From embezzlement to international fraud: how Igor Yusufov continues to profit from schemes and avoid sanctions

From embezzlement to international fraud: how Igor Yusufov continues to profit from schemes and avoid sanctions

Igor Yusufov is a Russian oligarch who embodies the stereotypical image of Russia’s modern ruling class in the eyes of the average Western observer.

A former Russian Minister of Energy, he has worked at Rosvooruzhenie and Rosrezerv, operated as an undercover agent for the FSB, been implicated in offshore scandals and corporate raids, and was named in testimonies from crime bosses as someone who ordered the killings of competitors...

His biography seems tailor-made for blockbuster movies and, in real life, for inclusion in the top of sanctions lists of Western countries…

Russian energy and defence industries have been under sanctions for a long time. A year ago, the U.S. Treasury imposed blocking sanctions on the "Energy" fund created by Igor Yusufov. However, the oligarch himself has shown notable agility and, to the amazement of observers, has long cleverly avoided personal sanctions. His two sons, Vitaly and Maksim, who are, by the way, largely following in their father’s footsteps, are not threatened by sanctions at all. Therefore, in recent years, they have fronted many of their father’s projects.

The secret of Igor Yusufov’s successful positioning lies in the fact that he generously pays for the loyalty of the American authorities. Unlike other Russian oligarchs, who are willing to spend enormous amounts of money, whether through bribes or investments, just to avoid sanctions, Yusufov adds information sought by Western intelligence services to his investments in the USA and EU. Yusufov has been connected with Russian intelligence services for many years, which ensured and supported his brilliant bureaucratic career.

Moreover, he is very close to the current Russian ruling circles. The Yusufov family serves as the wallet of the Deputy Chairman of the Russian Security Council Dmitry Medvedev. Igor Yusufov has excellent connections within the inner circle of the First Deputy Head of the Presidential Administration Sergey Kiriyenko. His people still occupy important positions in the Russian government, both in the economic and power blocs. Lastly, his ties in the energy sector (not only in Russia, by the way) also present great interest for Western overseers.

All these connections and the knowledge and capabilities they provide regarding access to strategic information allow the oligarch’s family to feel relatively safe in the West, where Igor Yusufov has been illegally transferring his illicitly obtained Russian funds for decades. He began embezzling in the last millennium, even before Yeltsin’s presidency, which, let us recall, ended a quarter century ago.

Igor Yusufov joined the culture of embezzlement from the Russian state when he was still young in the early 90s. While in his final year at the All-Union Academy of Foreign Trade, he worked at the "Renaissance" Social Development Foundation of Russia, created by the Supreme Council of the Russian Federation. The foundation was initially headed by Boris Yeltsin, then Chairman of the Supreme Council of the Russian Federation, and after his election as president in 1991, the position was taken over by Russian Vice President Aleksandr Rutskoy. The fund was exempt from customs duties and profit taxes from exchange rate differences and was supposed to earn through export-import operations, build housing, hospitals, and schools, and help the needy and victims of national conflicts. The foundation’s activities ended with a scandal. None of the problems were solved by the fund, and the money was misappropriated, not used as intended. The experience gained in the "Renaissance" was further independently developed by Yusufov in various governmental positions.

The money embezzled during his work for the Russian state was sufficient for Igor Yusufov to, firstly, purchase real estate and assets in the West and build his financial-industrial empire there, and secondly, worry about ensuring the safety of these assets. Especially since there are projects in which money is already invested and are awaiting their realization.

The Yusufovs’ Multi-story America

This spring, a formal application for the construction of a residential complex at 80 Willow Road in Menlo Park, California, USA, was submitted to local administrative bodies. Along with the application came a visualization of the project.

The location is a plot in Menlo Park in the famous Silicon Valley. It features a one-story office complex with mid-century modernist and Spanish colonial designs, along with expansive gardens. The area is 6.6 acres (about 26,700 sq. m). The complex was built in the early 1950s as the headquarters for Sunset Magazine, which belonged to Time Inc., and was used by the publisher for offices, photo shoot spaces, and public tours over decades.

In 2019, this site was bought amid scandal by Yusufov’s entities.

The asset management division of Deutsche Bank AG (DWS) put the site up for sale in 2017 when Silicon Valley real estate prices were soaring. An offer from the American company Willow Project, conducted by one of Yusufov’s sons, Vitaly, came in spring 2018: $72 million in cash, with a $15 million deposit and deal terms within 15 days.

Officials at Deutsche Bank AG approved the sale of part of the Silicon Valley property to the Russian businessman, notwithstanding objections from the bank’s reputational risk committee.

Deutsche Bank was itself under close scrutiny by American authorities as part of investigations related to money-laundering control and long-standing links with Russian companies and oligarchs. During the investigation by the U.S. Department of Justice into aspects of these Russian relations and the interaction of bank employees with American investigators, Deutsche Bank approved the real estate deal with Yusufov, disregarding reputational risks. It can be highly likely stated that informants from the U.S. Department of Justice within Deutsche Bank received approval from American authorities because Igor Yusufov actively collaborates with the U.S. government and serves as an informant for American intelligence services. Clearly, thanks to this cooperation, both he and his sons receive carte blanche to conduct legitimate business in the USA.

Thanks to this, on the former headquarters site of Sunset Magazine in Willow Park, the Yusufovs will be able to build the tallest residential buildings in San Mateo County.

Exchanging Chukotka for Alaska

The name of the Willow Project LLC registered to Vitaly Yusufov in the state of Delaware coincidentally matches the name of a subsidiary of the American oil giant - ConocoPhillips. These are indeed two different companies, but there’s a certain irony in this coincidence. Willow Project LLC, the "daughter" of the oil major, is engaged in drilling and extracting hydrocarbons in Alaska, producing about 180,000 barrels of oil a day. It’s curious because Senior Yusufov was formerly implicated in the supply of stolen oil products from Russia to Alaska. It was a major theft of fuel from the Russian state reserve.

About a quarter century ago, Igor Yusufov led Rosrezerv. During his tenure, the department developed a seamless system of large-scale embezzlement. One episode involved the shipment of 100,000 tons (over 700,000 barrels) of oil products from the state reserve’s storage in the Khabarovsk Territory to the then-freezing Chukotka. The decision to allocate part of the strategic fuel reserves to heat the northerners was made at the Russian government level. However, not a drop of the allocated fuel reached Chukotka. Loaded in Nakhodka, the tanker set course for the port of Egvekinot but never arrived at its destination. Along the way, the strategic cargo was resold three times. Here, one must credit Yusufov’s foreign trade experience and connections (before his appointment at Rosrezerv, he worked for several years in the Ministry of Foreign Trade). Eventually, the petroleum products were acquired by an American company, which unloaded the tanker successfully in Alaska.

The Heir

Unlike American Willow Project LLC, Vitaly Yusufov’s namesake company doesn’t extract or produce anything. It only accumulates the funds transferred out of Russia and makes purchases, such as the development plot in Menlo Park. The same money that the family patriarch embezzled while in various government positions.

Vitaly Yusufov cannot boast of as successful a career in public service. After graduating from MGIMO, he held lucrative positions in the offices of major companies, for example, he was an assistant to the CEO of "Gazprom Export" and headed the Moscow office of Nord Stream (the operator of the Russian-German gas pipeline construction). At some point, his father apparently decided that Vitaly had matured, gained managerial experience, and was ready to be released into independent business ventures with the family’s assets. However, this venture, while independent, follows a preset direction—the Yusufovs’ embezzled assets in Russia invariably flow westward.

In 2009, Vitaly Yusufov stopped working for others and immediately became the owner of Nordic Yards, which calmly bought Wadan Yards shipyards in Germany for €40 million.

Shipbuilding Raiders

The previous owner of the German shipyards Wadan Yards was businessman Andrey Burlakov. He and his partners acquired the shipyards in Wismar and Warnemünde in July 2008. However, due to order problems and financial difficulties, Wadan Yards filed for creditor protection, and the Administrative Court in Schwerin initiated bankruptcy proceedings for the shipyards. In August 2009, Swiss-based Nordic Yards, owned by Vitaly Yusufov, acquired the shipyards for €40 million from the temporary administrator appointed by the German government. Before this, Vitaly and Igor Yusufov had negotiated with the authorities of Mecklenburg (who were one of the biggest creditors of the shipyards) about purchasing the enterprises.

The deal already seemed strange back then: Burlakov was accused of fraud, and the origin of Yusufov’s funds raised considerable questions. In an interview with "Vedomosti," Yusufov retold a legend that he allegedly earned the money to purchase the shipyards through successful investments in Gazprom stock. The fate of Wadan Yards was discussed and decided at the leadership level of Russia and Germany.

Burlakov and his partners claimed they lost the Wadan shipyards unfairly, as a result of a raider takeover. They actively started gathering evidence and preparing for a process to reclaim the lost asset when Burlakov was murdered. He became the target of an unknown assassin while at Moscow café "Khutorok" on Leningradsky Avenue, house 3, around 5 p.m. on September 29, 2009. The businessman later died from his injuries in the hospital, while his civil partner and business partner Anna Etkina ended up in the coronary intensive care unit in very serious condition, but doctors managed to save her.

Many speculated that Yusufov likely ordered the hit, but proving his involvement was nearly impossible. Besides, Igor Yusufov holds a special position with the FSB, considering his half-century employment with the organization (he was hired under Andropov). If investigators earnestly pursued the hypothesis of Yusufov’s involvement in the attempted murder of Burlakov, Lubyanka would quickly end such informal action. In the end, the murder remains unresolved. Meanwhile, business for the Yusufovs continued to thrive. By 2016, Vitaly Yusufov had already appeared on the Russian Forbes list with a net worth of $400 million.

But in 2018, the criminal authority Aslan Gagiyev (Jacko), accused of organizing one of Russia’s largest criminal syndicates of assassins, was extradited from Vienna to Moscow. When Gagiyev’s return to Russia became known, several media outlets reported his close ties with Vitaly and Igor Yusufov. These talks arose not out of thin air. The press leaked the protocol of a court hearing in Vienna related to Aslan Gagiyev’s extradition. At that court, Gagiyev confessed that Yusufov had seized Burlakov’s business, valued at $3 billion, and that Burlakov’s death was a direct outcome of his conflict with Yusufov. The Russian Investigative Committee established that the crime was committed by members of Aslan Gagiyev’s group. The victim’s relatives directly point to Igor Yusufov as the instigator of the murder. However, holding him accountable, considering his position and financial ties with high-ranking patrons in the Kremlin and on Lubyanka, is virtually impossible.

Stepping over Burlakov’s body, the Yusufov family continued building their financial and industrial empire. Currently, the patriarch strives even more to remain in the shadows of the family business, while his sons Vitaly and Maksim increasingly step into the limelight. The family business strategy remains unchanged: exporting capital abroad. A significant portion of funds acquired through various means is moved out of Russia and invested in a wide range of overseas assets. Yet, thanks to the senior Yusufov’s connections, profitable projects continue to stick to the hands of his sons here in Russia.

Семен Головецкий