Three of the biggest banks in Moldova reached the brink of collapse in November after suffering losses totaling $1 billion—a shocking sum in an impoverished Eastern European country with a gross domestic product of less than $8 billion.
Now shock is turning to anger. In a report made public this week, investigators from the corporate risk-management firm Kroll pointed to a group of companies and individuals the report says are connected to a wealthy 28-year-old Moldovan banker named Ilan Shor. According to the report, the alleged conspirators may have surreptitiously taken control of the banks and then lent themselves nearly $1 billion, collateral-free. The money was spirited out of Moldova and into offshore bank accounts, according to the report. Records of many transactions were deleted from the banks’ computers, and some documents were allegedly loaded into a vehicle that was reported stolen and destroyed in a fire a few hours later.
Shor, who served as chairman of one of the banks, was placed under house arrest on Wednesday and has been charged with “abuse of office while managing a bank,” says Eduard Harunjen, chief prosecutor of Moldova’s anticorruption office. Three other people, whom Harunjen didn’t identify, have also been charged in the bank heist.
In a statement issued by a spokeswoman, Shor described the allegations against him as “groundless” and said he will “support the authorities in finding out the truth” about the bank losses. Shor said he had taken trips outside the country since the investigation began and returned because he didn’t want to “jeopardize in any way the prosecutors’ activity.”
The Israeli-born Shor, whose family immigrated to Moldova when he was a toddler, is one of the country’s wealthiest people. His business interests, some inherited from his father, include insurance companies, television stations, a local soccer club, and the duty-free concession at the Chisinau airport. He also has a security company called Klassika, cited in the Kroll report as the owner of the vehicle that was loaded with bank loan records and destroyed in a fire. In 2011, Shor married a Russian pop singer known as Jasmine, in a lavish ceremony at the Palace of the Republic, a Chisinau landmark that’s the former seat of Parliament.
The Kroll report, commissioned by Moldova’s central bank, was released on Monday by the speaker of Parliament after thousands of people rallied in the capital, Chisinau, to protest corruption and demand recovery of the missing money. Government bank bailouts have already cost hundreds of millions of dollars. (Calls to Kroll’s European headquarters in London were not immediately returned.)
The scandal recounted in the report centers on three banks that together account for about 30 percent of the country’s banking sector: Unibank, Banca Sociala, and Banca de Economii, where Shor was chairman. The three banks “were consecutively subject to significant shareholder change, which had the effect of transferring ownership to a series of apparently unconnected individuals and entities” in Russia, Ukraine, and Moldova, according to the Kroll report. The new shareholders formed “a common group,” with Shor as the alleged connection among them.
Once under control of the new shareholders, the banks “appear to have coordinated to maximize available liquidity, in order to facilitate a massive increase in lending to Moldovan entities,” the report says. The loans then moved through a “complex web of transactions,” with much of the money ending up in Latvian bank accounts held by U.K.-based limited partnerships. Many of these entities appeared to be shell companies that had been set up shortly before the transactions took place. “While these entities appear unrelated,” the report notes, “preliminary analysis shows that they effectively form a group of related parties.”
The Kroll report says a “full forensic trace” will be needed to find out exactly where the missing $1 billion went. “It is, however, clear that Ilan Shor, and individuals with which he is associated, are strongly implicated in the scheme,” the report says.
—With Andra Timu and Irina Vilcu