Russia to prosecute fugitive banker over $1 billion theft

The Prosecutor-General’s Office of Russia has opened a criminal case against Sergey Pugachev, charging the former banking tycoon with large-scale embezzlement and abuse of official position over the 2010 collapse of a bank he headed.

First Deputy Prosecutor General Anatoly Razinkin filed the indictment on Friday, according to the newspaper Kommersant, accusing Pugachev of violating articles 160 and 201 of the Russian criminal code.

The trial will be held in absentia, as Pugachev fled Russia in 2011 and sought sanctuary in France. Moscow has been unable to secure his extradition.

According to the indictment, Pugachev headed an organized criminal group that conspired to steal 30 billion rubles by bankrupting the International Industrial Bank (Mezhprombank, MPB), while another 64 billion went missing. The total loss was estimated at $1.03 billion at the time.

Pugachev, 59, was a senator who made a fortune in banking, making it onto the Forbes list of billionaires in 2008. Then the financial crisis hit, and MPB found itself unable to account for all the unsecured loans it had taken out from the Bank of Russia. It went bust at the end of 2010, wiping out billions in investor deposits.

The authorities in Moscow have long suspected the bankruptcy was a deliberately engineered way to make off with the stolen funds. The first criminal investigations into MPB was opened in January 2011, and Pugachev himself was first probed for embezzlement in late 2013.

Three of his business associates have since been investigated and convicted of crimes in relation to the MPB and its parent company United Industries (known by its Russian acronym OPK). Dmitry Amunets and Alexander Didenko were tried for misappropriating Central Bank funds worth 28 billion rubles. Didenko turned into a state witness and received a three-year suspended sentence, while Amunets was sentenced to seven years in prison. 

Another MPB executive, Marina Illarionova, was sentenced to four years for abusing her official position, for executing Pugachev’s instructions to liquidate the bank.

Dubbed “Putin’s banker” by some Western outlets for alleged ties to the Russian president, Pugachev fled abroad and obtained French citizenship. He has repeatedly sued Russia in European and international courts, alleging he was the one wronged by the Russian state, but lost every time.