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. Last Updated: 07/27/2016

Paper: Reiman 'Central' to Investigation

bloombergLeonid Reiman
IT and Communications Minister Leonid Reiman is a "central figure" in a money-laundering investigation that has spread from Germany to Cyprus, Switzerland and the United States, The Wall Street Journal reported on Friday.

Frankfurt prosecutors suspect Reiman "illegally enriched himself through a series of transactions," the paper said, citing letters prosecutors had sent to their counterparts in other Western countries.

"Using financial records, the prosecutors lay out what they suspect was an elaborate scheme to milk Russian state-owned telecom companies for cash or divert their assets," the Journal said. The paper said Reiman was behind a network of shell companies and trusts concealing more than $1 billion in assets.

IT and Communications Ministry spokesman Alexander Parshukov on Sunday said the report was a "paid-for article," declining to say who might have paid for it. The ministry is considering suing The Wall Street Journal over the article, he said.

Reiman's ministry is working to make the telecommunications market more transparent, which some players do not like, Parshukov said.

"The courts are still trying to understand how Alfa got control of a 25 percent stake in MegaFon," Parshukov said Sunday, referring to a long-running battle over the stake in the mobile operator between Mikhail Fridman's Alfa Group and a Bermuda-based investment firm, IPOC.

The Wall Street Journal said the minister saw the allegations against him as a pressure tactic by Alfa to fend off a rival claim by Jeffrey Galmond, a longtime associate of Reiman, to the disputed MegaFon stake.

The allegations stemming from the MegaFon case rely in part on the testimony of a former Galmond employee who is a convicted felon as well as on that of Anthony Georgiou, a former business partner of Reiman's who has fallen out with him, the newspaper said.

Both men, who have given sworn testimony in a civil case, have acknowledged in court that they have agreements to receive compensation from Alfa or its allies, according to the article in The Wall Street Journal.

Even so, the report said their testimonies were consistent with financial records it had reviewed.

Those records show a series of large transfers, moving assets of Russian telecom ventures to shell companies based in Cyprus, Liechtenstein, Switzerland and other tax havens, the newspaper said.

"Mr. Reiman's name has come up during the investigation, but he is not a suspect," said Doris Moeller-Scheu, a spokeswoman for the state prosecutor's office in Frankfurt, Reuters reported on Friday.

Frankfurt is linked to the case though the city's Commerzbank, whose CEO is a suspect in the case, the newspaper said.

German prosecutors confirmed Friday that they had asked for judicial assistance from their counterparts in other countries, including Denmark, Cyprus and Switzerland, Bloomberg reported, citing Moeller-Scheu.

"Reiman was responsible for those companies at the time, and it is possible that he may have been involved in a breach of trust," she told Bloomberg.

Frankfurt prosecutors have not yet approached Russian authorities for assistance, Bloomberg reported.

In July, German prosecutors confirmed they were investigating the privatization of Telekominvest, a St. Petersburg-based holding company that Reiman helped found in 1994.

Commerzbank says it believes no current staff member was guilty of illegal activity in connection with the case. It also fully backs its CEO, one of the suspects, the newspaper said.

Friday's Wall Street Journal report said the U.S. Justice Department has begun its own investigation, focusing on the New York office of Barclays.

Barclays London offices declined to comment to The Wall Street Journal.

The newspaper said Reiman had declined to comment for its article, adding that he had previously maintained he had done nothing wrong.