Pandora Papers: Putin image-maker’s position in billion-dollar cinema deal hidden offshore

By Margot Gibbs, Kathryn Kranhold and Jelena Cosic
As the 2014 Sochi Winter Olympics approached, Konstantin Ernst, the floppy-haired mental who reigns as Vladmir Putin’s chief picture maker, confronted the problem of a lifetime: to supply opening and shutting ceremonies spectacular sufficient to captivate the world – and to spice up the popularity of Russia’s more and more besieged president.
An Oscar-nominated movie producer, Ernst, then 53, had been boss of Russia’s main TV community, Channel One, for so long as Putin had been president, and he had performed a essential position in creating Putin’s picture because the savior of the Russian state.

But a tide of unhealthy information had eroded Putin’s home help: pro-European protests in Kyiv have been on the verge of toppling his ally in Ukraine; a decade of oil-fueled development had given option to financial stagnation; and a protest motion, led by dissident Alexei Navalny, was gathering power on the streets of Moscow.
Ernst flipped the script.

In a blinding parade of floating mountains, lakes and onion domes, heroes of the avant-garde, and greater than 3,000 performers, Ernst’s Olympic spectacle recast Russia’s troubled actuality into the Russia of Ernst’s creativeness: highly effective, artistic, forward-looking, triumphant. The world cheered.
Ernst would later say that the manufacturing was a labor of affection and that his pay for this achievement was only one ruble.

“It would be silly to assume that professing your love should have a price tag,” he mentioned.
But the International Consortium of Investigative Journalists has discovered that on the day of the Opening Ceremony, an organization was included within the British Virgin Islands that will pave the best way for Ernst’s secret 23% stake in a state-funded privatization deal price a billion {dollars}.
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Files leaked to ICIJ, and shared with 150 media companions, present that 9 months after the Olympic torch was extinguished, Ernst turned a secret companion in a deal to purchase 39 getting older however priceless Soviet-era cinemas and surrounding property from the town of Moscow. The deal was financed by VTB Bank, a state owned establishment that has been known as Putin’s “piggy bank”.
The properties have been bought on the minimal value set by a Moscow government-run public sale. A authorized problem alleged that the public sale was designed to successfully exclude all however the partnership wherein Ernst, behind layers of shell firms, held a stake.

The leaked information additionally present that Ernst was the beneficiary of a $16.2 million mortgage – from a Cyprus financial institution partly owned by VTB – used to fund his stake within the deal. The information present the financial institution explicitly instructed offshore legal professionals to maintain paperwork detailing Ernst’s connection to the mortgage out of presidency data within the British Virgin Islands, the place the shell firms concealing the deal have been included.
Further, the information doc how Ernst was joined within the partnership by a Russian media determine who’s linked to a few of Putin’s closest and strongest allies, together with Ernst’s bosses at Channel One.

In an e mail to the ICIJ, Ernst mentioned he had by no means made a secret of his involvement in the actual property mission and denied any suggestion that his involvement within the mission was compensation for his work on the Olympic ceremonies. He refused to reply ICIJ’s questions on the idea that ICIJ was “not an independent investigation company but an organisation commissioned by the US secret services.”
The findings are a part of the Pandora Papers, a trove of greater than 11.9 million information from 14 offshore legislation corporations and repair suppliers. The paperwork pull again the curtain on a monetary system that enables the worldwide 0.1% to stash their wealth away from tax inspectors, regulators and the general public. ICIJ obtained the paperwork and shared them with journalists from 117 nations.
The paperwork revealing Ernst’s secret deal come from Trident Trust, one of many world’s largest offshore service suppliers, with places of work within the British Virgin Islands (BVI), Mauritius, Singapore and different secrecy jurisdictions, together with the U.S. state of South Dakota.