The pounding on the door begins at about 6 a.m. on a wintry Moscow day in March 2016. Insistent knocking at that hour usually means just one thing: police.
Inside the apartment on tony Kutuzovsky Prospekt, Alexei Kulikov’s partner, Maria Plyushkina, 23, cares for their infant son. She begs Kulikov not to open the door. The 40-year-old banker, stunned by the possibility of arrest, knows better than to consider that option. Ignoring the appeals from the men outside but desperately seeking help, he starts making calls—first to his lawyer, then to any and every friend who might have some pull with law enforcement. It’s all for nothing. He’s alone.
The knocking continues for hours, eventually slowing but never entirely stopping. Around 5 p.m., police wrench the heavy steel door open with a crowbar. A half-dozen tired-looking officers conduct a desultory search of the apartment, plucking a wad of cash from Plyushkina’s purse—“spending money,” she recalls later. The police count every bill they find in the apartment: 2,010,000 rubles ($34,409) and $59,243, according to court records.
The officers take Kulikov, who’d celebrated his birthday just days earlier, to the headquarters of the Investigative Department of the Russian Ministry of the Interior near the Kremlin on suspicion of defrauding a bank in which he owns a stake. Questioned until 4 the next morning, he denies any wrongdoing. Later that day, a judge at Tverskoi District Court in Moscow orders him held without bail.
Kulikov hasn’t been home since. Charged with fraud and embezzlement and facing a 10-year prison sentence, he went on trial in March in the Podolsk City Court, just south of Moscow. The main allegations centered around the alleged looting of 3.3 billion rubles from Promsberbank, a small lender that the Central Bank of Russia had shut down about a year before Kulikov’s arrest.
By Russian standards, it was pretty typical treatment for a businessman in trouble with the law. Kulikov’s arrest got little notice in the local media. He lived large, driving a Mercedes-Benz SLR sports car and hiring stars from Comedy Club, Russia’s hottest TV-comedy show, to perform at a birthday party, says an associate, who spoke on condition of anonymity because of the sensitivity of the case. But he was no oligarch. As for Promsberbank, it looked like just another casualty in regulators’ efforts to clean up the financial sector. Its collapse drew scant attention beyond its home base in the gritty suburb of Podolsk.
A 'Crucial Link' In Money Laundering
Despite appearances, Promsberbank was, according to the central bank, a “crucial link” in one of the biggest money laundering schemes ever exposed in Russia. Kulikov wasn’t charged with laundering funds, but from its unprepossessing office on Kirov Street, his bank helped pump more than $10 billion out of Russia, the regulator says. Promsberbank was a key conduit into a channel that used stock transactions called “mirror trades.” These transactions involved buying shares of Russian blue-chip stocks through local brokers in Moscow for rubles and simultaneously selling them in London for dollars or euros, effectively bypassing regulations to move funds out of the country. Some of the laundering benefited members of President Vladimir Putin’s inner circle, say people familiar with the investigations. Igor Putin, the son of the younger brother of the president’s father, served on Promsberbank’s board of directors before regulators shuttered it.
One of the country’s biggest state banks says wealthy Russians keep three-quarters of their money outside the country
To help avoid detection, the brokers in Moscow made these trades through big Western banks, according to Russian regulators. The bulk of them went through Deutsche Bank AG from 2012 to 2014. Revelations about the mirror trades, first reported by Bloomberg News in 2015, rocked Germany’s largest lender, already battered by legal troubles and fines in the wake of the financial crisis. Deutsche Bank admitted to “systemic” failures in its internal controls, shut down its Russia trading desk, and agreed to pay a total of $630 million in fines to the U.K.’s Financial Conduct Authority and the New York State Department of Financial Services for lax anti-money laundering practices. The U.S. Department of Justice is pursuing a criminal investigation in the case.