Assad dispatched $250mn of Syria’s cash to Moscow

Bashar al-Assad’s central bank transferred nearly $250 million in cash to Moscow during a two-year period during which the then-Syrian dictator owed money to the Kremlin for military support and his relatives secretly bought assets from Russia.

The Financial Times has uncovered records showing that the Assad regime, facing foreign exchange shortages, flew nearly two tonnes of $100 notes and 500-euro notes into Moscow’s Vnukovo airport to be deposited in sanctioned Russian banks between 2018 and 2019.

The unusual transfers from Damascus underscore that Russia, a crucial ally of Assad and providing him with military support to prolong his regime, has become one of the most important destinations for Syria’s cash as Western sanctions push Assad out of the financial system .

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

David Schenker, U.S. Deputy Assistant Secretary of State for Near Eastern Affairs from 2019 to 2021, said the transfers were not surprising, given that the Assad regime regularly sends money out of the country “in an attempt to secure and hold together its ill-gotten gains.” Syria’s legacy abroad”.

“The regime will need to bring its money abroad to a safe haven so that it can use it 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 Syrian Legal Development Program, noting that Moscow has become a “hub” for evading Western sanctions imposed after Assad brutally suppressed an uprising in 2011 . .

Assad’s escape to Moscow as the rebels approached Damascus angered even some old regime loyalists, who saw it as evidence of Assad’s overriding personal interests.

His shaky rule has been bolstered by Iran and its proxy militant groups, which intervened in 2012, and Russia, which brought in warplanes to strike what remained of Syrian rebels and Islamist insurgents in 2015.

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

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

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

In February 2019, the central bank sent around 20 million euros in 500-euro notes. From March 2018 to September 2019, 21 flights were operated with a total value of over $250 million.

According to records starting in 2012, there were no such cash transfers between the Syrian central bank and Russian banks before 2018.

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

They added that the central bank will pay according to what is in the safe. “When a country is completely surrounded and subject to sanctions, it only has cash,” the person added.

Russian records show that regular exports from Russia to Syria occurred in previous years, such as shipments of safe paper and new Syrian banknotes from the Russian state-owned printing company Goznak, and shipments of spare Russian military components for the Syrian Ministry of Defense. and flew to Moscow, following a large amount of banknotes.

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

Even as Syria’s state coffers have been devastated by war, Assad and his cronies have personally seized control of critical parts of the country’s devastated economy over the past six years, people with knowledge of the regime’s workings say.

First Lady Asma al-Assad, former JP Morgan banker, created a strong position influencing international aid flows and chairing a secret presidential economic council. According to the USA, Assad and his aides were also earning income from international drug smuggling and fuel smuggling.

“Corruption under Assad was not a marginal event or a side effect of the conflict,” said Hamid of the Syrian Legal Development Programme. “This was a form of management.”

Cash transfers to Syria have previously led to sanctions from Washington. In 2015, the US Treasury accused former Syrian central bank governor Adib Mayaleh and a central bank employee named Batoul Rida of managing fuel-related deals to facilitate mass cash transfers to Russia for the regime and increase foreign exchange. Rida was also accused of trying to obtain the chemical ammonium nitrate used in barrel bombs by the United States from Russia.

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

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

In March 2018, records show that the Syrian central bank transferred $2 million to TsMR Bank, another Russian bank also sanctioned by the United States.

While Russian financial institutions received cash from Syria, Assad’s other international supporter, Iran, set up plans to funnel foreign currency to the beleaguered regime. Assad’s key moneymen held key positions in these companies, according to corporate records analyzed by the FT.

Yassar Ibrahim, Assad’s closest economic advisor, is a shareholder of a Lebanese company called Hokoul SAL Offshore, along with his sister Rana, who is also sanctioned by the US.

Hokoul is directed by Iran’s Revolutionary Guard Quds Force and the Lebanese militant group Hezbollah to move hundreds of millions of dollars “for the benefit of the brutal Assad regime,” according to the U.S. Treasury. Ibrahim’s role in the company was not previously reported.

As the Western sanctions cordon forces the regime to move out of the dollar banking system, corporate records analyzed by the FT show key Assad commanders continue to move assets to Russia.

in 2019 FT reported It was revealed that Assad’s extended family purchased at least 20 luxury apartments in Moscow starting in 2013, using a complex series of company and loan deals.

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

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

Corporate records show Zevelis City was founded by a female Russian employee of Mudalal Khoury, a U.S.-sanctioned Syrian-Russian banker accused by the United States of facilitating large movements of money from Syria to Russia on behalf of the Assad regime.

Khoury appears to have played a pivotal role in incorporating the regime’s interests into Russia’s financial system, and in 2015 the US Treasury said Khoury “has a long-standing relationship with the Assad regime and represents the regime’s commercial and financial interests in Russia.”

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

“He wasn’t going to buy an apartment there, but he also knew it would end badly if it went through. So they had years to try to smuggle in money to build systems that would be reliable safe havens.