Parex Bank Financial Controversy Explained

Parex Bank's financial controversy is a complex issue, but it can be broken down into key points.

The controversy centers around allegations of money laundering and financial irregularities.

Parex Bank was accused of allowing the laundering of millions of dollars through its branches.

The bank's lax anti-money laundering policies were criticized, allowing suspicious transactions to go unchecked.

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In 2005, Severneft CEO Zhan Khudainatov received a $100 million loan from Parex which led to the collapse of the Parex Bank.

Denis Sherstyukov, a close business associate of both Kargin's son and Georgy Krasovitsky, a son of Viktor Krasovitsky, was on the council of Parex and has close ties to Vladimir Putin through Nils Ušakovs and his Harmony Centre which is close to Putin's United Russia.

Parex transferred $111 million to Vladimir Putin’s good friend Eduard Khudainatov in 2006, with no collateral required.

The entire loss of $111 million will be suffered by Latvian taxpayers, as Khudainatov refuses to pay the money back.

Parex Bank transferred $111 million to Vladimir Putin's friend Eduard Khudainatov in 2006.

Apparently, there was no collateral for this loan. The auditors from Ernst & Young must have known about this.

Khudainatov refused to pay the money back in 2012, leaving Latvian taxpayers to suffer the loss.

Nobody was prosecuted for this, as usual.

A new article revealed that during a change of ownership in 2008, the former shareholders stole documents related to key bank deals with Russian customers.

This implies that the "loan" money was likely stolen, and documents were taken to cover it up.

The $100 million loan from Parex to Severneft's CEO, Zhan Khudainatov, was a pivotal moment in financial transactions.

In 2005, this loan led to the collapse of the Parex Bank, and its subsequent revelation in the Panama Papers.

Denis Sherstyukov, a close business associate of both Kargin's son and Georgy Krasovitsky, a son of Viktor Krasovitsky, was on the council of Parex at the time of the loan.

He has close ties to Vladimir Putin through Nils Ušakovs and his Harmony Centre, which is close to Putin's United Russia.

From 2004 to 2008, Denis Sherstyukov expanded Parex into countries of the former Soviet Union.

Parex Bank faced a significant legal issue when Reverta sued the founders, Kargins and Krasovickis, for nearly €88 million due to 14 highly irregular loans and deposits at Parex Banka.

Kargins and Krasovickis were ordered to pay €4,284,792 to Reverta in October 2016, a notable consequence of the lawsuit.

The financial strain of this lawsuit is a tangible example of the bank's troubles and the consequences of its actions.

On 22 October 2008, Parex owners privately requested state support to maintain the bank's solvency.

The Ministry of Finance rejected this suggestion, and the outflow of money from Parex continued.

Finance Minister Atis Slakteris discussed the situation with the FCMC and the Bank of Latvia, and on 28 October the Minister of Finance informed Prime Minister Ivars Godmanis.

Parex's owners proposed a state treasury deposit to Parex Bank, which was not accepted.

The authorities involved concluded that Parex needs to be taken over by the state in early November.

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Several options were considered, including the full takeover of Parex banka into state ownership, or the transfer of 51% of Parex banka's shares to the Mortgage and Land Bank.

On 27 October 2008, withdrawals from Parex began to accelerate rapidly, with around 29 million lats of capital leaving the bank by 29 October.

The nationalization of Parex Bank was a major cause of the 2008-2010 financial crisis in Latvia, prompting the government to take a €4.5 billion bailout loan from the International Monetary Fund, the European Union, and the World Bank.

Some claim that the nationalization triggered a chain reaction that led to the crisis, while others argue that it was a response to the global financial crisis' effects on Latvia.

The government had to take drastic measures to address the crisis, and the nationalization of Parex Bank was a key part of that process.

In a notable case, Reverta sued the founders of Parex Banka for nearly €88 million due to 14 highly irregular loans and deposits made between 1995 and 2008.

The court ordered Kargins and Krasovickis to pay €4,284,792 to Reverta in October 2016.

This lawsuit highlights the consequences of financial irregularities and the importance of accountability in the banking industry.