Following the money in Russia? Ask their central banker.

Discussion in 'Politics, Religion, Social Issues' started by LizKat, Feb 15, 2017.

  1. LizKat macrumors 68040

    LizKat

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    #1
    This is a pretty interesting piece from Bloomberg. Putin has authorized his central banker to do a big crackdown on the shoddy state of Russian banking which has been known for contributing to drain of foreign currency reserves, especially bothersome during sanctions on Russia. Of course her job is dicey, since Putin's authorization may have unexpected limits, depending on who owns which banks being looked at, how motivated the owners are to resist, and whether it's to Putin's advantage to have a bank rescued or closed and taken over. So far, so good since she's still alive. One of her predecessors was assassinated by a contract hit for $310k after a guy who owned four closed banks took exception to his loss of banking licenses.

    Excerpt:

    Shortly before Nabiullina took over as central banker in the spring of 2013, her predecessor, Ignatiev, gave a valedictory interview to a local newspaper. He said a massive $49 billion in illicit flows sapped the economy of capital and much-needed tax payments and that more than half that amount was attributable to interconnected companies. “You get the impression that they are all controlled by a single, well-organized group,” he said, without identifying anyone.

    When Nabiullina took over, she was told about 150  banks were suspected of involvement in criminal activity. Capital was flooding out of the country at a rate of $60 billion a year. Almost half of that was pronounced “dubious” by the central bank. Nabiullina stepped up the pace of bank closures. In her first six months she shut down or took over more than 50. Most of the those closed were suspected of involvement in money laundering, she said later.

    Some were previously thought to be untouchable. One was Masterbank, a top-100 lender suspected by officials of being a prime player in the “black cash” trade, in which banks provide huge sums of money for illicit payments, often under the protection of the country’s security services. A person close to the central bank but not authorized to discuss internal matters says Nabiullina didn’t expect to set a precedent with the closure and didn’t fully realize its significance until this illicit market contracted sharply and costs shot up.

    Perhaps fittingly, given Russia’s reputation for corrupt business practices, the “black cash” trade carried on, according to several senior bankers. The banks just charged more for it.

    And, another:

    It might seem obvious, given the pace of the purge, that Nabiullina has Putin’s explicit blessing. “Nabiullina is a person of character, but there’s no way she could have taken such a tough line without the support of the head of state,” says Lebedev, the banker and former legislator. “The president gave her carte blanche.” But absolute certainty is a rare commodity in Russia. People familiar with the situation say that while Putin hasn’t publicly questioned her bank crackdown, he also hasn’t explicitly given her the kind of sweeping authority to close banks at will. That, these people say, leaves Nabiullina in a less than rock-solid position—one of confidence tinged with uncertainty about whether the next one she hits could prove too politically hot.

    Russia’s banking mess dates to the 1990s, when the country lurched toward capitalism. Banks proliferated by the hundreds, profiting from speculation in currency and other markets rather than the more solid foundation of lending. By the middle of the decade, the number of banks had peaked at more than 2,500. Many became conduits for illicit activity, funneling money offshore or into cash for off-the-books operations—including payoffs, clandestine political funding, and organized crime. The first major efforts to crack down on crime came in the early 2000s as Russia transitioned into the Putin era from the free-for-all for wealth under Boris Yeltsin. But progress was slow and resistance high.
     
  2. VulchR macrumors 68020

    VulchR

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    #2
    One can say many things about Putin, but I have the impression he does not like garden-variety white-collar crooks. Mind you, it is only a matter of time before this is used for oppression.
     
  3. samcraig macrumors P6

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    #3
    Would Trump fall into that category - or maybe he's uncommon ;)
     
  4. Scepticalscribe Contributor

    Scepticalscribe

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    #4
    Thanks for sharing this, @LizKat.

    Glad to see that the article discussed the assassination of the deputy director of the Central Bank Andrey Kozlov in 2006 (who was cracking down on money-laundering at the time). Not everyone who works for the state sector is corrupt, an dRussia has lost some very impressive lawyers, bankers, and journalists to murder over the past twenty or so years.
     
  5. LizKat thread starter macrumors 68040

    LizKat

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    #5
    I've tended mostly to hear about the murders involving Russian journalists or the activists assisting them. But one gets a glimpse now and then of the more general potential for thuggery in dealing with political opposition. There sometimes seems an aura of implication rather than certain attribution of an untoward death to Russian government operatives. So it's apparently not just Russian officials committing mayhem, it also seems a more ordinary solution to legal hassles, unwanted reminders of debts, deals gone bad, etc.

    The drift I get is more or less along the lines of the Guardian's comment in a piece once that "poisoning is a tactic of Russian intelligence, but not only of Russian intelligence." That was about the alleged mysteries of who actually was behind Gordon Litvenenko's polonium-210 poisoning death. Similarly with incidents like the shooting death of journalist Anna Politkovskaya. Officials and others opposed to her journalistic revelations had been detaining and torturing, trying to poison or otherwise kill her for years, and finally succeeded by setting a bunch of gunmen to attack her near her home in Moscow. They still apparently don't know who paid for the hit although four or five were convicted of the shooting. Talk about potential setups, or not: she was slain on Putin's birthday. There are various ways one could take that.

    Back to the banking cleanup and its revelations: I was fascinated to read in that Bloomberg piece about Nabiullina's background; she seems not at all the usual acolyte of Putin. Coming along on her education and wit, earning credits from those above along the way, and carefully choosing moments for next stepping stones.

    The work Nabiullina's doing now is useful to Putin, of course, in ways past just plugging leaks of capital moving abroad. Discoveries in banking audits like the one's she's been overseeing must shed light on some networks he may be aware of, but now learns more about in whatever detail he chooses: he can hold his friends close and his enemies closer, by having unraveled their own thoroughly cooked balance sheets?
     
  6. Scepticalscribe Contributor

    Scepticalscribe

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    #6
    Russia is one of those countries where what are sometimes described as "the good guys" (and gals) die not just unnaturally, but profoundly unnaturally - but, what is often an even greater tragedy - sometimes the "good guys & gals" actually die naturally, but just at a somewhat younger age than they might have in other countries.

    The deaths - murders - of journalists has been well covered. And it didn't start with the government of Mr Putin - in the Yeltsin era an astonishing number of journalists were murdered - although, in fairness, nobody ever suggested that any of this might have been at the instigation of the authorities - or, those who wished to curry favour with them.

    But others - jurists, lawyers - and some very good ones - and Andrey Kozlov, whom I was very pleased to see mentioned, if only to send the signal that not everybody involved in banking and law in Russia was a shamelessly corrupt toady.

    Some were not, and courageously - and at a terrifying human cost - sought to try to build the blocks of of some sort of civil society with a value system derived from the rule of law and inspired by the concept of the public good.
     
  7. jerwin macrumors 65816

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    #7
  8. NT1440 macrumors G4

    NT1440

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    #8
    No he does not. Part of his ascension to power (and why much of the population genuine likes the guy) was throwing white collar crooks in jail.
     

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