The complaint was brought forward by investment fund Hermitage Capital and its founder William Browder who claimed to have evidence proving that Austrian Banks had ignored red flags and have facilitated the entry of financial flows worth US$967 million coming into the country from Russian criminals.
Nearly two-thirds of that sum, or $634 million went through accounts at Raiffeisen Zentralbank, now called Raiffeisen Bank International, according to Hermitage.
The country’s Economic and Corruption Prosecutor’s office, WKStA, has stated in June last year that according to the law there was no reasonable suspicion against Austrian banks, arguing that what the complaint alleged may constitute tax offense in Russia but not a predicate criminal offense for money laundering.
The money Hermitage claimed was laundered may have been linked to the so-called Magnitsky affair - a Russian theft of millions in public funds and a money laundering scheme that was discovered in 2008 by Moscow lawyer Sergei Magnitsky.
The lawyer was hired by Browder who suspected that his Hermitage Capital was misused to facilitate the theft of $230 million of public funds through fraudulent tax refunds.
Magnitsky investigated where the money went and found that the perpetrators had allegedly set up a complex network of fake companies that transferred the stolen millions from one to the other using accounts in different banks until they parked some of it in real estate in the West.
He reported his findings to the authorities but was immediately arrested and died in jail a year later, allegedly due to mistreatment.
Since Magnitsky’s controversial death, Browder has worked on bringing the corrupt scheme to light.
He filed criminal complaints in several countries, prompting investigations in many of them. But not in Austria.
The profil article highlights a continued mystery as to why Austrian authorities have not followed similar action.
In a written statement sent to profil, the WKStA reaffirmed its position from last summer not to investigate the Hermitage allegations.
However, the issue does not seem to be completely ignored. The new Austrian government that took office at the beginning of this year is planning to offer money laundering training to its judicial staff.
The Austrian judiciary sees the case as alleged tax offenses committed in Russia but that does not constitute a predicate criminal offense for money laundering, at least not in the case of most of the reported transactions, the WKStA explained in June.
The lack of reasonable suspicion refers also to the owners of the bank accounts, it said.
One of the owners of such accounts is Krešimir Filipović from Croatia, who is among several recipients of funds transferred from an offshore company called Mayco Finance Holdings, Oštro.si revealed in cooperation with the Organized Crime and Corruption Reporting Project, OCCRP.
The company moved a total of US$246 million between 2006 and 2010, about evenly split between incoming and outgoing funds and has made payments to itself in the staggering amount of $1.5 billion, transferring the funds between two of its bank accounts.
The origins and destinations of most of these transfers are unknown.
Leaked documents show that Filipović signed in 2009 a contract to sell two Zagreb apartments to Mayco for 1.97 million euros ($2.5 million) in what appears to be a fictitious deal. More money was sent to Filipović’s Austrian bank account than specified in the contract, while Mayco never took possession of the properties.
Another Croatian citizen, Siniša Cizel, received from Mayco nearly 5.7 million euros ($7.9 million) for the sale of a Zagreb villa which never took place and the issuance of a loan which appears never to have been repaid.
In response to inquiries by profil, WKStA stated that thus far, nothing has changed regarding its legal assessment of the reported money laundering.
A previous OCCRP investigation has demonstrated the bank’s complicity in the multi-billion dollar laundering operation, where Austrian banks served as a point of entry for money being laundered into the Eurozone.
