Lithuania’s banking regulator has suspended operations of Snoras bank, the 5th largest in the country, appointed a temporary state administrator and announced its plans to takeover 100% of the lender’s shares.

The government discussed the situation surrounding the bank, and the president made a statement. The Lithuanian central bank acted after it emerged that some of the bank’s assets were of worse quality than it had been expected.

The bank declared some foreign securities, worth of 290 million euros, as assets, which the investigation showed did not exist.

Antonov has swapped bad assets of Snoras for Sergei Polonsky’s former Mirax (now frozen development projects in Moscow that have high liquidity. The move enabled Polonsky to siphon off most of the money of defrauded shareholders and creditors into his foreign accounts. It is now a headache of Russian and Lithuanian authorities to fix the problem.

The debt, which Nazvanie.Net has declared, is $45 million, but in fact it exceeds this figure and amounts to hundred millions of dollars.

Antonov has been involved in a number of financial scams before. He has always had problems with banking regulators. His Conversbank and Conversbank-Moscow were barred from participating in deposit insurance scheme, run by the Russian government, and the U.K. Financial Services Authority denied Snoras permission to operate in Britain, because “the bank would be unable to cooperate with the FSA in open and constructive manner”.    

The scam was very simple. Antonov bought or set up banks - for instance, he acquired Lithuanian Snoras and Russian Investbank. The banks borrowed money from individuals and private companies for high interest. Antonov moved accumulated money into various projects of his own. He owned a lot of financial institution that enabled him to keep afloat, moving funds from one institution to another in order to fill in financial holes, if the problems occurred.

The scam worked until 2010, when it became obvious that Snoras and Investbank were on the verge of insolvency and even minor economic instability could have defrauded tens of thousands of people. The situation was even more dangerous in Lithuania. The hole in the bank’s balance sheet amounted to $100 million. The money was moved to the accounts of front companies in the form of unsecured loans. Antonov found no other way out, than to bring notorious Sergei Polonsky into his business. 

By 2010 Polonsky and his Mirax Group had already gone bankrupt. The debt of his companies was estimated from $600 million to $1 billion. Former oligarch dreamt about saving at list part of his wealth and moving the assets abroad. He was open to any proposals, including that of most suspicious nature. This was common ground for talks between Antonov and Polonsky. They discussed the scam first in London, than in Antonov’s private chalet in Switzerland. The sides discussed the details of large-scale fraud.  

Under the agreements reached by Polonsky and Antonov, Snoras swapped the securities of front companies for the ownership rights over developments, run by Mirax Group in Moscow (Dubrovskaya Sloboda, Mirax Park and Kutuzovskays Milya residential complexes, and Federation tower in Moscow-City business centre). Through his connections in the Staff of the Russian Federation President Polonsky received permission to strike share pledge agreements with the third party - the front companies, which Antonov had used to move money from his bank. After all, Polonsky sold his developments and got money, which had been siphoned off from Snoras.

The money of defrauded shareholders and creditors of Polonsky’s Mirax filled in the financial hole in Snoras. Now the bank owns a few objects in Moscow, which are despite being under construction are above all real and liquid, unlike the securities of the front companies.   

Polonsky has also benefited from the scam. Antonov committed himself to move large sums of money to offshore companies controlled by Polonsky. Antonov planned to resell Saab and other assets. He negotiated with the Chinese about the deal, according to the inside information. In the end, Polonsky has moved his most profitable assets abroad and they are under control of Snoras’ shareholders and depositors, who lent money to Mirax Group on the security of the Mirax Moscow’s developments. If Moscow authorities, or Russian creditors of decide to take over the developments of Polonsky, they will have to infringe upon the reights of the EU citizens. After all, Mirax got loans at  unpresidentally low rate - just 7% a year. In 2010 reliable lenders gave loans to Polonsky at the rate of 20-30%. If Mirax Group owner decided to bail out his objects in Moscow he would do it easily. Such option is a part of the agreement between Antonov and Polonsky.      

In a nutshell, co-investors of Polonsky’s Mirax Group and Moscow authorities face a long struggle with the member of the EU, whereas Antonov and Polonsky are very happy with the success of their scheme.