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. Last Updated: 07/27/2016

American Lawmaker Banks On Ivanovo

APTaylor, photographed during a campaign stop on Nov. 1, 2004, owns a bank and an investment company in Ivanovo.
IVANOVO -- The bank owned by U.S. Congressman Charles Taylor squats behind a municipal urology clinic on a back street in this small industrial city some 250 kilometers northeast of Moscow.

The Commercial Bank of Ivanovo, a small bank even by local standards, is tucked away in the corner of a residential building on the outskirts of town. Taylor, the multimillionaire Republican congressman who owns a majority stake in the bank, smiles down benevolently from photographs on a wall in the chairman's office.

As a major investor who has financed an Ivanovo apartment building and sponsors a local orphanage, Taylor is something of a minor celebrity here. But in Moscow and Washington, his Russian business ventures have gone practically unnoticed.

In his home state of North Carolina, the congressman owns another bank, Blue Ridge Savings Bank, which four years ago became ensnared in a scandal concerning a $1.3 million loan to a campaign donor.

While there is no evidence of wrongdoing at the Commercial Bank of Ivanovo, Taylor has been reluctant to paint a clear picture of his business operations in Russia. His critics in the United States charge that Taylor -- an eight-term congressman who sits on the powerful Appropriations Committee -- has not been forthright about business interests that they say could come into conflict with his role as a congressman.

Taylor, first elected to Congress in 1990, is chairman and owner of Financial Guaranty Corp., a holding company that owns Blue Ridge Savings, based in Asheville.

Beginning in the mid-1990s, Financial Guaranty made a series of loans to Russian companies with interest rates up to 60 percent, according to a copy of a loan agreement and testimony given to the FBI at the time of the investigation of the North Carolina bank.

In September 2003, Taylor bought an 80 percent stake in the Ivanovo bank for an undisclosed sum, while his partners -- a former Federal Security Service general and his wife -- bought the remaining stake. Taylor's partners said the three paid roughly $1 million total for the bank, with each paying in proportion to their ownership stakes.

He then went on to found a Russian investment company called Columbus, which makes investments in the Ivanovo region. The existence of Columbus has not been previously reported.

The president of the American Chamber of Commerce in Russia, Andrew Somers, said he had met the congressman and remembered Taylor's role in pushing the U.S. Congress to support a Western-style mortgage program in Russia. But Somers said he had heard nothing about Taylor's interests in either the Ivanovo bank or Columbus.

The Trade Bridge

Taylor's Russian bank was first unveiled to his North Carolina constituency in February 2004 as the cornerstone of a trade bridge between western North Carolina and Ivanovo. The plan was for both banks to match up small and mid-sized importers and exporters in their respective regions.

The Russian ambassador to the United States, Yury Ushakov, traveled to Asheville for the occasion. Ushakov told the Asheville Citizen-Times that he believed the trade could be worth $2.5 million per year in exports from North Carolina to Ivanovo alone.

Blue Ridge president Dwayne Wiseman was also optimistic. "These are markets we want to develop for manufacturers in the western Carolinas," he was quoted by the newspaper as saying. "We want to give businesses in the western Carolinas the opportunity to see if they want to export goods to Russia."

Whatever the plan, the trade bridge between Ivanovo and North Carolina evidently failed due to lack of interest. Andrei Fedotov, chairman of the board of the Commercial Bank of Ivanovo, said he was unaware of any trade deal facilitated by either bank. Wiseman did not respond to repeated requests for comment.

Fedotov said his bank had practically no relations with Blue Ridge and instead has focused on developing its own business. The bank's loan portfolio tripled after Taylor took over, he said, and last year the bank turned a profit of about 8 million rubles ($287,000).

The Ivanovo bank had 215 million rubles (about $7.7 million) in total assets as of Jan. 1, 2005, according to the bank's web site.

Fedotov said he could not explain why Taylor bought a bank in Russia.

"I can only say that Congressman Taylor is not the only foreigner who has invested in Russia," Fedotov said in an interview in his office. "Therefore, there is probably some reason to do it. ... You should ask him why he did it. I think he'll tell you better."

A spokeswoman for Taylor in Asheville, Deborah Potter, said the congressman was too busy to be interviewed. But she wrote in an e-mailed response to questions that Taylor had bought the Ivanovo bank not only to turn a profit but to promote democratic stability in Russia.

"It was his company's intent to promote small business in Russia, with Russia now having over 16 percent small business," Potter wrote. "When that number gets to be 75 to 80 percent, there will be more democracy in Russia."

Legal Trouble

Greg Walters / MT

A plaque outside an Ivanovo orphanage saying the building is being renovated "with the help of the family of a member of the U.S. Congress, Charles Taylor."

Taylor, no stranger to political controversy, has a host of critics back home who have hammered away at his activities as a businessman.

"I'd put him in the top 10 congressmen for unethical, scandalous behavior," said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, a Democratic-leaning research group that has tracked Taylor's business in Russia and North Carolina. "But he's not in the top 10 for attention paid for it. Taylor deserves a little more scrutiny."

Newspaper editorials in North Carolina also have criticized him for not better explaining his dealings in Russia. "The litany of recent implications and complaints against Representative Charles Taylor warrant a swift and thorough accounting," wrote the Asheville Citizen-Times during the 2000 congressional race. Taylor "hasn't told his constituents much about his personal interests in Russia," penned the Raleigh News & Observer.

Taylor's spokeswoman agreed to answer some questions in writing but did not respond to others. Weeks of repeated calls and e-mails requesting further comment or information about his activities in Russia went unanswered.

U.S. congressmen are permitted to have outside business interests as long as they keep them separate from their public service. For example, members of Congress are not to use their official position for personal gain or to vote on the House floor if they have a personal stake in the outcome.

Taylor's purchase of a tiny bank in Ivanovo might have raised fewer eyebrows if not for past legal troubles at Blue Ridge Savings Bank.

In 2001, one of Taylor's friends and campaign contributors, Charles "Chig" Cagle, pleaded guilty in a U.S. district court in North Carolina to charges of bank fraud and money laundering after taking out $1.3 million in loans from Blue Ridge. By law, the bank could not lend more than $500,000 to an individual. But Cagle, the owner of a large car dealership, forged the signatures of family members and made fraudulent applications, the court found.

Hayes Martin, then president of Blue Ridge, also pleaded guilty for his part in overseeing the loans. Cagle's lawyer, Tom Jones, was found guilty of assisting Cagle in preparing fraudulent documents.

In testimony given to the FBI and submitted as evidence in the Jones case, Martin said Taylor, through Financial Guaranty, made a series of loans to Russian companies in the 1990s with interest rates from 30 percent to 60 percent, according to an FBI summary of the testimony provided by Jones' lawyer.

For example, Financial Guaranty agreed to loan Ivanovo businessman Sergei Zvonov $100,000 to help finance the construction of a 61-unit apartment building. The loan carried a 60 percent interest rate and stipulated an additional $10,000 payment, according to a copy of the agreement, which was dated Aug. 21, 1995, and signed by Taylor.

Potter denied there was a 60 percent interest rate. She refused to elaborate.

Banking analysts said a 60 percent interest rate was unusually high but still within the range of possibility, given the incredible difficulty of getting any kind of loan in the mid-1990s. Russia's banking legislation was inchoate and confusing at that time, the analysts said.

Zvonov could not be located for comment. Local residents who knew him said he had retired from Ivanovo business life and was probably no longer in the city.

It is not clear how many loans Taylor made from Financial Guaranty to Russian firms, or how long this practice continued.

As late as June 1999, U.S. Representative Curt Weldon cited Taylor's lending during a congressional hearing to argue that Congress should help create a Western-style mortgage program in Russia.

"Charles Taylor ... is giving mortgages to Russian people today," said Weldon, a Republican. "If Charles Taylor's bank in North Carolina can give unsecured mortgages in Russia successfully, then doggone it, we ought to be able to do that."

His Russian Partners

Taylor bought the bank in Ivanovo -- rather than Moscow or St. Petersburg -- because "he felt that he could promote small business in the regions," said Potter, his spokeswoman.

Certainly Ivanovo was not a random choice. It was the hometown of two of Taylor's closest Russian friends and business partners, Boris and Marina Bolshakov, who own the remaining 20 percent of both the Commercial Bank of Ivanovo and Columbus investment company.

In interviews in Moscow, the Bolshakovs said Taylor bought the bank in Ivanovo as a way of showing that legitimate, transparent business could be profitable in Russia.

"It's an important step for showing that business can work in Russia," Bolshakov said. "He's risking his own money to show that."

The Bolshakovs met Taylor during a trip to the United States in 1993, when Bolshakov was a member of the Supreme Soviet, representing the Ivanovo region.

Bolshakov, who rose through the ranks of the KGB before retiring with the rank of general in the FSB in the late 1990s, is one of three owners of a tax consultancy and auditing firm in Moscow called EnAk, the Russian initials for Expert Taxes Audit Consulting.

Bolshakov also served for a year and a half as head of economic security for SBS-Agro, the bank started by Alexander Smolensky, one of the original oligarchs. Bolshakov, who said he had never met Smolensky personally, started working for the bank shortly after the August 1998 devaluation and default, when SBS-Agro collapsed spectacularly along with the rest of the Russian banking sector.

SBS-Agro had about $6 billion in debts as of July 1998, but an unrepentent Smolensky later told The Wall Street Journal that his foreign investors deserved nothing but "dead donkey ears." The bank was eventually taken over by the government's Agency for Restructuring Credit Organizations. Its assets were liquidated and the Central Bank annulled its license in January 2003.

Marina Bolshakova, a former teacher, runs a travel agency in Moscow called Fun Tour.

The Bolshakovs praised Taylor as a man of principles and said they were not bothered by the past legal troubles at his North Carolina bank.

"For me, it's important that no one who had their money in that bank suffered," Bolshakov said. "And I'm sure that Taylor would have paid back anyone who lost their money. That's why I do business with him."

Bolshakova said Zvonov was her husband's former assistant, and she remembered the loan he received from Financial Guaranty. She said Zvonov had said the interest rate was below 60 percent, but that she did not know the exact figure.

"We should take into account that Charles Taylor was a pioneer in U.S.-Russian relations," Bolshakova said. "He had more faith in Russian businessmen than they had in themselves. He is doing much more for Russian-American relations than those who say much but do nothing."

Banking in Ivanovo

Greg Walters / MT

The Commercial Bank of Ivanovo was first unveiled to Taylor's constituents as the cornerstone of a trade bridge.

Today, Taylor's Russian bank has some 200 million rubles in outstanding loans, board chairman Fedotov said, all of which were made to local Ivanovo entities. Two-thirds of the bank's clients were small and medium-sized businesses, he said.

The bank has never given a loan to a U.S. citizen or company and has so far limited itself to giving loans and taking deposits without making any other investments, Fedotov said.

That is where Taylor's investment company, Columbus, enters the picture. His spokeswoman said it had been formed to overcome some of the technical hurdles of Russian banking law and expand the range of investments Taylor could make in Russia.

"Columbus was organized to conduct business that the community bank ordinarily would not be able to do," Potter wrote in her e-mailed response to questions. "For instance, the bank ... cannot own other real estate except through the collection of debt. Columbus may be able to construct hotels or motels in the Volga region since there may not be adequate future accommodations in the Golden Ring area."

Columbus appears to work in concert with the Commercial Bank of Ivanovo. One local businessman, Vasily Skvortsov, said he had agreed to repay Columbus for its investment into a Renault showroom by taking out a loan from the bank.

Bolshakova said the company also served as a way of legally circumventing Central Bank regulations that require banks to set aside reserve funds equal to the amount that they lend. She declined to say how much Columbus has invested, but said the charter capital was $350,000.

Both Taylor and Columbus have accounts with the Commercial Bank of Ivanovo, Bolshakova said. But she declined to say whether other foreigners had accounts there, citing banking secrecy.

Non-Russian citizens have deposited funds in the bank amounting to slightly more than 14.6 million rubles ($524,800), and foreign legal entities have placed funds amounting to more than 20 million rubles ($720,200), according to Central Bank data from April 1. It was unclear how much of this belonged to Taylor.

'The Russia Virus'

Taylor's dealings in Russia have given his political opponents in the United States a new front for attacks. In Ivanovo, however, virtually no one has anything but praise for the foreign politician who visits Russia as often as three times per year. Here, he is known for his support for small and medium-sized businesses -- in the form of loans and advice -- and, most of all, for his charitable work.

A plaque outside the main gates of a pre-revolutionary church turned orphanage in Ivanovo declares the building is being renovated with the help of the family of Charles Taylor.

A priest who answered the door said Taylor had been a significant donor to the orphanage, where 54 children now live, attended by four priests. The priest declined to say how much Taylor had given to the orphanage but said he and the children were thankful for the help.

"We appreciate all gifts equally," he said, standing outside the main yard on a sidewalk littered with paper airplanes. "Whether someone gives $1,000 or a glass of water, we love him for it."

Taylor has also taken several Ivanovo residents to work as interns in his offices in Washington and in Asheville.

Tatyana Polosina, an Ivanovo journalist, said she had met Taylor a few years ago during an exchange trip to the United States. She recalled being invited to his house for dinner and spending a long evening discussing Russia with him. Poloshina said the congressman was interested in Russia almost to the point of obsession. "He has the Russian virus, in a good way," she said.

Nobody in Ivanovo said they quite understood why Taylor had taken such a shine to their city. But practically everyone who had heard of the congressman thought positively of him.

"The fact is, if Taylor could run for office in Ivanovo, he'd win," Bolshakova said.