IALOVENI, Moldova — A thick carpet of white ash in the back of a burned-out Volkswagen van is all that remains of the final, desperate act in a banking swindle so enormous that it cost this impoverished Eastern European nation the equivalent of an eighth of its annual economic output.
Relative to the modest size of Moldova’s economy, the disappearance of hundreds of millions of dollars from three lenders, now insolvent, could rank among the world’s biggest bank thefts.
The losses have exposed deep-rooted corruption and the shadowy power of feuding business oligarchs who have hobbled European and American efforts to draw former Soviet states out of Moscow’s orbit. The scandal has emboldened and invigorated pro-Moscow forces in the tug of war over former Soviet lands.
Iurie Leanca, Moldova’s prime minister until early this year, said he knew his country’s lenders “were going in the wrong direction” because of huge “toxic loans” to insiders. But little could be done, he said, “because institutions simply do not work here.”
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The events came dimly to light in November, when Moldova’s central bank took control of Banca de Economii, one of the country’s biggest lenders, and then two other troubled institutions, Banca Sociala and Unibank.
Then, in May, Andrian Candu, a powerful politician, used his personal blog to leak a confidential report commissioned by the central bank and conducted by the investigations company Kroll.
The report named Ilan Shor, a 28-year-old Moldovan oligarch who bought into the ownership of Banca de Economii in 2013, as the protagonist in “a coordinated effort involving all three banks working together to extract as much loan finance as possible from the banks without any obvious business rationale.”
Loans at one bank were paid off with loans from another and were then followed by yet more borrowing, the report said.
“It was like a carousel,” said Mr. Candu, who is the speaker of the Moldovan Parliament and a close political ally and friend of Moldova’s richest oligarch, Vladimir Plahotniuc.
From September 2010 to November 2014, the report said, companies linked to Mr. Shor increased their borrowing from banks a hundredfold to the equivalent of nearly $750 million at current exchange rates. Factoring in interest, Mr. Shor’s group now owes around $1 billion. It shows no sign of returning this.
Mr. Shor, now under house arrest at his sprawling residential compound in Chisinau, the capital, declined to be interviewed. But, in an emailed response to written questions, he denied allegations that he had orchestrated a swindle, saying there was “no documentary evidence” to support Kroll’s conclusions of deliberate looting.
The reason for that is perhaps the fate of the Volkswagen van, reduced to a charred wreck by a mysterious fire and now held in a police lot here in Ialoveni, a small town southwest of Chisinau. The van, owned by the security company Klassica Force, was carrying 12 sacks of loan documents from Banca de Economii when it was reported stolen and caught fire “under suspicious circumstances,” according to the Kroll report.
Other than Mr. Shor, nobody seems to believe that the van was stolen and burned by thieves, despite a police report to that effect.
Mr. Candu dismissed the stolen van report as a “primitive scheme” to hide the traces of an elaborate theft that shifted hundreds of millions of dollars into offshore accounts.
“It was a stupid mistake,” he said. “You can’t just burn a car and think everything disappears. Money leaves a trace.”
Mr. Shor scoffed at the idea of a cover-up, saying that only “illiterate persons” would try to conceal their tracks by burning documents that have digital and other copies. “It makes no sense to burn any of them, even if this could come into somebody’s mind,” he said.
The Klassica Force van, he said, was the object of a straightforward “cash-in-transit vehicle theft.”
Dorin Dragutanu, the governor of Moldova’s central bank, said he believed that the theft and the fire had been staged. But the real purpose, he said, was to hide the likelihood that Banca de Economii had no real documents to account for its lending.
“If you have transactions that are fake and don’t have any paperwork, you need to show somehow that the documents disappeared,” he said.
The scandal has been a political gift for the zealously pro-Russian Socialist Party, the largest group in Parliament after elections late last year, just days after news of the banking crisis first broke. Bolstered by the public reaction to details that surfaced in May, the party is expected to do well in local elections this month.
Igor Dodon, the leader of the Socialists, said the disappearance of so much money showed how the European Union had backed the wrong horse by supporting Moldova’s pro-European forces, which have held power since 2009. “The more money Europe gives, the more money our oligarchs steal,” he said.
Pro-European politicians say the roots of the scandal came from an earlier period of left-wing rule. Mr. Candu, the parliamentary speaker and a champion of closer links with the West, said Banca de Economii had been known for more than a decade “as a milk cow” for previous Communist-led governments.
When Mr. Shor married a Russian pop star in 2011, Mr. Dodon and two previous Moldovan presidents, both from the Communist Party, attended a lavish reception in Chisinau, along with many other prominent figures.
Today, former associates are distancing themselves from Mr. Shor, who is also running in elections this month, a candidacy that shields him from prosecution, despite his house arrest. Police officers armed with automatic weapons guard his vast residence around the clock, as do Mr. Shor’s own security guards, hired from Klassica Force, the same company whose van carrying bank files was supposedly stolen and then set on fire.
Born in Israel into a Jewish family from Moldova that, according to Moldova’s anticorruption agency chief, had close ties to that country’s governing elite during Soviet rule, Mr. Shor was taken to Moldova as a child. Building on his father’s connections and business interests, he became one of Chisinau’s richest men, with stakes in banking, duty-free shops, a soccer team, insurance and other ventures.
Mr. Shor, in his written responses to questions, acknowledged that Banca de Economii had serious problems with “unfavorable” loans, but he said that those dated from the previous management and had been kept secret from him until after he bought into its ownership.
He said he had kept quiet about this “bomb” because going public would have led to the “inevitable crash of the whole banking system.” All his moves since, he added, were simply “remedial actions” intended to save the bank.
Prime Minister Chiril Gaburici, voicing a widespread view, said that he did not believe Mr. Shor was solely responsible for the missing money and that he must have had powerful accomplices.
People in government were probably involved, either directly for personal gain or simply through inattention to what was going on, investigators here believe. But the question that most concerns the country is the one raised on national television by a journalist, Natalia Morari, who appeared on her evening show, “Politica,” wearing a T-shirt with the words, “Where’s the billion?”
That is unclear. The money lent by Banca de Economii and the other banks sloshed in and out of various foreign accounts, often held in Latvia, according to the Kroll report.
As the carousel of lending from bank to bank began to spin out of control, companies controlled by Mr. Shor transferred a total of $232.2 million, as well as 544.5 million euros, or almost $600 million, to mysterious offshore entities in just two days, Nov. 25 and 26, according to the Kroll report.
Shortly before this, Banca de Economii’s loan portfolio was abruptly moved, through a series of opaque transactions, to Banca Sociala. That bank then announced it had held a shareholders’ meeting in a remote Ukrainian town on Nov. 26 and decided to transfer collection rights on the loans to a British-registered company called Fortuna.
The next day, the van carrying bank documents was burned. Mr. Dragutanu, the central bank governor, said the shareholders’ meeting in Ukraine and the deal with Fortuna were “completely fake,” noting that Fortuna had supposedly agreed to pay full price for the loan portfolio, but not until 2019.
Asked about the looting of Moldova’s banks at a news conference in Chisinau, the European Union’s ambassador to Moldova, Pirkka Tapiola, voiced the dismay that has gripped locals and foreign diplomats. “I do not have an answer for you on how it is possible to steal so much money from a small country,” he said.