It was a typical Monday evening at Zaventem airport in Brussels when a queue of passengers arriving on a flight from Kiev was halted abruptly as an immigration official pored over the passport of a female traveller. As assistance from Belgium’s national border guards was summoned, the woman was told that her name had been logged with an entry ban in the Schengen Information System (SIS) by the Polish government, meaning she was barred from travelling in the EU.
The subsequent deportation of Lyudmyla Kozlovska in August last year was the first ripple in what has become a tidal wave of allegations and counter- allegations involving dirty money, offshore bank accounts, shell companies and fake news.
Among claims highlighted by The Sunday Times today is that Scottish companies were used to launder cash through a non-governmental organisation run by Kozlovska, to fund a secret lobbying campaign on behalf of two criminal eastern European oligarchs.
Veaceslav Platon, a Moldovan businessman, was jailed in 2017 for money-laundering and fraud linked to the disappearance of $1bn (£770m) from Moldova’s banking system a few years earlier. The missing money caused a political crisis in Moldova, one of Europe’s poorest countries, which is squeezed between Ukraine and EU member state Romania.
There are claims that Platon has funded Kozlovska, a former student at the University of Wales in Bangor, and Warsaw’s Open Dialogue Foundation (ODF), which claims to promote human rights and the rule of law in Russia and its former Soviet satellite republics.
The Moldovan parliament suggests that another important source of funding for the foundation is Kazakh oligarch Mukhtar Ablyazov, the subject of the biggest fraud case ever heard in the British High Court.
Ablyazov went on the run in 2012 after being accused of stealing up to £4bn from the BTA Bank, of which he was chairman. Backed by Royal Bank of Scotland, BTA had to be bailed out by Kazakh taxpayers after its collapse in 2008.
The human rights activist
Despite the travel ban, Kozlovska hosted a series of lectures and events in several EU countries, including Britain, where she was invited to address a gathering at the House of Commons.
She is an accredited lobbyist at the European parliament. A written declaration by the Council of Europe’s parliamentary assembly, condemning a “defamation campaign” against her, was signed by parliamentarians from across the EU, including Lord Foulkes, the Labour peer, and SNP MP Tommy Sheppard.
Last month Kozlovska was granted a five-year residence card for Belgium, after a campaign involving Guy Verhofstadt, the chief Brexit representative for the European parliament, and British Labour MEPs Julie Ward and Clare Moody.
The ODF, meanwhile, has received financial support from several other organisations including the Council of Europe, the Atlantic Council and Cambridge University’s Slavonic studies department.
A commission of inquiry by the Moldovan parliament, published last November, concluded that Kozlovska and her NGO were “involved in subversive activities directed against the institutions of the Republic of Moldova, which are funded and orchestrated by special services that are hostile to the state”.
Its report alleged Kozlovska and the ODF had been funded from transactions with Russian military companies banned from trading in America and the EU under international sanctions, as well as from “the supply of military equipment to states involved in regional conflicts”. Payments also came from offshore areas of “dubious unknown routes and origins” and from “Laundromat” money-laundering schemes, it said.
The report added: “The sophisticated mechanism through which the ODF is funded bears all the hallmarks of a money-laundering scheme and indicates practices involving financial intelligence which only the special services employ.
“In reality, the ODF and Lyudmyla Kozlovska are a vehicle for lobbying and influencing various international institutions and for protecting and furthering the interests of certain persons with a dubious past, usually with considerable wealth originating from fraud and money laundering, contrary to the law.”
The report accuses the ODF and Kozlovska of having “relationships with and obligations towards a agents of the intelligence services of the Russian Federation and are dependent on them . . . making them a tool for soft power intervention which is used by the special services of the Russian Federation in the hybrid war that has begun to be waged against states regarded by it as enemies of the geopolitical interests of the Russian Federation in Eastern Europe”.
Supporters of the ODF counter that Moldova is ruled by oligarch Vladimir Plahotniuc, the leader of a West-leaning party that dominates parliament and government, effectively controlling the country with little separation of powers. Last year the European parliament declared Moldova “a state captured by oligarchic interests”.
Amid the ideological knockabout and “he said, she said” of pro- and anti-EU voices, the search for the real Kozlovska has proved elusive. Is this fresh-faced activist a blameless pawn or an active combatant in a hybrid war being waged between Russia and the West?
The Scottish connection
Montgomery Street, in the centre of Edinburgh is a magnet for affluent young professionals seeking a foot on the city’s property ladder. In this quiet, residential row of Victorian tenement closes, adorned with decorative art nouveau ceramics, No 78 looks oddly out of place.
The garden is just big enough to fit a couple of rusty motorbikes and an old telephone box, lying on its side. What sets this property apart is that it’s also the centre of a controversy over an alleged multimillion-pound money laundering operation.
Companies registered at this, and another, address in Edinburgh are accused of laundering more than £26m, some of which was used to pay funds into a company run by Kozlovska’s husband, Bartosz Kramek, which paid donations into the ODF, according to Poland’s National Revenue Administration.
The Moldovan parliament report claims payments for fictitious contracts were paid through the Scottish companies to finance the activities of Kozlovska’s organisation which it says, lobbied “for the interests of Veaceslav Platon . . . in exchange for funding received from him through offshore companies” previously linked to the Russian Laundromat and Moldovan banking scandals.
In 2017, Platon was convicted of embezzling $42m in a banking fraud, known in Moldova as the “theft of the century”, when the equivalent of one- eighth of the country’s GDP was stolen from three of its largest banks between 2012 and 2014.
Platon is also suspected of involvement in a money-laundering operation that funnelled about $22bn of Russian money through the Moldovan financial system between 2011 and 2014 as part of the Russian Laundromat. He denies any wrongdoing.
Payments to the ODF were allegedly made through a complex web of offshore entities registered as Scottish limited partnerships, businesses that, under an obscure reserved corporate law, are permitted to operate without paying taxes, publishing accounts or declaring publicly who owns them.
One of the companies, Kariastra Project, was registered in February 2013 at a virtual office in Bath Street, Glasgow.
Its principal place of business was listed as 78 Montgomery Street, Edinburgh, which is home to a prolific number of Scottish tax-haven firms. There is no suggestion that anyone at either address knew about the activities of the company.
Among its offshore partners, listed in registration documents, are Lausanne Group SA and Sion Holding SA, both owners of Avenilla Commercial, named in a report by US investigators into allegations of corruption in Moldova.
The Moldovan parliament report said: “There are reasonable suspicions that Kariastra Project was involved in money-laundering activities. Through the account held at AS PrivatBank (Latvia) by Kariastra Project, banking transactions worth a total of €5,228,024 and $27,764,388 took place with different companies registered in offshore regions, based on fictitious contracts for the sale and purchase of goods and machinery.”
According to the report, Kariastra Project paid Kramek’s company, Silk Road Bureau of Analysis and Information, which shares the same office as the ODF, a total of £720,378 (made up of $852,828 and €64,785) for computer and IT services in 2014 and 2015.
Silk Road is said to have been paid a further £348,203 ($448,465) by Stoppard Consulting in Edinburgh, for “consulting services” between 2014 and 2016.
The company, registered at a virtual office at Duke Street, Edinburgh, was incorporated in 2010 via offshore companies based in the Seychelles. It is affiliated to companies owned by Platon, including Harwood United, Harrogate Consulting, Rosslyn Trade, Winston Associates (Seychelles), Carberry Investment (Seychelles), Erin Group Corp (Belize) and Maytree Overseas SA (Panama), which was involved in the Panama Papers.
Described as a trader in cork, it had no website, phone number or any publicly available evidence of its commercial activities before being struck off in 2017. There is no suggestion anyone at its Edinburgh address was aware of its activities.
The report said: “The organisation Silk Road Biuro Analiz i Informacji is the recipient of multiple suspicious transfers originating from companies which are among the main recipients of funds stolen from financial institutions in the Republic of Moldova. Between 2014 and 2017, B Kramek, the husband of Lyudmyla Kozlovska, received transfers to the value of $1.2m and €60,000 from an offshore company registered in Scotland, Stoppard, through Silk Road Biuro Analiz i Informacji.”
It added: “The basic sources of the ODF’s funding, which have not been declared publicly and transparently, were channelled temporarily through the bank accounts of the Silk Road Biuro Analiz i Informacji organisation.”
The criminal oligarchs
After Platon’s arrest, the ODF allegedly paid for members of his family and entourage to fly from Bucharest to Warsaw. Airline tickets, obtained by Moldovan investigators, were booked by Rafal Matouszek, the foundation’s logistics co-ordinator, on behalf of Platon’s lawyer, Ana Ursachi.
Four days later the foundation appears to have bought flights for Platon’s sons, Artiom and Egor, from Odessa to St Petersburg, and the following week it apparently paid for Ursachi’s father, Constantin, to travel from Odessa to St Petersburg, after Moldovan authorities raided an apartment in which her father and son were staying. Her computer and tablets were seized during the search.
Documents also suggest the ODF paid for Platon’s solicitor Eduard Rudenco and Alexei Tulbure, whom it describes as a “diplomat”, to fly from Chisinau in Moldova to Frankfurt. The following month Kozlovska launched a campaign to lobby the EU to restrict financial assistance to Moldova.
The Moldovan parliament report said: “The ODF made Veaceslav Platon a central focus of its activities in an attempt to portray him as a victim and gain support from the international community on the pretext of ‘persecution’ of a political opponent of the government who was taking refuge in Ukraine.”
According to the report, Ukranian-born Kozlovska met Ablyazov in Kiev in their student days and during the Orange revolution of 2004. He disappeared in 2012, after being convicted by London’s High Court of contempt of court. In 2016, a string of luxury London properties owned by him, worth £11m, were auctioned after being seized through the High Court.
The report said: “The ODF positioned itself from the outset as an advocate for the oligarch and spared no time, money or effort in lobbying, in the public domain and also before European institutions, in order to peddle the myth that Ablyazov is not a criminal, fraudster and thief who has stolen billions, but a dissident persecuted by the leaderships of Ukraine, Kazakhstan and Russia, which have issued international warrants for his arrest.”
Martin Mycielski, director of public affairs for the Open Dialogue Foundation, dismissed all of the allegations in the report which, he said, was hastily produced within weeks without proper investigation by a special parliamentary committee, created at the request of the head of Moldova’s ruling PDM party before parliamentary elections to discredit the pro-EU opposition ACUM bloc.
The organisation, Mycielski said, represented Platon as part of its advocacy work for a period of three to four months.
“Independently of his biography or any crimes he might have committed, his case warranted concern, as he had been extradited from Ukraine with disregard for the rule of law or due process, having unlawfully stripped of his Ukrainian citizenship and being deported overnight to Moldova.”
Mycielski added: “It’s very likely that ODF paid for flights for Platon’s family during the period that we advocated for his case, just as we do regularly for family members of other victims of political persecution, when we invite them to speak at our events or help us raise awareness of human rights violations.”
Regarding the Scottish companies named in the report, Mycielski said: “For obvious confidentiality reasons, the company [Silk Road] does not comment on past or current clients. Having said that, ODF has never received any funds from any Scotland-based company.
“ODF is an international NGO with over 10 years of documented history in human rights and rule of law defence in numerous countries [in Moldova, since only 2016]. It does not, and never did, ‘launder cash’ nor provide ‘secret lobbying campaigns’.
“Our body of work speaks for itself. The advocacy work we do is never directed by anyone’s interest or paid for by anyone. The only motivation for our work are the principles or respect for human rights, rule of law and democracy, or the generally understood European values.”
Back at 78 Montgomery Street, John Hein, who lives there, said he knew nothing about Kariastra Project’s activities. Hein previously ran a company formation agency, which he closed in 2016 following a series of visits by police investigating alleged illegal activities by some limited partnerships.
“Unfortunately for us, while the bulk of limited partnerships relocated their registered offices to other addresses, a number failed to do so and have, in effect, been abandoned at our address. Kariastra Project . . . did actually change its registered office in 2015,” he said.
Meanwhile, the political clamour for legislative change to close the loopholes that allow Scottish limited partnerships to flourish is continuing. https://www.thetimes.co.uk/edition/scotland/an-edinburgh-flat-a-human-rights-activist-and-the-oligarchs-dirty-money-vzs9htpnt#