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GermansSee Shady City Link

By Greg Walters

Staff Writer

MOSCOW — German prosecutors confirmed on Tuesday that they are investigating the privatization of Telekominvest, a St. Petersburg holding company that IT and Communications Minister Leonid Reiman helped set up more than a decade ago.

Reiman himself is not a subject of an ongoing money laundering investigation and will not face charges, a spokeswoman for the Frankfurt prosecutor’s office, Doris Moeller-Scheu, said.

Investigators are examining Telekominvest only to determine whether assets transferred to Germany had a criminal origin, Moller-Scheu said. German prosecutors have limited jurisdiction outside Germany, she said.

The legitimacy of Telekominvest’s 1990s privatization is therefore a key point in the investigation — but only as a legal prerequisite for proving money laundering charges in Germany. “If it does not come from criminal acts, it was not money laundering,” she said. “That’s the point.”

The goal of the German probe is not to file charges relating to the privatization itself, she said.

Telekominvest on Tuesday said there had been no wrongdoing in a series of share issuances in which private companies gained control of the company.

“There was a series of share emissions,” said Telekominvest spokesman Alexei Ionov. “The state companies did not take part. Therefore, their share dropped.”

“It was all done absolutely legally and absolutely officially,” he said.

The German investigation is focusing on seven individuals, five of whom are current or former employees of German banking giant Commerzbank, Moller-Scheu said.

Moeller-Scheu declined to give details on the other two individuals, but said that not all the people under investigation were German nationals.

Reiman was a senior executive responsible for international relations at St. Petersburg Telephone, or PTS, a state-owned company that originally owned 50 percent of Telekominvest.

Reiman was also one of the founders of Telekominvest, which became the holding company for a significant chunk of PTS assets.

Lyudmila Putina, the president’s wife, worked for Telekominvest at the end of the 1990s, Vedomosti Daily reported on Thursday, quoting an anonymous source close to the company, confirming information originally printed in Frankfurter Rundshau this week.

Putina started working for the company shortly after she moved with Putin to Moscow when he was appointed to a federal position.

“It would have been impossible to call the Moscow branch an office. It was more likely a place where communication specialists who came from St. Petersburg held their meetings,” Vedomosti cited the source as saying.

“Lyudmila Putina was the only employee. She answered phone calls, organized meetings,” the source said, “There wasn’t any political background in her work. … It shouldn’t be assumed that Telekominvest and Putin are connected in any way.”

The Kremlin believes that journalists are mentioning Putin’s name in connection with Telekominvest to bring intrigue into the story.

“It is not clear from the article [published in Frankfurter Rundshau] in what way Lyudmila Putina and her brief employment at Telekominvest are related to the problems in the communication business,” Vedomosti quoted an anonymous source from the presidential administration as saying.

Commerzbank said that from 1996 to 2001 it held shares in Telekominvest via a Luxembourg-based company.

Commerzbank was one target in a series of raids that German and Swiss investigators staged in Frankfurt, as well as Zurich and Zug in Switzerland.

Alexander Parshukov, a spokesman for the IT and Communications Ministry, condemned the investigations and Western media coverage of them.

“This is a program targeted against Russia. There is no proof,” he said. “I suspect this is an ordered attack. ... A lot of people took part in the creation of the company. Why did they decide to pin it all on Reiman, just because he is a minister now?”

Eurokapital, an investment management company owned by a close associate of Reiman, Danish lawyer Jeffrey Galmond, was targeted in the recent raids in Frankfurt.

Galmond is the beneficiary owner of a majority stake in Telekominvest, and owns shares through a Luxembourg-based holding company called First National Holding, or FNH, which purchased a majority stake in Telekominvest in a series of deals starting in late 1995.

Galmond has said in court testimony that he asked Commerzbank in 1996 to act as a “nominee shareholder” for his interest in FNH. The bank held shares in FNH until 2001.

Without mentioning Telekominvest, German and Swiss authorities said on Monday that they were investigating Commerzbank employees in connection with possible money laundering and the privatization of an unspecified Russian company.

Staff writers Catherine Belton and Vladimir Kovalev contributed to this report.

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