U.S. Investigation into VTB: What to Expect in Armenia

  • Politics - 09 November 2017, 21:54
“The U.S. Justice Department and Federal Bureau of Investigation are investigating three international banks for their roles in selling about $2 billion of debt for Mozambique, opening a new phase in the global inquiry into the bond deals, people familiar with the matter said,” The Wall Street Journal writes. The three banks are Credit Swisse Group, BNP Paribas, a French bank, and VTB, a Russian bank.

The U.S. authorities want to find out if these banks are anyhow related to providing illegal money to Mozambique officials for public debt. According to the American newspaper, the U.S. law enforcement agencies have already met with the investors who bought public bonds of Mozambique. They were asked to submit all documents related to the three banks. The representatives of the banks, as the website of the Russian Dozhd TV informed, refused to comment on the situation.

Dozhd also recalls that in June 2016 The Wall Street Journal reported that the British authorities started investigating the Russian VTB and Credit Suisse Group with regard to Mozambique public debt.

IMF Africa Director Antoinette Sayeh, the Suisse bank and VTB issued bonds worth 850 billion dollars for Mozambique’s public fishing company. Besides, in March 2016 the banks exchanged the bonds with Mozambique sovereign bonds with a longer payment period.   

In fact, the American law enforcement agencies targeting the Russian VTB may end up in sanctions against the bank if the American law enforcement agencies prove the relationship of this bank to illegal payments to Mozambique officials. Armenia should watch out for possible sanctions against this ban because the Russian VTB is the owner of 100% of shares of VTB Armenia.

Therefore, the question is about potential risks for the Armenian subsidiary which may cause trouble for the financial system of Armenia. In this respect, it is worth recalling the communique of the Armenian Central Bank on the scandal about the shares of the Azerbaijani state oil and gas company in VTB. The scandal was in 2014 when it became known that Azerbaijan owns 2.95% of shares of the Russian VTB.

“We would like to note that the legislation of the Republic of Armenia allows deeper scrutiny and revelation of financial and loan organizations, including the real stakeholders of the banks, including the last individual than the international standards allow for,” the Central Bank announced, noting that according to the Armenian legislation Azerbaijan having 3% of shares of VTB cannot have a defining importance in the governance of VTB Armenia.

The history of the Azerbaijani share in VTB became part of another scandal. The editor of the Analytic website Ani Hovhannisyan was arrested and sentenced to prison after Member of Parliament Tigran Urikhanyan sued her for embezzlement. Hovhannisyan’s advocate announced that she is persecuted for writing about the Azerbaijani share in VTB.

By the way, Ani Hovhannisyan has recently been set free after serving her sentence. Hovhannisyan was convicted in 2016.