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. Last Updated: 07/27/2016

Swiss Aggressively Investigate Berezovsky Firms

GENEVA -- In the Swiss investigation of possible Russian money laundering, the authorities have moved aggressively against two Swiss companies that worked for the Russian airline Aeroflot, where the powerful Moscow financier Boris Berezovsky had wielded considerable influence.

This summer, Swiss prosecutors raided the offices and froze the bank accounts of Andava SA and Forus Services SA, two Lausanne companies that provided Aeroflot with cash management, loans and other financial services. Investors in both companies included Berezovsky.

In a 13-page letter to the Swiss, Russian investigators said they believe that the companies may have been used by members of Russia's political and business elite, including Berezovsky, to steal hundreds of millions of dollars.

The Russian investigators said they suspect that $200 million paid to Aeroflot by foreign airlines for the use of Russian air space appeared to have been funneled illegally into Andava's Swiss bank accounts, a violation of foreign exchange rules. To manage this, they wrote, Berezovsky had formed a "criminal group."

Officials at both companies deny any wrongdoing, arguing that they are the victims in a Russian political drive to get Berezovsky, and through him President Boris Yeltsin, his political patron. Berezovsky has repeatedly denied the accusations and said the companies performed legitimate business services for the airline.

"Mr. Berezovsky has not only friends, but quite a number of enemies," William Ferrero, the general manager of Andava, said.

People familiar with the investigation say it may never be possible to prove a crime. But they want to know who owned the two Swiss companies, how Russian money may have flowed through them and the ultimate destination of the fees and dividends the companies paid their investors.

Since the Swiss police raids in July, Ferrero and his counterpart at Forus, Rene Kuppers, said their businesses, which employ six to eight people, have dried up.

According to Ferrero, Andava was formed in 1994 as a joint venture by a respected Swiss commodities trading group, Andre & Cie., and Russian business executives.

Ferrero would not identify the Russian investors, but people familiar with the matter said they appear to have been led by Berezovsky through a Russian company called Logovaz, which Berezovsky has used to develop interests in businesses from oil and automobile distribution to the news media. Yves Cuendet, secretary general of Andre & Cie., said the original idea was for Andava to arrange Western financing for Russian companies. By 1996, however, Andre concluded that Andava was venturing into other businesses, and it decided to withdraw, he said.

Ultimately, Andava embraced a bold plan devised by Ferrero, who before joining the company helped manage financing in Switzerland for the Swedish automotive group Volvo AB. His idea was to provide similar cash management services to Russian corporations.

Andava approached Aeroflot, Ferrero said, and the idea was warmly embraced by Aeroflot's chief financial officer at the time, Nikolai Glushkov, a close associate of Berezovsky.

Thus, in June 1996, a fax was sent to Aeroflot's foreign offices by Yevgeny Shaposhnikov, the carrier's president, directing them to send their hard-currency revenues, essentially payment for plane tickets, to Andava's Swiss bank accounts.

Almost immediately, Ferrero said, Aeroflot managers balked. Not long after, he said, the first news reports appeared in Russia accusing Berezovsky of illegally diverting Aeroflot revenues to Switzerland.

"Not everybody was happy," Ferrero said. "Before the money was going to Russia, and now it was going to some obscure Swiss company."

People familiar with Aeroflot say the airline's old Soviet-style treasury was indeed open to abuse, and that managers regularly tapped ticket receipts, which by the mid-1990s amounted to about $300 million a year.

The shift to Andava robbed Aeroflot managers of the chance to siphon off hard currency, but it also gave effective control of the revenues to Berezovsky.

As to running afoul of Russia's foreign currency laws, Ferrero acknowledged that Aeroflot hesitated before asking the Russian Central Bank for a license to move money to Switzerland. But he said Aeroflot had assured him that under Russian law, hard currency could be kept abroad for up to 180 days without formal approval.

In March 1997, when Valery Okulov, a former Aeroflot navigator and son-in-law of Yeltsin, became president of the airline, Aeroflot obtained a foreign exchange license from the government. Several months ago, Ferrero said, management of Aeroflot's revenues reverted to the airline.

Ferrero seeks to refute the charge that Andava siphoned off fees collected from foreign airlines when they used Russian air space. He said the fees were used as temporary collateral to secure loans for Aeroflot. The loans were often needed to cover expenses such as lease payments or the purchase of airliners to replace Aeroflot's aging fleet, and for maintenance contracts with Lufthansa, the German airline, which maintained the planes.

Two years before Andava went into business, Forus Services was similarly established by Andre & Cie. and Russian investors associated with Berezovsky. Forus was devised as a go-between for Russian corporations and Western banks in arranging loans.

Thus, when Aeroflot acquired its Boeings and Airbuses, Forus helped arrange short-term loans to make the down payments. When Aeroflot joined a project, financed in part by the U.S. Export-Import Bank, to acquire an upgraded version of a Russian-built Ilyushin aircraft to be outfitted with Rockwell Avionics and Pratt & Whitney engines, Forus was Aeroflot's adviser.

For several years, Andava and Forus flourished. Despite the withdrawal of the Andre family, the companies expanded their capital several times and remained profitable, though as privately held companies they do not publish figures. Starting in 1993, Forus helped its clients, mainly the Russian auto maker Avtovaz, which also had close ties to Berezovsky, and Aeroflot raised about $1.5 billion in loans.

Executives at both Andava and Forus emphasized that at the latest by 1996, Berezovsky had ceased to be a shareholder, though they do not say why. Before that, they said, he rarely interfered in day-to-day operations.

Kuppers, at Forus, grudgingly acknowledged that at least under Swiss rules, the fact that Berezovsky, a major shareholder in Aeroflot, also effectively controlled companies that provided financial services to the airline would be a serious conflict of interest.