The money failed to deliver Le Pen the French presidency in last year’s election, denying the Kremlin a powerful ally in the heart of Europe. Instead, the 9.4 million-euro loan, then worth $12.2 million, dragged her party into the shadowy underworld of Russian cross-border finance, putting it in league with people accused of having ties to Russian organized crime, money laundering and military operations.

The mysterious saga of the loan offers a rare look inside the Russian influence engine, demonstrating how people, companies and networks outside the Kremlin pursue President Vladimir Putin’s foreign policy aims, often without a centralized plan.

“It was in the interest of Russia to support Marine Le Pen,” said Aymeric Chauprade, a member of the European Parliament who advised Le Pen on foreign policy before leaving her party. “Every time you have a political leader who says we should change our policy regarding Russia . . . they are interested in supporting him.”

AD

AD

After Russia interfered in the 2016 U.S. election, the intelligence community concluded that Putin himself had signed off on “active measures” to bolster Donald Trump. The assessment added to a perception in the U.S. and beyond that the Russian president personally orchestrates all of Moscow’s covert operations.

But Moscow’s foreign influence efforts also bubble up from below, or percolate on the margins, with power brokers offering support to Kremlin sympathizers abroad in ways that do not always require Putin’s upfront blessing.

The Le Pen loan, analysts say, is an example of how it works. After Putin sets out the vision, agents inside and outside the government begin executing it, hoping to score points with him if their gambits succeed.

AD

The money is also perhaps the best evidence in recent years that Russian influence operations abroad involve not only Internet trolling and military adventurism but secretive financing as well.

AD

The network that facilitated the deal, according to Joshua Kirschenbaum, a senior fellow at the German Marshall Fund’s Alliance for Securing Democracy — which has authored a study on the loan along with the Washington think tank C4ADS — is “the purest distillation of how illicit finance intersects with foreign interference.”

Financial needs

Like most loans, the one Le Pen’s party took out in 2014 began with a need for cash.

At the time, Le Pen’s modern touches were breathing momentum into a far-right movement started decades earlier by her father and known for its anti-Semitic and xenophobic views. Le Pen presented a cleaned-up version of the party’s politics, deftly mixing calls to pull France out of NATO and possibly the European Union with broadsides against immigration and Islam.

AD

But the party, then known as the National Front and now called the National Rally, was having difficulty securing credit from traditional French banks. Le Pen accused the banks of discrimination for refusing to offer a loan.

AD

In search of money from a non-French bank, party officials turned to Jean-Luc Schaffhauser, a member of the European Parliament elected as part of Le Pen’s party bloc.

For years, Schaffhauser wanted to build an alliance between Europe and Russia to act, he said, as a Christian bulwark against Asia and the Middle East. In between working as an international consultant for French oil and aerospace firms, he said, he dreamed of one day running a pro-Russian foundation that would distribute Russian money to organizations in Europe and drive the continent closer to Moscow.

AD

Through what he described as work on a French-Russian development-bank project in 2004 or 2005, Schaffhauser said he met a Russian businessman and member of parliament named Alexander Babakov, who in 2012 became the Kremlin’s special envoy for Russian organizations abroad.

AD

Schaffhauser, looking for a loan for Le Pen, said he reconnected with Babakov through a mutual contact in the Russian Orthodox Church and arranged a meeting in mid-2014.

“It was face-to-face,” Schaffhauser recalled, speaking English in an interview. “He says he has a possibility.”

The “possibility” Babakov proposed, according to Schaffhauser, was a loan from the First Czech-Russian Bank. Through a spokeswoman, Babakov declined to comment for this report.

'For me, it was safe'

First Czech started out as a joint venture between a Czech state bank and a Russian lender. In the early 2000s, it became part of a Russian pipeline construction company that was subsequently acquired by the firm of a billionaire friend of Putin’s, Gennady Timchenko.

AD

The bank spun out on its own under the personal ownership of one of the pipeline company’s executives, a Russian financier named Roman Popov. A subsidiary of the bank secured a European license in the Czech Republic.

AD

For Schaffhauser, the bank’s European license was a green light for the party, despite some questions about its lending practices. Popov had been facilitating transactions in Iran and working with a businessman the U.S. Treasury Department recently hit with sanctions for allegedly being an “overseer” in a Russian organized-crime syndicate.

When asked whether the party was suspicious of the bank’s activities, Schaffhauser cited the European license and said, “For me, it was safe.”

Sometime in September 2014, the National Front’s treasurer, Wallerand de Saint Just, went to Moscow.

AD

At the bank’s headquarters, he had lunch with Popov and his colleagues and signed a contract that lent the National Front 9.4 million euros at an interest rate of 6 percent per year. The final repayment date was Sept. 23, 2019.

AD

De Saint Just described the process as “very amicable.”

At the time, Le Pen and other politicians from her party were making pro-Russian pronouncements in public but had not disclosed the loan.

The secrecy didn’t last long.

An investigative journalist at the French publication Mediapart exposed the deal 2 1/ 2 months after it was signed, setting off a firestorm of criticism and more reports from Mediapart and others about financial links between Russian individuals and the French far right.

AD

Le Pen dismissed the furor, saying at the time that she had no choice but to turn abroad for a loan and denying that the money influenced her political positions. Le Pen’s party did not respond to a request for comment.

Schaffhauser, for his part, said he received 140,000 euros, or about $181,000 at the time, for brokering the loan. His fee was deposited in what he described as a family foundation. He said people close to Babakov, the Russian member of parliament and special envoy, also discussed investing in his think tank.

AD

At the same time, Schaffhauser was railing against sanctions imposed on Russia and promoting other pro-Russian positions in the European Parliament. He said he did not think that advocating for Russia while arranging a Russian loan to Le Pen’s party and a fee for himself presented a conflict of interest.

“What’s the problem? I have the right to be against this,” he said of the sanctions.

A loan on the move

Back in Moscow, strange things began happening with the loan.

AD

In early 2016, First Czech started mysteriously shedding assets. Russian authorities alleged that millions of dollars in assets fraudulently flowed out the door as regulators closed in on the bank. Among them — the loan extended to Le Pen’s party.

Elvira Nabiullina, the head of the Russian Central Bank, was leading a broad crackdown on questionable banks, many of which had become playthings for Russian businessmen, mob bosses and politicians.

AD

With backing from Putin, she began closing banks with bad loans and insufficient reserves that threatened Russia’s economic stability. The effort shut down nearly 100 financial institutions by the end of 2016.

Russian regulators described First Czech’s assets as low-quality, saying the company had made loans to shell companies in excess of 19.2 billion rubles, or $277 million at the time. They placed the distressed bank under the management of provisional administrators.

But as they seized the company, regulators said they encountered serious obstruction, with bank officials concealing asset withdrawals.

Within months, the bank had lost its Russian license, and later it was formally declared insolvent. Czech regulators later pulled the European license, too.

By then, Le Pen’s loan had disappeared from the books.

Some six days before Russian regulators placed the bank in the hands of the provisional administrators, First Czech sold the loan to an obscure Russian company that corporate registration records describe as a machinery and equipment rental company.

The loan didn’t stay there for long.

At the end of 2016, it was transferred to a Moscow-based aircraft supply company called Aviazapchast, according to Russia’s deposit insurance agency.

A private company, Aviazapchast grew out of the foreign sales arm of the Soviet aviation ministry, which repaired and replaced plane and helicopter equipment that the Soviet Union sold abroad. Among its clients today is the Syrian air force, which human rights groups have accused of committing atrocities against civilians by dropping barrel bombs for Syrian President Bashar al-Assad.

The company is deeply intertwined with the Russian military. Three of the four executives listed on its website spent decades in the Soviet and Russian armed forces. The company holds a government-secrets license from Russia’s FSB security service.

The No. 2 executive on the leadership team listed on the company’s website is Yevgeny Barmyantsev, a retired military officer who served as an attache at the Soviet Embassy in Washington. In 1983, as a 39-year-old Soviet military spy, he was expelled from the United States after federal agents caught him retrieving documents from the base of a tree in Maryland.

Why Aviazapchast acquired the Le Pen loan is unclear. The company’s owner is a Russian businessman, Valery Zakharenkov, who, according to filings for another company he controls, keeps an apartment near the Arc de Triomphe in Paris.

'Ms. Romanova'

Whether the aviation company in fact owns the loan is a question pending in Russian courts.

Russia’s state deposit agency filed a case in Moscow’s arbitration court in 2016 arguing that the frantic deals First Czech made in the days before its collapse were illegitimate. The agency said the assets should go to the Russian financial authorities that seized the bank.

Le Pen’s party agrees.

“When a commercial company is liquidated, no one can take an asset out and dispose of it. This can only be done by the person in charge of the liquidation,” said de Saint Just, the party’s treasurer. “Since it wasn’t done by the person in charge of the liquidation and this was a person we didn’t know at all, we obviously refused.”

What’s more, he added, “we found it a little odd that this should be handed to a company that sells equipment to planes.”

De Saint Just said that when Aviazapchast tried to collect interest payments, he contacted Russian authorities.

For now, he says he is sending interest payments to a notary in Moscow named Ms. Romanova, who will hold the cash until a final Russian court ruling indicates where the money should go. He declined to provide evidence of the payments.

Asked whether Aviazapchast had links to Russian military intelligence, de Saint Just waved his hand in dismissal.

“In Russia, they’re all former members of the KGB,” he said. “All of them.”

Aviazapchast declined to comment.

Earlier this year, Moscow’s arbitration court ruled that Aviazapchast was in fact the rightful owner of the loan. But Russian regulators have appealed, according to the deposit insurance agency. An official there said the next hearing is in February.

While Russian regulators attempt to recover the assets First Czech sold before its collapse, criminal prosecutors in Moscow have been pursuing the bank’s managers and owners, including Popov.

Russian police arrested a senior vice president of the bank who worked there for only two weeks and oversaw the asset sales, accusing him of financial fraud in an ongoing criminal case. He has denied wrongdoing. In April, Russian authorities issued an international arrest warrant for Popov and his deputy on accusations of large-scale embezzlement.

An attorney for Popov said that the case remained open and that his client was not in Russia. He did not say where he is. Another attorney for the firm said Popov has denied wrongdoing in the proceedings. Popov could not be reached for comment.

Despite all that has transpired with the loan, de Saint Just said he would do it again under similar circumstances.

“If I could, I would have seen Mr. Popov again to tell him things had worked well the last time and ask him to loan us money again,” de Saint Just said in an interview in his Paris office, where he sat under a poster of Le Pen. “But the bank was shut down. It’s over.”

De Saint Just said he has a phone number only for the bank’s administrative director, who he said was laid off as the bank collapsed.

“I hope she found a job,” he said, “because she was very pretty and very competent.”

'No standard playbook'

As the case unfolds in Russia’s courts, the loan has become a cautionary episode for recipients of Russian backing abroad and a case study for officials in Washington and Brussels looking to understand how Russian influence-peddlers wield financial power.

The Alliance for Securing Democracy and C4ADS describe the loan in their forthcoming report as an example of how Russian state actors leverage allegedly illicit financial networks for political purposes. What is unclear is how often they do so, given that few such transactions have been exposed and political parties rarely receive formal loans from foreign banks.

Moscow did not regard the loan as successful, particularly after Le Pen lost the presidency, said Mark Galeotti, an expert in Russian security affairs and a fellow at the European University Institute in Florence. He said Russia is now more likely to use smaller amounts of untraceable “black cash” in financial influence operations.

The story of the loan agreement again demonstrates how Russia is not the “kind of ruthlessly disciplined, lockstep state” many have imagined, Galeotti added.

“Most of these things are experimental,” he said. “The Russians have no standard playbook. They just try things and see what works.”