Russian Oligarch's Billions Hidden Through Cyprus Law Firm as UK Courts Freeze £1.34 Billion in Assets

Georgy Bedzhamov, a fugitive Russian banker wanted for embezzling billions from Vneshprombank, utilized a sophisticated network of European professional enablers to hide stolen assets while evading justice, according to investigations based on the Pandora Papers and UK court documents.

The former co-owner of Russia's Vneshprombank employed the prominent Cypriot law firm Demetrios A. Demetriades LLC (Dadlaw) to create an intricate web of shell companies and trusts designed to obscure ownership of assets worth hundreds of millions of dollars. This cross-border financial maneuvering has enabled Bedzhamov to maintain access to luxury properties and substantial monthly allowances while living under an asset freeze in London.

The Vneshprombank Scandal

Bedzhamov and his sister Larisa Markus orchestrated what Russian authorities describe as one of the country's largest banking frauds. Between 2011 and 2015, they "developed a plan" to attract large depositors to Vneshprombank "in order to fill the Bank with cash and create the possibility of committing theft," according to Russian court documents.

Markus was arrested in December 2015 and later pled guilty to embezzling $1.8 billion from the bank, receiving a nine-year prison sentence. The Central Bank of Russia revoked Vneshprombank's banking license in January 2016 after discovering a shortfall of 187.4 billion rubles ($2.3 billion), later rising to 218 billion rubles (around $3 billion).

Among the affected depositors were VIP clients including family members of Russian government officials, ministries, state-owned corporations, and the Russian Orthodox Church, who entrusted the bank with tens of billions of rubles.

Cyprus Connection and Asset Hiding

Bedzhamov fled Russia in December 2015, shortly before his sister's arrest. From abroad, he worked with Dadlaw to execute backdated transactions and create layered corporate structures designed to frustrate asset recovery efforts.

The Pandora Papers reveal that Dadlaw helped Bedzhamov and Markus backdate the transfer of Stanferme Asset Management Inc, a British Virgin Islands company. Markus instructed the transfer on December 28, 2015 - nine days after her arrest. However, Bedzhamov only accepted the shares 13 months later, specifically requesting that "this transaction must be recorded with effect from 2nd November 2015".

"Often, backdated transactions are needed to confirm the legal ownership of a company or asset on a specific date," explained Ilya Shumanov, director of Transparency International in Russia. "An attempt to confirm the transfer of the company's shares retroactively looks like a pre-agreed action by the parties in order not to lose control over the assets".

Complex Money Laundering Schemes

Documents show how Bedzhamov moved over $50 million through convoluted loan arrangements during the height of the Vneshprombank embezzlement. The scheme involved Felarco Management Limited, a Cypriot company that served as a conduit, receiving large sums from obscure UK limited liability partnerships and immediately transferring identical amounts to Bedzhamov.

These arrangements featured suspicious characteristics including:

• Vaguely formulated repayment terms
• Unclear loan periods
• Misspellings of parties' names in official documents
• Zero-interest or non-standard financing arrangements

"Often loans without a clearly defined repayment period and not requiring repayment, which are carried out by one person, but are actually made in the interests of another person — these are transactions that have signs of money laundering," Shumanov noted.

Lakshmi Kumar, Policy Director at Global Financial Integrity, explained that such complex arrangements "make money move between multiple jurisdictions, making it harder to connect dots and establish a forensic trail" and "create a veneer of legitimacy".

UK Asset Freeze and Ongoing Litigation

The UK High Court has imposed a worldwide freezing order on Bedzhamov's assets worth £1.34 billion, including a sprawling London mansion. Despite this freeze, the court increased his monthly allowance in 2019 to £120,000 (around $160,000) to cover subsistence, rent, personal security, and other expenses.

In a May 2024 judgment, UK courts examined whether A1 LLC, the litigation funder pursuing Bedzhamov's assets, is controlled by sanctioned Russian oligarchs including Mikhail Fridman, German Khan, and Alexey Kuzmichev. The court found "reasonable cause to suspect" that despite purported sales to non-sanctioned individuals, the oligarchs retain control through nominee arrangements.

The judgment highlighted suspicious aspects of asset transfers, including a sale price of just €714 for A1 LLC despite the company's involvement in pursuing over $1 billion in claims, and financial documentation that failed to account for obvious assets.

Wider Implications

The Bedzhamov case exemplifies how Cyprus has become a critical node in international money laundering networks. Dadlaw continued servicing the siblings until summer 2019, "long after evidence of Bedzhamov and Markus's central involvement in the Vneshprombank scandal had become public knowledge".

The firm only dropped Bedzhamov as a client after the London court imposed the worldwide freezing order. By April 2021, all companies linked to the siblings had been struck from the Cyprus corporate registry.

This case underscores the urgent need for stronger oversight of professional service providers who enable kleptocrats to hide stolen wealth. While Bedzhamov lives comfortably in London under asset freeze, the victims of Vneshprombank's collapse—including pensioners, religious institutions, and state entities—continue seeking recovery of billions in stolen funds.

Russian authorities persist in their global hunt for hidden assets, even deploying mobile billboards around London's Knightsbridge district asking residents for information about Bedzhamov and his sister's wealth. As the case demonstrates, the international financial system's vulnerabilities continue to provide safe havens for illicit wealth, frustrating justice and perpetuating harm to victims worldwide.

Sources:
[1] Organized Crime and Corruption Reporting Project (OCCRP). "Fugitive Russian Banker Used Cypriot Law Firm to Hide Assets, Move Money." Retrieved 2024-05-24.
[2] Judiciary of England and Wales. "Vneshprombank v Bedzhamov Judgement." [2024] EWHC 1048 (Ch). Retrieved 2024-05-24.