Leaked files show that a Russian businessman whose companies have backed 34 Tory MPs made millions from an allegedly corrupt pipeline deal
Former oil executive, Russian businessman Victor Fedotov owns a firm that is currently seeking UK government approval for a controversial energy link between both the UK and France.
A BBC investigation has shown that the businessman secretly benefitted from the alleged $4bn fraud in Russia.
His lawyers have said that “there is no evidence whatsoever” he behaved improperly.
These revelations come from the Pandora Papers, a leak of 11.9 million offshore files that were obtained by the International Consortium of Investigative Journalists (ICIJ). BBC Panorama and The Guardian have led an investigation of the documents in the UK.
The BBC has discovered documents revealing that Mr Fedotov is a secret owner of the company known as VNIIST that has benefitted from hundreds of millions of dollars in contracts from Transneft, which is the Russian state-owned oil and gas pipeline firm.
A 2008 audit report has suggested that Transneft had lost huge sums of money to corruption and that one of these contractors that had benefitted from the fraud was the company VNIIST.
It was alleged that VNIIST was paid for work that it hadn’t carried out and that Transneft had lost around $143 million over just two contracts.
This comes after Chancellor Rishi Sunak has suggested that he may have to introduce further tax rises on the public as the economy emerges from the global COVID-19 crisis, declaring that: “Our recovery comes with a cost.”
The audit report was leaked to the Russian opposition figure Alexei Navalny who had estimated that $4bn had been embezzled. No charges were brought against any of those who were involved.
The audit report did not reveal that one of Mr Fedotov’s secret business partners in VNIIST was the President of Transneft, Semyon Vainshtok. The documents within the Pandora Papers show that he was secretly benefitting from the contracts that Transneft had awarded.
They reveal that a scheme to funnel profits from the Transneft deals through layers of companies within the Netherlands, Luxembourg, Malta and the British Virgin Islands under the ownership of trusts of which Mr Fedotov and Mr Vainshtok were both secret beneficiaries. A second Transneft executive had also been profiting from the cash.
The files show that millions of dollars were flowing into the trusts and that by the year 2007, Mr Fedotov’s trust had held some $97m in assets.
The evidence suggests that some of the money from Transneft had ended up paying for Mr Fedotov’s £7m house within the English countryside.
Andrew Mitchell QC told Panorama that the scheme appeared to be “a pure attempt to slice money out of government and, when you factor in that the CEO of the government-owned entity organised and did the subcontracting with a couple of mates, um, that’s fraud.”
Mr Vainshtok’s lawyers have said that the allegations of fraud were “unfounded” and had been made for “political purposes”.
They said: “The allegations were investigated at the time by the Audit Committee of Russia, the Ministry of Interior Affairs of Russia and the General Prosecutor’s office in Russia, who all found that there was no basis for making the allegations, and no grounds to take any action against our client.”
Mr Fedotov’s lawyers have said that the 2008 audit report is not an official reliable document and that he denies any allegations of wrongdoing.
But it is not just property that Mr Fedotov has funded in the UK. His money has funded the Conservative Party.
This comes after the Furlough scheme has been hailed by many as one of the government’s big successes during the COVID-19 pandemic, but now that it’s ending there are fears that it could spark mass job losses.
Last year Mr Fedotov was revealed to be the owner of Aquind, which is the company behind a £1.24bn project to build an electricity cable linking Britain to France. Aquind is currently seeking the UK government approval for the project and a decision is set to be made within weeks.
His connection to Aquind has been hidden through an exemption to UK company laws that are granted to people who have personal security concerns.
Mr Fedotov is now identified on the company’s public records, alongside Alexander Temerko, who is the Ukraine-born public face and a part owner of Aquind.
Mr Temerko is a Conservative Party activist and personal friend of the nation’s Prime Minister, Boris Johnson.
He is a regular at Conservative Party fundraisers and has personally donated over £700,000 to the party.