Zala Group Update

My most popular blog posts this past year were not really Russia related. They were a story that I accidentally stumbled upon while researching corruption here in the country of Georgia.

Each quarter a report is put out on the banking sector in Georgia by KPMG [see here for the most recent one]. A company name caught my eye while scrolling through. And the whole story spun out from that.

I’m still getting asked about this story, so I thought a follow-up would be appreciated.

Shortly after I published my series on ESOL BV, Gilbert Armenta, William C Morro, and their partners in crime, a notice appeared regarding a company called MoneySwap.

It was “a notice convening an extraordinary general meeting (the “EGM”)”, whose purpose was:

“…to approve, inter alia:

i.    the subscription for new ordinary shares in the Company by Wraith Holding B.V. (“Wraith”), together with certain options to be granted to Wraith to subscribe for additional new ordinary shares;

Who was Wraith Holding B.V.?

You guessed it!

Gilbert Armenta and William C Morro.

In March, MoneySwap had entered into a loan agreement with Wraith, which “…was incorporated for the purpose of investing in MoneySwap.”

In a statement, MoneySwap’s interim CEO Craig Niven stated:

“I am pleased to be able to announce the involvement of Wraith, which we hope will result in Wraith becoming a controlling shareholder in Moneyswap. Wraith has a real vision as to how the company can be developed and the financial and management resources necessary to achieve this vision,”…

Morro is now a board member of Moneyswap. Of course, none of his fraudulent activities are mentioned, except to note that he is a director of the now infamous Zala Group Limited.

What is MoneySwap and what does it do?

MoneySwap is a Gibraltar incorporated payment solutions provider which allows both online and point of sale transactions to be settled using UnionPay cards with operations in Hong Kong and China.

MoneySwap was advised on Armenta and Morro’s takeover by Hamlins in London, who wrote:

Wraith is an investment company backed by Gilbert Amenta who has considerable experience in the payments sector.

*Cue the laugh track*

Meanwhile, Zala Group is still active and looking for employees.

Screen shot 2017-12-31 at 08.54.01

Zala’s contact page has been updated to show its connection to MoneySwap, using the latter’s addresses in London and Hong Kong.

Where is this going?

According to MoneySwap’s website:

MoneySwap provides a gateway to UnionPay’s MoneyExpress® services. This enables users abroad to remit funds directly to UnionPay cardholders in China. Each remittance is authenticated by UnionPay and the State Administration of Foreign Exchange of China (“SAFE”). The cardholder in China can withdraw cash at an ATM or make purchases where UnionPay cards are accepted. Currently, China is the second largest global recipient of remittances. MoneyExpress® is a secure, cost effective and convenient way to send funds to China. MoneyExpress® is a registered trademark of UnionPay.

Right now it can take days and exorbitant fees to transfer money from one country to another. There are multiple issues with SWIFT, and people are looking for options to move away from it. Getting a company on blockchain to transfer money easily and rapidly and cheaply would be an ideal alternative for many. China is one of the largest countries for remittances (it placed in the top 5 in 2016 with $61 billion), so you can imagine the fees a company like MoneySwap could rake in for their services.

As we know from my previous research into Armenta and Morro, it is also an ideal way to launder money.

My previous blog posts on Armenta, Morro, and their drug running, money laundering, Hawaiian separatist connections (in order):

Bank Fraud & Crypto Scams


More Details

Drug Smuggling



Banking Fraud

The arrest last week of the deputy head of the Ministry of Internal Affairs’ Committee for Economic Security and Combating Corruption has again brought attention to the massive amount of fraud taking place in Russia’s banking sector. Dmitry Zakharchenko was arrested, according to The Moscow Times,after uncovering the money [approximately $120 million in cash] in his car, study and sister’s apartment”.

Authorities say that the money belonged to NOTA bank, whose licence was stripped by Russia’s Central Bank last November.

Russian billionaire (and self-proclaimed anti-corruption activist) Alexander Lebedev has been out in front on the issue of the authorities aiding and abetting banking fraud, even before the recent scandal involving Zakharchenko.

Lebedev writes in Komsomolskaya Pravda today :

In general we have had in the past ten years massive banking fraud, the largest in the country’s economy. The main beneficiaries are the bankers themselves and their top managers. And those like Colonel Zakharchenko are their support staff.

He continues:

Approximately $100 billion has been stolen from our banking system in the past decade. Of this, about $20 billion is accounted for from about a dozen bankers: Sergei Pugachev [currently residing in France] from “Mezhprombank”, Andrei Borodin [currently residing in the UK] from the “Bank of Moscow”, Anatoly Motylyev from “Globex” & “Russian Credit”, and others…. They feel comfortable right now abroad. Then there are the smaller cases, where they stole not $2-3 billion from the same bank, but a hundred million. These were, of course, organized groups, many of whom have plundered more than one bank.

Take, for example, Mr Motylyev. First, in the previous crisis, from his bank “Globex” several billion disappeared. And then he has crashed six banks and five pension funds. This is at least several hundred million dollars.

Lebedev then turns on the Western system that he says aids and abets this fraud:

And here is the most interesting part. Where is all the money that was taken? What is hidden somewhere “cleaned” is only a small fraction. The whole infrastructure for receiving these billions is in the West. To move the money yourself is too large and complex an operation. There are nominee directors, there are lawyers, there are special companies that draw up the documents. There are agents who place the money in the funds and banks. And people stuck to it, various merchants of real estate, airplanes, yachts. We are talking about several tens of thousands of people who are fed with all of these machinations. And around the world, not only from Russia, the machinery pumps out a trillion dollars a year.

No, they are not hiding the money in London. The capital of the UK is a place where you can hire good lawyers and get political asylum, declaring yourself a fighter against the Russian regime. All of the money is held via offshore jurisdictions – from the Marshall Islands, to the Seychelles and the US states of Nevada and Delaware. And finally the money is parked in “safe havens”. In New Zealand Trusts and Liechtenstein foundations. On top of all of this sit Anglo-American lawyers, the best in the world.

And don’t tell me that the Russians are the most corrupt. Nothing of the sort! All our banker-fraudsters were trained by Western experts, auditors and lawyers. And they all got their share. Believe me, the commission received by western launderers and the hosting infrastructure, legal and banking, is not less than that of Colonel Zakharchenko, but much more.

The State needs to focus on getting this money back, he concludes.

Do you know what a hundred billion dollars means for the Russian economy? This is more than the National Welfare Fund! None of our export industry can be compared to that money. Because they still have costs – oil must still be obtained, weapons produced… If even half of that stolen money will be returned, Russia will have a lot of money. And this must be one of the priorities of state policy.

Not content to just comment on the problem, Lebedev announced on Twitter this afternoon:

“We are planning a conference on the complicity of auditors Ernst & Young, KPMG, PWC and Deloitte in stealing 6.5 trillion from the Russian banking system.”

He continued:

On average these “auditors” – Ernst & Young, KPMG, PWC, and Deloitte – have earned $50 billion in the past ten years.

Fighting the Last War

The Wall Street Journal had an article on Wednesday saying “New York’s top banking regulator is set to publish on Thursday strict and long-awaited anti-money-laundering regulations to take effect in 2017.”

You can read the statement from DFS here. Essentially it places the onus on the financial institutions (like Goldman Sachs, Deutsche, and others) to report on themselves.

In the WSJ article, the head of DFS stated:

“Management must set the tone of compliance from the top so that message is disseminated throughout the enterprise,” Ms. Vullo said. “With this new regulation, New York will lead both in the fight against terrorist financing and money laundering and in providing useful guidance to our regulated institutions.”

We are always fighting the last war. These were steps that should have been taken 20+ years ago after Bank of New York and the fallout from that, if not earlier.

And we are still only treating the symptoms. All the regulations in the world will not stop the illicit movement of cash. In the 70s, 80s, and into the 90s, people were moving money across borders in bags. I even came across a story a few weeks ago about a man in the mid-2000s who was still doing the same using his private airplane. And it would not surprise me if it was still happening.

Meanwhile, the professionals who are laundering money have adapted and moved on into new technologies. And they likely changed tactics about a decade ago, if my research is correct. And our law enforcement is only now waking up and reacting to it. It will take years to fully understand the damage done by the new ways of moving money, and law enforcement’s failure to react in a timely manner.

And so we’ll have more inquiries and finger pointing, but never find the real culprits. And we’ll just keep trying to treat the symptoms.

A Nemtsov Act

Boris Nemtsov has barely been dead for 3 days, and certain people are already trying to capitalize on his murder to push their agenda.

I’m not against the proposals outlined in the above article per se.  Russian money (and not only) coming into the UK is a huge problem.  As are the tricks used to hide its origin.

But it is naive to think that enacting something like this would change the situation all that much.  The only thing these kinds of laws do is keep honest people honest.  They increase the cost of doing business, and the cost of bribing someone to look the other way.

And it is cynical to use a man who has been dead less than a week to push an agenda.