Russian national suspected of siphoning USD 1 mln by ‘purchasing’ fruit and vegetables Reviewed by Momizat on . [caption id="attachment_5442" align="alignnone" width="615"] A Novosibirsk company transferred funds to the account of a foreign branch under a foreign trade co [caption id="attachment_5442" align="alignnone" width="615"] A Novosibirsk company transferred funds to the account of a foreign branch under a foreign trade co Rating: 0

Russian national suspected of siphoning USD 1 mln by ‘purchasing’ fruit and vegetables

A Novosibirsk company transferred funds to the account of a foreign branch under a foreign trade contract for the purchase of fruit and vegetables. The money arrived in Hong Kong last fall, according to the Siberian Customs Criminal Service. The contractual obligations expired in December 2014. However, the purchased goods were never delivered to Russia and the company failed to return the money.

A Novosibirsk company transferred funds to the account of a foreign branch under a foreign trade contract for the purchase of fruit and vegetables. The money arrived in Hong Kong last fall, according to the Siberian Customs Criminal Service. The contractual obligations expired in December 2014. However, the purchased goods were never delivered to Russia and the company failed to return the money.

A criminal case has been opened against a Novosibirsk resident who is alleged to have transferred USD 1 mln from Russia disguised as a payment under a produce purchase agreement, the media agency RIA Novosti reported last Friday citing the Siberian Customs Service, according to a recent article by the Russian Legal Information Agency.

A Novosibirsk company transferred funds to the account of a foreign branch under a foreign trade contract for the purchase of fruit and vegetables. The money arrived in Hong Kong last fall, according to the Siberian Customs Criminal Service. The contractual obligations expired in December 2014. However, the purchased goods were never delivered to Russia and the company failed to return the money.

The suspect was charged with avoiding the repatriation of large funds, a crime punishable by a prison term of up to five years and a fine up to RUB 1 mln (USD 15,600).

In a sign of a worsening problem, the Customs Service noted that the number of criminal cases opened over the past six months in Siberia on non-returned funds has exceeded the statistics of the same period last year by over 100 percent.

Siberian customs agents have explained that while transferring money overseas, offenders take the following steps: a Russian company signs an agreement for the supply of goods from abroad and then transfers the money to the accounts of a foreign counterpart. When the contract expires, the goods have not been delivered to Russia and the company does not take any action to return the ‘lost’ money.

The counterparts in such deals are usually shell companies registered under false names. The scheme is used to transfer funds from Russia mainly to Cyprus, Switzerland, Latvia and Hong Kong, and is integral to a wider problem faced by Russia, capital flight.

Russia`s central bank has revised upwards its estimates of capital flight overseas in 2014 to USD 154.1 bln from its previous estimate of USD 151.5 bln. The net outflow of capital from Russia reached USD 32.6 bln during the first quarter of 2015, according to the nation’s Central Bank and could amount, in the absence of an oil price increase, to USD 130 bln in 2015, according to estimates.

Russia has suffered a total net capital outflow of about USD 550 bln since President Vladimir Putin gained power in 1999, with net outflows every year except in 2006 and 2007. Independent researchers suggest that the government figures underestimate the problem, and assert that the actual total may be higher than USD 1 tln.

In addition to the loss of tax revenues, capital flight has an important bearing on other aspects of the Russian economy. “Capital flight weakens the national economy, starving it of investment funding, which further worsens the economy’s development prospects,” according to two Russian economists, Mikhail Gelvanovskiy and Vladislav Ovchinskiy.

In short, the Novosibirsk case suggests a “democratisation” of the issue in hand with not just Russian oligarchs wishing to export funds abroad but even lesser amount schemes operating at greater frequency.

Photo courtesy of PDPhoto.org and Jan Sullivan (Wikimedia Commons).

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