guardian the complex structure appears to have been designed to deliberately conceal any connection between the Russian companies and their ultimate owners.

The files suggest that within three years of the creation of the offshore structure, Fedotov, Vainshtok and the other Transneft executive became extraordinarily rich with a combined total of at least $220m flowing into their New Zealand trusts.

Money appears to have moved up through the structure to the trusts in the form of dividend payments. In one August 2005 document held by the trusts’ administrators, a handwritten note suggests Vniist intended to pay dividends to each of the trusts. The value of each dividend payment is not clear, nor is the precise route payments took before arriving into trust bank accounts.

But accounting records suggest a flurry of large bank transfers to each of the trusts were made at the time Vniist was engaged by Transneft as a contractor for work on the Espo pipeline.

For Fedotov, who served as Vniist’s chairman until 2006, the trust generated a lucrative windfall for him and his family. Financial records suggest that his London-based accountants calculated the trust received $97m between 2003 そして 2005.

The funds appear to have been quickly put to use. 早めに 2005, the trust’s BVI company agreed a $40m line of credit with an exclusive Swiss bank. Weeks earlier, it purchased a $34m Bombardier private jet, a top-of-the-range aircraft designed for long-distance flights.

5月 2007, the secret trust structure was restructured, boosting Fedotov’s stake in the underlying companies. Shortly after, Fedotov agreed to transfer his new 65% stake in the Russian companies to a series of newly incorporated companies in Cyprus. Vainshtok left Transneft in September 2007.

But by May 2008, Fedotov and Vainshtok were working together again, this time in the UK, where the pair of Russian energy executives briefly became directors of a struggling oil and gas engineering firm based in a seaside town on the Suffolk coast.

That company, SLP Engineering, was part of a group of companies that later became known as Offshore Group Newcastle (OGN). Vainshtok’s lawyers said he was only “briefly” a director of SLP Engineering, and had no involvement in OGN.

二年後, に 2010, OGN created Aquind, the company now vying for ministerial approval for its undersea electricity cable.

For a decade, the ownership of OGN and Aquind, which had been transferred offshore, was shrouded in secrecy. Fedotov lawfully kept his identity as owner of Aquind hidden after Companies House granted him an exemption to rules requiring a company’s ultimate owners to be identified. Fedotov’s lawyers said the exemption was made to protect his “personal security”.

今年の初め, Aquind disclosed in corporate documents that Fedotov was the majority owner of the company. Lawyers for Aquind stressed that Fedotov did not personally donate to the Conservative party, was not involved in the management of the company and had “no influence” over its donations.

Fedotov’s lawyers said he “has never had any interest in British politics and has operated in an open and transparent manner throughout the course of his career”.

しかしながら, the Pandora papers revelations are likely to give rise to questions for the Conservative government.

MPs have raised concerns that Aquind’s electricity connector is a critical piece of UK infrastructure with potential national security implications, not least as the company has also been seeking to run a telecommunications line alongside its power cable.

Now they are likely to ask other pressing questions. Was the fortune earned by Fedotov from Vniist in any way connected to funds supporting Aquind’s bid for a government-approved undersea cable? And did any of that money make its way into Tory party coffers?

The quasi-judicial decision over whether to approve Fedotov’s contentious undersea electricity interconnector is being taken by the business secretary, クワシ・クワーテン. Aquind agues its project will help reduce the impact of volatile gas and coal prices, which are the reasons behind growing electricity bills this autumn and winter. A decision is due within 17 日々.

Letters released under freedom of information laws suggest the business secretary favoured the project when he was a junior minister in the same department, and agreed to lobby French officials to support it on their side of the Channel.

In one piece of correspondence from October 2019, Kwarteng wrote to Aquind saying the government had written to the European Commission to “reiterate our support for a number of projects including, もちろん, the Aquind project”.

Following the release of the letters, Stephen Morgan, the Labour MP for Portsmouth South, raised concerns in the House of Commons about the Tory party’s links to Aquind. In addition to Aquind’s political donations and links to ministers, the company has ties to two Conservative peers: James Wharton and Martin Callanan. There is no suggestion of wrongdoing by either Tory peer.

Wharton was employed by Aquind as an adviser at the same time as he was running Johnson’s bid to take over as Conservative prime minister in 2019. Callanan, a former Aquind director, is now a business minister.

A spokesperson for the Department for Business, Energy and Industrial Strategy said the decision over the Aquind’s cable would be made “solely” by Kwarteng. They added: “No decision has yet been taken.”

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