It’s hard to feel sorry for someone who once headed Rosneft, the Russian state-owned oil-and-gas Goliath, as Sergey Bogdanchikov did from 1998 to 2010.
But Bogdanchikov tells a tale that, if true, is a disturbing one—especially for anybody who might have assumed that entrusting money to the most storied name in Western banking was either wise or safe.
In 2001, Bogdanchikov began investing his fortune—eventually more than $150 million of it—with Edmond de Rothschild (Europe), which is a Luxembourg bank in the Geneva-based Edmond de Rothschild Group. In 2016, he claims, he suddenly learned that more than $60 million of it had vanished.
Since this alleged discovery, Bogdanchikov has filed criminal and civil complaints in Luxembourg and Switzerland—so far in vain. Moreover, the confidentiality laws of those countries have kept the litigation secret, so his remarkable accusations have so far escaped any public airing.
Until now. On Wednesday, Bogdanchikov filed suit in the New York State Supreme Court in Manhattan, where complaints are public. That suit, which seeks more than $100 million in damages, focuses on chunks of Bogdanchikov’s money that, he claims, were secretly funneled to a hedge fund in New York City without his approval. Most of those sums, too, were lost, he says.
After being sent a copy of that complaint and a list of 18 related questions, both the Edmond de Rothschild Group and its Luxembourg branch declined all comment for this article. (The Edmond de Rothschild Group is distinct from the London-based investment bank Rothschild & Co., which is run by a different branch of the family.)
Bogdanchikov, 63, grew up in a Russian village near Kazakhstan. Trained as an engineer, he moved to Sakhalin Island, north of Japan, where he became a top manager in the Soviet oil industry. After the fall of Communism, he made a fortune during the privatizations of the Boris Yeltsin period, according to his son Alexey. (Alexey agreed to be interviewed for this article on Sergey’s behalf, explaining that his father’s English is not fluent.)
In 1998, a little more than a year before Vladimir Putin became president, Bogdanchikov was appointed to lead Rosneft, which was then a struggling, medium-size company. With Bogdanchikov as C.E.O.—and, since 2004, with Igor Sechin, a close Putin ally, as chairman—it grew into one of the largest oil companies in the world. (It did so in part by acquiring the assets of Yukos Oil, which was then being forcibly broken up to pay off unpaid taxes while its then C.E.O., Putin opponent Mikhail Khodorkovsky, was thrown in jail.)
Bogdanchikov left Rosneft in 2010. Today, his son says, he circulates between Moscow, Cannes, Dubai, and Vienna, depending on the season.
After the fall of Communism, Bogdanchikov made a fortune during the privatizations of the Boris Yeltsin period.
Back in 2001, when Bogdanchikov was looking to invest $56.9 million, he turned to the ultra-discreet Luxembourg branch of Edmond de Rothschild (Europe), according to the complaint, which was filed by Bogdanchikov’s New York counsel, Tibor L. Nagy Jr., of Manhattan’s Dontzin Nagy & Fleissig. In 2007, Bogdanchikov made a second deposit—$98.1 million—to the account. He was drawn to the bank largely by the Rothschild name, the complaint asserts.
The Edmond de Rothschild Group was founded in Paris in 1953 by Baron Edmond Adolphe de Rothschild, the great-great-grandson of Mayer Amschel Rothschild, who set up a banking house in Frankfurt in the 1760s. After Edmond died, in 1997, his son, Baron Benjamin de Rothschild, took control of the group, which today has 32 offices in 15 countries and comprises about $190 billion in assets. Benjamin is known for driving Formula 1 Ferraris, founding the Gitana boat-racing team, and owning fine vineyards. His wife, Baroness Ariane (née Langner), chairs the group’s executive committee and served as its C.E.O. from 2015 to 2019.
According to the complaint, Bogdanchikov’s relationship manager at the Luxembourg bank was Carlo Thewes, a senior vice president there. Thewes (pronounced “te-ves”) led Bogdanchikov to believe he was a close friend of the baroness’s, and assured him that Bogdanchikov would have approval rights over each investment, the suit alleges. The bank then set up a confidential account for him called Fortinvest Investments Holding, with bank officials serving as directors.
In late 2015, the Luxembourg bank began to come under a cloud for suspected financial shenanigans. Though these publicly reported matters are distinct from Bogdanchikov’s allegations, he alludes to them in his complaint as backdrop. In August 2015, for instance, the Luxembourg bank’s C.E.O., Marc Ambroisien, stepped down. Soon thereafter, the bank became the subject of money-laundering inquiries relating to the scandal-ridden sovereign-wealth fund 1Malaysia Development Berhad, or 1MDB.
In the summer of 2016, several top officials of the Luxembourg bank—including the baroness herself, the branch president—stepped down. A year later the branch paid Luxembourg’s financial regulator $10 million to settle charges of having failed to enforce money-laundering and terror-finance laws. In March 2020, the regulator suspended former C.E.O. Ambroisien from the industry for 10 years, citing transgressions of the same rules.
In 2016, as that scandal was coming to light, Bogdanchikov’s story began to unfold. He allegedly heard from an acquaintance that his Rothschild bank contact, Thewes, had been providing another client with phony bank statements, Bogdanchikov’s attorney, Nagy, told Air Mail in an interview. This prompted Bogdanchikov to reach out to Thewes, but he found him elusive, Nagy continues.
In June 2016, Bogdanchikov attended a meeting at the bank’s headquarters in Luxembourg, according to Bogdanchikov’s son Alexey. There Bogdanchikov allegedly learned that Thewes was no longer employed by the bank.
He also learned, the complaint alleges, that Thewes had been showing him false statements for years, and that his true balance was more than $60 million less than Thewes had led him to believe. (Thewes did not respond to messages sent by e-mail and via LinkedIn.)
Also in his interview with Air Mail, Bogdanchikov’s attorney, Nagy, alleged that the branch’s then C.E.O., Marc Grabowski, was at first sympathetic to Bogdanchikov’s plight. Grabowski suggested that the bank’s insurance would likely pay for his loss, according to Nagy. (Grabowski, who announced his own departure from the bank in 2016, did not respond to messages sent to two e-mail accounts and via LinkedIn.)
But the bank allegedly soon turned hostile. According to someone familiar with the situation, it took the position that, since accurate bank statements had been available for review at the bank’s headquarters, Bogdanchikov’s failure to promptly review and contest them amounted to validation of their contents. The branch further argued that the phony statements Thewes had provided were so crudely drawn that it was unreasonable for Bogdanchikov to have relied on them.
In the New York suit, Bogdanchikov alleges that for years Thewes—with the assistance of other branch employees—had been secretly placing Bogdanchikov’s money with investment advisers who were selected not for their financial savvy but for their willingness to pay kickbacks.
These transactions had to be approved by several bank officials besides Thewes, the complaint alleges. These were the directors of Bogdanchikov’s Fortinvest investment vehicle—who were all branch employees. In addition, the complaint asserts, to complete certain transactions, the Fortinvest directors used offshore shell entities that Bogdanchikov had never heard of. These had been incorporated in the Pacific island nation of Niue—northeast of New Zealand—by the global law firm Mossack Fonseca, the firm allegedly at the center of the Panama Papers money-laundering scandal. The director of these entities was Leticia Montoya, a low-level Mossack Fonseca employee, who reportedly served as a director for close to 11,000 companies.
In April 2017, Bogdanchikov filed a criminal complaint against Thewes, and, that October, a civil case against the branch—both in Luxembourg. Those actions are proceeding at a glacial pace, according to a source familiar with the matter.
Last year, Bogdanchikov also filed a criminal complaint in Switzerland against the Luxembourg bank’s parent, Edmond de Rothschild (Suisse), alleging failure to supervise. That complaint was dismissed on jurisdictional grounds—all the key alleged wrongdoing occurred in Luxembourg, a court found—but Bogdanchikov is appealing. In that litigation, it has emerged that Rothschild’s Luxembourg branch has filed its own criminal complaint against Thewes, according to a source familiar with the matter. (The bank’s Swiss branch has had its own issues. In December 2015, it signed a non-prosecution agreement with the U.S. Justice Department, admitting facilitation of tax evasion and paying $45 million in fines.)
Finally, this year Nagy unearthed a U.S. beachhead to the alleged scam. Bogdanchikov’s money was allegedly being managed not just out of the branch’s ornate stone mansion in Luxembourg, as Bogdanchikov assumed, but also out of a nondescript office building in Brighton Beach, Brooklyn, according to the complaint. There Vladimir Oblonsky, aided by his wife, Olga, was allegedly running a brokerage called Fontanelle Capital. The complaint claims that Thewes enlisted Oblonsky to hunt for investment advisers willing to pay kickbacks to the bank. Oblonsky allegedly found one in OIM Capital, in Manhattan, a fund run by Mikhail Filimonov, the complaint continues. (Filimonov’s domestic partner is Oblonsky’s ex-wife, according to the complaint.)
In 2010, Oblonsky allegedly arranged for $15 million from Bogdanchikov’s Fortinvest account to be steered to OIM, which eventually lost $10 million of it by investing in an Indian company that went bankrupt. The complaint asserts that Filimonov’s firm was charging Fortinvest (Bogdanchikov) inflated fees and then paying kickbacks to Fontanelle (Oblonsky), which forwarded them to the bank (Thewes).
Bogdanchikov’s money was allegedly being managed not just out of the branch’s ornate stone mansion in Luxembourg but also out of a nondescript office building in Brighton Beach, Brooklyn.
Neither Fontanelle nor Vladimir Oblonsky has a listed phone number. An Olga Oblonsky in Brooklyn did not return two e-mail messages. Nikita Oblonsky, who identifies himself as Fontanelle’s vice president on LinkedIn, also did not reply to a message. Mikhail Filimonov, through his attorney, said in a statement: “The complaint’s allegations against OIM are patently false. OIM will vigorously defend itself and looks forward to being vindicated in court.”
Not surprisingly, Bogdanchikov’s son says that he and his father are appalled by the way they claim the bank behaved. “When my father discovered the extraordinary fraud in 2016,” says Alexey Bogdanchikov, “Rothschild quickly unraveled before our very eyes from a storied and sterling bank to a den of thieves.” Since then, he adds, it “has done nothing to address its unjust actions.”
If the Bogdanchikovs’ story is true, the lessons of their case may extend even beyond that particular bank. Luxembourg is renowned for its banks, which make up the core of its economy. The Bogdanchikovs’ narrative suggests that that reputation is, in one sense, amply justified. If one believes their account, Luxembourg would seem to be, indeed, a splendid place to be a bank.
It’s just a hellish place to be an aggrieved client of one.
Roger Parloff is a New York City–based writer