The Russian banking supervisor is remarkably active
I love reading about Russian business dealings because they are far more entertaining than anything you read in the Financial Times or the Wall Street Journal. Take for instance the case of Valery Miroshnikov, for the last fifteen years the First Deputy Head of the Deposit Insurance Agency (DIA) in Russia. In his role, Miroshnikov was responsible for the closure and eventual rehabilitation of failing Russian banks. And he was remarkably active. Since 2004, the DIA has closed 319 Russian banks and is in the process of investigating a further 366 banks. Compare this to the US, the world’s largest banking system, where the FDIC reports that over the same time frame, 536 US banks have failed.
One may argue that the Russian banking system is in its infancy and as a result one might expect more failures than in a mature market like the US. And if the DIA is doing its job properly, such a high number of investigations and closures should be expected.
But then again this is Russia…
This week, investigative reporters at The Bell and Proekt reported that there probably was a different reason for the high degree of activity of the DIA. It turns out that Miroshnikov was one of the links between the Russian Intelligence Service FSB (the successor of the KGB) and the Russian banking system. Together with Kirill Cherkalin, who worked at the “banking division” of the FSB, Miroshnikov ran what effectively amounts to an extortion racket.
The two apparently launched criminal investigations into Russian banks and threatened to revoke their banking licence. Then, they would approach the owners of these banks and ask for bribes to stop the investigation and restore the licence. The Bell reports that anonymous sources told them that they were asked to cough up $200 million to stop the DIA investigation into fraudulent foreign money transfers. The billionaire and former owner of Mezhprombank, Sergey Pugachev, even went on record and told the reporters that DIA employees representing Miroshnikov asked for $350 million. If he wouldn’t pay, they would either have him killed or “deliver his son’s finger to his yacht”. Overall, it seems as if the FSB and Mirsohnikov have managed to extort billions of Dollars from Russian banks this way.
However, it seems all good things come to an end. In April this year, Cherkalin and two of his colleagues were arrested for fraud and corruption (one has to wonder who Cherkalin crossed so much he was arrested). Authorities found $190 million in cash and jewellery with Cherkalin.
And just by coincidence, Miroshnikov flew to Germany shortly before his pal was arrested. In Germany, Miroshnikov is undergoing hospital treatment for traumatic injuries suffered while playing tennis. The DIA has announced his resignation as of 22 July this year for “health reasons” …
And our children are embarrassed that their parents have such boring and uncool jobs as “bankers”. Turns out, being a banker can be quite exciting sometimes.