Russia’s role in enabling the Syrian regime to avoid sanctions has come under renewed attention after it was reported that a number of Syrian President Bashar al-Assad’s cousins own $40 million worth of apartments in Moscow.
The allegations center on the Makhlouf family, al-Assad’s cousins and Syria’s richest family.
According to the report from the watchdog Global Witness, the Makhloufs controlled 60 percent of the country’s economy before the outbreak of the war in 2011. But with their assets and Swiss bank accounts being frozen and several members having their European visas revoked, the family has had to resort to new methods to maintain their riches.
The Global Witness found that the Makhloufs have acquired at least 19 high-end apartments in Moscow’s famous “City of Capitals” complex, prompting allegations of sanctions evasion.
Former Syrian diplomat Bassam Barabandi told Al Arabiya that Russia could be helping the Makhloufs launder money in exchange for the family bringing its investments to the country.
“Russia is a big market and is run by groups like the Makhlouf family. So, it is not difficult to find partners covered by the Russian government to facilitate the al-Assads’ money coming into Russia,” Barabandi said.
This includes al-Assad’s first cousin Hafez Makhlouf, who was sanctioned by the EU in 2011 for his involvement in “violence against demonstrators” during his role as a senior intelligence official.
Despite the sanctions, Makhlouf was able to buy more Moscow apartments than any of his family members using a complex loan structure, reported Global Witness.
Makhlouf, who owns a number of Russian property companies, was able to take out a loan from the offshore Lebanese company Nylam SAL Offshore, owned by his cousin Mohammed Abbas.
In 2018, Makhlouf passed on his shares of the Russian companies to Briana SAL Offshore, a Lebanese company that has the same shareholders and directors as Nylam, in an attempt to erase his involvement in the agreement.
The agreement might have been used as a pretext with banks to move money from Syria to Russia and beyond and vice versa.
Makhlouf’s older brother and Syria’s richest man, Rami, has also participated in the family scheme to launder money out of the country and has had his wife buy several apartments in the “City of Capitals.”
Rami Makhlouf owns Syria’s largest mobile provider, Syriatel, as well as assets in several holding companies with interests in oil, gas, and aviation.
Both Makhlouf brothers have been sanctioned by the US Treasury. In 2011, the US Treasury sanctioned the Syrian president, nine officials, and three entities for “human rights abuses, including repression against the Syrian people, as well as a set of companies tied to Syrian corruption.”
This was the treasury’s second time sanctioning Hafez, whose finances were frozen in 2007 for “undermining the sovereignty of Lebanon or its democratic processes and institutions.”
Russia: ‘An alternative safe haven’
Russia is operating as an “alternative safe haven” for the Syrian regime to launder money and evade sanctions, according to the Global Witness report.
“It seems that the Syrian regime has been using Moscow as an alternative safe haven, and possibly a potential gateway for its ill-gotten gains to enter the wider financial system,” the report states.
The country’s obscure business environment and inconsistent legislation, combined with a potential deal between political allies Moscow and Damascus, means that Russia provides opportunities for families like the Makhloufs, Barabandi explained to Al Arabiya English.
“The convergence of the political will of the Russian leadership to encourage the wealthy of the [Syrian] ruling authority to go to Russia to invest safely from economic sanctions, with the phenomenon of corruption suffered by the Russian financial system, helps many of the people in power and those close to Russia to launder their money or save it in Russian markets,” said Barabandi.
The Global Witness report also implicated Russia’s banks in facilitating the Syrian regime’s transactions. The country’s biggest bank, Sberbank, provided banking services for at least one of the property companies previously owned by Makhlouf.
The use of properties to launder money out of Syria is an easy investment to track but the Makhlouf family and others could be concealing their money trails through other, more obscure methods, noted Barabandi.
“The Russian apartments are relatively easy to find out about since they are properties, but there are a lot of other investments that are easier to hide – like owning factories or companies that are doing trade or [providing] services,” Barabandi said.
Syria has been at war since the 2011 revolution, which demanded the fall of the regime led by Bashar al-Assad, who has now been in power for 19 years. His father, Hafez al-Assad, ruled Syria for 30 years before him.
The Makhlouf’s vast wealth has made them a vital player in Syria’s economy and politics and key pillar of support for the regime. As a senior official in the country’s intelligence, Hafez Makhlouf presided over many of atrocities committed by the regime before he was removed from his post in 2014, including the crushing of peaceful protests in 2011 in the name of “fighting terrorism.”
The subsequent war has killed more than 370,000 people and displaced millions.