A spreadsheet and other materials seized nearly three years ago from a Big Yellow Self Storage unit in London is helping investigators close in on billions of dollars that disappeared from BTA Bank JSC, a commercial lender in Kazakhstan. A team of lawyers, financial crime consultants, investment bankers and private detectives working on behalf of the bank is trying to recover more than $6 billion in what Bloomberg News says could be the largest financial-fraud case since Bernard Madoff’s $17 billion Ponzi scheme.
The spreadsheet lists hundreds of interconnected offshore shell companies, many of which investigators believe former BTA bank chairman Mukhtar Ablyazov used to misappropriate bank assets and shield at least $6 billion in stolen funds, according to a Bloomberg report. The shell companies stretch from Russia to the British Virgin Islands.
In addition to the spreadsheet, 25 boxes of documents and data tapes as well as a computer server were recovered from the storage unit.
After five years of investigation, the investigative team has recovered “several hundred million dollars,” according to Pavel Prosyankin, a former investment banker who is overseeing the asset recovery. He believes only $2 billion to $3 billion of the missing money will ultimately be recovered, according to the report.
Ablyazov, who is currently in jail near Marseilles, France, has testified in British civil courts that he didn’t embezzle the $6 billion or commit fraud. He also has denied fraud charges brought against him in Kazakhstan, Russia and Ukraine. In a statement to Bloomberg News, Ablyazov admitted to using shell companies to hide his majority stake in BTA and manage bank assets, but he denied defrauding depositors and creditors. He was chairman of BTA from 2005 to 2009.
Auditors first discovered a $10 billion hole in BTA’s balance sheet after Kazakh regulators took over the bank in February 2009. In an effort to recover $6 billion of the missing money, lead attorney Chris Hardman, a fraud litigator at Hogan Lovells International LLP, established jurisdiction in the United Kingdom for 11 separate lawsuits. The move was based on a 2008 transaction in which BTA transferred $295 million to a British shell company called Drey Associates.
Private detectives were ultimately led to the Big Yellow Self Storage facility while conducting surveillance on Salim Shalabayev, the younger brother of Ablyazov’s brother-in-law, Syrym Shalabayev. In December 2010, they watched Salim and another man transport 25 boxes between the storage unit and an accounting firm for Eastbridge Capital LLC, a supposed London investment firm linked to the Ablyazov shell companies. Eastbridge Capital was managed by Syrym Shalabayev.
In February 2011, Hardman secured a warrant to search the storage unit and recovered the spreadsheet and other materials. Hardman said the spreadsheet links Eastbridge Capital to the shell companies.
Ablyazov was found in contempt of court in February 2012 by British judge Nigel Teare but fled the country before receiving a 22-month prison sentence. The Shalabayev brothers were also found in contempt and fled the U.K. In March 2013, Teare ruled Ablyazov had defrauded BTA and ordered him to make restitution. He was apprehended in France in July. As of Dec. 9, he still owed the bank $4.1 billion, Bloomberg reported.