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THE SON OF A CANADIAN COMMUNIST WITH A CYPRIOT PASSPORT, ERIC WHITE AND AN
OFFSHORE NETWORK WITH ASSETS IN EUROPE AND RUSSIA WORTH $100 MILLION

by Jane Soer
23/08/2022
in Offshore leaks
Reading Time: 11 mins read
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Andrey Kostin



Head of state-controlled VTB Bank Andrey Kostin – the person is not poor. He
first disclosed his income back in 2014, telling German journalists that he had
earned 240 million rubles. Kostin then strongly denied the amount of income of $
37 million, which he counted by Forbesby calling it “complete nonsense”.

This statement of the state banker turned out to be true: three tens of millions
of dollars is nothing compared to assets worth a hundred million. “Important
Stories” publishes an investigation by the Center for Corruption and Organized
Crime Research (OCCRP) about the relationship of the head of VTB to offshore
firms with Russian and foreign property worth more than $ 100 million. The big
list of assets has it all: houses, premium apartments, investment companies and
even an expensive hotel in Austria. The property was controlled through an
offshore network run by Costin’s confidant, Eric White, the son of a prominent
Canadian communist.



Network of companies associated with Eric White



The son of Canadian communist Burt White, Eric moved to the Soviet Union as a
boy in 1966 and was educated at the Interdom boarding school for children of
foreign communist leaders. These are almost all the scarce publicly available
details about his life. The memoirs of the late Father White are only a glimpse
mention about his birth. After leaving school in 1973, White Jr. stayed in
Russia to study history at Moscow State University. Then he moved to Canada and
went into business.

Eric White is not a public person. Most of the information about him personally
is connected with Interdom. Education in this boarding school, apparently,
influenced his whole life. On the school website there is a 2010 White interview
in which he spoke a little about himself.



Eric White at the meeting of graduates of “Interdom”



“My father was a correspondent for a Canadian communist newspaper accredited in
Moscow. Now I work in business in Russia and Cyprus. I believe that any country
that claims to be a world power must have an international children’s school in
which children from all over the world would study. It is not necessary that
there be a political background here, as it was in Soviet times. It can receive
children from disaster areas, who, growing up in Russia, then, as in the case of
our interhouse, will disperse all over the world. These will be people for whom
Russia is a second home. They will no longer be able to listen to lies about
this country, they will always have a warm attitude towards this country, they
will be a voice of influence in society in support of the country in which they
grew up.


The government should be interested in this for the sake of future relations
with many countries. Here, in Russia, they give a good education, and people,
returning to their countries, get good posts in leading state institutions, they
become influential people, and they have influential friends. Do you understand?

White became a citizen of Cyprus in 2015, having bought a luxury villa near
Limassol, on the south coast of the island, as part of a citizenship by
investment program. On the wall at the gate of the villa there is a playful
inscription “The Whyte House”, in consonance with the White House (White House)
– the official residence of the President of the United States.



The gate of the Cypriot mansion of Eric White



White’s Cypriot house is right next door to the house owned by the deputy head
of the former VTB subsidiary in Cyprus, RCB Cyprus, Vladimir Popov. A
significant share of RCB, as you know, back in 2009 unexpectedly turned out to
be with its top managers. Sources connected with VTB then said that in fact this
Cypriot bank had moved away from the state-owned VTB and went to Kostin’s
people. As it turned out, some companies associated with Andrey Kostin, from an
offshore network managed by White, received millions of dollars in loans from
RCB Cyprus.

“White could have acted as Kostin’s confidante,” said Tamara Makarenko, a
business intelligence analyst with extensive experience in investigating
oligarchs, after reviewing the materials collected by OCCRP. She notes that
property ownership schemes suggest such an idea. And that the oligarchs used
similar schemes to hide their assets.

Kostin had reasons to take care of the property that he had accumulated over the
long years of work as a state banker: he had long located under US and European
sanctions and risks losing its foreign assets if they are discovered by EU or US
authorities.




As it turned out, the winery and estate had been in the hands of Eric White for
years. White’s offshore firm Vargas Properties controlled the Russian company
that owns both the house and the winery. This March, shortly after Russia’s
invasion of Ukraine triggered another round of sanctions against prominent
Russians (including Kostin himself), ownership of the property was transferred
to a Russian company whose owner was not disclosed.



Nailya Asker-Zade



One apartment was given to her by a top manager of VTB, and the other was
presented by the state bank itself. But there was an intermediary in the
transfer of the apartment from VTB to Kostin’s girlfriend. A year before
Asker-Zade received the apartment, the property was transferred to an offshore
company registered in the British Virgin Islands, Erelson Investments.


As it turned out, this company belonged to Eric White. And another of his
offshore firms acted as an intermediary in the transfer of the Moscow residence
from VTB to Kostin himself. The State Bank transferred ownership of a luxury
three-story townhouse in Moscow to Whyte’s Laroy Enterprises in 2006. In October
2015, she handed it over to Kostin. The following year, he sold the townhouse to
Angerston Holdings in Cyprus. By the way, for this deal, Angerston received a $7
million loan from the now former VTB bank in Cyprus, RCB Cyprus. As we have
already noted, the Cypriot bank soon sailed away from the state-owned VTB and
went to people close to Kostin.


Cypriot anti-money laundering expert Anna Stylianou told OCCRP that before the
tightening of rules in 2018, many wealthy Russians gave their property to
Cypriot companies, which provided anonymity and the opportunity to avoid paying
taxes.

“Real estate rental income could be presented as income from dividends
[компании] in Cyprus and, therefore, was not taxed, ”explained the expert.
Cyprus has been popular in this regard also because, until last month, it did
not have a public database of ultimate beneficial owners. “Hiding Russian
property was easy,” Stylianu concluded.



Austrian Hotel Tannenhof



According to numerous media reports, the Tannenhof is owned and operated by
married couple Axel Bach and Judith Volker, who the media say completely rebuilt
it in 2011. In a 2017 interview, Bach revealed that the unexpected legacy helped
him “realize his philosophy” of hospitality, implying that he used the windfall
to buy the hotel. “The notary was looking for me for a year and a half and asked
what I would do with all the money now!” Bach recalled.

Another article published the same year reported that Bach and his wife had sold
an estate in Italy to buy a hotel. According to former hotel chef James Baron,
staff were also told that the establishment was owned by Bach and Volker.

However, Austrian and Cypriot corporate reports say that between 2010 and 2015,
the Tannenhof hotel was owned by a Cypriot entity held by VTB. Whether the bank
created this structure in the interests of any client was not disclosed.


The US and EU imposed sanctions against VTB in 2014. And the following year, the
ownership structure of the Tannenhof changed. Prior to the imposition of
sanctions, the hotel was owned through the ITC Consultants (Cyprus) company
created by VTB.


But in 2015, ownership passed to other Cypriot firms – Cahulia and Aktien
Enterprises. Their owners were not disclosed. That all changed last month when –
after years of pressure from the EU, Cyprus released a register of beneficial
owners. Eric White turned out to be the owner of Aktien Enterprises.

OCCRP, 7/28/2022, “A native of Canada manages assets associated with VTB Bank
and Andrey Kostin, including luxury real estate in Europe”: However, a law has
come into force in Austria requiring all companies to declare their ultimate
beneficial owners. The Tannenhof likely exploited a loophole by stating that any
Austrian company owned equally by two shareholders does not have a beneficial
owner. Around the same time the law was passed, Cahulia Ltd sold 50 percent of
the hotel’s holding company to another Cypriot firm, Aktien Enterprises Ltd, for
a nominal $584, thus keeping the same stake. As a result, the register of
beneficial owners in Austria does not show who actually owns the Tannenhof Hotel
– only the directors are listed there. — Inset K.ru



Real estate associated with Andrey Kostin and Eric White companies around the
world






In 2013 and 2014, White’s “related party” Landshut bought $38 million in shares
from CIS Opportunities Fund, an investor in the economies of the former Soviet
republics. In January 2014, the fund bought a stake in Burger King’s Russian
franchise for $25 million, according to corporate documents.

White’s offshore companies are also linked to Kresorco Enterprises, which owns
the Russian Hoff furniture and home goods hypermarket chain. The Cypriot
Volkeburg associated with White’s structures reportedly acquired a 20 percent
stake in Kresorco in 2011, according to reports. As of 2020, this stake was
valued at $62 million.


Another Cypriot company, IFG Fund AIFLNP VCIC, a subsidiary of Solozhentseva’s
structure, acquired a stake in the Russian KFC franchise in 2018. And in 2021,
Ozon.ru shares worth $49 million and a stake in the Russian retail chain Fix
Price during its IPO.

Whether White still serves Kostin’s money and other assets or works
simultaneously for himself and various wealthy people, helping them manage their
property, could not be clarified. White, Kostin, and VTB did not respond to
OCCRP questions about real estate, investments, and the offshore network.

In March 2021, in his “Congratulations from Cyprus”, addressed to the former
pupils of the Soviet Interdom, White could not resist mentoring rhetoric:

“Life is not easy . To be successful, you need two things – work and luck. Luck
helps, but you have to work,” he taught.


***





Andrey Kostin



Grabbing a couple of acres of land adjacent to the site is a well-known country
tradition. Larger landowners can afford to grab a larger piece – a hectare, or
even a couple. The head of VTB Andrey Kostin is a Crimean summer resident. The
holdings of the companies associated with him in Crimea are extensive. First,
there are vineyards. The farm is called Alma Valley, and, as Open Media wrote
recentlythis winery is one of the largest (270 hectares).

The fact that the companies that own the winery are associated with the head of
VTB, earlier media reported with links to their own sources. Indirectly, the
connection can be traced through the documents. The operating company of the
winery is Invest Plus. She belongs “East Investments”, which is owned by an
offshore company from the British Virgin Islands. East Investments also owns
Forian Co., which Andrey Kostin owned directly in 2015–2017. Kostin himself has
always denied any connection with the winery.

As Baza found out, Invest Plus, in addition to its legal possessions, actually
seized land of 0.8 hectares, which is in regional ownership. Moreover, he
captured along the perimeter of his site, on each side (on the one hand – 40
acres, on the other – 5, on the third – 30, on the fourth – 1). Such data is
contained in the state register of inspections.

The company must correct the violation by June 26, then Rosreestr will re-check.
Also, the company has already been fined 105 thousand rubles.

In the spring of 2018, the media reported that the Crimean winery Alma Valley
won three silver medals at the annual International Wine & Spirits Competition,
which takes place in London. And in February 2019 Roskachestvo called Alma
Valley products – the best red wine. But, despite the prestigious awards, the
company’s financial success is much more modest: according to SPARK-Interfax,
over the past five years, East Investments has never made a profit. So in 2019,
the net loss amounted to 204 million rubles.

Alma Valley vineyards are not the only real estate owned by firms associated
with the head of VTB on the Black Sea coast. In 2017 reportedthat the Invest
Reserve company (a subsidiary of Invest Plus) bought vineyards in Sevastopol –
more than 1,000 hectares.

In addition to vineyards, there are places for recreation. In 2015, the press
service of VTB reportedthat Kostin travels to the Crimea from year to year to
rest at the dacha, which is owned by the Forian company (recall, then Kostin
owned it personally). This company owns a plot in the town of Foros with an area
of 4511 sq. m by the sea.

Neighboring area of 19.5 thousand square meters. m is owned by East Investments.
Another plot nearby (12.4 thousand square meters) belongs to the SPB-Fort-Sich
company, which is also owned by East Investments. Plus a plot of 7.9 thousand
square meters. m) is on a long-term lease from East Investments.

All these plots are located nearby, on Terletsky Street, they all have the same
category of use – for a hotel. Two sites are located at the address of the
former pioneer camp. It was reported that it was converted into a boarding house
and got the beachwhich was closed to the public.

Representatives of VTB and East Investments did not respond to Baza’s inquiries.




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JANE SOER

Jane Soyer - 30 years old. A graduate of Yale University. Chief editor of the
publication "The Russian Crimes".




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