Russian and Ukrainian Oligarchs: Finding and Seizing Their REAL Assets

Russian oligarchs’s $300 million yacht seized by Fiji on behalf of U.S.” blared the headline in the Washington Post. “Germany seizes world’s largest yacht because of its ties to Russian oligarch” blared another in

Superyacht Dilbar, worth $735 million. Seizure of these yachts is just chump change compared to the real assets of the oligarchs.

USA Today. Other articles outline the seizure of Russian oligarchs’ luxury villas in such exotic places as Sardinia, where eight such villas have been seized.

The stories are many, but how serious is this seizure of Russian oligarchs’ assets in reality? Understanding of this question requires an understanding of the whole money laundering industry. For that, a good place to start is Casey Michel’s book American Kleptocracy, with emphasis on “American”. (Unless otherwise noted, quotes and statistics in this article come from Michel’s book.) That’s because, according to Michel, the US is “the largest provider of money laundering and financial secrecy services in the world…. The United States has refined the product [of shell companies] into an art, making it more efficient and more accessible than anywhere else” in the world.” And why shouldn’t it be since the dollar is the most secure currency in the world and the US market – especially the real estate market – is the most massive?

Money laundering got a huge boost with the collapse of the old Soviet Union and the theft of the state-owned industries by the former Soviet bureaucrats. As the newly capitalist Russian economy sank into the mire, these newly minted capitalists needed a safe haven for their ill-gotten gains. What better place than the capitalist country that was so integral in the Russian return to capitalism – the United States?

Structure of US Government
The federal structure of the US form of government has assisted the money laundering operations here. Under this structure, each state has a high degree of autonomy, and among other things companies incorporate through state governments, not the federal government. Once incorporated in, say, Delaware or South Dakota, a corporation can operate anywhere in the country. Just as individual countries compete for international investment by cutting wages and business regulations, so do the individual states in the U.S. So they all compete to get the fees involved when a company incorporates in their state. One form of such competition is facilitating the establishment of “shell companies”, often in the form of “Limited Liability Corporations” (LLC’s). These are corporations whose actual owners are hidden – a perfect set-up for money laundering.

For a long time, Delaware – the home state of President Biden – was in the undisputed lead. Delaware lieutenant governor S. B. Woo went on a recruitment tour of China in 2005, in which he advertised to Chinese capitalists: “In the event of an emergency in your home country… your company can temporarily or permanently move its domicile and be protected by the laws of the State of Delaware.” By 2020, nearly one quarter of a million new corporations per year were registering in Delaware and state revenue from this totaled $1.5 billion in that year.

South Dakota (top) and Nevada (bottom). These idyllic-looking states are giving Delaware a run for its money as far as being centers of money laundering.

Not to be outdone, other states saw a good thing and passed new laws facilitating the establishment of shell companies in their states. It was a sort of race to the bottom. In Nevada, an agent can set up a mobile home at some crossroad in the middle of nowhere and with access to the internet register hundreds of shell companies. A South Dakota journalist wrote “forget about Switzerland; South Dakota is actually one of the best places in the world for the wealthy to stash their cash in secret.” In the early years of the second decade of this century, nearly $1 trillion – not billion, trillion – of shell company money flooded into that state alone.

Now think about how much must go to the US in total.

Money Laundering
Clearly, the purchase of a few piddling little $100 million yachts is just a minor expense for these people, similar to an average worker going to the movies with their family. It’s just chump change. The real money is in the bank accounts and the purchase of real estate by, especially the latter, accomplished through money laundering through these shell companies.

Donald Trump
One major facilitator of laundering the ill gotten gains of the Russian oligarchs was none other than Donald Trump, as oaklandsocialist has repeatedly reported. The capitalist media and their politicians, Republican and Democrat alike, have been extremely reluctant report on this because money laundering is absolutely rampant in the US, especially in the real estate industry. (The socialist left has been even more reluctant to report on this, probably because they are terrified of being called pro-Democrat!) Despite the reluctance of the capitalist media, a few articles have come out. Here is a list of them. One of the most thorough is a memorandum co-authored by former federal prosecutor, Dennis Aftergut. Entitled “The Trump Organization – a Racketeering Enterprise?”, it explains that “(B)eyond… [the] hallmarks of criminality, Trump’s enterprises bear in common another, striking characteristic: Russians play a predominant role. Some of these Russians had links to Vladimir Putin. Trump’s involvement with Russians goes back decades.”

The memo examines both Trump’s gambling operations and his real estate investments. In both cases, he violated the few federal laws that supposedly regulate both real estate and gambling for the purpose of preventing money laundering. Trump flagrantly violated these laws in his gambling operations. As far as real estate investments, the memo explains the role of such Russian oligarchs as David Bogatin, who bought multiple units in Trump Tower for $6 million cash. (Cash payments for real estate is almost always a sign of money laundering.) It explains the links between such oligarch gangsters (is there a difference?) as Vyachelsav Ivankov and Dmitry Ryboloviev to Trump. (In the latter case, Trump sold a property in Florida at a massively inflated price and Ryboloviev then sold it at a huge loss, but it didn’t matter. He’d laundered his money in the meanwhile. Michel says that nearly one quarter of the purchases of condo units in Trump Tower fit the money laundering profile. The overwhelming majority of these purchasers were Russian oligarchs.

Trump’s money laundering operations have spanned the globe, from Toronto to Panama to Azerbaijan. For the purposes of this article, however, the point is that the Russian oligarchs have invested billions of dollars in real estate in the United States, and these form the real assets that should be seized.

Ihor Kolomoisky: A Ukrainian Oligarch
But it is not only the Russian oligarchs who should be made to pay; how about the Ukrainian oligarchs? Shouldn’t they have to pay for their country’s war for independence?

A poster child for the Ukrainian oligarchs is Ihor Kolomoisky. As in the

Ihor Kolomoisky
Why is this man laughing?

former Soviet Union, what happened was that those in Ukraine with the right connections bought up former state owned industries at a song and made out like bandits. In Kolomoisky’s case, he gained control over much of the former state owned manufacturing industry. From there, he branched out into oil, natural gas and media outlets. From there, Kolomoisky went on to bigger and better things, including what was the biggest ponzi scheme in world history when he established Ukraine’s Privatbank in the first decade of this century. Through the payment of high interest rates, Privatbank became the biggest bank in Ukraine, winning 40% of all retail deposits in the country’s industry. What Kolomoisky did was make fake loans which he and a few associates pocketed. It was embezzlement, really. He had to continually win ever more depositers to cover the theft. According to American Kleptocracy, one analysis showed that 99% of the bank’s loans were fake. As must all ponzi schemes, Privatbank eventually went under, leaving the depositers holding the bag. The losses were so widespread that the Ukrainian government was forced to step in, shelling out $5.5 billion to cover the depositors’ losses. (In other words, that one scheme of one individual was worth at least 55 $100 million yachts!)

Kolomoisky Real Estate Purcheses in US
This is where US asset seizure comes in, because Kolomoisky laundered many millions through US real estate investments. Many of his purchases were industrial property such as a steel mill in Ohio, for which he obtained loans for upgrades he never carried out, meaning he simply pocketed the money. He purchased a Motorola plant in Harvard, Illinois which he then sold to a Chinese money launderer names Xiao Hua Gong.

So, one must ask: If the Russian oligarchs should be made to pay for the war in Ukraine, why not the Ukrainian oligarchs like Kolomoisky? He and similar types stole billions of dollars from the Ukrainian people, meaning from Ukraine as a whole, and then laundered that money through investments around the world, mainly in the United States. Their assets should be seized too.

Why has it remained untouched?

Money Laundering Part and Parcel of US and Global Capitalism
Money laundering of these and other gangster oligarchs has become completely integrated into the banking system around the world. In the US, major banks like Citibank and Mellon Bank helped launder this money through turning a blind eye. In fact, the Number One bank in Washington DC, Riggs Bank. Michel describes Riggs as being that city’s “most venerable bank. It catered to embassies in the capital, but had to close down because of its role in laundering the ill gotten gains of another gangster oligarch, Teodorin Obiang, playboy son of the dictator of Equatorial Guinea, Teodoro Obiang. (The whole issue of shell companies and money laundering should also be considered regarding the poverty, corruption and oppression in Africa!)

There are laws requiring “due diligence” of banks when they accept major new accounts, but these laws are loose, enforcement agencies are both underfunded and corrupt (enforcers are offered high paying positions at the companies they are supposed to investigate) and those responsible – the bank executives – almost never serve time even when the laws are proven to have been broken.

These oligarchs/money launderers are not only thoroughly integrated into the US banking system, they are also an integral part of the corrupt and degenerate social world of US capitalist high society, partly through philanthropic donations. According to Michel, Russian and Ukrainian oligarchs have donated up to $435 million to institutions like George Washington and Cornell Universities, New York’s Museum of Modern Art, Lincoln Center, Carnegie Hall, and the Guggenheim Museum and even to think tanks like the Atlantic Council and the Council on Foreign Relations. They are recognized by high society through such awards as the Woodrow Wilson Award for Public Service, and by their donations which was given to Russian oligarch Viktor Vekselberg in 2018.

It is because of their thorough integration into the real estate, banking and social world of the US capitalism that the real assets of these oligarchs remains largely unmentioned and untouched. In 2021, Biden and the Democrats pushed through the National Defense Authorization Act, which among other things supposedly bans anonymous shell companies. But the owners must only be revealed to the feds, so there is no way to check up on it. Futhermore, previous such acts exempted certain industries, the most important of which is the real estate industry. That is the very industry in which money laundering is most rampant! That exemption remains. So the act is really a fraud.

Sale of Assets and Distribution of Their Wealth
But it is not only a matter of seizing those assets; it is also a question of using them to pay for the war and the rebuilding of Ukraine, and there’s the rub. Under previous laws, in the rare instance where illegally obtained assets were seized, they had to be turned over to the government of the country from which the money was stolen. That would mean in this case that the Russian oligarchs’ assets would be turned over to… Putin. Fat lot of good that would do!

In April, an attempt was made to pass a bill enabling the federal government to sell the few seized assets of the Russian oligarchs and send the money to Ukraine. That bill was passed simply as an advisory measure. (Interestingly, liberal Democratic Representatives Ocasio Cortez and Tlaib joined some far right Republicans in voting “no” on it.)

Corporate War Profiteers
There is another important aspect of who should pay for this war and for the rebuilding of Ukraine: The corporate war profiteers, first and foremost the oil industry. Partly due to the war and the cutting off of Russian gas and oil supplies, oil profites have skyrocketed.

According to “Time” Magazine, “Oil prices started to creep up in late 2021 due to supply constraints, but then turbocharged after Russia invaded Ukraine in February. For Chevron, the upshot was $6.3 billion in profits last quarter, up from $1.4 billion a year ago. For Exxon Mobil, profits more than doubled in the same period, to $5.5 billion.” Similar figures apply to European firms, even including the French Total, which has large investments in Russian oil fields.

The arms industry hasn’t seen such a profit surge yet. That’s because so far the US, for example, is mainly drawing down on its reserves of such armaments as Javelin missiles and hasn’t started purchasing new ones yet. Once it does, and production ramps up, you can be sure that that industry’s profits will surge also. They, too, should be made to pay for this war.
Programmatic conclusion
Today, according to polls 76% of Americans believe that the US should continue to support Ukraine in the war and 67% support increasing economic sanctions on Russia. This is despite the fact that the American working class is being made to pay for it. Socialists who genuinely support Ukraine (as opposed to those who condemn the invasion out of one side of their mouths and blame Ukraine out of the other) should link up with this sentiment and carry it further. We should campaign to:

  • Open the books. Expose the true owners of all shell companies.
  • Seize/expropriate and sell the full assets of all Russian and Ukrainian oligarchs with the money to go to pay for Ukraine’s fight against the invasion as well as to rebuild Ukraine.
  • Seize/expropriate the wealth of the war profiteers, first and foremost the oil companies, with the wealth used for the same purpose as well as to repay the working class, which has had to pay for this war through its taxes.
  • Add these demands to the demand to cancel Ukraine’s foreign debt.

There is not the slightest chance that the Republicans or the Democrats will even start down this road. So the building of a working class party with socialist principles should be an integral part of such a campaign. To those who say this is a difficult and longer term project we say: There is no time like the present to start.

Superyacht Dilbar, worth $735 million. Seizure of these yachts is just chump change compared to the real assets of the oligarchs.

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