Mirror trades are not inherently illegal. On the Moscow markets, this sleight of hand had a nickname: konvert, which means “envelope” and echoes the English verb “convert.” In the English-language media, the scheme has become known as “mirror trading.” Because the Russian company and the offshore company both belonged to the same owner, these ordinary-seeming trades had an alchemical purpose: to turn rubles that were stuck in Russia into dollars stashed outside Russia. These transactions had nothing to do with pursuing profit. To inspect the trades individually, however, was like standing too close to an Impressionist painting-you saw the brushstrokes and missed the lilies. Deutsche Bank earned a small commission for executing the buy and sell orders, but in financial terms the clients finished roughly where they began. Deutsche Bank was helping the client to buy and sell to himself.Īt first glance, the trades appeared banal, even pointless. Both the Russian company and the offshore company had the same owner. In the second trade, Volkov-acting on behalf of a different company, which typically was registered in an offshore territory, such as the British Virgin Islands-would sell the same Russian stock, in the same quantity, in London, in exchange for dollars, pounds, or euros. Usually, the order was for about ten million dollars’ worth of the stock. In one, he would use Russian rubles to buy a blue-chip Russian stock, such as Lukoil, for a Russian company that he represented. Volkov would speak to a sales trader-often, a young woman named Dina Maksutova-and ask her to place two trades simultaneously. Illustration by Anna PariniĪlmost every weekday between the fall of 2011 and early 2015, a Russian broker named Igor Volkov called the equities desk of Deutsche Bank’s Moscow headquarters. The bank, beset by scandals and mismanagement, is in a precarious state.
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