How Russia Inc. Moves Billions Offshore

US$51 billion exited Russia in Q1, headed for tax havens. Nations such as the Netherlands, Luxembourg, Cyprus, Switzerland, and Ireland may hold the key to sanctions.

Two years ago, a Dutch law firm prepared a pitch in Moscow to Russian businesses: Come to the Netherlands and we can help you avoid taxes and keep your assets safe.

“You can rely on our legal system!” the firm, Buren van Velzen Guelen, said in a slide presentation.

Officials from Luxembourg’s ministry of finance declined to respond to e-mailed questions seeking comment.

In the Netherlands, sanctions have prompted an examination of the country’s role as a popular way station for companies and industrialists routing profits to low-tax jurisdictions like Bermuda and the British Virgin Islands. On May 15, the Dutch Parliament will hold a debate on how Russian and Ukrainian magnates and companies have used the Netherlands to dodge taxes.

“Gunvor Group is structured for optimal tax planning purposes, the same as other global trading houses,” and “operates in full compliance with all applicable tax laws and regulations,” Seth Pietras, a Gunvor spokesman, said in an e-mail.

Gunvor, which in recent years has slashed its dependence on Russian oil and diversified into trading metals and coal, reported net income of $308 million for last year on revenue of $91 billion.

Swiss banks held 13.8 billion Swiss francs (US$15.7 billion) worth of Russian money in 2012, according to the latest available statistics from the Swiss National Bank. More than a dozen Russian and Ukrainian industrialists have business interests, charity operations, or own property in Switzerland, Tages Anzeiger, a Zurich newspaper reported in March. Andrei Klishas, the politician and metals businessman who was sanctioned by both the EU and the U.S., owns an estate in Ticino, near the Italian border.

Switzerland is “closely” monitoring the situation in Ukraine and the sanctions imposed by its “most important trading partners,” Marie Avet, a spokeswoman for Switzerland’s State Secretariat for Economic Affairs, said in an e-mailed statement.

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