Exclusive: Russian buyer of Canadian oil company accused of paying kickbacks to former Ukrainian PM

07 December 2018, Rhineland-Palatinate, Koblenz: Cycling: Team presentation of Team Katusha-Alpecin in the showroom of bike sponsor Canyon. Oligarch Igor Makarov, who sponsors the racing team, speaks to the journalists. Photo: Thomas Frey/dpa . (Photo by Thomas Frey/picture alliance via Getty Images)

A Russian energy billionaire was able to buy a majority stake in a Canadian oil and gas company without any regulatory scrutiny, despite a longstanding battle in a U.S. federal court over his alleged role in schemes involving international money-laundering, kickbacks and a disgraced former Ukrainian prime minister, Global News has learned.

Igor Makarov, who acquired 21 per cent of Calgary-based Spartan Delta last year, has been accused by American authorities of paying at least $28.5 million in kickbacks to former Ukrainian prime minister Pavel Lazarenko in 1996 for exclusive rights to sell gas in Ukraine.

While there is nothing illegal about Makarov’s Spartan Delta’s purchase, the complex international transactions expose regulatory gaps between federal and provincial agencies and the lack of vetting of foreign investors.

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This is because the deal involved a so-called exempt take-over bid, a type of share-swapping transaction that in Alberta does not require disclosures from potential buyers. This process allowed Makarov’s group to merge Spartan Delta and Inception Exploration, a smaller, strategically placed oil sand company in northern Alberta.

Global News has also found there was no regulatory engagement from Alberta Securities Commission (ASC) on Makarov’s investment in Spartan Delta.

The U.S. civil forfeiture case against Lazarenko, which cites his transactions with Makarov and others, is an effort to seize about US$250 million secretly pooled in bank accounts worldwide. The California-based proceedings allege that Makarov and the principals of his Florida-based company, Itera International, personally benefited from complex money-laundering transactions that were “intended to conceal Lazarenko’s abuse of his government positions.”

Makarov is not named as a defendant or charged with any crime in the case, which has run for almost two decades.

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The proceeds were allegedly stashed in a scattering of offshore banking accounts in Switzerland, Guernsey, Lichtenstein and Antigua, the Caribbean island where a Bank of Nova Scotia branch received about C$111 million, according to the U.S. government’s case.

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The case filings also say that Makarov and energy tycoon Yulia Tymoshenko, who later became a Ukrainian prime minister, were prominent “associates of Lazarenko who amassed multi-million dollar fortunes,” and that associates of Lazarenko engaged in plots that included “fraud, extortion, bribery, and embezzlement.”

Lazarenko, who held power until 1997, was first convicted on money laundering charges in Switzerland, in 2000. Six years later, he was sentenced to nine years in prison on U.S. money-laundering indictments that stemmed from a six-year FBI probe. One of Lazarenko’s convictions related to a money-laundering conspiracy involving Itera International and Makarov.

It was only the second time the U.S. has sentenced a former head of state.

The Bank of Nova Scotia did not respond to specific questions regarding the deposit identified in the U.S. civil forfeiture case, an amount of C$111 million  transferred to the bank’s Antigua branch.

A spokeswoman said the bank no longer has operations in Antigua, and that it has adhered to strict anti-money laundering guidelines.

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James Cohen of Transparency International Canada (TIC) said Makarov’s case can be understood through the prism of Canada’s global reputation as an easy mark for offshore tycoons looking to launder their wealth and reputations through Ottawa’s weak laws.

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Earlier this year, Makarov’s controlling stake in Spartan Delta was worth more than $200 million on paper. But following Russia’s invasion of Ukraine last February, Makarov offloaded more than half of his shares in Spartan Delta to an unidentified third party for $121 million. The transaction occurred three days before Ottawa sanctioned him, alleging that he was a close associate of the Russian regime.

Federal agencies, including the RCMP, would not answer questions from Global News on the circumstances surrounding the Makarov sanction and his Spartan Delta transactions.

“This case just goes to the question, ‘Ottawa, you blatantly have not closed the gaps even after our Prime Minister acknowledged in 2019 that money laundering is a national problem,” Cohen said.

“We see advertisements in Chinese and Russian where offshore registration companies are almost saying, ‘Go launder your money in Canada.’ People aren’t even rolling the dice here because they know they will succeed.”

Cohen also noted Makarov’s use of companies registered in Cyprus in the Spartan deal fits with suspicious investment trends that TIC has reported on.

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A spokesman for Makarov said that neither Makarov nor his corporate entities would comment for this story, but have previously asserted that there is no basis for any sanctions against him. Makarov, a former Soviet Union cycling champion, launched his sprawling empire of gas companies in Turkmenistan in 1992. In the meantime, he rolled out affiliated trading companies in Switzerland, Cyprus and Ukraine as well as the previously mentioned Itera International in Jacksonville, Fla.

The relationship between Itera’s explosive growth and Makarov’s association with Russian state-energy giant Gazprom has long drawn the curiosity of business analysts such as Bill Browder, a U.S. investment fund manager who has influenced Western governments to clamp down on corrupt Russian officials.

Two decades ago, Browder reported that Itera had gained more than 50 per cent of Gazprom’s business in Ukraine and other former Soviet states, while Makarov was given free usage of Gazprom’s European pipelines.

“Our research showed that Itera, which was owned by this character Makarov, was gaining huge economic advantage from Gazprom, and it didn’t appear they were providing any particular service that Gazprom couldn’t have done for free,” said Browder, who is the bestselling author of Red Notice and Freezing Order. “So the question was, why would Gazprom do this?”

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Lawyers for Gazprom have argued the U.S. civil forfeiture case is politically motivated. The company didn’t respond to questions from Global News on the U.S. allegations. Ukrainian and Russian governments also did not respond to questions about the U.S. government’s case.

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In 2013, Makarov sold some of Itera’s energy assets to another Russian state company, Rosneft, for $2.9 billion. Two years later, Makarov rebranded his remaining network of trading and real-estate companies as Areti.

Corporate records obtained by Global News reveal that Makarov’s rebranded companies are connected with many of the same Florida-based Itera International founders and Cyprus-based corporate officers involved in the Lazarenko case.

These Itera International veterans were directly involved in Makarov’s consolidation of oil and gas reserves in Alberta without scrutiny from the provincial regulator using a type of share purchase called an exempt take-over bid. Formal takeover bids require significant disclosure from the investors involved, which ensures that target company investors have enough information to make informed decisions.

Regardless, the Alberta Securities Commission is not obliged to engage in exempt takeover transactions, spokeswoman Theresa Schroder confirmed.

“The ASC also doesn’t vet the directors of private companies, such as Inception Exploration,” Schroder said.

Records show that Makarov turned his sights to Alberta two years after he established Areti, which eventually became the largest shareholder of Spartan Delta.

In December 2016, four executives in Areti’s Jacksonville headquarters,  including Makarov, became directors of Inception Exploration, a company with a small oilsands property in Alberta’s northwestern Montney fields.

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This involvement gave Makarov control of the small company at a time when oil prices were starting to rebound from a crash in 2014. And if Makarov’s moves in Canada are compared to a chess game, Inception Exploration’s relatively small oilfield seems to have provided him a pawn in Alberta.

Makarov’s big moves started in February 2021, when private investors arranged for Spartan Delta to take over Inception Exploration’s Montney property through a share swap.

In March 2021, Spartan Delta closed the deal by issuing 23.7 million Spartan Delta shares to the Inception Exploration shareholders.

Spartan also issued a $50-million promissory note to an unidentified Inception Exploration investor, providing for more shares in Spartan Delta by 2023.

National Bank Financial contributed $80 million to fund the deal. In total, the cash and share trades that gave Makarov 21 per cent of Spartan were worth $148 million, the company reported.

In July 2021, Makarov and Areti disclosed they had transferred 14.6 million Spartan shares from their company in Geneva to their parent company, Areti International Group, which is registered in Cyprus.

This transaction involved entities tied to the U.S. government’s ongoing civil forfeiture case involving Itera and Lazarenko, the former Ukrainian prime minister.

Areti International Group’s Cyprus-registered company – 50 per cent of which is owned by Makarov – has two notable directors:  Igor Andrianov and Gulnara Ziadetdinova. These two business people are also directors of Omrania, a Cyprus-registered company that the U.S. government says in court documents, Makarov and his partners used back in 1996 to funnel kickbacks to Lazarenko.

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Later in July, Spartan Delta announced its acquisition of Velvet Energy, a large Montney producer bordering the acreage that Spartan took over from Inception. The $743-million purchase, funded through Canadian lenders, made Makarov’s company the top producer in Montney’s oil sands.

When asked if the ASC has concerns that directors connected to allegations of kickbacks and money laundering are involved in both the purchase of Spartan Delta and transfer of Spartan Delta shares to Areti’s Cyprus registered company, spokeswoman Theresa Schroder said that money laundering matters fall under federal jurisdiction.

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