During the freezing night of 12 December 2022, 291 days after the Russian invasion of Ukraine, Latvian SUV special forces broke into a bank accused of handling stolen state funds from Russia. SUV men armed with submachine guns blasted a hole through the snow-dusted front doors of the bank that 16 years ago wired $2mn, stolen from the social fund of Kyrgyzstan in central Asia, into the HSBC and NatWest bank accounts of Blackpool Football Club.
The chief camera operator of Latvian TV, Ivans Milovs filmed the open doorway and all office lights burning at 43, Kaleju Street in the old Hanseatic German quarter of the capital city.
Ten years earlier, investigators in London and Washington DC working for Global Witness, an international organisation tracing financial links between poverty and government corruption, named the Baltic International Bank as the link between the revival of Blackpool Football Club and the theft of billions of dollars from the state funds of Kyrgyzstan, one of the poorest nations on earth. Just two weeks before the Riga bank raid, Global Witness discovered rail wagon records linking the French oil and gas giant TotalEnergies with the supply of jet fuel to Russian aircraft bases behind the front lines in the Ukraine war.
On 9 December Reuters reported that TotalEnergies had written off their $3.7bn partnership with Russia’s biggest independent gas producer and withdrawn their directors from the board of PAO Novatek in West Siberia.
Back in 2012 Global Witness traced dollars stolen in central Asia, laundered by back-to-back deals in Latvia and transferred into bank accounts in Blackpool that funded the player transfer deals that that took an unfancied club from the most deprived local authority in England out of League One and into the FA Premier League for the 2010–2011 season.
After the bank raid in Riga and the freezing at 6pm on 12 December of all Baltic International Bank (BIB) accounts, credit cards and internet banking, the LETA news agency announced “unconfirmed reports” of armed searches at the homes of the managers of the bank.
The bank was founded in 1993, two years after the collapse of the Soviet Union, by Valeri Belokon, the Latvian-born son of a Russian sailor and a Latvian orphan, who worked as a sports reporter and served in Afghanistan as a front-line sniper in Soviet times. BIB operated boutique private banking in Riga, Moscow, Kyiv and Mayfair in London.
Allegations of money laundering
In Surrey, Belokon owned a house between two golf courses at Wentworth and served as a trustee of Prince Charles’s charity, the Prince’s Foundation for Building Community, between 2010 and 2013.
The Financial and Capital Market Commission in Latvia (FKTK) fined BIB in 2019 for “repeated violations of the provisions of the Law on the Prevention of Laundering the Proceeds from Criminal Activity (Money Laundering) and of Terrorist Financing”. BIB were fined again in August 2022 forfailure to submit accounts on time after Belokon and his brother Vilori had agreed to sell their 59% holding in the bank to Sheikh Hamad Bin Khalifa Bin Mohammed Al Nahyan of Abu Dhabi in the United Arab Emirates, who already owned 8.26%.
FKTK discovered “serious internal governance deficiencies, including the area of the prevention of money laundering and terrorism and proliferation financing”.
Proliferation financing is described by the intergovernmental financial action task force as:
“The provision of funds or financial services used for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical or biological weapons and their means of delivery and related materials.”
FKTK stated, “the bank operates at a loss, is unable to restore profitability, fails to ensure an adequate internal control system and a stable future vision”. They expect to repay €46.7mn from a deposit guarantee fund to 1,257 of the bank’s 1,580 customers, without drawing on the Latvian state budget.
The French connection
On 23 March 2022, France’s highest civil court, the Cour de cassation, rejected an appeal by Belokon against the annulment of an arbitration claim arising from the seizure of his Manas Bank after a 2010 raid by the Kyrgyzstan banking authority. The Paris Cour d’appel had found that $4.2bn in bank transfers from Manas Bank involved no more than 17 accounts, each a non-resident offshore company without any commercial or industrial purpose.
Belokon’s appeal to the Cour de cassation was rejected on the grounds that awarding him $15mn for the seizure of the Manas Bank would “result in Mr Belokon benefitting from the proceeds of criminal activities, violating international public policy in a manifest, effective and concrete manner”. The Paris judgment also noted the creation in Riga on 20 June 2006, of a Latvian company named Maval Aktivi, jointly owned by Belokon and Maksim Bakyiev, son of Kurmanbek Bakyiev, the president of Kyrgyzstan.
From Paris to Blackpool
In October 2006, during a royal visit to Riga, Prince Philip Duke of Edinburgh, expressed surprise when the President of Latvia introduced Belokon to Queen Elizabeth II as “President of Blackpool FC from Latvia”.
Belokon became president of the 119-year-old Lancashire football club after 26 June 2006, when BIB transferred a £1mn loan into the HSBC bank account of Blackpool Football Club [Properties] Ltd in the name of Belokon’s 17-year-old daughter Vlada. BIB wired a further £1.8mn into the club’s NatWest bank account on 4 July 2006, just 14 days after the formation in Riga of Maval Aktivi, the partnership with Bakyiev.
In August 2009 Belokon funded a £500,000 two-year loan deal to bring the Scottish international midfielder Charlie Adam from Rangers in Glasgow to Blackpool. Ten months later he scored the first goal in the richest match in world football, a 3-2 play-off final win for Blackpool, worth £90mn, taking the Lancashire club into the FA Premier League for the 2010–11 season.
When Global Witness examined the accounts of Maval Aktivi in 2012, they calculated that Belokon and Bakyiev had ploughed at least two million US dollars stolen from state funds in Kyrgyzstan into shares in Blackpool Football Club held in the name of Belokon’s firm VB Football Assets.
Bakyiev jailed for life
The Tazabek news service published a photograph of Bakyiev watching a football match at Blackpool after the Belokon investment. He was accompanied by a group of 31 people described as “former citizens of the Soviet Union”.
Two years after Global Witness published their report, Bakyiev was jailed for life, in absentia in Kyrgyzstan, for diverting state funds of $40mn into his personal bank accounts at the time of his investment in Maval Aktivi. Belokon was also sentenced in his absence to 20 years jail for ‘criminal actions expressed in the legalisation and laundering of the proceeds of crime’. The court traced stolen state funds from the Manas Bank in Bishkek to the Kimmel brewery in Riga.
Bakyiev flew into Riga in 2010 after his father, President Kurmanbek Bakyiev, fled to Belarus during the April Revolutionagainst his régimein which 2,000 people died in Kyrgyzstan. In the 32 months Belokon had owned the Manas Bank in Bishkek the total value of transactions amounted to $5.2bn, a sum greater than the annual gross domestic product of all six million inhabitants of Kyrgyzstan, one of the poorest countries on earth.
Later that year Bakyiev arrived in England by private plane to live in Surrey, in a £3.5mn house owned by a Belize offshore company and situated near the Belokon family home at Wentworth. The fugitive Russian billionaire Boris Berezovsky lived four miles away at Sunninghill near Ascot.
After a bodyguard found the body of Berezovsky hanging in a locked bathroom on 23 March 2013, the Financial Times revealed that the biggest creditor against the Berezovsky estate would be the Baltic International Bank in Riga.
A court in Kyrgyzstan found that Belokon took over the Manas Bank in Bishkek with “criminal intention relating to the use of the commercial bank for the laundering and legalisation of the proceeds of crime” appointing in 2006 “the son of the former President of the Kyrgyz Republic K.S. Bakiyev – Maksim Bakiyev – as Deputy Chairman of the Supervisory Board of the Kimmel brewery, and also the co-owner in the investment company Maval Aktivi”.
When Blackpool FC sold Charlie Adam to Liverpool FC in 2011 for a club record of £7.5mn, they wired £731,250 in untaxed transfer dealing profit to the bank account of the Kimmel brewery in Latvia, jointly owned by Bakyiev and his business partner Belokon.
The Organized Crime and Corruption Reporting Project, based in Sarajevo and partly funded by the United States government, reported on 20 November 2011 that Baltic International accounts in Riga were used in one single year to launder $680mn from Moldova and Russia through a phantom company called Tormex:
“Yet Tormex didn’t really exist. It was a phantom. It had no offices, no employees. Its director was a Russian citizen; an unwitting stand-in with no idea there was such a thing as Tormex. What Tormex did own was a bank account at the Baltic International Bank in Riga, Latvia. Who really runs the operation, no one knows, so carefully have they disguised themselves behind layers of dead-end proxies and offshore companies.
“But their goal is boldly clear: launder money and hide assets. It insured that crime profits were hidden behind outward-looking legal import-export operations or consultancy and intermediary agreements. Money that flowed through Tormex has been connected to criminal activities or is simply lost in the maze of offshore companies. It is no coincidence that Tormex’s account was in Latvia, a country with one of the least transparent banking systems in the world. It is recognized as a hotbed for international money laundering.
“OCCRP also found out that Tormex Ltd played a role in laundering the money for a fraudulent scheme that ultimately led to the death of lawyer Sergei Magnitsky, a brave Russian whistleblower. Two companies involved in the Magnitsky case and in the looting of the Russian state budget, Nomirex Ltd and Keronol Ltd, sent almost US$15 million to the Tormex account.”
OCCRP reporters found “scores of companies” moving money from Russia and Moldova into the Tormex account at the Baltic International Bank in Riga before it was laundered into the bank accounts of phantom shell companies.
Belokon defended his activities at the Manas Bank in a question-and-answer exchange with latviannews.lv, published online in December 2012:
“Our bank appeared in Kyrgyzstan after the revolution of 2005. An interesting place, small country, like Latvia, surrounded by big ones, like Uzbekistan, Kazakhstan… The easiest part would be obtaining of a new licence to start operations. Yet in Kyrgyzstan, as in any country, they have their own red tape and their own economy protection methods.
“We did not get a license to open a new bank, yet were offered an opportunity to acquire one of their banks on the verge of failure. There were enough of them. And I acquired a bank, which had already failed. After purchase of its licence I paid out the money to depositors. It was much costlier as compared to a new licence. Afterwards I filled it by hundred per cent with a capital required for a bank of such standings.”
The value of Belokon’s investment in the team and stadium at Bloomfield Road in Blackpool was the subject of a four-year legal battle in Manchester and London between Belokon and the Blackpool estate agent Owen Oyston, owner of most of the remaining shares in the football club.
NEXT WEEK How Belokon lost in the courts of Canada, Kyrgyzstan and France but won £31.5mn from Owen Oyston in the High Court in London.