CONNECT WITH:

Fields of gold: A commodities kingpin, political connections and millions laundered through Miami real estate

  • A Mongabay investigation has traced the rise and fall of a billion-dollar commodities cartel in Eastern Europe, finding it relied on money laundering, tax avoidance and state capture.
  • Over more than six months reporters reviewed hundreds of court filings, corporate and property records, and carried out interviews with those involved to reveal how the deals were done and where the money went.
  • Despite mounting evidence of impropriety by the group, major development banks continued to fund its projects, lending legitimacy to its operations.


BY JACK DAVIESLIUBA SEVCIUK, MONGABAY

Illustrations by Yana Adamovic

CHISINAU, Moldova — Many men have regretted their friendship with Yuri Drukker.

Born to Jewish parents in what is now Ukraine at the close of the Second World War, Drukker narrowly escaped the Holocaust. He trained as an agricultural engineer before emigrating to the United States in 1988, spending the next 25 years forging a commodities trading empire that spanned the former communist world and in its heyday turned over almost $1 billion annually. By the early 2000s, however, the little-known company Drukker built, the WJ Group, began to tear itself apart — but not before he and his associates secreted away millions of dollars in Miami and New York real estate through a sprawling web of shell companies.

This is the previously untold story of WJ’s rise and that of its rival, Trans-Oil, which critics describe as a monopoly that is exploiting Moldovan smallholders already struggling amid regular environmental shocks prompted by climate change.

Though Drukker has undeniable business acumen, by piecing together his story from hundreds of previously unreported court records, emails, corporate data and interviews with those involved, a Mongabay investigation has found his activities and those of his associates were partly enabled by money laundering, tax avoidance, extortion and the co-option of senior political figures in a bid to capture emerging democracies’ core agricultural markets. What is more, they did it all with the financial backing of some of the world’s leading development banks.

Of the many countries in which WJ operated, its tale played out nowhere more fully than in the former Soviet republic of Moldova, a landlocked nation of 3.5 million people sandwiched between Ukraine and Romania.

But it begins a world away, in Brooklyn.

The homecoming

When Yuri Drukker arrived in New York at the tail end of the Cold War he was accompanied by Joseph “the Redhead” Vays. Before leaving Ukraine, Vays had spent 20 years at the Union of Cooperatives, a state-owned agricultural enterprise, he told trade magazine World Grain in a 2004 interview. With communism foundering across the Soviet Union, its previously closed markets were about to open up to investment and trade. It was the business opportunity of the century for those with the right connections.

In 1989 as the World Bank prepared to bankroll land privatization across Eastern Europe, Vays and Drukker founded WJ Export-Import, Inc. WJ’s first inroads into the region came on Dec. 7 of that year in the form of an advert placed in the Ukrainian-American diaspora newspaper Svobda Ukrainian Daily. “We are sending cows to the USSR — without tariffs — from America and Canada,” the notice read. It listed an office address in Manhattan’s East Village that WJ rented from the proprietor of a nearby 24-hour Ukrainian restaurant.

But Vays and Drukker were destined for grander things. Vays soon reconnected with his former colleagues at the Union of Cooperatives, who helped WJ enter Ukraine shortly before it declared independence. In the spring of 1990, they placed their first order of sunflower seeds. The following year, Drukker and Vays brought aboard a third partner, Muscovite émigré Mikhail Berkovskiy.

In Vays’s telling of the story to World Grain, WJ’s trading partners were not particularly interested in cash. Instead they wanted the crops exchanged directly for consumer goods that were in scarce supply in economically freefalling Ukraine. “We had six months to deliver garments and electronics against [the seeds],” he told the magazine. Between 1990 and 1991, WJ shipped 12,000 tons of grain. Two years later it would move more than 10 times that amount.

Yuri Drukker.

Instrumental to the company’s early deals was Nikolay Kompanetz, Ukraine’s minister of grain, a position he held until 1991 when the role was abolished. He became chairman of the Ukrainian State Committee for Bread Products, a government agency, and in 1993 he was appointed general manager of WJ’s Ukrainian grain operations. Vays would later say that WJ’s early successes in Ukraine could be attributed, in part, to the hiring of Kompanetz. It would not be the last time the WJ business model would lean on access to senior government officials.

The rival

Meanwhile, in Fort Wayne, Indiana, another group of Soviet emigrants were looking to capitalize on their homelands’ newly liberalized agricultural markets.

Born in 1966 in the Republic of Georgia to a Soviet diplomat, Vaja Jhashi’s early years were spent on the move. By 1990 he had toured Afghanistan with the Russian army and found himself in Indiana, where his wife was studying for a doctorate in art history at the state university.

It was there that Jhashi met Im-Ali Nadouev, a Russian-Canadian born in Stavropol, a city nestled in Russia’s northern Caucasus region. By 1994 they had gone into business together, establishing two agro-trade companies. Both would build fortunes from their ventures, but 25 years on they find themselves in very different positions.

Today, Jhashi is a personal adviser to senior Eastern European political figures. He transacts multi-million-dollar deals with international investment banks and addresses industry conferences as the keynote speaker, while his company, Trans-Oil, is a major donor to the Atlantic Council, a prominent Washington think tank, along with the likes of HSBC, Airbus and Chevron.

Meanwhile, Nadouev, labeled the “Godfather of Stavropol” by the city’s press, is a fugitive, having reportedly avoided serving a 25-year sentence in a Russian penal colony for arms trafficking and ordering the murders of business associates. But however wildly at odds their fates, one thing they have in common is their luxury condos on Miami Beach’s Collins Avenue. For the discerning renter, Nadouev’s 230-square-meter (2,480-square-foot) property goes on the market in April for $7,500 a month.

Jhashi and Nadouev fell out in the late 1990s over the ownership of their companies, documented in a lengthy court battle in the United States. A spokesperson for Jhashi characterized Nadouev as a supplier rather than a business partner and said there has been no contact with him since then.

Their parting of ways coincided with Jhashi meeting a man Indiana’s then-governor would name Sagamore of the Wabash, the state’s highest honorific. Born to a rural family a decade before the onset of the Great Depression, James Kelley was a serial entrepreneur. According to family legend, he felt a tug of sympathy when, on the lot of his Fort Wayne Chevy dealership, Jhashi and a Chechen associate described the plight of farmers struggling to make a living in post-communist Eastern Europe.

Vaja Jhashi.

Kelley brought to bear his not inconsiderable wealth, which had already bankrolled a stock car team and midget air races, in support of Jhashi’s grain-trading venture. Together, they would run Trans Oil Ltd. Its successor, Trans-Oil Group, is now wholly owned by Jhashi and has gained a near-total monopoly over the Moldovan market for sunflower and wheat, respectively the country’s second- and third-largest exports. As Trans Oil Ltd. arrived in Moldova in 1996, Kelley was airlifting a million gallons (3.8 million liters) of diesel into the country each year, loaning it to farmers to run their tractors in return for a portion of their future crops. Before long, Trans Oil Ltd. would amass tens of thousands of hectares of Moldovan farmland.

WJ arrived in Moldova the same year. As in Ukraine, one of its key hires was a former agriculture ministry official, Gheorghe Bonari, the brother-in-law of WJ founder Yuri Drukker. They set themselves up with an office in downtown Chisinau, Moldova’s capital, in a modernist tower block resembling an ancient air conditioning unit tipped on its side. The building happened to be the home of Moldova’s agriculture ministry.

Paradis agricole

In 1997, WJ brought another partner into the fold: David Holpert, or Halpert (he alternates spellings of his surname in different jurisdictions). Born in the same Ukrainian village as Yuri Drukker, Holpert moved to the United States at a much younger age, and by the time Drukker arrived in Brooklyn was already a practicing attorney in the suburbs of Chicago. He was appointed WJ’s chief financial officer shortly after leaving his position as deputy managing director of Dutch bank ABN Amro’s Russian subsidiary.

ABN Amro is today being investigated by Dutch prosecutors over allegations it played a key role in the so-called Troika Laundromat, which saw billions of dollars laundered from Russia via the Netherlands between 2004 and 2014. A year after Holpert left ABN Amro, the bank allegedly began actively courting Russian financial institutions and processing transactions between shell companies and banks in the former Soviet Union.

Attempts to contact Holpert and Vays for this story were unsuccessful, while Drukker did not respond to questions sent by Mongabay.

There is no evidence Holpert was involved in the ABN Amro money-laundering scandal, however his appointment to the WJ board coincided with the company’s transition offshore to secrecy jurisdictions like the Bahamas, Cyprus and the British Virgin Islands. Gheorghii Delistoian, the former director of a Moldovan WJ subsidiary who acted as Drukker’s driver when he was in Chisinau on business, said he clearly recalls the reasoning behind the move offshore. “They needed the Bahamas for money laundering,” he told Mongabay in an interview. “At that time, when I worked for the company, I know exactly that they used the Bahamas only for this.”

Delistoian is a native of Gagauzia, a corner of southwest Moldova wedged like a doorstop between Ukraine and Romania. Following the collapse of the Soviet Union the Gagauz people, a Turkic Christian ethnic minority, negotiated a degree of autonomy within the new Moldovan republic. Today, Delistoian and his son plant grain, sunflowers and corn across 1,500 hectares (3,700 acres) of Gagauzia. Speaking to Mongabay in late September at his farmhouse, he said he first encountered WJ through Bonari, the ex-agriculture ministry official, who Delistoian says had previously managed the largest collectivized farm, or kolkhoz, in Moldova during communism.

The year was 1998. Delistoian needed tractors to farm his land but lacked cash, so Drukker offered to buy them for him in return for a 90% stake in his farm. Those shares would come to be owned by Ancom Trading Ltd., a shell company registered to a post office box in the Bahamian capital of Nassau.

Ancom turned up in the Panama Papers, a 2016 leak of 11.5 million documents from Mossack Fonseca, a Panamanian law firm that specialized in the registration of offshore companies. Records from the cache made available to Mongabay by the International Consortium of Investigative Journalists and German newspaper Süddeutsche Zeitung show that until December 2007 Ancom’s shares were held by two nominee companies; that is, companies whose purpose is to hold assets on behalf of somebody who wishes to remain anonymous. Such companies will often act on behalf of dozens, or even hundreds or thousands, of beneficial owners.

At the close of 2007, new shareholders were appointed, not just for Ancom, but also for two other Bahamian companies that US court filings show were ultimately controlled by the WJ Group. From December 2007, all three were owned by Joseph Vays and a company directed by Drukker and managed by a law firm run by George Pamboridis, who became Cyprus’s minister of health in 2015. Pamboridis’s law firm did not respond to multiple requests for comment.

The ghost

What was it about the Bahamas that made it such an attractive jurisdiction to the WJ Group? “At that time, everyone knew about this,” Gheorghii Delistoian said. “Until 2006, it was chaos in the Bahamas.”

Jason Sharman is a professor of political science at Cambridge University and a leading expert on shell companies and money laundering. According to Sharman, while many of the world’s tax havens were prompted to make improvements from 2000, the Bahamas lagged behind. There were few better places to hide your money at the start of the new millennium. But what is the point of stashing millions of dollars offshore if you have no way of enjoying them onshore?

Enter Leonid Shapovalov, a ghost.

He had, at one point, a Florida driver’s license. Or at least a Dade County notary claimed he presented one to prove his identity. He appears in no phone books, has been party to no litigation, is not registered to vote in the United States and seems to own no property there. Or if he does, it is not held in his name. However, on paper at least, he ought to be spectacularly wealthy. During the 2000s Shapovalov presided over five British Virgin Islands companies that engaged in big-ticket Miami real estate transactions. The companies’ names were designed to suggest activity, but none in particular, as is the unofficial naming convention for shell firms: Tiger Ventures Ltd.; Business International, Inc.; Best Way Trading Ltd.; Waterfall Property Inc.; Pacific Agri-Investments, Inc.

Tiger Ventures was used to purchase a condo on Miami Beach six days after the company’s formation. The property was located on Collins Avenue — where so-called mob accountant Meyer Lansky, who pioneered the U.S. mafia’s use of offshore banking, retired to in the 1980s — a stone’s throw from those of Vaja Jhashi and Im-Ali Nadouev. In 2010 the condo was transferred to two entrepreneurial Ukrainian émigrés, Hugo and Judith Gutman, for $100,000 less than the price paid by Tiger Ventures, which extended the Gutmans a loan to cover the cost anyway. The Gutmans’ home address also happened to be the registered contact address for Tiger Ventures.

The other four shell companies were also used to buy apartments on Collins Avenue in the late 1990s that were transferred to Yuri Drukker, Joseph Vays and the wife of WJ CFO David Holpert in 2003 and 2004. As one WJ associate who also purchased Miami real estate from a British Virgin Islands company said of the transactions in an email to Mongabay: “It’s a very easy and simple way to laundry [sic] the money without paying taxes. You buy RE [real estate] with offshore money with [an] offshore company and then you sell it and keep the money in … US banks and nobody is interesting [sic] in those transactions.”

Sharman, the tax haven expert, said buying Miami property with shell companies was in the “standard playbook” of techniques used to launder money into the United States. “The US, up until recently, has been incredibly lax in screening the money — or completely failing to screen the money — that goes into real estate investments,” he said.

While Mongabay was unable to track down Shapovalov, he appeared in the Cyprus corporate registry as an alternate director for Holpert. The Gutmans are Facebook friends with Drukker and his wife, Marina, as well as Vays and his wife, Greta. They also own a vineyard on the outskirts of Vays’s Ukrainian hometown on the border with Hungary. Emails sent to the vineyard seeking comment on Shapovalov and the shell companies went unanswered.

Joseph Vays.

No-man’s-land

By the time WJ began to funnel money into the Miami Beach property market the firm had been generating a substantial cash flow for some time. No longer were Yuri Drukker and Joseph Vays bartering modest shipments of wheat for boomboxes and blue jeans. Just four years after they placed their first order of Ukranian sunflower seeds WJ was bankrolling the refurbishment of Russia’s only deep-water port to accommodate ships big enough to cope with demand. In 1998 they established a trading office in Paris and by 2000, operating out of an office at the World Trade Center, they were shifting millions of tons of produce a year across Europe and North Africa.

Toward the end of the 1990s Drukker enlisted Gheorghii Delistoian, the Gagauzian farmer, in an effort to acquire Moldova’s largest edible oil processing plant in its second city, Balti. Established in 1922, the Balti Fat and Oil Plant was an essential cog in the country’s agricultural machinery and its majority shareholder was the Moldovan state. The WJ directors wanted it. They had already acquired similar plants in Russia and were hungry for more.

Delistoian happened to be a friend of Moldova’s prime minister at the time, Ion Ciubuc. “I introduced Yuri to the prime minister to convince him to sell the plant,” Delistoian told Mongabay. And sell the prime minister did, although the deal was not finalized until 2002, two years after Ciubuc left office. The tractors that Delistoian had traded 90% of his farm for were requisitioned by WJ and taken north to the company’s Moldovan crown jewel. By 2004, the plant — rechristened Floarea Soarelui S.A., literally “Sunflower S.A.” — was the country’s top exporter.

In 2003, WJ turned its gaze east to Transnistria.

Moldova’s farm land — making up 75% of the country — was dramatically overexploited during Soviet times, with more than 1,000 sites in need of mediation as a result of heavy pesticide use, according to the government. This trend continued with privatization and has led to declining soil fertility, particularly in Transnistria. A smuggler’s promised land, the territory has been the thorn in every Moldovan president’s side. In Transnistria’s second city, Bender, a state-owned seed oil extraction factory of a similar caliber to the Balti plant was about to be put up for sale. “I think they didn’t want to have any competition,” Delistoian said of WJ’s Transnistria strategy.

The territory had unilaterally declared independence from Moldova in September 1990. The announcement was not well received in Chisinau, sparking a two-year armed conflict that left hundreds dead and 100,000 internally displaced. Moscow had backed the separatists with support from its 14th Army, garrisoned in Moldova. The resulting stalemate was broken in July 1992 with the signing of a cease-fire. The conflict has remained frozen ever since, leaving the separatist government in its de-facto capital, Tiraspol, to treat the territory as a private fiefdom.

That fiefdom was headed until 2011 by Igor Smirnov, a larger-than-life figure sporting a salt-and-pepper goatee. His administration took advantage of Transnistria’s status as a diplomatic no man’s land, encouraging smugglers of guns, cigarettes and poultry to flourish, along with a secret police service that locks up and allegedly tortures dissidents. On February 27, 2003, the United States and the European Union imposed travel bans on Smirnov and other leading figures within his regime. Four months later, Smirnov gave the order that the Bender plant could be privatized. WJ made a bid for a little more than $1 million and by August it was signing a takeover deal with the internationally sanctioned Tiraspol government. It would be an albatross around Drukker’s neck that remains there to this day.

No sooner had the ink dried on the Bender plant contract than the freeze in the Transnistria conflict started to show signs of thawing. As tensions rose, Moldova’s then-president Vladimir Voronin shut down a train line between Chisinau and the port city of Odessa in neighboring Ukraine. The consequences would be disastrous for WJ’s latest investment. The route was the Bender plant’s primary channel for raw materials and freight would not pass that way again until 2012, lumping the company with a useless factory and leaving WJ a million dollars out of pocket. But there was no bad blood between Drukker and Voronin, the former president told Mongabay at his office.

The last communist to serve as a European head of state, Voronin was dressed in a denim shirt at his desk in the party headquarters in Chisinau. Behind him an easel propped up a painting of the Second Bolshevik Congress of 1917. Except on closer inspection it was not Lenin addressing the crowd. In fact, the orator’s face looked suspiciously like Voronin’s. That’s because it is, he said. Every face was a member of his cabinet from his election in 2001 until 2009, when popular protests forced his resignation. There, a security minister; here, a minister of agriculture. “Out of all these people,” he said, “only two have not betrayed me.”

Born on the eastern bank of the Dniester River midway through the Second World War, Voronin spent his 20s managing Soviet Moldova’s industrial bakeries before moving into politics. His understanding of both the Transnistria issue and the importance of grain to the economy of Moldova — a country that from above resembles a patchwork quilt of browns, greens and yellows — is more personal than for many politicians.

We had come to his office to ask why, in February 2004, he had signed a presidential decree awarding Yuri and Marina Drukker Moldovan citizenship on the grounds it was in the country’s national interest. It seemed like an odd decision. Voronin had frequently railed against Transnistria as a hive of organized crime and instability. Why then did he make one of the Tiraspol regime’s latest business partners a citizen?

Voronin studied the decree carefully, reading each line aloud.

“I saw him on TV the other day,” he said after a while. “There was a big memorial concert for Joseph Kobzon and I saw Drukker and Marina in the crowd.”

Labelled the Frank Sinatra of the Soviet Union, Kobzon died in August 2018 having spent much of the decades following the collapse of communism courting controversy. In the 1990s he was barred from the United States for his alleged ties to organized crime and the EU declared him persona non grata in 2014 after he performed for troops in rebel-held parts of Ukraine. After his death a memorial concert was held at the 6,000-seat State Kremlin Palace in Moscow; footage of the concert shows Drukker and his wife in the crowd. It was striking that 10 years after leaving office, Voronin still remembered Drukker’s face well enough to recognize a fleeting glimpse of it on television.

There was nothing untoward in the Drukkers being granted citizenship, Voronin said. After all, the Moldovan parliament had passed a law permitting dual citizenship. The following year, he would sign another decree, this time making Drukker’s competitor, Vaja Jhashi, a citizen. “Drukker is a Jew, they are very smart people. Vaja is from Georgia,” the former president said. “I didn’t know them personally, but when I was in power they did business legally; we didn’t have any problems.”

Creative accounting

At the turn of the millennium, WJ was exporting more than 3 million tons of grain annually to the European Union, North Africa and the Middle East, while its brands of vegetable and sunflower oil could be found on supermarket shelves from Siberia to Serbia. In 2002, as it snapped up factories, grain elevators and port concessions across the former Soviet Union, WJ invested in a new kind of asset: a bank.

Founded in 1993, Antares Bank would outlive WJ but would not survive it. In 2004 the bank underwrote a bond offering by a WJ subsidiary of 30 million Ukrainian hryvnia (about $5.6 million at the time). The following year, shortly before the bond matured, Antares changed its name to Kontrakt Bank and was soon marketing itself as part of the WJ Group.

Filings with a US court in 2008 would reveal that at least part of WJ’s investment in the bank was held in the form of bearer shares. Today, bearer shares are banned in almost all jurisdictions due to their potential for abuse. They are a primitive, finders-keepers alternative whereby whoever holds the physical share certificate (quite literally, the bearer of the shares) is their owner. There are legitimate uses for bearer shares, for example, to act as a hedge against instability in low-trust societies where there is a high risk someone could tamper with the corporate register. However, for the most part they are simply used as vehicles to camouflage the ownership and transfer of shares from scrutiny.

At the end of 2005, the WJ directors placed the Kontrakt Bank bearer shares in a Budapest safe deposit box with the chief financial officer of the group’s Hungarian subsidiary, under strict instructions not to remove them unless all four owners were present. When the time finally came for the slips to be retrieved, WJ would be short a shareholder.

Mikhail Berkovskiy, Misha to his colleagues, was the odd one out at WJ. The other shareholders — Yuri Drukker, Joseph Vays and David Holpert — were all born in the same corner of southwest Ukraine; Berkovskiy was from Moscow. The other three all appear to have bought their Miami condos in the same building on the same day through the same offshore network, while Berkovskiy’s wife had invested in another beach-front tower a mile south on Collins Avenue.

In August 2001, as WJ was preparing to corner Moldova’s edible oil market and add a bank to its portfolio, Berkovskiy became the majority founding shareholder in a New York company that would closely resemble WJ.

Westoil Ltd. operated out of an office in Kiev, Ukraine, shipping grain and seeds around the world from the former Soviet Union. Just like WJ, it routed millions of dollars through tax havens, banked in Switzerland, and its owners would double-cross one another until the disputes spilled into the courts. In 2013, as they sued each other over Westoil’s remains, one junior partner would describe another in an affidavit as a “thief and a crook” who “lies all the time”. “He finally told me… I should forget all the promises he gave me and I should ‘go fuck myself,’” the associate recalled. “That was the final telephone conversation I had with [my] almost 25 years friend and partner.”

A decade earlier, Drukker, Vays and Holpert had brought a suit against Berkovskiy and Westoil in the very same court. Records of the 2003 case were unavailable, but by its conclusion Berkovskiy had agreed to be bought out of WJ for $12.4 million. A source familiar with Berkovskiy’s business affairs, who asked to remain anonymous, said in an interview that a relative of Berkovskiy’s had made a fortune while working in a salaried position in WJ’s Moscow office, which they claimed “played a role in the breakup of WJ.”

“All the original partners put their close relatives in some important positions in WJ and all of them were stealing money from WJ,” the source said.

By 2004, when WJ summoned the World Grain reporter, Berkovskiy would find himself written out of the company’s history. The article opened by noting that having shipped 3.65 million tons of grain in the previous year, only one other company had exported more cereals from the former Soviet Union.

Eastern promises

Despite the hype the WJ founders were trying to drum up, things had not been going as well for the group as its remaining shareholders would have liked. They needed help.

“In early 2006, the ‘WJ Group’ ran into financial difficulties due to massive trading losses,” lawyers for the company would write years later in a submission to a Dutch court. The losses, they said, totaled about $15 million and were the fault, at least in part, of Joseph Vays. Vays’s lawyers would describe the situation more diplomatically for the same court. “The constantly increasing competition in the international market, the declining turnover and increasing difficulty to obtain financing prompted the WJ Group to look for a strategic partner,” they wrote.

In 2006, they believed they had found that partner: Indonesian conglomerate the Salim Group.

At first glance, they seem like a good fit. Founded in 1972 during the reign of Indonesia’s President Suharto — once declared the most corrupt world leader of modern times by Transparency International — the Salim Group flourished thanks in large part to its founder Sudono Salim’s carefully cultivated relationship with the strongman ruler. Though the company floundered after Suharto was ousted in 1998, it was revived as a Singapore-based multinational helmed by Sudono’s son, Anthoni — today one of Indonesia’s richest men — with whom the WJ directors found themselves negotiating.

A deal was reached whereby WJ would be valued at $160 million and Anthoni would buy 50% of the company from Vays, Yuri Drukker and David Holpert for $80 million. But there was a catch. For 17 years WJ had grown ad-hoc in response to market conditions and emerging opportunities. The result was a spider’s web of companies and ownership structures so convoluted as to make even the boldest of investors nervous. In response, the WJ shareholders embarked on what they codenamed “The Giselle Project”: the consolidation of the group’s most important assets and activities under the management of a single, Cyprus-based holding company.

With the shareholders approaching pensionable age, it would have been a dream retirement opportunity. After decades of hustling and willing an agricultural empire into existence out of nothing, Drukker, Vays and Holpert could retire to their beach-front condos with tens of millions of dollars each to live out their twilight years.

It was not going to be that simple. Mikhail Berkovskiy’s departure had upset a careful equilibrium among the shareholders. Meanwhile, the competition was gaining ground and WJ’s countries of operation were hit by a series of poor harvests. In 2007, as Europe experienced its warmest air temperatures for 500 years, Moldova suffered mass crop failures, enduring its worst drought since records began. A United Nations fact-finding mission would later report that cereal production dropped by more than two-thirds that year. “Moldova this year is fucked up,” was Drukker’s assessment of the situation in a November 2007 email to his colleagues. The Moldovan meteorological service now estimates that the likelihood of a catastrophic drought has increased from one in every nine years to one in two.

Bathing in champagne

Moldovan agriculture was in crisis and WJ with it, but in crisis Vaja Jhashi saw an opportunity. His U.S. business partner, James Kelley, had died on Oct. 16, 2005, after ceding control of Trans Oil Ltd. to Jhashi the previous year. Two months after Kelley’s death, Moldovan President Vladimir Voronin granted Jhashi citizenship. Not long afterward, the country’s foreign ministry issued him with a service passport usually reserved for civil servants traveling on official business, journalists at media outlet Rise Moldova found.

A spokesperson for Trans-Oil Group told Mongabay in an email that the passport was issued so that Jhashi could accompany Moldova’s president on a trade junket. “Upon the completion of that trip, which happened in the mid-2000s, the passport was immediately returned to the government and he has not had a service passport since then,” the spokesperson added. This account contradicts Ukrainian immigration records obtained by Rise Moldova, which show that Jhashi used the passport to cross the border at least 25 times over the course of two years.

Service passport in his back pocket, Jhashi went to work convincing the US government’s Overseas Private Investment Corporation (OPIC) to guarantee a $10 million loan that would all but ensure Trans-Oil’s takeover and the end of WJ. In an email to his colleagues, Yuri Drukker gave a characteristically colorful analysis of the group’s position: “From the next [year] this faggot Vaja starts operating his new plant in Causeni and a port in Giurgiulesti. It means he is not such a faggot in the end, but we are, and we will be sucking, and he will be bathing in champagne. And this I do not want.”

The port in Giurgiulesti changed everything. Despite being landlocked, Moldova has had access to international waters since 1999 in the form of a third-of-a-mile (500-meter) stretch of the Danube River. Running through almost every country in central Europe on its way from Germany’s Black Forest to Ukraine’s Black Sea coastline, the Danube has been a key artery in European trade networks for centuries. So it was a boon to the roughly 3,000 inhabitants of Giurgiulesti when they learned their village was the last stop on Moldova’s only beeline to international shipping lanes. “Before, this was the village at the end of the world,” said Yurija, a local gas station attendant.

The OPIC-backed loan to Trans-Oil allowed the company to begin work on Moldova’s first and only grain and edible oil terminals with direct access to international waters. In the future, if anybody wanted to export serious quantities of grain or edible oil from Moldova competitively, they would need to go through Trans-Oil. In attendance at the groundbreaking ceremony was Asif Chaudhry, then-US ambassador to Moldova, who secured a non-executive directorship at the company after leaving government service. In an emailed response to Mongabay, Chaudhry denied there was a conflict of interest involved in his appointment. “There is nothing more important for me than my integrity,” he said. “And one reason for my decision to accept the offer to be part of the TransOil board was that from everything I had visibility on, in spite [of] what you might hear as negative comments about this company, TransOil, while being a private company, has always been unusually transparent.”

As Trans-Oil ballooned, the WJ directors were bickering among themselves. Joseph Vays had begun boycotting board meetings, refusing to sign documents formalizing the company’s relocation to Cyprus, believing it would render him powerless in the face of a boardroom alliance between Drukker and David Holpert. Publicly, these two counseled reconciliation, repeatedly inviting Vays to negotiate a mediated settlement. Privately, it was war.

“We need to tell him to go fuck himself. He is a thief … so let him be punished,” Drukker wrote of Vays in an email to Holpert. “We will not have to pull out our veins to pay him off. The money will stay in the family. It will take some nerves, but fuck it … push ahead! We will remove their uterus!”

Apparently uninterested in reconciliation, Vays made a surreptitious though ultimately unsuccessful bid to sell off his shares in the group to CentreInvest, a Russian bank. For their part, Drukker and Holpert painted their former friend’s behavior as a bid to hold the group’s viability hostage in the hope of being bought out at a premium. Whatever the truth of the matter, amid the squabbling, Anthoni Salim backed out of the merger.

The slush fund

With no deal left to focus their attention, the schism poured out into open court in almost as many jurisdictions as WJ operated in: Moscow, Cyprus, New York, Illinois, Amsterdam, the Bahamas. Filings in the cases highlighted the degree to which WJ routed its day-to-day business activities through opaque offshore shell companies — and to what end.

In the Dutch case, for example, Joseph Vays’s lawyers asked why WJ had opened a bank account in Luxembourg for Wessels Management Inc., a company registered in the Seychelles, and why more than $900,000 was transferred to the account with instructions for the money to be dispersed across “a large number of payments,” including one of $20,000 to Hugo Boss.

WJ denied responsibility for the payments made from the Wessels account, despite the company being beneficially owned by Leonid Ciupac, a WJ executive in Moldova. The account was also established and the payments disbursed from it by a WJ staff member in Hungary. Resembling a slush fund, the Wessels account was used to dole out commissions, fees, bonuses and “additional incentives” to contractors in Moldova who procured and sold grain on WJ’s behalf, court submissions allege. In response, WJ tried to downplay Ciupac’s role in the affair, arguing he was merely “a grain trader from Moldova who does not … have a clue about formalities like these.” Speaking through his wife at her beauty salon in the suburbs of Chisinau, Ciupac declined to answer questions about his time with WJ.

In a separate case in New York, Vays accused his partners of “siphoning off funds” from WJ subsidiaries “through offshore accounts for their personal enrichment.” He listed a dozen companies that he alleged were the recipients of WJ money. Many have since achieved notoriety. Malton International Ltd., another Seychelles company, was named in a complaint to the Latvian prosecutor general as part of a scheme to launder hundreds of millions of dollars out of the Russian treasury. In another case, a Moldovan garlic importer was accused of shielding $500,000 from the tax authorities. And Rockford Industry Ltd., a British Virgin Islands company, was listed in a U.S. Securities and Exchange Commission indictment as having laundered at least $325,000 as part of a Ponzi scheme.

In 2009, as the company he had spent the last third of his life building crumbled before his eyes, Berkovskiy quietly transferred his Florida real estate into his wife’s name and returned home to the outskirts of Moscow, where he died later that year. Meanwhile, in Moldova, an election that would unseat President Vladimir Voronin was four days away. It was to be a do-over of an April parliamentary vote that had triggered mass protests. In mid-May, despite the chaos and calls for his resignation, Voronin found the time to sign a presidential decree declaring four individuals Moldovan citizens. One was Yuri Drukker’s younger brother. Two were a married couple from the former Soviet Union now domiciled in Miami Beach, just south of Collins Avenue. Another was Alexander Spiegel, one of Drukker’s oldest friends.

The fire sale

Alexander Spiegel had attended kindergarten with Yuri Drukker in Ukraine, and though he arrived in America 16 years before his friend they had stayed in touch — and in business. He ended up living a mile south of Drukker in an apartment in Collins Avenue’s Trump Tower. He was on the board of directors for Floarea Soarelui, the processing plant majority owned by WJ. He was also, he said, a major financier of the group, fronting Drukker and his fellow shareholders tens of millions of dollars over the course of their friendship. “From day one till the end I financed them,” he wrote in a text message to Mongabay. In 2009 he must have been wondering if he had backed the right horse.

Trans-Oil had started work on the grain terminal at Giurgiulesti that would shortly render competing with it futile. Even Gheorghii Delistoian, who in the 1990s had chauffeured Drukker to and from Chisinau airport, could not afford to keep selling to WJ. “When Trans-Oil bought the port it made problems for us because we could only sell to them,” he said. In 2011, Drukker and David Holpert faced up to the inevitable and sold Vaja Jhashi the Moldovan assets they had spent two decades accumulating. The exact figure their Georgian rival paid for them is unknown. But in 2012 Trans-Oil refinanced the takeover with a $70 million loan from the World Bank’s International Finance Corporation (IFC) and several other lenders.

While WJ may have lost its war with Trans-Oil for control in Moldova, there was plenty of work still to be done. As relations between the former friends hit new lows, Drukker set about asset-stripping the company, selling off its concessions in Eastern Europe and Russia. In one deal in 2011, he relinquished his minority stake in southern Russia’s second-largest grain terminal for $40 million. The buyer was one Ziyavudin Magomedov, the billionaire owner of the Summa Group and one of several dozen oligarchs close to President Vladimir Putin, according to the U.S. Treasury Department. In 2018 the Russian authorities jailed Magomedov over a $35 million embezzlement scandal, denying his bail request after it emerged he had scheduled a flight to Miami the day before his arrest.

Following Jhashi’s takeover, WJ still owned assets in Moldova that either could not be sold to Trans-Oil or that Drukker and Holpert did not wish to part with. One was Kontrakt Bank, which Holpert took control of via three offshore companies. Another stranded asset was the Bender seed-crushing plant in Transnistria that had lain idle for nearly a decade, control of which passed to Drukker. In 2010, internationally mediated negotiations between the Moldovan government and the Transnistrian separatists saw the freight rail route that ran behind the Bender plant reopened. Subsequently, Drukker entered into negotiations with Tiraspol to arrange a re-launch. By the end of March 2010 an agreement had been reached. Under the deal, WJ would process 400 tons of oil seeds at the site every day. In return, the authorities would impose a 10% levy on the seeds for at least five years to stabilize prices. Now all that was needed was start-up capital to get the plant running. Drukker again turned to Spiegel.

From here onward, things get murky. What is certain is that two shell companies formed in Liberia and the British Virgin Islands wired millions of dollars from Swiss bank accounts to WJ Holding and a second Cyprus company controlled by Drukker: Stubrick Ltd. Those shell companies, Shireen Maritime Ltd. and Mazlin Trading Corp., were ultimately controlled by Spiegel, whose co-director in the offshore vehicles, the son of his Israeli business partner, works at a yoga retreat on a secluded island off the coast of Thailand.

Spiegel said he was merely loaning the funds to Drukker’s companies; however, Drukker’s lawyers have said the loan was designed to disguise the equity investment in the Bender plant from the tax authorities. They also allege that in 2014, Spiegel came under investigation by the Internal Revenue Service (IRS) “due to suspicion that he was improperly sheltering income by laundering it through his offshore companies for the purpose of avoiding taxation.” An IRS spokesperson declined to comment on the allegation, citing confidentiality rules.

The London Court of International Arbitration (LCIA) was unimpressed with Drukker’s case, ruling that he should pay Spiegel’s companies more than $14 million — an invitation Drukker has so far declined to take up. Separately, the LCIA awarded WJ $12.4 million in a case it brought against the Transnistrian quasi-state, which also refused to pay, over its alleged failure to maintain the 10% export duty.

As is often the case when people pursue Drukker through the courts, damaging allegations were made. Lawyers for Spiegel have accused his childhood friend of undertaking “fraudulent transfers.” Put simply, they allege Drukker funneled money out of WJ and into his family’s pockets in the hope that, if the company was forced to pay up, WJ’s coffers would be empty but Drukker none the poorer. The transactions are alleged by Spiegel’s lawyers to have started on April 24, 2014, and to have run to more than $2 million by the time they were discovered. If that timeline is accurate, then they came in the immediate aftermath of other serious accusations in Transnistria.

Force majeure

Maria Poclid was import manager at Galatex Oil Import SRL, an edible oil trader in the Romanian town of Galati, just across the border from Giurgiulesti. She had previously done business with the Bender oil seed plant, operating as Grain Oil LLC, and was aware that not everything was above-board. For starters, Galatex was invoiced by Agroleon Consulting, a Moldovan company (this was normal, she said, as Romanian companies are prohibited from importing Transnistrian produce), but was then asked to pay Cyprus-registered Stubrick Ltd.

Grain Oil, Agroleon and Stubrick were all beneficially owned by Yuri Drukker.

In early March 2014, four of Poclid’s trucks arrived at the Bender plant to collect an order. When they went to leave, the drivers were told they would be detained until Galatex fulfilled an alleged debt owed to Stubrick Ltd., Poclid said; she denied any such debt existed. Speaking to the local press, the drivers described a fearful ordeal, but said they were not subjected to physical violence. Romanian consular officials brought the captives food but were unable to secure their release in the no-man’s-land that is Transnistria. “It was a very ugly experience,” one driver told the Romanian daily AdevarulI. “We could go outside one or at most two at a time, but we could not be gone for more than 20 minutes. We didn’t allow ourselves to be late, because we didn’t know how they would react.”

The drivers were held against their will for 10 days, by which time Poclid said she had caved in and paid what she said was effectively a ransom for her drivers and vehicles. Back in Galati, Poclid said she was contacted by a “mobster” who cautioned her against seeking restitution through the courts. “You know, they fooled a lot of people, Grain Oil and ’Leon,” she said, referring to Agroleon. The head of Agroleon’s legal department at the time, Rodica Ciubotaru, became vice president of Moldova’s Central Election Commission in 2016. Contacted by Mongabay, Ciubotaru said she recalled the Bender incident but declined to comment on it.

Across the border in Ukraine, David Holpert was watching the kingdom that had once been his slip through his fingers. He had reconsolidated his holdings in Kontrakt Bank. Where previously its shares had been divided between three offshore shell companies (one in Cyprus, a second on the islands of St. Vincent and Grenadine, and a third in the Dominican Republic) they would now be held through a new Cyprus company, EM&M Holding.

It was June 2015 and Holpert had agreed to sell the bank to Yehiam “Jack” Avissar, a British-Israeli dual national who would later that year be revealed to have duped Ukraine out of $125 million for a toxic waste cleanup that he never performed. The Kontrakt Bank sale didn’t go through in the end. On the same day in December 2015 that the Kyiv Post was reporting on Avissar’s swindling of the Ukrainian taxpayer, the National Bank of Ukraine declared Kontrakt Bank insolvent. Clients had complained about failed payments, and an inspection had found the bank possessed less than a third of the cash reserves it was reporting to the authorities. In the years that followed, it emerged that by October 2014 staff at the bank were processing a large volume of transactions that bore red flags for fraud. Owning a bank that went bust can’t have hurt the Holperts too much, though. By February 2019 they were chartering a private jet and limousine for their Valentine’s Day trip to Miami.

Robber barons

As WJ was getting stuck in the mud, Trans-Oil kept pushing forward, buoyed by a commodities boom and financing from the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation, Dutch and German state development banks, as well as an assortment of private financial institutions. By 2014 Trans-Oil’s borrowing had reached into the hundreds of millions of dollars. With it the company funded aggressive expansion, not just in Moldova, but also in neighboring Ukraine and Romania.

Publicity materials released by the EBRD in 2014 promoted a $25 million loan to Trans-Oil — “Moldova’s largest agricultural company” — to support the growth of the company’s grain terminal at the Giurgiulesti port and to upgrade storage facilities at another port in Reni, Ukraine. “Increasing the capacity of the silos at Giurgiulești and acquiring the storage facility in Reni will enable Trans-Oil Group to export Moldovan grain and oilseeds more efficiently and in greater volume,” it says. In theory, greater and more efficient access to international markets could be a good thing for Moldovan farmers. In reality, however, Trans-Oil’s spending power appears to have created a near-monopoly. In its investor prospectus, the company notes it “controls almost all of the inland and sea export agricultural infrastructure in Moldova.”

Vladimir Voronin, the former president, told Mongabay that during his time in office it was illegal for farmers to sell below a certain price as the state regulated the market to ensure that only produce that was surplus to Moldova’s domestic requirements could be exported. Today, he said, it is a free-for-all, with farmers selling their grain to exporters at rock-bottom rates, while the cost of goods on the supermarket shelf increases for Moldovans. “The market is not regulated by the authorities,” he said. “The monopoly can set whatever price it chooses, and that price is very low.”

Interviews with members of Moldova’s agricultural community described a landscape in which Trans-Oil’s dominance allows the company to bend the market to its will, often to the detriment of Moldovan farmers.

In front of a grain silo outside of Causeni, one laborer explained what the Trans-Oil price structure means in real terms: “Six kilos of grain buys you one liter of petrol,” he said, or about 50 pounds of grain for a gallon of gasoline. “It’s not a good business.” In Balti, in the north of the country, Lilia Banuh sat in her office a short drive from Floarea Soarelui, the processing plant purchased from WJ by Trans-Oil in the 2011 takeover. Banuh is the president of the Center for Private Initiatives, a nonprofit organization working to support small- and medium-sized producers. “The monopoly exists,” she said. “We think that the market is free, but it is not free because the cost of producing one kilo of grain or sunflower seeds is more than the market will pay.” Outside of Balti, Cornel Burcovschi, 27, manages an 800-hectare (1,980-acre) farm with his father. He said he believes the sunflower market is a closed shop. “We can sell to [Trans-Oil’s] Floarea Soarelui or to Romania and we are obliged to accept that price because it’s impossible to export by yourself,” he said. “Other farmers tried, but there’s a monopoly.”

A spokesperson for Trans Oil denied the company enjoyed a monopoly in Moldova, dismissing the suggestion as “the kind of stuff business competitors or others might say without evidence or basis.” They said the Giurgiulesti port “is not closed to anyone,” pointing to the company’s enduring relationship with international finance institutions as vindication of its “market-based and transparent” business model.

The WJ Group had relied on patronizing senior politicians and civil servants in famously corrupt transitional states. Its assets were owned and managed through a spider’s web of offshore companies that were used to siphon cash and, in one case, allegedly dispersed hundreds of thousands of dollars in illicit payments. A portion of its assets were operated in partnership with the internationally sanctioned government of a separatist mafia state. By the mid-2000s, its directors were suing each other in open court, laying bare their questionable practices. PriceWaterhouseCoopers, one of the world’s top-four accounting firms, had expressed “concern about the continuity of the business” in a 2006 assessment. And in March 2008, WJ was deemed too risky an investment for Indonesia’s Salim Group.

Yet none of this deterred international finance institutions from lending to WJ. As late as 2009, for example, the EBRD made a long-term loan of 11.5 million euros ($14 million) to a WJ subsidiary in Moldova. In a statement to Mongabay, the EBRD said the bank employs “robust procedures of due diligence assessment to ensure any proposed financing complies” with its founding principles. “We are aware of the fact that the Moldovan authorities are monitoring Trans-Oil’s operations and business practices in view of the group’s dominant position,” it added.

Two years after the EBRD loan was approved and following the takeover by Trans-Oil and the selling off of its remaining Moldovan assets, the WJ Group ceased to exist in any meaningful sense. In the years since, Trans-Oil has continued to mushroom, coming to dominate the country’s agricultural sector.

For its part, Trans-Oil says its impact on Moldova has been positive overall.

“It is true that Trans Oil has grown over the last 20 plus years and has businesses in agricultural production, processing and trade. However, one thing is always a constant, that the company operates ethically, and always protects the interests of Moldova,” a spokesperson wrote in an email to Mongabay. “That is the reason that over the last 20 plus years, while TransOil has grown to contribute significantly to the GDP of Moldova, it has always been recognized as a positive contributor … and hence always enjoying the backing and support of the successive and changing Moldovan governments.”

Trans-Oil has managed to maintain this good will despite apparently paying as little as 1% tax on its profits, far below the country’s already relatively low 12% standard corporate rate. In 2017, for example, it enjoyed an operating profit of $35 million, upon which it paid corporate income tax of $346,000, less than half of the $791,000 it spent on “key management compensation.”

Trans-Oil is able to pay such a marginal Moldovan tax rate in part thanks to its use — much like the WJ Group — of offshore jurisdictions such as Cyprus and Switzerland. The company says there is nothing illegal in incorporating in places that are more “advantageous to their business for profitability, business access and tax advantages” than the country or countries in which they conduct the majority of their physical business activities. “Where TransOil is headquartered has no other reason except that it provides the best business model, market access and tax benefits for the company, and this is completely legal in every way,” the spokesperson said.

Mike Lee is an agricultural expert specializing in the Black Sea region. In his view, when financial analysts got involved in Eastern European agriculture, they attempted to reinvent the wheel. “These finance guys, these sharp-suited clever people were constantly trying to reinvent agriculture,” he said. “We’ve been doing this for 6,000 years, since we left the fertile crescent of Central Asia, there isn’t really much more to reinvent here. But they were constantly looking for ways of making more money out of it.”

The Budapest shuffle

Ion Cojocaru does not look like a man who has recently sold $5 million of real estate. The 43-year-old has a nervous demeanor as he speaks outside his apartment block on the outskirts of Chisinau. It is not a wealthy neighborhood. The building’s door is made of iron and has an intercom that works for some apartments but not for others. For Cojocaru’s it does not.

And yet, according to official records in Hungary, Ion owns a 30 percent stake in BDVH Kft. In April last year, BDVH sold a 50-room 1920s Budapest villa to the Chinese government. Although Ion initially appeared unaware that the sale had been finalized, he later clarified when informed that it had in fact gone through five months earlier: “It’s a long process, we sold the building but we haven’t received the money yet.”

Cojocaru may one day receive a cut of the sale price, although it is unlikely to be 30% of $5 million. Until May 2017, BDVH was owned by Yuri Drukker’s Cyprus shell firm Stubrick Ltd., which was also the owner of Cojocaru’s employer at the time, Agroleon Consulting. The other 70% was transferred to another WJ employee in Moscow. Four months before the shares were handed over, Drukker extended BDVH a $5.6 million mortgage, using the villa and an adjoining piece of land as collateral. After the sale was completed, BDVH owed Drukker, not Cojocaru or the other shareholder, more money than the property had sold for.

Alexander Spiegel’s attorney is currently arguing before a New York court that this is just the latest example of Drukker engaging in “fraudulent transfers” with the goal of diverting money away from the corporate entities that owe Spiegel’s offshore companies money. In March 2017, Spiegel’s companies brought proceedings against Stubrick Ltd. (BDVH’s parent company at the time) and obtained a freeze order on assets it held, two months before Cojocaru became a paper millionaire.

The list of allegations against the WJ founder goes on. Cojocaru’s Budapest mansion isn’t the only piece of real estate lawyers have accused Drukker of embezzling money through. In 2012, just a few months after Trans-Oil bought out WJ, a Florida limited liability company named Drukker NY Properties paid almost $3.5 million for an opulent Manhattan apartment previously owned by Michael Cohen, Donald Trump’s former attorney. Less than 10 minutes from Central Park and the Metropolitan Museum of Art, it had 4-meter-high (13-foot) ceilings and marble bathtubs. A few days before the Cyprus asset freeze came into effect, Drukker NY Properties transferred ownership of the apartment to the firm’s directors, Yuri and Marina Drukker. In exchange, they paid the company $10.

Mongabay is a nonprofit environmental science and conservation news platform that produces original reporting in EnglishIndonesian, and Spanish by leveraging over 450 correspondents in some 50 countries. We are dedicated to evidence-driven objective journalism.

Print Friendly, PDF & Email

Latest comments

leave a comment