Financial Crime World

Moldova’s Billion-Dollar Heist: How a Coordinated Banking Scam Drained the Country’s Economy

Overview

  • In 2014, over $1 billion disappeared from three state-owned banks in Moldova: Banca de Economii, Unibank, and Banca Socială.
  • Ilan Shor, a Moldovan businessman, orchestrated the scheme involving money laundering and shady transactions.
  • The loss equated to 12% of Moldova’s GDP and led to significant consequences for the country and European financial sector.

The Scam Unfolded in Two Stages

Pre-2012: Expansion of Loans and Potential Money Laundering

  • Banca de Economii had previously expanded its lending activities.
  • The government investigated potential money laundering schemes involving Moldovan institutions.

2012-2014: Shareholder Changes and Collaboration Between Banks

  • Ilan Shor and associates gained control over Unibank.
  • Shor himself became a part-owner of Banca de Economii.
  • The banks collaborated to increase liquidity, expand lending, and use funds from the State Health Insurance Company.

Foreign Auditors Failed to Detect Irregularities

  • Grant Thornton, a foreign auditing firm, failed to identify any irregularities during this period.
  • A conflict of interest arose due to Olesea Bridé, a partner in the Grant Thornton office in Moldova, being married to Stéphane Christophe Bridé, the Moldovan minister of economy at the time.

Extraction of Funds During the 2014 Moldovan Parliamentary Election

  • More than $750 million was extracted from the banks in three days in late November 2014.
  • Bank files containing crucial data on the suspicious transactions were stolen and later burned.

Kroll Report Details Alleged Transactions

  • Released in January 2015, the report revealed that Ilan Shor’s affiliated companies allegedly received 13.5 billion lei from the banks.

Consequences Beyond Moldova

  • The fraud made Moldova’s financial institutions a part of larger money laundering schemes, such as the Russian Laundromat.
  • Funds involved in these money laundering schemes amounted to tens of billions of dollars.

Accountability and Recovery

  • Several individuals have been arrested, including Ilan Shor, for their involvement in the fraud.
  • Reactions in Moldova include calls for reform and early elections.
  • In Latvia, stricter regulations on money laundering were implemented, and prominent financial officials departed.

Demand for Change and Seeking Justice

  • Moldovan people continue to demand accountability and justice for the billion-dollar heist.