Page 12 - bne IntelliNews monthly magazine October 2024

12 I Companies & Markets bne October 2024
JPMorgan Chase and HSBC reportedly
unwittingly processed payments for
Wagner warlord Prigozhin bne IntelliNews
Leading western banks JPMorgan Chase and HSBC unwittingly processed payments for companies linked to Russian warlord Yevgeny Prigozhin, the late leader of the Wagner Group Private Military Company, the Financial Times reported on September 24.
The payments were connected to Wagner’s extensive operations in Africa where Prigozhin hired out Wagner’s services to multiple regimes, earning billions of dollars in the process.
Prigozhin died last August when his private jet crashed outside Moscow in mysterious circumstances, shortly after he organised a march on Moscow in a military rebellion against Putin’s regime, briefly capturing the southern city of Rostov.
Wagner has been accused of multiple human rights abuses in Africa where it acts as trainers or paramilitary support for various regimes. Leaked documents obtained by the Center for Advanced Defence Studies (C4ADS), a Washington-based think-tank, show how payments for companies controlled by Prigozhin flowed through major financial institutions as Wagner’s operations expanded across the continent, the
FT reports.
In 2017, Meroe Gold, a Sudanese company serving as a front for Wagner, purchased industrial equipment from China, with payments transiting via large Western banks. These transactions occurred before Meroe Gold was subject to sanctions, though Prigozhin himself had been sanctioned by the US in 2016.
Wagner often accepted payment in the form of mining concessions, including gold mines, and other business activity in the raw materials sectors from the mineral-rich, but cash- poor regimes in Africa. A search of Prigozhin’s residence after his death found suitcases packed with millions of dollars of cash and gold bars amongst other things.
The Kremlin was happy to allow Wagner to operate in Africa as a tool of its foreign policy to bind African states closer
to Moscow and as a counter to the US and French military presence in Africa. Wagner also played a crucial role in the Ukraine war, especially in the eight-month long siege and eventual capture of the city of Bakhmut.
Wagner's operations, according to the US Treasury, were notorious for “mass executions, rape, child abductions, and
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other brutalities against innocents” in Africa. Prigozhin was also well known for recruiting Russian prisoners, offering them a pardon for six months of service, but using them as cannon fodder on the battlefield.
Amongst the leaked documents, one invoice from August 2017 reveals that Meroe Gold used a local Sudanese bank account to send a payment via JPMorgan Chase in New York
to a Chinese supplier, the FT reports. Another payment, processed through Hang Seng Bank – part of the HSBC Group – facilitated the purchase of diesel generators and spare parts. There is no indication that the banks involved were aware they were handling transactions tied to Wagner front companies.
Although Meroe Gold was not under sanctions at the time,
it was later targeted by the US in 2018 for being “owned or controlled by Prigozhin” and for helping him “exploit Sudan’s natural resources for personal gain.”
Both JPMorgan and HSBC distanced themselves from the revelations. JPMorgan stated: “After a review of the limited details shared with us, we have not found any records matching those transactions.” HSBC declined to comment on the Sudanese payments specifically but reiterated its dedication to combating financial crime, stating it has “invested significantly in building and maintaining an effective control framework to detect and mitigate this risk.”
C4ADS stated that the transactions demonstrate Wagner’s ability to blur the lines between licit and illicit activity.
“To facilitate its early exploitation of natural resources, the internationally sanctioned organisation relied on a network of financial services and transportation networks to move supplies and generate revenue,” C4ADS said in its report.
Following Prigozhin’s death Wagner's African operations have reportedly been absorbed into entities controlled directly
by Russia's defence ministry. Many of Wagner’s leaders have joined the Armed Forces of Russia (AFR) and have been credited with bringing fresh and more effective tactics to Russia’s military operations in the current operations to take the key Ukrainian city of Pokrovsk.
Since US President Joe Biden signed an executive order in December, new so-called strangulation sanctions have been effectively targeting Russian banking operations making payments to Russian entities via third party banks more difficult.