Mystery of Russia Gang, ADM Brokers Solved in London CourtBy and
Police say firms were laundering dirty money through trades
Four companies say U.K. police abused power by seizing checks
A year-old mystery over the identities of four companies at the center of allegations of Russian money-laundering that led to the dawn arrest of a London broker was solved this week in a city courtroom.
London police withheld the names of the companies -- Merida Oil Traders Ltd., Bunnvale Ltd., Ticom Management LLC and Intoil SA -- in May when it accused them of using futures trades on the Intercontinental Exchange Inc. to help a gang illegally move money from the British Virgin Islands to Russia. It led to the arrest of a broker at a unit of Archer-Daniels-Midland Co., and the questioning of another.
Further details of the alleged crime and subsequent money-laundering investigation remained secret, until Bunnvale, Ticom and Merida sued the City of London Police for seizing $22 million once stored in their trading accounts with ADM.
Judges presiding over the case had questions about how detectives obtained a court order that forced ADM to write checks for the money in the accounts that were later seized by police. The companies complain that police used improper methods to obtain the funds.
It could be characterized as "collusion between ADM and the police to create the situation," Judge George Leggatt said at the judicial review of the police action. "You yourself caused the checks to be created. They were not of value to the investigation."
The investigation began in May 2015 when ICE alerted authorities of suspicious trading patterns involving Bunnvale. The oil-derivatives trader, along with its Russian-incorporated sister company, Ticom, appeared to be making money on all of its transactions with Merida and Intoil -- both identified in Bunnvale’s court documents as special-purpose vehicles set up for two of Russia’s largest independent oil refineries.
“This was a method of transferring value from the British Virgin Islands to Russia, making it appear they were part of legitimate transactions on a legitimate exchange," police lawyer Andrew Bird said during the Tuesday hearing. "That would be a good way of laundering money if the BVI money was proceeds of crime."
In May 2016, London police said they’d seized $22 million from five trading accounts of an unidentified broker who was arrested two months earlier. That broker was identified as ADM’s Dzmitry Niadzvetski. Paul Osborne, an account executive at the firm, was also interviewed. Both were suspended by ADM, and neither is still working at the firm.
Before Niadzvetski joined ADM, he was a broker for 12 years at now-defunct MF Global Holdings Ltd., according to his LinkedIn profile. Osborne worked at MF Global with Niadzvetski and moved to ADM around the same time, his LinkedIn profile shows.
At the hearing Tuesday, court documents detailing the investigation were provided to Bloomberg, while police lawyer Bird told the court that authorities believed a total of $76 million may have been laundered through the suspect trading.
According to Bunnvale’s court filings, it wasn’t until February 2016, eight months after ICE’s report, that police began investigating Niadzvetski, Osborne, Bunnvale, Intoil and Merida. The police subsequently provided ADM with a copy of the ICE report, which then decided it wished to terminate its relationships with the companies.
Two months later, ADM sought consent to pay out the funds of its accounts to the companies, to which the police refused, according to Bunnvale’s filings. Instead, Bunnvale and Merida say the police obtained a court order to force ADM to create checks made payable to the companies for $22 million, which detectives then seized.
That seizure was an abuse of power, Rupert Bowers, a lawyer for Merida, told the court. Without the "order they wouldn’t have made the checks and there would have been nothing to seize."
Lawyers representing Merida declined to provide court filings and didn’t respond to calls and e-mails seeking comment. Spokesmen for ADM and the police declined to comment as did Bunnvale’s law firm, London-based Peters & Peters. Calls to Intoil’s administrative director weren’t returned.
In its court filing, Bunnvale said the trades were unremarkable and police had simply misunderstood how it conducts business.
"Bunnvale facilitates the purchase of derivatives products for oil refineries such as Merida and Intoil, from which Bunnvale makes money in the form of a ‘mark-up’ on the products which it buys and sells," Bunnvale said in its filings. "Properly understood, Bunnvale’s trading activities are not inherently suspicious in terms of the volume of its business with Intoil and Merida, nor that it invariably makes large" profits.