Moldovan bank fraud scandal
Banca de Economii was a state own Moldovan bank involved in the faudulent money laundering scheme
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| Type | white collar crime, banking fraud, money laundering |
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Key people
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Vlad Filat, Ilan Shor, Nicolae Timofti, Iurie Leancă, Stephane Christophe Bride, Mircea Buga |
In 2014, $1 billion disappeared from three Moldovan banks: Banca de Economii, Unibank and Banca Socială. The bank fraud in Moldova was a coordinated effort involving all three banks working together to extract as much loan finance as possible from the banks without any obvious business rationale. Ilan Shor, a 28-year-old Moldovan businessman and the current mayor of Orhei, "masterminded" the scam. Shor was chairman of the board at Banca de Economii (Savings Bank) up to November 28, 2014.
Funds worth $1 billion were transferred to United Kingdom and Hong Kong shell companies used to conceal the real owners of assets, then deposited into Latvian bank accounts under the names of various foreigners.
The total loss from the scheme is equivalent to 12% of Moldova's GDP.
A carousel borrowing scheme was applied, loans at one bank were paid off with loans from another. The massive expansion of bank lending was funded with heavy borrowing from Russian companies.
During the parliamentary hearings on the bank fraud, the Moldovan Information and Security Service deputy director, Vadim Vrabie, declared that President Nicolae Timofti knew since 2013 about the robbery at Banca de Economii, Banca Socială and Unibank.
In 2005-2008 the financial-banking legislation was substantially modified by the Parliament specialized commission headed by Oleg Reidman, as well as the regulations of the National Bank of Moldova on the supervision of the banking sector and the tracking of financial flows. These changes weakened the banking system and exposed it to risks of fraudulent activities.
In 2007-2009 the Banca de Economii (Savings Bank) have expanded their lending activities, with a significant number of the credits given at the time being not reimbursed later in 2011. In June 2012, the Moldovan Anticoruption Center was requested to investigate the involvement of institutions registered in Moldova in money laundering schemes on regional and international level, following the Sergei Magnitsky cause célèbre.
During this period, the three banks were the subject to significant shareholder change. Commencing August 2012, ownership of Unibank was transferred to nominees as well as political figures and individuals close to Ilan Shor. In 2013 Ilan Shor bought into the ownership of Banca de Economii.
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Wikipedia