Assad sent $250 million of Syria’s cash to Moscow

Bashar al-Assad’s central bank airlifted around $250 million in cash to Moscow over a two-year period when the then-Syrian dictator was indebted to the Kremlin for military support and his relatives were secretly buying assets in Russia. .

The Financial Times has uncovered records showing that the Assad regime, although desperately short of foreign currency, sent nearly two tons of $100 bills and 500-euro bills to Moscow’s Vnukovo airport to be deposited in sanctioned Russian banks between 2018. and 2019.

The unusual transfers from Damascus underscore how Russia, a crucial Assad ally that provided military support to prolong his rule, became one of the most important destinations for Syria’s money when Western sanctions locked it out of the financial system.

Opposition figures and Western governments have accused the Assad regime of plundering Syria’s wealth and resorting to criminal activities to finance the war and its own enrichment. The cash shipments to Russia coincided with Syria becoming dependent on military support from the Kremlin, including mercenaries from the Wagner group, and with Assad’s extended family embarking on a buying spree of luxury properties in Moscow. .

David Schenker, who was US assistant secretary of state for Near Eastern Affairs from 2019 to 2021, said the transfers were not surprising, given that the Assad regime regularly sent money out of the country for “a combination of securing its ill-gotten gains.” facts and Syria’s heritage abroad.

“The regime would have to take its money abroad to a safe haven so it could be used to provide a good life… for the regime and its inner circle,” he said.

“Russia has been a haven for the Assad regime’s finances for years,” said Eyad Hamid, senior researcher at the Syria Legal Development Program, noting that Moscow became a “hub” for evading Western sanctions imposed after it Assad brutally put down an uprising in 2011. .

Assad’s escape to Moscow as rebels closed in on Damascus has even angered some loyalists of the old regime, who see it as proof of Assad’s overriding self-interest.

His unstable government had been propped up by Iran and its allied militant groups, which had intervened in 2012, and Russia, which sent its warplanes to attack what remained of Syrian rebels and Islamist insurgents in 2015.

Syria’s relations with Moscow deepened dramatically as Russian military advisers bolstered Assad’s war effort and Russian companies became involved in Syria’s valuable phosphate supply chain. “The Syrian state could be paying the Russian state for military intervention,” said Malik al-Abdeh, a London-based Syrian analyst.

The Assad regime moved large quantities of US and euro banknotes to Russia between March 2018 and September 2019.

Russian trade records from Import Genius, an export data service, show that on May 13, 2019, a plane carrying $10 million in $100 bills sent on behalf of Assad’s central bank landed at Vnukovo airport. from Moscow.

In February 2019, the central bank deposited around 20 million euros in 500-euro bills. In total, there were 21 flights between March 2018 and September 2019 with a declared value of more than $250 million.

There were no such cash transfers between Syria’s central bank and Russian banks before 2018, according to the records, which begin in 2012.

A person familiar with Syrian central bank data said foreign currency reserves were “almost zero” in 2018. But because of sanctions, the bank had to make cash payments, he added. He bought wheat from Russia and paid for money-printing services and “defense” expenses, the person said.

They added that the central bank would pay based on “whatever was available in the vault.” “When a country is completely surrounded and sanctioned, it only has cash,” the person added.

Russian records show that regular Russian exports to Syria, such as shipments of secure paper and new Syrian banknotes from the Russian state printing house Goznak, and shipments of replacement Russian military components for the Syrian Ministry of Defense, took place in the years previous. and then the large quantity of bills were flown to Moscow.

But there is no record that the two Russian lenders who received the Damascus banknotes in 2018 and 2019 received other bulk cash shipments from Syria or any other country over a ten-year period.

Even with Syria’s state coffers devastated by war, Assad and his close associates over the past six years have taken personal control of critical parts of the country’s devastated economy, people with knowledge of the regime’s workings said.

First lady Asma al-Assad, a former JP Morgan banker, built a powerful position influencing international aid flows and heading a secretive presidential economic council. Assad and his acolytes also generated income from international drug and fuel trafficking, according to the United States.

Hamid of the Syrian Legal Development Program said “corruption under Assad was neither a fringe issue nor a side effect of the conflict. “It was a way of governing.”

Syrian cash transfers had previously drawn sanctions from Washington. In 2015, the U.S. Treasury accused former Syrian central bank governor Adib Mayaleh and a central bank employee named Batoul Rida of facilitating massive cash transfers from the regime to Russia and arranging fuel deals to raise foreign currency. Rida was also accused by the United States of trying to obtain the chemical ammonium nitrate, which is used in barrel bombs, from Russia.

Records show that cash delivered to Moscow in 2018 and 2019 was given to the Russian Financial Corporation Bank, or RFK, a Moscow-based Russian lender controlled by Rosoboronexport, the Russian state arms export company.

The US Treasury sanctioned the bank this year for facilitating cash transfers, enabling “millions of dollars in illicit transactions, foreign currency transfers and sanctions evasion schemes to benefit the Syrian government.”

In March 2018, records show that Syria’s central bank also sent $2 million to another Russian bank, TsMR Bank, which has also been sanctioned by the United States.

While Russian financial institutions received cash from Syria, Assad’s other international backer, Iran, created plans to funnel hard currency to the beleaguered regime. Assad’s key money men held senior positions in these companies, according to corporate records analyzed by the Financial Times.

Yassar Ibrahim, Assad’s closest economic adviser, is a shareholder in a Lebanese company called Hokoul SAL Offshore, along with his sister Rana, which has also been sanctioned by the United States.

Hokoul, according to the US Treasury, is under the direction of Iran’s Revolutionary Guard Corps-Quds Force and the Lebanese militant group Hizbollah to move hundreds of millions of dollars “for the benefit of the brutal Assad regime.” Until now, Ibrahim’s role in the company had not been reported.

While the cordon of Western sanctions forced the regime out of the dollar banking system, corporate records analyzed by the Financial Times show that Assad’s key lieutenants continued to move assets to Russia.

In 2019, the Financial Times reported that Assad’s extended family had since 2013 purchased at least 20 luxury apartments in Moscow using a complex series of companies and loan agreements.

And as recently as May 2022, Iyad Makhlouf, Assad’s maternal cousin and major in the Syrian General Intelligence, who allegedly monitored, oppressed and murdered citizens, established a real estate company in Moscow co-owned by his twin brother Ihab called Zevelis City, Russian corporate records. show.

Iyad’s brother, Rami Makhlouf, was the regime’s most important businessman and at one point was believed to control more than half of the Syrian economy through a network of companies that included the SyriaTel mobile phone network. But after Rami fell out of favor with the regime in 2020, Syrians with knowledge of the regime say Iyad and Ihab remained close to Bashar and his wife Asma.

Corporate documents show that the city of Zevelis was established by a Russian employee of the US-sanctioned Syrian-Russian banker Mudalal Khoury, who has been accused by the US of facilitating large movements of money from Syria to Russia on behalf of the regime. Assad.

Khoury appears to have played a key role in incorporating the regime’s interests into Russia’s financial system, and in 2015 the US Treasury said that Khoury “has had a long association with the Assad regime and represents the commercial interests and financiers of the regime in Russia.”

Schenker said that given the pressure Assad had faced from Western governments, especially the United States, for more than a decade, “Assad always knew he would never be acceptable company in, say, Paris.

“I wasn’t going to buy apartment buildings there, but I also knew that if this was going to end, it was going to end badly. “So they had years to try to steal money and set up systems that were safe, reliable havens.”