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1 THE GAZPROM FILES ROME IN THE SUMMER In october 2003 Poland Monthly and Rzeczpospolita revealed secret offshore bank accounts linked to National Insurer PZU. But new files show a much deeper scandal that affects an entire decade of PZU Executives. Nr indeksu ISSN X ISSN X PRICE: PLN (incl. 7 percent VAT $5.95US / $7.95CANADA _ 3.95UK / C5.95 FACE TO FACE WITH GRZEGORZ WIECZERZAK

2 Art by Aleksander Rokicki PZU: WHERE THE MONEY WENT In october 2003 Poland Monthly and Rzeczpospolita revealed secret offshore bank accounts linked to National Insurers PZU and PZU ycie. But the investigation since has revealed that this was only the tip of the iceberg. The island is picturesque. Long, sandy beaches, fishing cottages and beautiful countryside gradually meld into bustling luxury shops and restaurants reminiscent of Monaco or Cannes. Sheltered by the coast of Normandy, the island boasts pleasant winds, seaside restaurants, and every summer the population of 60,000 leaps to 120,000 or more, as the vacation spot is deluged by the British, the French and just about every other nationality within or outside of the European Union. It is the rare northern paradise with a catch. It is also the base of operations for money launderers siphoning money out of major firms in Poland and Russia. When maverick French MP Arnaud Monteburg called the United Kingdom a money launderer s paradise, he may well have been thinking of the island of Jersey and more specifically, the town of St. Helier. If not, he probably would add the island to the list after reviewing documents, computer disks, taped phone conversations, bank transfers and accounting statements accumulated by Poland Monthly during its 18-month investigation of top players in Poland s largest insurance company, PZU. Managed by British national Alan Evans, the Warren Trustees Group, a loosely structured outfit of lawyers and accountants specializing in offshore deals, aided and facilitated what appear to be illegal offshore trust funds, accounts and transfers for PZU officials. These included not only the controversial and now infamous pair of PZU and PZU Życie presidents Władysław Jamroży and Grzegorz Wieczerzak, but other PZU executives as well, including former PZU President Krzysztof Jarmuszczak, former 22

3 PZU Vice President Krzysztof Baca, PZU board member Janusz W., and former PZU President Roman Fulneczek. Finally, the accounts did not stop there. Trust funds and bank cards were set up for a number of other persons, who were not only indicted in the PZU investigation, but whose dealings were also noted in a 1999 Deloitte&Touche audit, entitled Project Cobra. The tip of the iceberg... The actions of Evans, a director of the Warren Trustees, would be questionable simply because until Oct Poles could not legally set up individual private bank accounts in other countries unless they were currently residing there. Exceptions were made only with a special permit issued by the National Bank of Poland, and not once in the thousands of documents pertaining to the Warren Trustees is there any mention of such licenses. Moreover, Evans and others linked to Mr. X a man who cannot be listed by name, thanks to a long-running gag order against Poland Monthly that still awaits a decision by the Polish court of appeals ( The Third Man /Poland Monthly/Oct. 2003) created a pipeline of money out of PZU for PZU executives and for a number of other Polish nationals as well. Yet the controversy does not stop there. Documents and computer disks obtained by Poland Monthly reveal what appears to be evidence of tax evasion in the United States and insider trading on the Australian stock market not to mention still more secret accounts and private bank cards for Russian and Ukrainian nationals linked to Russia s Gazprom and Chimprom companies (see related story, The Gazprom Files, p. 28). Moreover, the amounts of money are hardly negligible. On one account alone, the Warren Trustees listed more than EUR 21m in bank movements for 2001 and this appears to be only the beginning. Finally, many transfers as well as payments from PZU went through the accounts of, and were facilitated at least in part by, British Liberal Democrat Robert Woodthorpe Browne Poland first The story of the Warren Trustees is filled with the sort of intrigue usually reserved for spy novels. Unmarked packages sent to hotels apparently contained secret credit cards and cash. Corrupt deals were hatched and rehatched. Players were double-crossed, phone conversations taped and some persons were apparently threatened or bullied into keeping quiet. Yet this story, which culminates with the Jamroży and Wieczerzak affair, actually played out over a full decade and appears to have begun in Poland during the reign of Jarmuszczak and then-vice president Krzysztof Baca in the post-communist photo by Wojciech Hajkiewicz The home of controversy... The first door into the secret offshore accounts came when documents were revealed detailing irregularities in the construction of the PZU tower. chaos of PZU. At that time the company was underfinanced and few in Poland would have predicted that only 10 years later the insurance company would post profits of close to PLN 1bn for the first half of Reinsurance was a necessity, but in spite of the company s still unpredictable future, the possibilities at PZU did not go unnoticed by at least some British reinsurance figures, who managed to work their way into the company through reinsurance and green-card programs. That said, it appears that by 1993 a relationship between the Trustees and Jarmuszczak and Baca was apparently firmly in place so much so that the Warren Trustees, through the direction of Evans, set up accounts for both men in the form of Global Financial Investment Holding Limited, one of many trust funds that would be based in Jersey or the Bahamas. It was a strange, if not inauspicious, beginning. Seemingly straight out of the freewheeling money-laundering schemes of the 1970s, Jarmuszczak and Baca both received Barclays Bank cards. Soon after Global would be layered into a series of trust funds a technique both effective and traditional in money laundering circles that would see Baca s trusts mutating from Global Financial Investment Holding Limited to European Risk Management Consultants Limited to European Risk Management Consultants (UK) limited. Jarmuszczak s trusts would mutate into Financial Engineering International Limited to Thameside Risk Management. Whether or not money laundering took place, the setup was strange and apparently a precedent: The Warren Trustees would use the same formula for PZU officials for a decade, including both Jamroży and Wieczerzak. And whether or not Jarmuszczak s and Baca s accounts were indeed funnels out for PZU cash, it appears that the Warren Trustees had clear doubts about what they were doing. According to notes taken from a meeting at Charles de Gaulle Airport in Paris France in 1993, Baca, as well as a man labeled RWB would agree on the eventual structure for both Poles. At this time as was the case until October 2002 (and technically even now) such offshore accounts were illegal for Poles, and it was clear that both Baca and Jarmuszczak preferred to keep the accounts secret for many reasons. There were notes taken showing that both were reviewing options for citizenship in Portugal and Eire (Ireland), but a note attached to the bottom of the document is perhaps the most revealing. It says the following: Note: Both KB and KJ have had senior positions in the communist and post communist periods with state insurance company. As a consequence they have attracted some suspicion and it is presumed that they will have benefited personally in some way during the communist era. Their future cross border commercial dealings and investments in Poland, especially relating to foreign currency, must be carefully planned and their visibility limited. Visibility may have been limited, but both Jarmuszczak and Baca do appear to have benefited personally from the get go. According to a schedule of financial reimbursement, dated 13/10/1993, $300,000 was disbursed to Global, $300,000 went 23

4 photo by Jacek Turczyk/PAP Out on bail... Former PZU President W adys aw Jamro y was released on bail in August. Like former PZU ycie President Grzegorz Wieczerzak, Jamro y had been jailed for years. to Financial Engineering, $199,776 went to European Risk Management Consultants Limited and another $100,000 went to the Warren Trustees. Yet the cash did not stop there. Jarmuszczak benefited from a US Dollar Company Barclays bank card (No XXXX) throughout the 1990s, picking up cash collections from a certain Tracy Brennan at Barclays' 147 Holborn address in December of 1998, according to correspondence sent by Alan Evans through yet another trust company, Allied&Provincial Limited. Such cash collections were sent to various Barclays banks, including those located in Jersey, as late as January 2001, and company minutes listing Warren Trustees George Alan Evans and Paul Jackson as present, noted that loans were granted to European Risk Management, Financial Engineering and Global Financial Investments that totaled more than $640,000 in A further $273, was loaned to Baca in the spring of the same year, with July 4, 2003 minutes listing the reason for the disbursement as allowing him to complete the purchase of shares in Bank Śląski, which was already listed on the Warsaw Stock Exchange. Meanwhile, according to a fax dated Jan. 23, 2002, Evans set up additional bank accounts for Baca s European Risk Management Consultants, including one in Barclays Wall Street branch in New York. When contacted by Poland Monthly neither Fulneczek nor Jarmuszczak would discuss anything about the accounts or anything else, saying that as a result of a brutal press campaign that was begun against us, we must inform you that we do not intend to have any correspondence or discussion [on the matter]. Both did threaten legal action, however, if any libelous articles appear in the press. In fact, the no-comment strategy reigned supreme. Baca did not respond to faxed questions. Evans did not return phone calls and Browne did not answer the phone or return inquiries through his political party, the Liberal Democrats. Meanwhile, only one day before this article went to print, Poland Monthly was informed of an apparent criminal investigation that could potentially have this correspondent severely punished for publishing The Third Man (Poland Monthly/October 2003), for reasons that remain unclear, but surely violate press freedom standards the world over. Passing on benefits But silence or no silence and regardless of the nature of the Ochota district prosecutor s investigation into the circumstances surrounding The Third Man the secret accounts hardly stopped when Jarmuszczak stepped down. According to Warren Trustees files, Evans soon set about establishing a secret trust fund for Jarmuszczak's successor, Roman Fulneczek, who took over PZU in Although there seems to have been some difficulty in finding a bank to issue a card for Fulneczek, on Sept. 8, 1995, Evans convinced Ian Bastable of National Westminster Bank in St. Helier, Jersey, to issue a business card (company reference No XXX) that could draw on Narai Limited, which was registered for Fulneczek himself. Again a middleman was present, with faxes sent to him in 1996 at the Vienna Plaza Hotel stating that Narai Limited already had DEM 3,546,774 and $403,851 on its accounts. The fax concurred with Narai Limited minutes, but moreover, documents seized and stamped by the French fiscal authorities from a residence in France included National Westminster Bank business card accounting statements addressed to Evans but with Fulneczek s company reference number that further detailed sundry expenditures, including stays at the Vienna Marriott and purchases in Vienna. Yet the chain of PZU secret accounts would continue after Fulneczek. By Fulneczek s abdication of the PZU throne in 1998, a certain PZU board member, Janusz W., had already been given power of attorney to represent Ultra Overseas Holdings Limited, a company registered in the Republic of Ireland, according to Warren Trustees files. The appointment is damning in itself. Janusz W., who could not be reached at presstime, is currently indicted for a multitude of sins allegedly committed while at PZU. Moreover, in the Deloitte&Touche Project Cobra audit, he and his brother Roman W., who also could not be reached at presstime, actually have the honor of having an entire section ded- 24

5 icated to their work with PZU Development and PZU Development President Wojciech D., who was also indicted (and who also has his own trust through the Warren Trustees, but also could not be reached at presstime.) And it would appear that the Deloitte&Touche report hit right on the money. According to Ultra Overseas documents, $723, was in the accounts as of June 23, 1998 only days before Janusz W. s appointment to the trust and oddity in itself as most trusts do not come complete with full bank accounts. In any case, the money went awfully fast. By April 14, 1999 the amount had diminished to $230, The scandal hits For years the trust funds and accounts were known only to a few individuals. Yet Fulneczek s retirement from PZU meant the end of dealings that were completely outside of the public eye. Allegations of mismanagement and missing money would hit the press with PZU President Władyslaw Jamroży, who was later indicted for purchasing property at a loss and acting against the interests of the company (and recently released on PLN 1m bail). Again, it is hard to disbelieve the allegations, as Jamroży who would not return calls to Poland Monthly appears to have convinced Evans and the Warren Trustees to set up yet another offshore account, The Portland Trust, for his own use. Detailed in Poland Monthly s article, The Third Man, Jamroży would later commission the construction of PZU s current headquarters in Warsaw, using Warren Trustees related companies to build the towers. Funds diverted through various companies some involved in the tower project had three or four mirror companies in Jersey, Vienna or the United States appear to have gradually made their way to Jamroży s account. Poland Monthly was able to verify that that the trust had been established as Portland Trustees Limited and registered in Jersey on Nov. 24, 1997, as well as Pinnacle Trustees, set up much earlier, yet also later linked to the former PZU president. More shocking, Jamroży s account listed a whopping total of $4,308, in January 2001 not to mention the relatively paltry sums of DEM 419, and EUR 1,001,535 on the same account. And whether or not money ever moved through the Pinnacle Trust, secret accounts and Barclays cards were set up The Wieczerzak saga Equally interesting was the evolution of the Fountain Trust, a trust fund set up for Grzegorz Wieczerzak. As detailed in Poland Monthly s October 2003 issue, Fountain was set up by the Warren Trustees through Jamroży s Portland Trust. At a press conference in May Wieczerzak confirmed the existence of Fountain (Poland Monthly/June 2004/No.28), but claimed it was inactive. Later, he confirmed that he did set up the account, but that either his signature was falsified or his account was misused without his knowledge. Whatever the case, the account was hardly inactive, although the first recorded monies sent to Wieczerzak actually were sent to Midland Bank s offshore department in St. Helier, to the account of A.R. Wieczerzak (Barclays account No. 8303XXXX) to the tune of $930,000 only weeks after Wieczerzak s appointment as president of PZU Życie. Like Jamroży, Wieczerzak was recently released on bail after being held for years on charges of acting against the interest of PZU Życie. In mid-august, the courts also ruled that he could not be prosecuted for income tax evasion, as there was apparphoto by Tomasz Gzell/PAP for Jamroży and former PZU board member Jacek B. through Linfield Consultants Limited and Ellenton Investments Limited. Jacek B., who was listed as sitting atop yet another Warren Trustees trust, Rednap Limited, was assigned cards through the help of Warren Trustees Karen Bradley and Evans. According to Trustees files, the card accounts were canceled and returned by September 2002, but Ellenton Barclays accounts were active indeed. Yet the fun does not stop there. A glance into the history of Ellenton reveals that both Wojciech D. (PZU Development) and Bolesław D. received Barclays cards through Ellenton Investments, with Wojciech D. being listed as one of the founders of the trust. While letters indicate that Wojciech s card (No XXXX) was cancelled by April 5, 2002 (ironically, not long before limited offshore accounts would become legal), there was also a note taken in June 2003, where it was resolved to pay Bolesław D. $14, for services rendered Sept. 27, Bolesław D. is later referenced as being active in insurance sales in Poland. Wojciech D. s PZU Development was yet another company under investigation for suspicious activities during the construction of the PZU tower. Wojciech D. was also arrested (although, like the others, still not convicted) when the authorities Free and controversial... Former PZU ycie President Grzegorz Wieczerzak contested the existence of some accounts and that money was ever sent to anyone in his family. moved in on Wieczerzak for alleged misdeeds. According to Warren Trustees files, as of Jan. 20, 1999, Ellenton investments listed $123, on its accounts. In fact, the web of accounts and funds is so extensive with regard to the PZU tower that it is surprising that some parties did not try to find other ways to invest their money. After all, one serious leak such as that of documents given to Poland Monthly in 2003 could eventually jeopardize the entire scheme. Moreover, the Rednap accounts are more than incriminating, with massive amounts of money bouncing from bank to bank and country to country. One transfer, referenced Rednap Limited hit Lloyds TSB in Jersey in April 2001 to the tune of $424, Still more money, $300,000, was transferred to an account, labeled Softwired Technology, at Raiffesien Bank Polska in Warsaw only four days later on April 6, 2001, which would seem to indicate that at least some money had made the journey full circle, out of Poland and back in again. That said, Jamroży has remained the centerpiece of the PZU investigation. Needless to say, with such monies in Jersey accounts, posting bail in August was simply not much of a problem. 25

6 photo by Preston Smith ently not enough evidence to convict either Wieczerzak or his wife. In a phone interview Wieczerzak pointed out that the account could not be his, as he had no idea who A.R. Wieczerzak could be (and that Poland Monthly should try to find that A.R. Wieczerzak ). When told that the initials stood for Anna Renata (later there are other names listed, including Anna Marie), he said that he knew no-one with that name, although he did admit that his wife s name is Anna when Poland Monthly obtained court records stating this fact. Additionally, money that was sent in the name of another family member also matched. Yet Wieczerzak did seem genuinely surprised to learn of other accounts, and the discrepancy with Anna s middle name creates even more questions. This becomes even more intriguing, as Wieczerzak s accounts were hardly inactive during his incarceration. Fountain Holdings (Barclays account No. 7258XXX) may have been the first in the stable of offshore trusts, but it was soon joined by Hestia and Stofield Developments, with GBP 287, hitting Hestia s books in April 2002, according to notes from a board meeting, chaired by none other than Evans. Small amounts left the trust, ostensibly to pay for a private school for Wieczerzak s children although he also challenged this point. Later GDP 276, was transferred to Stofield Developments. Yet, as if the private accounts needed a bit more mystery, a letter sent to a certain Tom Hart in August 2001 indicates that Stofield Developments Where it all began... St. Helier, Jersey is similar in style and feel to Monaco or Cannes. Shown above is National Westminster Bank, which also granted bank cards to the Warren Trustees. was at that time bidding on land at Aston Down, Gloucestershire land belonging to the British Ministry of Defense. It is unclear as to whether or not money from Wieczerzak was involved, but the tendency of the Warren Trustees to borrow indiscriminately from other accounts and the size of the bid (GBP 6m) are troubling indeed. What about the cops? Yet perhaps the most troubling aspect of the Warren Trustees money-laundering scam is not that it runs so deep other files showed secret accounts and transfers for a number of other Polish nationals (see related story, The Other Files p. 26) but that it has lasted so long and has not been hindered the slightest by revelations in the press. After Poland Monthly (and, we admit, more importantly) Rzeczpospolita, Poland s second-largest daily, revealed that offshore dealings existed in October 2003, statements were issued from the Polish prosecutor s office that seemed both serious and bizarre. According to a statement made to Rzeczpospolita by press spokesman Zbigniew Jaskólski, Polish authorities had contacted the Jersey attorney general s office, although Jaskólski stated at the time that the Polish prosecutor was not happy with the level of cooperation. Additionally, Polish Attorney General Karol Napierski stated that if monies were proven to be in Jersey, the authorities would set about retrieving them. What has happened since October 2003 remains a mystery, however. A spokesman for the Jersey attorney general s office was all but cryptic, saying that he would neither confirm, nor deny, that Polish authorities had been in contact with the Jersey office, adding only that it could have been the case that the Poles had not followed proper Jersey procedure, and thus no progress had been made. Gary Godel, director of enforcement for the Jersey Financial Services Commission, refused to comment on the specifics of the Warren Trustees allegations, although he did say that trust directors would be obligated to notify Jersey police if they were suspicious about the origins or nature of money passing through trust fund accounts (see related article). When pressed he also admitted that a situation where one director was orchestrating hundreds of companies around the world was not the norm and that high-profile corruption cases, such as Gazprom or PZU, should set off alarm bells for company directors. Moreover, intentionally overlooking suspicious dealings could mean jail time for such directors. At least on the surface the authorities seemed to be taking allegations or theoretical allegations seriously. Yet something appears to be amiss, if not in the UK then in Poland. A member of the UK s fraud squad told Poland Monthly that such allegations, if placed by the Polish authorities, would mean a full investigation. In the event of wrongdoing, British authorities would trace the money to the ends of the earth. But most shocking was an official statement by Nicholas Troy, acting head of the Financial Crimes Unit in Jersey. Troy sated that at the present time the States of Jersey Police has received no request from the Polish authorities for assistance in any inquiries they may have on this matter. This statement would seem to imply that if Polish authorities did indeed contact Jersey the cooperation did not last long or run very deep. Simply put, in spite of a supposed ongoing investigation into PZU, PZU Życie, the antics of Wieczerzak, Jamroży and a host of others, it is questionable as to whether Polish authorities tried to find the money at all, much less retrieve it. In fact, it appears that the only concrete reaction to the October 2003 headlines has come from the Polish courts in the form of a gag order and PLN 1m lawsuit upheld by a Warsaw court against both Poland Monthly and Rzeczpospolita. So why the long-running gag order? It could be simply the result of Poland s 26

7 creaky, slow-moving legal system. Even so, it would seem that the public deserves the right to see such documents for itself documents that include puzzling letters and faxes to Jamroży that likely affected negotiations during the PZU privatization process. In fact, the gag order and the release of indicted PZU executives is even more difficult to understand when the Deloitte&Touche report is taken into account. The Project Cobra report, published on Dec. 19, 2001 by Deloitte&Touche, details multiple misdeeds, with the construction of the PZU tower taking up a major section of the audit. Apparently, the Deloitte team, headed by Deloitte&Touche Partner Dereck Davey, had more access to the inner workings of PZU than anybody before or since yet the company has not participated as a witness or an expert witness in the case against the indicted PZU executives. Moreover, Davey, who is regarded by due diligence experts to be top-notch, also managed to list Warren Trustees companies and members as questionably active in the construction of the PZU tower. The report itself would seem to be enough for a prosecutor to go on although some questioned the resources available to the attorney general s office. When contacted by Poland Monthly, Deloitte&Touche confirmed they had published the report, although the company would not comment on cooperation with the prosecution. That said, other companys have also shown that they would be interested in working with the Polish prosecutor. Brian O Brien, a director with PricewaterhouseCoopers Investigations and Forensic Services noted that it was important to have the right resources to perform such an investigation, which was both complex and jurisdictional. This case ranks right up there with some of the more high-profile cases in Western Europe, and it must be addressed appropriately by the Polish legal system. The publicly reported comments to the prosecutor by the judge lead us to question whether the prosecutor has the resources available to manage the complexity of the case, so that the facts are finally presented in a court of law. O Brien also questioned whether appropriate resources were being committed to recover the assets that were allegedly misappropriated. Back to Jersey But could there be deeper, more sinister motives? Poland Monthly learned unofficially in August that the Jersey regulatory board for financial transactions was long ago made aware of allegations involving the Warren Trustees, yet apparently by press time no official move had been made to investigate Evans or the actions of other individuals involved with the scheme. Strange news as new money laundering legislation in the UK has become incredibly stringent. Moreover, under the law a broker, lawyer or person such as Evans or any of the trustees has the obligation to notify authorities if there is even the suspicion of wrongdoing, questions regarding the source of monies or doubts about a specific transaction. In short, not only did Evans and other trustees blatantly avoid reporting suspicious transactions at one point Evans and a Jersey lawyer, David Le Cornu, traded correspondence on Wieczerzak s criminal proceedings even though money continued to be paid out through Hestia but the regulatory commission failed to move on both stories published in the foreign press and accusations by the spouse of one person involved, who claimed in Jersey courts that actions taken during the construction of the PZU Tower amounted to fraud and money laundering. Some pointed out that the regulatory group was simply being cautious, but others, including a noted Jersey lawyer said he was stunned at the lack of action. The articles should have triggered the regulatory commission into action, he said. The entire island is talking about the case simply because it threatens the offshore industry in Jersey itself. I have no doubts that this is going to end Jersey as we know it, said the lawyer. The United States, in particular, has long been frustrated with money movements here, and many feel that Jersey is already on its last legs, thanks to concerns linked to money laundering and terrorism. This is so blatant, however, that the courts are going to have to deal with it. Considering the fact that Warren Trustees files also contain secret accounts for Turks, Americans, Poles and Russians, the problem may be more shocking that anyone ever expected especially as the Russian accounts lead to Russian giant Gazprom and Chimprom, both of which have been the subject of chronic scrutiny (see related story, The Other Files, p. 26) Smoke and mirrors Yet Jersey is always the coquette. Mystery and secrecy are the island s strong point, and as if to prove this it appears that some sort of investigation is actually under way. Although Jersey law prevents police from confirming current investigations, a BBC journalist confirmed that Jersey police had offered at least one person protection under a witness protection program. Another Jersey official said cryptically that the police are very interested in this. With regard to protection, it may indeed be necessary, as other sources recently in contact with Poland Monthly voiced fears of revenge or retribution from what was described as a web crossing borders and possibly even penetrating government intelligence agencies. Such talk might seem fanciful or fantastic, yet the Warren files which match previous documents obtained more than a year earlier by Poland Monthly, not to mention letters signed and received by Jersey legal offices do leave plenty of room for conspiracy. This case ranks right up there with some of the more high-profile cases in Western Europe. Brian O Brien, PricewaterhouseCoopers Poland What is on paper happens to implicate an entire line of PZU presidents, vice presidents and board members from 1993 until the arrival of PZU President Zbigniew Kostkiewicz, who was given the unenviable task of cleaning up something that seems much more organized than most could have imagined. That said, there is evidence to suggest that Kostkiewicz was only partially successful and considering the organization stacked against him, this comes as no surprise. And considering the secret letters, secret accounts, the political ramifications and the efforts to shut up the press there can be no other conclusion: The PZU/Warren Trustees conspiracy runs deep. The real question remains: Is there anyone in the Polish authorities with the integrity to do anything about it? Preston Smith, 27

8 The Gazprom Files The Warren Trustees had more on its ledger than just Polish accounts. Files linked to secret commissions show money being funneled out of Russian Gazprom. The PZU affair may seem huge, but then there is Gazprom. Files, documents and accounting records belonging to a Jersey offshore services company, the Warren Trustees Group, indicate that much more was afloat than just setting up accounts for former PZU and PZU Życie presidents Władysław Jamroży and Grzegorz Wieczerzak. Apart from setting up secret offshore accounts for a host of other PZU executives and apart from aiding in questionable money transfers out of the country money appears to have been siphoned out of both Gazprom and from Chimprom, one of Russia s largest 200 companies. More shocking, files and Barclays bank cards directly linked the Warren Trustees and British Liberal Democrat Robert Woodthorpe Browne with questionable bank transfers in the form of insider commissions paid to Vladimir Denga, the former director of Gazprom s insurance-oriented subsidiary, Sogaz. Just the link to Gazprom is enough to raise eyebrows. Called Russia s Enron although it is not going bankrupt anytime soon Gazprom hit the press in 2002 when it was revealed that PricewaterhouseCoopers had apparently overlooked millions of improper deals due to what has been kindly described as lax accounting methods. According to reports in Businessweek International, former Gazprom CEO Rem Vyakhirev had run the company as his own fiefdom up until This changed when Vyakhirev was ousted by Putin, replacing him with Alexei Miller, whose mandate was to clean up what had long been Russia s largest and most controversial company. And one of the first tasks Miller had to look into was a bizarre gas-for-tax barter deal in the Yamal-Nenetsk province worth at least $200m in taxes and potentially $5.5bn in pretax profit. The Denga transfers were questionable for a number of reasons, most importantly because Denga was dismissed by Sogaz s Board of Directors April 1, 2001, although Denga later claimed he resigned because of the changes in Gazprom management that came in Yet long before his resignation The Warren Trustees had set up the trust fund Rendale Limited as a Bahamas-based company (in September 1998). Company notes state that all correspondence should go via Robert Browne & Co in London. Also, connected companies included the shell trusts Bellerwick Limited, Kinsey Limited, Hervey Limited and Rexberg Holdings, and transfers designated for Denga were more than large. On Oct. 21, 1999 FF 300,000 was sent to Denga s Monte Carlo Account, with similar sums (up to $450,000) going to other accounts in Monaco, New York and Vienna at least until Equally interesting, Rendale sent RRI Risk Research International invoices for massive amounts of money based on profit commission due on reinsurance placements, reinsurance commissions on satellite risk cover in respect of launch of Yamal 1 & 2, and premiums due on reinsurance placements that were often more than $100,000 and sometimes more than $300,000. In short, it appears that Browne s company reinsured or gave reinsurance advice to the president of Sogaz, who then invoiced Browne for commissions from a company set up by the Trustees, whose correspondence all went through Browne s hands. This latter point becomes clear when company minutes are examined: Browne s company, RRI/ Risk Research International Limited, acted as an intermediary for Rendale Limited, both trusts apparently operating out of the same Union Street address as the hundreds of other companies managed by the Warren Trustees. (Although RRI s address was technically in London, Warren Trustee Alan Evans seemed to control billing to and from both companies.) Yet this seems to be only the beginning. Other companies, including Astra, Kinsey, Bellerwick, Hervey and Caltron all functioned in similar fashion, with Browne s RRI acting as the ultimate go-between for The Secret Hub of Jersey The Warren Trustees/PZU/Gazprom/Sogaz case is not the first scandal to rock Jersey. But the real question is: Just what are the authorities going to do about it? The PZU/Warren Trustees case is hardly the first time that the Channel Islands and more specifically, Jersey have hit the radar of the press and international authorities. In March 1999 the Russian Central Bank was accused of bypassing a law passed in April 1995 that would send half of the bank s profits to the government. Instead, it turned out that a whopping half of Russia s currency reserves had been invested offshore where the profits disappeared. So where did they go? According to a Washington Post Foreign Service investigation, Russia s reserves were turned over to a small, little-known money-management company by the name of Financial Management Co. Ltd., or Fimaco, which was set up in 1990 in Jersey. Although the chairman at the Central Bank at the time, Viktor Gerashchenko, claimed that Fimaco belonged to Paris-based Eurobank, it turned out that Fimaco actually belonged to Ogier Nominees Ltd. And Ogier Secretaries Ltd., two unknown offshore groups that had been kept secret by the Central Bank. It was, to be sure, a high-profile case. Yet in spite of this Jersey was not included on a list of uncooperative tax havens created by the OECD in April 2002, which included Andorra, Liberia, Liechtenstein, the Marshall Islands, Monaco, Nauru and Vanuatu. Yet this list seems to be somewhat incomplete, with international lawyers routinely complaining that tax havens basically still exist in Vienna and Switzerland. Moreover, Jersey may not have been named in the list, but an agreement orchestrated by US Treasury Secretary Paul O'Neill that called for more transparency and cooperation between US 28

9 PAP/EPA his doorstep in mid-august. Authorities stated that Bondarenko had opened the door only to be handcuffed and then shot dead at his apartment Aug. 11. Officials said they suspected that the assailant had wanted access to a computer program that would give access to Russian tax information. Poland Monthly was still not able to determine at press time, however, if the deceased Bondarenko was the same man involved in the Rendale transfers. Cleaning house... Russian President Vladimir Putin discusses the future of Gazprom with Gazprom President Rem Vyakhirev, who was later kicked out by Putin in all companies involved. Astra installments arranged on behalf of Sogaz Insurance company ran at more than $200,000 a pop for commissions sent to Astra by RRI (there were at least 11 installments), and it appears that the money was thus sent to trust fund holders, all of whom were Russian nationals, including Vladimir Bondarenko (Bellerwick) and Sergey Medvedev (Caltron Holdings Limited). So could the transfers have been legit? Perhaps, but the arrangements have all of the makings the layering of companies, shell-company arrangements, massive commissions, circular payments and vague invoices of classic money laundering. Finally as if the Russian transfers needed still more intrigue Russia s top tax official, a certain Vladimir Bondarenko was found murdered on A world without borders Meanwhile, the Russian accounts are not the end of suspicious money movements across borders. Files included Gameshi Holdings Limited, which aside from being registered at the same St. Helier s address as the hundreds of other shell companies formed by the Warren Trustees group, also highlights a relatively minor tax evasion scheme in the United States. Another file, labeled Danesfort, includes details linked to companies that appear to have been working to take over companies and illegally play the Australian stock exchange. Meanwhile, files related to the Warren Trustees and Browne detailed business interests ranging from Turkey to Zimbabwe to Curacao to the former Yugoslavia. Back to Poland... Admittedly, such accounts demand more investigation before conclusions can be drawn. Yet the Polish accounts, while less heart-stopping, also hold their own surprises especially those active during authorities and the Channel Islands was at least somewhat indicative of international concerns at that time. Even so, secrecy does seem to be Jersey s biggest selling point, and getting answers to simple questions is not easy. No comment or I can neither confirm or deny that an investigation is taking place, is the norm, and Jersey police are in fact limited by Jersey law so that they cannot make comments to the press with regard to an ongoing investigation. But to assume that Jersey officials have no interest in ongoing cases would be a mistake. Considering Jersey s GDP some estimates put this as high as GBP 2.2bn there is plenty of reasons to run a legitimate, honest shop that cannot be shut down by the bad apples in the batch. When contacted by Poland Monthly, Gary Grodel, director of enforcement for the Jersey Regulatory Commission, said, I can confirm that Warren Trustees is a regulated trust company business, and we take issues such as those raised in your publication seriously. You will appreciate that I cannot discuss any non-public information with you. Grodel did respond to theoretical situations, however, agreeing that a situation where a single director appears on a hundred-plus different trust funds or large amounts of money arriving from troubled and infamous companies such as PZU or Gazprom should set off warning bells among Jersey directors. There is always some discussion going on between us and the [Jersey police], he added. We have the proper gateways and if we see something going on, then we will get around [to a particular company to investigate it.] I think that if I had a client and I saw details in the press, and that information looked as if it should be taken seriously, I would hope that they reach for that file and if they don t make a report, then they are quite comfortable about that. When asked if a failure to contact Jersey police in such a situation could make a director or lawyer that was privy to such information culpable for a crime, Grodel answered that according to Jersey law the failure to report even a suspicious transaction could be punished by prison time. Grodel said that recent changes in the law had put the onus on bankers, lawyers and trust directors to try and stop money laundering, 29

10 the PZU crisis years that began with the regime of former PZU President Władysław Jamroży. Markaz LTD files indicated relatively sundry sums being disbursed to a certain Kazimierz Dembski, as well as to a Leszek Strawiński and Jan Chrostowski, all of whom also received Barclays cards (No XXX, No XXX and No XXX, respectively) on May 22, 2001 under the Hermes Consultants LTD company, also set up at the same Union Street address as almost every company mentioned in this month s Poland Monthly. Chrostowski also received power of attorney for yet another offshore trust, Haselden Investments Limited only one day earlier ostensibly to sign a loan agreement made between the company and Elmedia. Monies had previously been sent to Chrostowski s various private accounts in different Warsaw banks, but money was also sent to a certain Pierre Belin, who received FF 1,246,800 at an account listed as Tresor Public, Tresorie de Draguigan Cedex. The reference on the transfer was listed as Plots 37/38 Bal on 3 Plots Mr. J., which at first seems a bit mysterious. Strawiński had received successive $50,000 sums, sent from Hermes to a bank account in Switzerland, but Mr. J. appears to have been Marek J. and again the intrigue is considerable. In December 2001 Marek J. found himself fighting with the former employees of technology provider Formus, who had accused him of acting against the interest of the company and de facto leading it to bankruptcy. Interestingly enough, Formus happens to be the same company that, according to a Gazeta Wyborcza report, spawned Elmedia although it would seem that the company was instead born out of Hermes sister company Haselden Investments Limited, and at least partly funded by a $101,500 bank transfer sent from Haselden account No to Elmedia s Wielkopolski Bank Kredytowy account in May Even more interesting, in a telephone interview Chrostowski, he current director of WAN, a little known Warsaw developer that just landed a contract for Polkomtel s new headquarters, admitted to being a co-owner of Formus. That said, he denied any knowledge of Haselden or Elmedia, which seems strange as, according to various media reports, Elmedia owned 51 percent of Formus. So do the minor Polish accounts amount to money laundering? Not necessarily, although there mere existence could be a violation of Polish law. Moreover, the fact that almost everything organized by the Warren Trustees (including yet another account under the Elysium trust for a controversial Polish lawyer) is suspect, would seem to demand inspection by the authorities. That some of the above-mentioned accounts were at least indirectly, if not accidentally, linked to the Russian accounts and the PZU accounts also arouses suspicion. In a best-case scenario, the above-mentioned Polish accounts were all backed by special permission from the Polish authorities. Perhaps all transfers were based on services rendered, were taxed appropriately and were completely legit. Perhaps, the bizarre accounting and cross-borrowing by the Warren Trustees has wrongly cast doubt on otherwise squeaky-clean offshore banking. Perhaps, but still there seems to be little doubt that the Warren Trustees have, at the very least, a lot of explaining to do. Gazprom. Chimprom. Russian schemes and indicted Poles and hundreds of documents that indicate monies were also later transferred to Turkish accounts. And considering that leading anti-corruption experts claim that up to one-third of the world s money is traded illegally, a logical explanation for all of the above is something many of us would really like to hear. Preston Smith, which has become an even greater worry in the age of terrorism. We can t say that no money laundering has ever occurred in Jersey, he added. All kinds of institutions the world over have been involved in things they should not have been. You could say the same thing about London or New York. But having said that, once it s discovered, the question is: What happens next? Do these guys act responsibly? Responsible behavior, unfortunately, has not always been the norm in offshore banking. Traditionally, the hint of an investigation has prompted illegal brokers to begin shredding documents, but recent legislation has paid off. The Jersey commission and Jersey police recently broke up a Nigerian group and repatriated monies back to that country, according to a press release posted on its website. According to the commission, trust fund directors have an obligation to know your client, and ignoring a proper vetting process is a first, and potentially lawbreaking, mistake. 30 Which leads us back to the wondrous powers of the Warren Trustees and chief director Alan Evans. According to documents in Poland Monthly s possession, Evans managed the accounts of at least 700 different trust funds, with many funds changing names or having double or triple accounts at different addresses in Dublin, Trenton NJ, the Bahamas and other locations around the world. Considering the wide range of nationalities involved and the wide range of business links it is difficult to believe that the Warren Trustees Group took even basic steps to vet international clients. Moreover, some companies and persons appear to have been simultaneous experts in real estate acquisition, insurance, reinsurance, government permit acquisition, construction, Internet technology and project development not to mention in trust fund law and financial advisory services. Moreover, even a cursory glance at documents should have raised eyebrows. How Sogaz CEO Vladimir Denga could buy reinsurance from Robert Woodthorpe Browne s RRI group, yet receive commissions on the sale to a trust set up for Denga by Evans and apparently Browne is a mystery. Of course, receiving commissions on something you buy yourself is the oldest scam in the book (especially if it is using government money), but if Gazprom and PZU are the model for the Warren Trustees, it is probably worth having a look at other operations, including those in the former Yugoslavia and Turkey. So what is going on? Hopefully, some sort of investigation somewhere. Either Evans and partners are the ultimate business geniuses, or the Jersey commission is going to have quite a bit of work on its hands. Considering that this may not be the only scam of its type (top Romanian journalist Paul Radu also recently traced bizarre Gazprom transfers to Jersey, which appear to be unrelated but happened to go through Balkan contacts), it would probably be good to bet on the latter. Preston Smith,

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12 INTERVIEW Wieczerzak the Enigma On deadline, former PZU Życie President Grzegorz Wieczerzak agreed to meet Poland Monthly Editor Preston Smith to talk about the Warren Trustees and Jersey accounts. The interview was at times intriguing, mystifying and often more than just a little troubling. Smith: First, let me say that I appreciate you having the courage to meet with me and talk about this face-to-face. Most of the others linked to the PZU accounts have asked for us to send faxes or have avoided interviews altogether. Wieczerzak: It s [not a problem to meet]. Smith: Getting to the point, through a number of sources we obtained the accounting and bank transfer records for the Warren Trustees, an offshore company in Jersey that created trusts for a number of people in Poland, Turkey and Russia, not to mention yourself. When we met the first time I m sorry that I was rather rude you told me that Fountain Holding did belong to you, although it was not active. Wieczerzak: I wasn t the owner. I only had power of attorney. Smith: But you were listed as having the unlimited right to withdraw money. Wieczerzak: Yes. Smith: There were also other accounts, including Hestia and Stofield Developments, created in your name. That s what it looks like. Wieczerzak: I can only say I would be very interested in this for a very simple reason. I have to account for $930,000, which the bank is demanding of me, which my wife took from me. I would very much like to take these documents straight to the public prosecutor. Smith: That s intriguing. The bank transfers involved show money going to either Anna Wieczerzak sometimes the middle name or middle initial is different or large sums of money are sent from this account apparently to pay for your son s schooling. It appears that some money was moving around between Hestia and Stofield after you had been arrested. Not the first $930,000 that hit the Midland bank account only a little while after you took over at PZU ycie but the later transfers were sent to Anna Wieczerzak or to pay for school for you son or Wieczerzak: I pay for my children s photo by Preston Smith Cool and collected... Wieczerzak owned up to some facts, but also said he wanted to know more himself. school myself. Nine-thousand pounds is much too much money to pay for private school. Smith: Private school can cost that much or this could simply be something written to somehow justify transfers on paper. There are plenty of other transfers with very strange reasons attached to them. We know the money was sent and your family s names are involved. I m prepared to believe that you did not know about the later transfers because you were under arrest, but the $930,000 to Midland Bank did happen. Wieczerzak: I don t know what this is about. On my account it is true that in October or maybe in November 1998 this investment went through, but what I am looking at here does not correspond with my name. The prosecutor has all of this information, and I have even given the prosecutor power of attorney to try to get through this. Smith: This is money sent to a private person (to A.R. Wieczerzak), so this could be classified as an investment. That is what is strange about it. The other accounts also were foundations, but in the end they were in the names of individuals which was illegal in Poland. Wieczerzak: It is pretty much the right amount of money. The bank is the same. The time frame is not correct because the money should have been sent there sooner and the name is not right. Only the amount of money is correct, not the bank account number or the name. I would like to check it out myself because this money the $930,000 I never saw it again in my life. [Grinning] And I m sure I ll never see it. Smith: I still don t understand. PZU was supposed to pay you $930,000? Wieczerzak: That was money coming from the bank, from Societe-Generale, some of it for an investment and some to be awarded to me. Only it was sent to my private account some to be my earnings and some to be invested and you can check this with the tax office. I ve given them power of attorney to my accounts in Great Britain, so there is no problem for them to go there or to Societe and find out. I ve made it as easy for them as I can. But I can only say that a large part of that money should be returned to me by the banks, but my wife left and took the money from the account, although the account should read A.R. Wieczerzak, not G. Wieczerzak. The other things don t add up. The name of the bank is correct, although that is the old name because it is HSBC Smith: Are you separated from your wife? Wieczerzak: I m in the middle of a divorce. Smith: That is intriguing. When it comes to the Warren Trustees, the way they handled money is strange from the start to the finish. Wieczerzak: [No answer] Smith: Are you in contact with W adys aw Jamro y? Wieczerzak: No. Smith: His account at one time held about EUR 6m. There was also a lot of money on the other peoples accounts, which is why I have to be critical of anything you say. After all, you are all involved with PZU, and some have already confirmed that they had accounts in Jersey, which is in itself controversial as they were not legal for private persons. Wieczerzak: Please remember that I was not the owner of Fountain Holdings. Smith: Right. You had power of attorney, but Portland did belong to Mr. Jamro y, and in fact the trust is regis- 32

13 tered in Jersey. But okay. If we look at Hestia and Stofield this is just a small part of the documents you can see what was happening. Wieczerzak: I can only comment in the abstract because I was being held under arrest when these transfers were taking place. My wife did not have the legal right to take money out of my account except to pay for our children or to pay for school. Then she could have arranged these kind of payments if they were supposedly being used for school The sums of money are still very big and I paid from this account myself for their school fees, so like I said, I can only say this is something I can t really comment on, except in the abstract. Even in Britain that is a lot of money for school. Like I said, this has all been checked out by the tax office, and the account is G. Wieczerzak, not A.R. Wieczerzak, so I can t say any more about that. Smith: Fair enough. I guess the next question I would like to ask, however, is that you have said more than once that you are being framed. That you did not commit any crimes. The problem I have with that is that so many other people are involved we have found evidence to support almost point-by-point irregularities listed in the Deloitte&Touche audit... My point is that this would have to be an extremely well-organized conspiracy against you because it would mean that everyone else is guilty but you. How would you realistically explain this? If true, who would be behind it? Wieczerzak: I m not going to sit in jail for something I did not do. The affairs of Alan Evans and the Warren Trustees, that s one thing, but it never had anything to do with PZU Życie. Smith: I can t agree with you there because too many things are in Deloitte report. If you were right, this would have to be a huge conspiracy, which would be difficult for me to believe. And why would this be happening to you? What would be the logical reason for so many people to attack you, Grzegorz Wieczerzak? Wieczerzak: This is revenge for me blocking the privatization of PZU. For everything that happened in 2000 [ed. note he is referring to a series of controversial board votes that saw Deutsche Bank fail to take control of Big Bank Gdański]. This is a case of personal revenge from people backed by the president. Smith: KwaÊniewski? Wieczerzak: Yes. Smith: President Aleksander KwaÊniewski? Wieczerzak: Yes. Smith: [Stunned] All right. I have one last question. How did you get involved with the Warren Trustees? With Alan Evans for example? Wieczerzak: Through some of our clients when I worked at Societe Generale. At that time it was very popular for people to set up accounts in Britain. It was, among other things, a tax question for some of our clients. It was very popular for people in banking to set up such accounts for annual premiums in Jersey, where the money was sent. Smith: But such firms in Jersey, set up for individuals, were not legal. Wieczerzak: [Shrugs] Smith: Okay. But you can t tell me who approached you first on the matter? Wieczerzak: I don t remember exactly, but it would have been in 1996 or Smith: Do you know Robert Woodthorpe Browne? Wieczerzak: I know him. Smith: Maybe it was through him? Wieczerzak: It could have been. 33

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