A Moldovan oligarch accused of involvement in his country's biggest alleged banking fraud used a New Zealand-based trust in an offshore financial structure that held more than $180 million in assets, according to the Pandora Papers.
Vladimir Plahotniuc, 55, is one of thousands of wealthy and powerful figures whose offshore financial dealings have been exposed in the extraordinary leak of nearly 12 million documents from 14 companies that provided trust and corporate services to international clients.
Launching today, the Pandora Papers is a major international investigation by dozens of media outlets including the New Zealand Herald that reveals how wealthy elites used complex offshore structures to shelter assets and move money around the globe.
Plahotniuc, who was among the richest businessmen in Moldova and held a seat in its Parliament, is one of dozens of people named in the leaked documents who used New Zealand foreign trusts, a legal structure that allowed overseas residents to shelter assets with minimal disclosures and without paying tax.
He is a controversial figure in his home country. In May last year, Plahotniuc was accused by Moldovan prosecutors of involvement in the alleged theft of US$1 billion from Moldovan banks in 2014 and 2015.
The alleged fraud, which amounted to 12 per cent of the impoverished Eastern European country's GDP, sent shock waves through Moldovan politics, triggered street protests, and has become known as Moldova's "crime of the century".
Plahotniuc could not be reached by the Herald for comment but has previously denied the allegations. He is now believed to be living in Turkey.
In June 2020, Plahotniuc was placed by the US government on a list of foreigners barred from entering that country.
The US State Department said in a release it had sanctioned Plahotniuc under legislation that requires travel restrictions to be imposed on foreign officials suspected of involvement in corruption, although it did not provide details of any specific claims against him.
Documents in the Pandora Papers reveal that Plahotniuc established a New Zealand foreign trust, the Otiv Trust, for the benefit of his Swiss-based former wife Oxana Childescu in 2011.
Between 2012 and 2015, more than $100 million was paid out in various currencies to Latvian and Swiss bank accounts for "living expenses" and "financial personal investments", according to the documents reviewed by the Herald.
The Otiv Trust was administered by Asiaciti Trust, a Singapore-based offshore services provider which was one of a handful of professional firms that dominated the foreign trust market in New Zealand.
Plahotniuc was one of more than two dozen "politically exposed persons" among Asiaciti's New Zealand clients, according to a register kept by the company's Auckland office. In the financial industry, clients who hold political positions are rated a higher risk of involvement in bribery or corruption.
Founded by an Australian accountant named Graeme Briggs, Asiaciti has operated in New Zealand since 1996. For years, it marketed New Zealand foreign trusts to its clients as a safe way to hold assets offshore without paying tax or disclosing their identities, without the stigma of a tax-haven.
Asiaciti declined to address questions from the Herald about specific clients, citing confidentiality, aside from saying there were "inaccuracies and instances where important details are missing" in the information provided to it for comment.
"We are committed to the highest business standards, including ensuring that our operations fully comply with all laws and regulations," the company said in a statement.
"The regulatory and industry landscape has evolved over the course of our 45-year history, and we have worked diligently to comply with prevailing regulations through this passage of time. Compliance is core to our business and we have adapted our company to meet the changing requirements. Any organisation operating over such a length of time is likely to have legacy matters that do not reflect the current business. We recognise there have been isolated instances in the past where we have not kept pace, and in these situations we have worked closely with regulatory authorities to address any deficiencies and quickly updated our policies and procedures."
Asiaciti's full response to the Herald can be read here.
Plahotniuc, whose LinkedIn page describes him as "the most successful businessman in Moldova", had a fortune estimated at several hundred million dollars, with interests including television stations, radio networks, hotels, and banks.
In 2010, he successfully ran for a seat in Moldova's Parliament and became its deputy speaker.
The next year he set up the Otiv Trust through Asiaciti.
Documents obtained in the Pandora Papers reveal that it was established for the benefit of Plahotniuc's former wife, Childescu, although the tycoon was to be kept regularly updated about investment decisions and any distributions.
The Otiv Trust's only asset was a New Zealand company, Mavogan Overseas Investments which owned shares in a Cypriot entity called Mavogan Holdings, according to financial statements held by Asiaciti. In 2013, it was valued at US$128 million.
The Pandora Papers reveal that, between 2012 and 2014, Otiv Trust received substantial dividends from Mavogan Overseas Investment and passed on almost all the proceeds as distributions to Childescu.
In 2017, the Otiv Trust was transferred out of New Zealand jurisdiction and Asiaciti handed over most responsibilities to the structure to a Cypriot law firm, the documents show, although its staff remained directors of the New Zealand-registered Mavogan Overseas Investments company.
Among the documents about Plahotniuc in Asiaciti's files was a due diligence report commissioned as the Otiv Trust was established.
The report by World-Check described Plahotniuc as a "controversial" politician and businessman and said his foray into politics was regarded as a "sudden departure from his previous position as an alleged kingmaker and discreet financial backer of the former communist administration".
The report detailed numerous serious allegations that had been made about Plahotniuc in the media and flagged several potential compliance risks that would be posed by his political position.
In the late 2010s, Plahotniuc's influence in Moldova waned, and he went from power broker to fugitive.
The Democratic Party of Moldova, which Plahotniuc chaired, lost power in the parliamentary elections in July 2019. After a change of government, Moldovan prosecutors opened an investigation into the alleged "crime of the century" which resulted in the charges against Plahotniuc in May last year.
Plahotniuc's lawyers deny he was involved in the alleged fraud, according to media reports. But by then he had already reportedly fled his home country.