Russian President Vladimir Putin insists that while the Panama Papers stories published by Organized Crime and Corruption Reporting Project (OCCRP) and its partner Novaya Gazeta are correct, they show no corruption or illegal activity on his part. Putin has called the stories a Western plot to destabilize his regime.

But additional analysis of the records by OCCRP and Novaya Gazeta show that offshore companies connected to Sergey Roldugin, one of Putin’s oldest friends, profited obscenely in building the jewel of the financial empire of Putin’s inner circle: Bank Rossiya.

And not only that, Bank Rossiya itself has profited massively at the expense of Russian taxpayers.

Bank Rossiya featured prominently in earlier OCCRP stories that showed Roldugin used offshores to conduct a series of highly suspicious transactions, many of which made no financial sense but left Roldugin much wealthier.

Documents showed that Roldugin and his associates owned a number of offshore companies registered in the notorious tax havens of the British Virgin Islands (BVI) and Panama. Billions of dollars flowed through the companies, which received “donations” from Russia’s richest businessmen and controlled the activities of strategic Russian enterprises.

Bank Rossiya employees figured prominently in many of the transactions.

The Panama Papers One of the biggest leaks in journalistic history reveals the secretive offshore companies used to hide wealth, evade taxes and commit fraud by the world's dictators, business tycoons and criminals. More info

The bank is described by the US Treasury Department as “the personal bank for senior officials of the Russian Federation” whose “shareholders include members of Putin’s inner circle associated with the Ozero Dacha Cooperative, a housing community in which they live[d]”.

New records found by OCCRP show that in 2010, a company linked to Roldugin bought shares of Bank Rossiya for US$ 6.50 per share and sold them just days later to an unknown investor for 32 times more than he paid for them. Within a month, Gazprom, Russia’s largest state-owned company, paid more than 169 times what he had paid for the same shares: US$1,120 per share. Even worse, Gazprom would later sell most of them again for half that price earning large losses.

The records detailing these transaction were obtained by OCCRP from public records and the Panama Papers, a set of documents that were leaked from an offshore services provider called Mossack Fonseca to the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ) with more than 100 media partners across the globe including Novaya Gazeta and OCCRP.

Putin, however, was adamant that the Panama files demonstrate no corruption or illegal activity on his part. “They are just trying to cause confusion, saying that some of my friends are involved in business, and suggesting that some of the money from these offshore accounts finds its way to officials, including the president,” he said.

“Putin’s Bank”

As retaliation for the annexation of Crimea and Kremlin support for pro-Russian separatists in Eastern Ukraine, authorities in both the US and European Union (EU) imposed sanctions on individuals and companies from Putin’s inner circle. One of the most important targets was Bank Rossiya.

Many of the figures involved in the bank owned houses in the Ozero Dacha Cooperative near Putin. The cooperative, founded in the mid-1990s, is a gated community of summer homes on the shores of Lake Komsomolskoe near St. Petersburg. One of his neighbors was Yuri Kovalchuk, the largest shareholder of Bank Rossiya (with about 38 percent). Kovalchuk, 64, is considered by EU authorities as Putin’s long-time acquaintance who is benefiting from his links with top Russian decision makers.

At various times, Bank Rossiya shareholders have included Nikolay Shamalov (his son, Kirill, is married to Putin’s younger daughter Katerina Tikhonova); Mikhail Shelomov, a distant relative of the president; and Roldugin, a celebrated cellist and godfather to Putin’s oldest daughter.

The bank was established in 1990 in the twilight of the Soviet era with the participation of the St. Petersburg branch of the Communist Party. After the collapse of the Soviet Union, new investors stepped in. They included Kovalchuk, former Minister of Education Andrei Fursenko and former Russian Railways head Vladimir Yakunin – all long-time friends and associates of Vladimir Putin.

In the mid-1990s, they were joined by powerful St. Petersburg criminal: Sergey Kuzmin and Gennady Petrov and companies affiliated with them controlled a significant stake in Bank Rossiya up until the end of 1990s when Putin became the head of the FSB, the Russian intelligence agency, and later the leader of the country. Last summer Petrov was indicted by Spanish prosecutors as a leader of the Tambovskaya organized crime group and accused of money laundering, fraud and other crimes.

Today Bank Rossiya is among the top 20 Russian lenders according to the Interfax rating agency, with assets of about US$ 9 billion and equity of US$ 700 million. It controls a sprawling financial empire with important strategic assets that underpin the Russian economy, including one of the country’s largest insurers and the management company for Gazprom’s pension fund.

One of Bank Rossiya’s holdings owns 25 percent stake in Channel 1, a state-controlled TV network with the largest audience in Russia.

The Panama Papers detail how a few suspicious deals involving Bank Rossiya’s shares helped a company linked to Roldugin make a fortune in just two days.

Buy, Resell — Become a Millionaire

One of the companies affiliated with Roldugin is Sandalwood Continental from BVI. Starting in 2007, Sandalwood belonged to Oleg Gordin, a businessman from St. Petersburg who has acted as Roldugin’s authorized representative in other companies. Internal documents from Mossack Fonseca show that Sandalwood held billions of US dollars.

The company got loans on preferential terms from the Cyprus-based RCB Bank, a large stake of which is controlled by the Russian state-owned VTB Bank. Sandalwood invested some of their funds in luxury projects linked to Putin. For instance, Sandalwood then gave loans to a Russian company called Ozon, which owns the ski resort Igora, not far from St. Petersburg.

Reuters reported last year that Igora was the site of the 2013 wedding between Putin’s daughter Tikhonova and Kirill Shamalov, son of the long-time Putin friend and Bank Rossiya shareholder Nikolay Shamalov.

On June 23, 2010, Sandalwood bought 66,198 shares (about 3 percent of the share capital) of Bank Rossiya from Evgeny Malov. Malov is another well-connected businessman from St. Petersburg.

Malov was a business partner of Gennady Timchenko, another Putin friend, until they split their business interests in the mid-2000s. Timchenko was a cofounder of an oil-trading firm called Gunvor, a company that trades much of Russia’s oil.