The Prosecutor-General’s Office of Russia has recently initiated legal action against Sergey Pugachev, the former banking tycoon, on charges of large-scale embezzlement and abuse of official position. The case is in connection with the collapse of a bank Pugachev was previously in charge of, which occurred in 2010.
First Deputy Prosecutor General Anatoly Razinkin submitted the indictment last Friday, according to leading newspaper Kommersant. The charges against Pugachev are in violation of articles 160 and 201 of the Russian criminal code.
As Pugachev fled Russia in 2011 and sought asylum in France, the trial will be conducted in absentia. Moscow has been unsuccessful in obtaining his extradition, contributing to the decision to proceed with the trial without his physical presence.
Based on the indictment, Pugachev is accused of leading an organized criminal group that conspired to embezzle a staggering 30 billion rubles by deliberately bankrupting the International Industrial Bank (Mezhprombank, MPB). An additional 64 billion rubles went missing, resulting in an overall estimated loss of $1.03 billion at the time.
Pugachev, 59, was a prominent senator who amassed immense wealth through his involvement in the banking industry. He even made it onto the prestigious Forbes list of billionaires in 2008. However, with the onset of the global financial crisis, MPB faced insurmountable difficulties in accounting for the unsecured loans it had taken from the Bank of Russia. Ultimately, the bank collapsed in late 2010, leading to the loss of billions in investor deposits.
Authorities in Moscow have long suspected foul play behind the bank’s bankruptcy, believing it was a calculated scheme to fraudulently acquire the embezzled funds. Criminal investigations into MPB commenced in January 2011, with Pugachev himself being investigated for embezzlement towards the end of 2013.
Throughout the course of the investigation, three of Pugachev’s associates involved with MPB and its parent company United Industries (known as OPK in Russian) were also investigated and convicted for their respective roles in the embezzlement scheme. Dmitry Amunets and Alexander Didenko faced charges of misappropriating Central Bank funds worth 28 billion rubles. Didenko cooperated with authorities, becoming a state witness and receiving a three-year suspended sentence. On the other hand, Amunets was sentenced to seven years in prison.
Marina Illarionova, another executive from MPB, was found guilty of abusing her position and carrying out Pugachev’s instructions to liquidate the bank. Consequently, she was sentenced to four years in prison.
Given Pugachev’s alleged ties to Russian President Vladimir Putin, certain Western media outlets have referred to him as “Putin’s banker.” However, Pugachev fled to France and obtained French citizenship. He has persistently taken legal action against Russia in European and international courts, claiming that he, in fact, was wronged by the Russian state. Nevertheless, he has consistently lost these legal battles.
The criminal case against Pugachev marks another significant step in the ongoing pursuit of justice for the collapse of MPB and the subsequent misappropriation of funds. While Pugachev remains outside of Russia’s custody, the trial conducted in absentia will proceed with the intention of holding him accountable for his alleged crimes.