(Jan 22): A fugitive banker accused of orchestrating a US$1 billion (RM4.45 billion) fraud in Moldova appears to be helping Russian lenders and businesses to continue conducting foreign trade amid payment problems caused by sanctions.
Ilan Shor is a 37-year-old former politician in Moldova wanted by that country’s authorities for what officials there have dubbed “the theft of the century” that took place about a decade ago. He has established intermediary companies, including in partnership with sanctioned entities, according to publicly available regulatory documents, that are positioned to help Russian businesses execute international transactions that are otherwise disrupted due to US restrictions.
Shor’s work in Russia is a stark example of the lengths the country’s businesses have to go to as they increasingly experience delays in cross-border payments due to punitive Western sanctions. Many local businesses have had to rely on intermediaries — a potentially profitable niche the businessman has appeared to jump at — to arrange those settlements through entities in third countries in order to skirt obstacles created by US sanctions and the threat of additional penalties.
One of the companies run by Shor offers on its website settlements with any country and in any currency within five working days — a marked contrast to the delays of several months that some Russian firms now face with those transactions.
Shor and the main lender for Russia’s military-industrial sector, Promsvyazbank, which is currently under some of the harshest US sanctions, launched A7, a company that advertises it helps facilitate cross-border payments. When the firm was established in September, its founding documents showed Shor owned a 51% stake and Promsvyazbank held 49%. A business partner in one of Shor’s ventures, who asked not to be identified discussing their relationship, confirmed that Shor is a co-owner of A7.
A7-Agent, a subsidiary of that company, is run by Shor, according to that company’s founding documents, which show its activities include financial services, wholesale trade, and assisting in the exchange of fuel, metals and chemicals. The firm also provides derivative products and consulting, the documents showed.
On Jan 15, the US sanctioned Kyrgyzstan-based OJSC Keremet Bank, accusing the lender of facilitating cross-border transactions for Promsvyazbank and noting Shor had “been involved in the discussions” regarding Keremet’s “role in the sanctions evasion scheme”.
Another entity, which lists its address in the centre of Moscow at the building next to A7-Agent, according to documents from the state’s business registry, was founded in June by Shor together with Russian state corporation VEB.RF, which is included on multiple western sanctions lists. Exim International, 75% of whose shares belong to the businessman and 25% to VEB.RF, describes itself as a “public-private partnership to provide support in export-import operations”.
“If any of these international transactions involve the US dollar and are cleared through US banks, that would be a clear violation of US primary sanctions,” Alan Kartashkin, a partner in the London office of Debevoise & Plimpton LLP and a member of the firm’s global sanctions group, said in a phone interview. “Any involvement of any US person or any US dollar payment systems involving US financial institutions would also be a direct violation.”
It remains unclear what volume of payment transactions with Russian companies Shor’s firms have helped handle.
Representatives of A7 and Promsvyazbank didn’t respond to questions from Bloomberg News. A spokesperson for VEB.RF declined to comment.
Shor didn’t respond to a request for comment made through the head of a Moldovan political party widely reported to have been established last year by the businessman and members of his former political bloc. Calls and messages to two other associates of Shor went unanswered.
The Israeli-born Shor, who is married to a Russian pop star, was a banker and politician in Moldova. He was convicted of masterminding the siphoning of funds from Moldovan banks that cost the country’s taxpayers the equivalent of roughly 12% of its economy. He was sentenced in absentia to 15 years in prison for the US$1 billion 2014 fraud. He has repeatedly denied all charges.
Shor fled Moldova to Israel to avoid punishment in 2019, and last year said he had received a Russian passport, and according to Moldovan police, has been in Russia since early 2024.
He’s on US and European Union sanctions lists for destabilising Moldova’s political landscape. He also was sanctioned by the UK in 2022 for alleged past involvement in “bribery of foreign public officials”.
Restrictions imposed by the US, European Union and UK now affect about 95% of the Russian banking sector, Bank of Russia governor Elvira Nabiullina said in December. The US and its allies have imposed sweeping sanctions in the wake of Moscow’s February 2022 invasion of Ukraine.
Nonetheless, Shor’s Exim International is currently looking for high-level specialists in banking services, promising “an opportunity to gain unique experience in the cross-border payments market”, according to a job posting on Russia’s main online recruiting platform.
His A7 firm has advertised on the same site that it is “creating the future of international settlements, providing timely and guaranteed cross-border payments for Russian companies operating in the global market”.
While it is possible those services could be provided using non-dollar currencies or even crypto or barter without triggering primary US sanctions, they could still provoke secondary sanctions under an executive order issued in late 2023, Kartashkin said.
“The risk for any foreign financial institutions involved is going to be quite high,” he said.
Uploaded by Tham Yek Lee