How I think the Luhansk/Donetsk pension system is laundering oligarch money
It's complicated like a relationship status
These are my research conclusions, but not my investigative conclusions, and it’s already public, so I think I can put it out there to get some feedback on it.
So, the big deal here is money laundering for pro-Russian separatists comprising the so-called government of the so-called Luhansk and Donetsk People’s Republic (the L/DPR), the people on whose behalf Russia is putatively fighting its war.
The economy of the L/DPR resembles, as Nataliaa Savelyeva at Rosa Luxemburg Foundation puts it in 2017:
“(A) huge money-laundering scheme: while Russian money filled state coffers, from which pay pensions and salaries for public-sector workers were paid, most income produced by local enterprises went to private individuals.”
The front end of that economy is decently well-established by multiple informed observers onto the L/DPR and its financing, not just Savelyeva, but also Brian Milakovsky in Kennan Cable in 2020, as well as the left-leaning International Crisis Group in September of 2020.
This is not a hard overall pattern to notice. VNESHTORGSERVIS is a rather large company registered in South Ossetia and intended specifically to serve as a holding company for “nationalized” industries in the L/DPR. It sells coal and anthracite mined in the L/DPR and receives euros, hryvnia and (presumably) U.S. dollars for doing so, and pays its expenses in rubles.
It is the only entity of sufficient size and importance to fund the pension system, which a lot of people are already guessing that Russia is doing. It is also a sanctioned entity.
The investigative devil, so to speak, is in the details here.
Based on Ilya Barbanov’s investigation published in Kommersant on May 6, 2017, this is how I think the quasi-official pension system for the so-called Luhansk and Donetsk People’s Republic works.
SERHIY KURCHENKO (sanctioned) owns VNESHTORGSERVIS (sanctioned)
VNESHTORGSERVIS' General Director is VLADIMIR PASHKOV, prime minister of the DPR (sanctioned)
PASHKOV is president of FUND FOR THE SUPPORT OF INTERNATIONAL HUMANITARIAN PROJECTS
FUND FOR THE SUPPORT OF INTERNATIONAL HUMANITARIAN PROJECTS pays CENTER FOR INTERNATIONAL SETTLEMENTS
CENTER FOR INTERNATIONAL SETTLEMENTS pays into GOSBANK, the state bank of the L/DPR (sanctioned)
GOSBANK pays the pensions.
Contra Ukraine’s intelligence services, I agree with Barbanov that the CENTER FOR INTERNATIONAL SETTLEMENTS is most likely the South Ossetian entity of the same name, and not the Russian one.
I believe this is the entity listed as one of GOSBANK’s “credit organizations” (Кредитные организации) on its official website:
I speculate that a few things are happening here:
Money laundering: the separatist pension fund is being used by sanctioned entity VNESHTORGSERVIS to pay pensions to maintain social support in the L/DPR while circumventing sanctions, and as such,
Legitimacy: it’s serving an important role in legitimizing and maintaining popular support for the so-called L/DPR, because pensions are disbursed in rubles, which means that
Currency primacy: it’s assisting in the disruption of Ukrainian sovereignty by ‘trapping’ pensioners in the Russian economy in addition to the fact that
Spurious sovereignty: it’s reaffirming a surrogate, fictitious notion of sovereignty that isn’t really there
There are a few ways this theory could be falsified, and it seems to avoid most of these fairly neatly. If we accept (and, as necessary, verify) the findings that are out there in terms of public-domain media and open-source intelligence, this seems fairly solid.
#FTGIP, it would appear.