Nearly $50 bn left Russia illegally in 2012: central bank

MOSCOW: Russia's central bank said on Wednesday that $49 billion had left the country illegally last year through capital flight, equal to 2.5 percent of the country's gross domestic product.

Outgoing central bank chairman Sergei Ignatyev told the Vedomosti daily that of $14 billion of that amount came in illicit trade operations while the rest left Russia through "dubious" cash schemes.

"This could be payments for deliveries of drugs, (illegal) shipments, bribes and paybacks to officials...or managers carrying out purchases in big private companies," Ignatyev said.

"Or these could be tax avoidance schemes," he said.

Capital flight has battered the Russian economy throughout the post-Soviet era and is seen as the primary indicator of a lack of investor confidence in the country's reforms.

Polls among investors show concern not only about graft and corruption but also a lack of court independence and fears that Kremlin politics could impact fundamental economic decisions.

President Vladimir Putin has made the fight against corruption into a priority of his fourth mandate and a series of new probes -- including one involving former defence minister Anatoly Serdyukov -- have been launched in recent months.

But no official studies have been conducted on criminal cash flows out of Russia and Ignatyev's revelations suggest the problem is worse than originally thought.

Ignatyev said more than half of the dubious cash operations -- called "grey schemes" by investors -- were performed by a web of companies that all appeared to be interlinked.

"You get a feeling that they are all being controlled by one well-organised group of people," Ignatyev said without specifying whom he thought this might be.

Vedomosti speculated however that Ignatyev was talking about bankers rather than Kremlin insiders.

It added that the government was taken aback by the idea that the hugely-respected Ignatyev suspected a single powerful clan was behind most of the illegal flight.

"This is the first time I have heard anything about a single group," the business daily quoted a senior government official as saying.

"But we are working hard on this problem with the central bank. We have submitted a bill against money laundering," the unnamed official said.

The comments from the usually-reserved Ignatyev -- set to retire in June after 11 years on the job -- reveal a degree of exasperation by Russia's chief financial overseer.

Ignatyev said the overall flight of capital was caused not only by a poor investment climate but also by a recent redistribution of property among Russia's elite.

"It seems that Russia is witnessing a change in generations among those who own businesses," said the banker.

"Those who created their businesses in the early 1990s are gradually stepping away from their affairs, selling their business... and investing not only in Russian assets, but also foreign ones."

Germany's BND intelligence service estimated this year that the accounts of Cyprus now held $26 billion in Russian cash -- an amount greater that the annual gross domestic product of the tax haven island.

Analysts meanwhile said seasoned investors in Russia should not be too surprised by Ignatyev's disclosure or the prescription necessary for solving the problem.

"The story about grey capital flows is not a new one," VTB Capital said in a research note.

"We believe that improvements on this front, coupled with developing an investment climate, will turn Russia's economic conditions to the better." (AFP)