Plot thickens over Russian bank loan to Marine Le Pen's Front National

By and

Mediapart has obtained a copy of the contract for the 9 million euro loan that a Russian bank gave to France's far-right Front National (FN) in 2014. The document answers some of the questions in this murky affair but many remain. The bank later went bankrupt, its former director is wanted for alleged misappropriation of funds, the FN's loan has been sold on at least twice, and it is still not clear to whom it has to be repaid. Marine Turchi and Agathe Duparc report.

 

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It was a document that France's far-right Front National has always refused to make public. But after a legal battle Mediapart has won the right to see the contract for the Russian loan that the Marine Le Pen's party obtained in 2014. Its 17 pages shed light on some of the murky areas surrounding this unprecedented loan by the Moscow-based First Czech Russian Bank (FCRB). This bank has since gone bankrupt in circumstances which remain unclear and is now at the centre of legal proceedings over the alleged misappropriation of funds.

As Mediapart revealed at the time, in 2014 Marine Le Pen and her father Jean-Marie negotiated two Russian loans totalling more than 11 million euros. These consisted of a 9.4 million euro loan for the Front National itself and a 2 million euro loan for COTELEC, Jean-Marie Le Pen's micro-party which helps finance the main party's election campaigns. The far-right party said it had turned to Russia for money after being refused by a “great number of French banks and European banks”.

The Front National continued its search for financing in Moscow ahead of the 2017 presidential campaign; in June 2016, Marine Le Pen signed a third request for a loan from a Russian bank totalling three million euros. The FN's treasurer has insisted to Mediapart, however, that this project was not pursued.

Part of the loan contract signed by the Front National in 2014; bank details have been obscured. © Document Mediapart Part of the loan contract signed by the Front National in 2014; bank details have been obscured. © Document Mediapart
The loans that did take place, and which were taken out to finance the party's election campaigns, have raised a number of questions. These include the extent of Russian interference in a French election campaign, the dubious nature of some of the intermediaries and of the FCRB bank itself, the opaque structures that surrounded it and the commissions that were paid in relation to the loans.

The Front National was able to borrow this sizeable amount in 2014 thanks to the involvement of several intermediaries and some intense pro-Russian lobbying. The necessary steps to receive the money were taken during the summer of 2014. On June 10th the party's president Marine Le Pen signed a resolution approving the principle of such a loan, and the party's executive bureau fell into line on August 29th. On September 11th of that same year the FN's treasurer Wallerand de Saint-Just went to Moscow to sign the contract with FCRB, a small bank based in the city. For the Russians the document was signed by the bank's chairman Roman Yakubovich Popov.

Popov, who had been head of the finance department at the leading pipeline engineering company Stroytransgaz, took over FCRB in the 2000s and became its sole boss. Russian prosecutors have just issued an international warrant for his arrest, as the Russian daily Kommersant has reported. Now on the run, the man who bankrolled the FN is under formal investigation in Russia for alleged misappropriation of funds in the context of bankruptcy proceedings involving the FCRB bank in 2016.

The Russian loan contract signed by the head of the bank Roman Popov and Front National treasurer Wallerand de Saint-Just. © Document Mediapart The Russian loan contract signed by the head of the bank Roman Popov and Front National treasurer Wallerand de Saint-Just. © Document Mediapart
The contract, written in triplicate and in two languages – English and Russian - contains several clauses. First of all it provides for complete confidentiality: “The Borrower and the Lender shall keep confidential any information related to the subject matter and the terms and conditions of the Agreement and shall take all steps to protect such information from disclosure to third parties except as provided for by the laws of the Russian Federation in effect.”

The agreement gives the date for the final repayment as September 23rd, 2019 unless the lender chooses another date. Under its terms, from December 2014 the Front National has to pay interest on the loan – set at 6% - “on a quarterly basis on or before the 20th of the first month of each calendar quarter”. This rate was much higher than the 2.5% negotiated by Jean-Marie Le Pen for his loan.

The FN also had to pay the fees for opening the 'loan account', which totalled some 141,000 euros. This sum enabled the party to pay indirectly its intermediary Jean-Luc Schaffhauser, as he has himself confirmed to Mediapart. Elected a European Member of Parliament in 2014 and then a member of Marine Le Pen's campaign team in 2016, former consultant Schaffhauser acknowledged that he had been paid some 140,000 euros “as a flat commission by the bank” for the “work carried out” in agreement “with the president [of the FN]”. The party's treasurer Wallerand de Saint-Just had previously told Mediapart that it was “the Front National who paid him”. He had added: “In any case, it was debited to the Front National.” Wallerand de Saint-Just did not response to questions from Mediapart in relation to this article.

Marine Le Pen at the European Parliament on November 27th, 2014, with Aymeric Chauprade, left, and Jean-Luc Schaffhauser, two MEPs who played a key role in getting the Russian loans. © Reuters Marine Le Pen at the European Parliament on November 27th, 2014, with Aymeric Chauprade, left, and Jean-Luc Schaffhauser, two MEPs who played a key role in getting the Russian loans. © Reuters
 This commission raised many questions. First of all, because the MEP had benefited personally from the loan that he had negotiated for his party. And also because Schaffhauser had “omitted” to declare this commission in his declarations of interest as an MEP, as he is legally obliged to do. When questioned at the time, the MEP himself saw “no conflict of interests” but several days later he updated his declaration at the European Parliament.

The payment to Jean-Luc Schaffhauser had meanwhile attracted the attention of France's anti money laundering unit TRACFIN, which alerted the French judicial authorities. In February 2016 the financial crimes prosecution unit the Parquet National Financier (PNF) opened an investigation into the funds the MEP had received. Then in November 2017 the bank Société Générale closed Schaffhauser's personal bank account.

 

International arrest warrant

The contract also contains a clause which, in hindsight, seems prophetic. Clause 4 begins by stating: “The borrower shall not repudiate the Agreement or any other agreement/contract entered into between the Parties and shall not transfer its debt to any third party without written consent of the Lender.” But it continues: “However, the Lender reserves the right to assign/pledge its rights hereunder at its discretion by written notice to the borrower.” This is exactly what happened: the FN's Russian loan was passed on to other companies.

In July 2016 the FCRB bank went bankrupt with liabilities of 31.8 billion roubles, or 497 million euros. But four months earlier – and just one week before the financial institution was placed under formal supervision – the FN loan was taken on by Conti, a small car hire firm in Moscow. Then in November 2016 the loan was sold on again, this time to Aviazapchast, an aviation company run by former soldiers close to the Russian secret services and who were active in Syria. Unlike Conti, which appears to have operated as little more than a front company for the procedures, Aviazapchast is a private company whose business is apparently flourishing and which operates in sensitive areas.

There is a well-established practice in Russia; just before a bank fails its healthy assets are stripped away and just its bad liabilities are left. This can also mean some recipients of loans never have to pay off their debts. So did Marine Le Pen's supporters in Russia use such a plan as a way of enabling the Front National to receive donations under the guise of loans? Neither the party's treasurer Wallerand de Saint-Just nor the loan's 'fixer' Jean-Luc Schaffhauser responded to Mediapart's questions on this.

The Moscow site of aviation company Aviazapchast, the new owners of the 9.4 million euro loan obtained by the Front National. The Moscow site of aviation company Aviazapchast, the new owners of the 9.4 million euro loan obtained by the Front National.
Back in May 2017 Schaffhauser gave his version of events to Mediapart. “Some villainous bankers took the liberty of selling this loan and the FN were not aware of it,” he said at the time. “When the managers of the company who had taken on our debt told us 'It's us you have to pay now' I said 'This racket stinks! We have to ask the central bank to find out what we should do!' I know Russia well. You don't teach your grandmother to suck eggs!” he added, avoiding at the time any mention of the name of the company, which has since been revealed to be Aviazapchast.

The Euro MP also described how the 'new owners' of the debt portrayed themselves to the Front National as “acting on the orders of the government”. He added: “I got one of my colleagues who speaks Russian to investigate [that claim] and I discovered that that was easy to see through, and that there was nothing to it.” Schaffhauser said he had warned Marine Le Pen over such provocative claims.

In any case, the intrigue has continued. At the end of 2016 the official Russian state body in charge of liquidating the FCRB bank, the Deposit Insurance Agency, started legal proceedings to recover the Front National's debt. It applied to Moscow's arbitration court requesting the contract between Conti and the FCRB for the re-sale of the loan be invalidated. The agency argued that the transfer of the debt was made without the bank receiving any financial compensation. Then the insurance agency found out that the loan debt had been sold on again, to Aviazapchast, and requested that that contact also be struck down.

Roman Popov, director of the FCRB bank which lent 9.4 million euros to the FN. © dr Roman Popov, director of the FCRB bank which lent 9.4 million euros to the FN. © dr

But May 3rd, 2018, the Deposit Insurance Agency's requests were rejected. In a judgement seen by Mediapart, the arbitration court ruled that “in the documents in the case there is insufficient proof that the contentious transactions were carried out in violation of the legal requirements and that they prejudiced the interests of other persons, including those of the FCRB's creditors”. At the hearing Conti had produced a document which they said showed that the purchase of the FN loan had been accompanied by a payment from RonsinterBank – where Conti had an account – to the FCRB. The arbitration court found in its favour.

However, the insurance agency still insisted that the Front National's loan debt had been passed to Conti without a kopek landing in the accounts of the FCRB, and that the loan business was removed from the bank's books thanks to a dubious compensation operation with RosinterBank. To back up their argument, the agency produced a document from the criminal proceedings that are being taken against the former director of FCRB, but the arbitration court refused to take it into account. On its website the Deposit Insurance Agency has reported the court's verdict but has not so far indicated whether it will appeal.

It has also emerged that for a period the FN's loan debt was with RosinterBank. Like the FCRB a few months before, this Moscow-based bank saw its banking license removed in September 2016, in particular for having on several occasions breached legislation against money laundering and financing terrorism. The bank had left behind astronomical liabilities totalling 71 billion roubles or 949 million euros and in June 2017 the daily newspaper Vedomosti revealed that the bank's archives and electronic data had mysteriously disappeared.

So what is happening with the FN loan? In its rejection of the insurance agency's demands in relation to the Conti case, the arbitration court considered that the case against the Aviazapchast contract could not be successful either. So does that mean this company still owns the FN loan debt? Its representatives did not respond to Mediapart's requests for a comment. In its decision the arbitration court noted that “during the hearing the representative from the Front National declared that it had not decided on a legal position on the substance of the demand [by the Deposit Insurance Agency]”. This shows how the party has sought to keep a low profile in this complex affair.

Today the FCRB itself is facing legal proceedings for the misappropriation of funds on a vast scale. In January 2017 its former vice-director Dmitry Merkulov was arrested in Moscow and placed under formal investigation for having organised the illegal sale of the bank's assets totalling 2 billion euros or 31.5 million euros. Since then, according to Kommersant, that figure has been scaled down to around 5.4 million euros.

So far FCRB's former director Roman Popov, who signed the documents on the Front national loan, has escaped arrest. Like his former deputy Olga Arsentieva, he been charged with the misappropriation of funds and on April 9th, 2018, an international arrest warrant was issued against him. His lawyer refused to make any comment to Mediapart. But the lawyer told Kommersant his client had left Russia for medical treatment abroad well before the opening of the investigation.

The Deposit Insurance Agency has declined to comment on the case. Meanwhile MEP and loan middleman Jean-Luc Schaffhauser only spoke about the issue of the 140,000-euro commission payment. He told Mediapart: “I've stepped back from the details of the case, my lawyer's managing it. I've sent him your questions. Today the Front National is paying the interest which is being impounded by a notary. Recently I believe that the beneficiary has been designated by the judicial authorities. I'm no longer involved in this affair.”

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  • The French version of this article can be found here.

English version by Michael Streeter

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