Members of Putin’s state machine received Hungarian residence permits through controversial Golden Visa program

While Viktor Orbán’s government has closed down borders for refugees and migrants, the country’s controversial residency bond program offered a backdoor for wealthy investors to Hungary and the EU. The government refused to disclose the names of these investors but a joint investigation by Direkt36, 444 and Russian newspaper Novaya Gazeta has revealed that a number of influential Russian individuals, including politicians and executives of state companies, received Hungarian residence permits. In several cases, we could confirm that they did it through investment in Hungary’s bond program. The family members of the head of Russia’s foreign intelligence service (SVR) and a Russian businessman reported to be connected to an organised crime group were also clients of the Hungarian Immigration Office, though the Office declined to share more details about their exact involvement.

These revelations are based on information that Direkt36 and another Hungarian news organization, 444, received earlier this year. In January, both outlets received an anonymous envelope that contained the names of citizens of Russia and several other countries, who, according to the sender, had received residency permits through Hungary’s residency bond program. We managed to verify this claim in a number of cases.

A member of the Russian Duma, Vladimir Blotskiy confirmed that he and his family members had received Hungarian residence permits through the bond program before he became a lawmaker. He claimed that he gave up the residency after joining the Duma. Besides Blotsky, several executives of state-owned companies also confirmed that they received a Hungarian residence permit, and one of them also confirmed that he did so through the bond program.

Among the Russian individuals listed by the anonymous letter, the most remarkable ones are the family members of the head of Russia’s foreign intelligence service (SVR), Sergey Naryshkin. An additional source with knowledge of the bureaucratic process of gaining residency in Hungary claimed that Sergey Naryshkin’s son, Andrey participated in the residency bond program. The Hungarian Immigration Office confirmed that Andrey Naryshkin was their client but declined to say in what capacity. Although we contacted the Naryshkin family through various channels, they did not respond to our questions.

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Another name that stood out was Dmitry Borisovich Pavlov. He is a Russian businessman with close ties to the Kremlin, who is active both in charity and around the orthodox church. Many newspapers also linked him to an organized crime group in Moscow. We could not reach Pavlov to ask him whether he received Hungarian papers, but a source with knowledge of the bureaucratic process of gaining residency in Hungary claimed that he participated in the Hungarian residency bond program, and the Hungarian Immigration Office confirmed that he was one of its clients.

“From a national security aspect, it is remarkable and relevant if such senior political figures, state officials and their relatives are buying residency bonds in Hungary, with which they can travel inside the European Union,”

said Ferenc Katrein, a former official of the Constitution Protection Office, the Hungarian domestic secret service. “The intent to purchase these bonds can draw the attention of the Hungarian and EU services, because normally these figures can travel inside the EU in their official capacity,” he added. Katrein also noted that it is a priority for the Hungarian and European services to examine what relationship these Russian people have with the Russian security services, and what risk this can pose to Hungary and the European Union.

According to information provided earlier by the Hungarian authorities, potential bond investors went through a strict security screening carried out by four authorities, but no further details about the process were made public. In our previous articles, we quoted two sources with knowledge of the security screenings, who talked about the shortcomings of the process. One of them suggested that there could not have been any in-depth investigations because of the vast number of participants in Hungary’s residency bond program. At the time of the program, Hungarians abroad could also acquire Hungarian citizenship through naturalisation, and the two processes overburdened the authorities responsible for security screenings. As we recently reported, a Syrian moneyman whose name was connected to human right violations, obtained a Hungarian residence permit in only ten days, and it took the Hungarian authorities only four working days to complete his security screening.

The Hungarian Immigration Office did not respond to our questions regarding Russian bond buyers neither when we contacted them as journalists, nor when we submitted a freedom of information request. VoldDan Investment Limited – the only company that was authorised to sell residency bonds to Russian citizens – only said that they “cannot help us with anything”.

The family of the SVR chief

Among the names we received in January, we found immediate family members of Sergey Naryshkin, the current head of the Russian foreign intelligence service, known by its acronym SVR. A successor of the Soviet-era KGB, the agency is tasked with gathering intelligence and conducting espionage activities outside of Russia. Before becoming the director of SVR in October 2016, Sergey Naryshkin served as the speaker of the Duma, the lower house of the Russian parliament, between 2011 and 2016. Following the Crimean crisis, in 2014, among other Russian officials, he was put on the EU’s sanctions list for having publicly supported the deployment of Russian forces in Ukraine.

Sergey Naryshkin’s 39-year old son, Andrey has also been close to the Russian state but has not taken any political roles. According to a Forbes article published in 2012, he became the member of the Board of Directors in Russia’s largest, majority state-owned electrical transmission grid company and system operator, but there is no information about his current workplace, and he does not own any companies either. Andrey Naryshkin and his family – his wife and two daughters – appear among the names we received. One family member’s social media activity suggests that the family has recently traveled to various European countries, including Austria, Germany, France, and Poland. In 2016, the family member uploaded photos taken in the castle of Budapest, and at the beginning of September, a new photo taken in front of the Hungarian parliament.

We reached out to Andrey Naryshkin through various channels to ask whether he and his family members received Hungarian residence permits, but he did not answer our questions. The SVR’s press office declined to comment on the case, saying that the issue is not in their competence. A source close to SVR told Novaya Gazeta that “they [SVR] know that the situation with residency permit is real, but do not think it will be a problem and are not going to react.” A source with knowledge of the bureaucratic process of gaining residency in Hungary claimed that Andrey Naryshkin participated in the residency bond program.

As journalists, we could not get an official response from the Hungarian authorities about the bond buyers, so we asked the help of independent MP Ákos Hadházy. According to the 9th paragraph of the act about the Statute for Members of the Parliament, MPs can enter all state administration bodies and public institutions, and the employees of state institutions are obliged to answer the MP’s questions. The Hungarian Immigration Office told Hadházy that they had a client who was called Andrey Naryshkin, but they did not say if Naryshkin received a residency permit and if yes, under which circumstances.

Although it is not clear what type of process the Naryshkins participated in, a source with knowledge of the security screening of foreigners said:

“When the authorities assess the risks that an individual might pose to Hungary, they do not only screen the individual but also his family members and his environment.”

According to the source, an individual who has a family member at such a high-level position of a foreign intelligence service, is very problematic. Thus, the authorities responsible for the screening process are unlikely to take a decision without political approval.

The involvement of Naryshkin in the Hungarian residency bond program is not only interesting from a Hungarian viewpoint. In our previous article, a source with knowledge of the inner workings of VolDan Investment Limited, the only company that was authorised to sell bonds to Russian citizens, said that Russia’s leadership is not happy at all with wealthy citizens taking cash out of the country. Besides, in the domain of intelligence operatives, it is especially controversial if a close family member of a prominent figure acquires residency papers in a foreign country.

Six people injured in shootout at a birthday party

Among the names we received, appeared Dmitry Borisovich Pavlov. A source with knowledge of the bureaucratic process of gaining residency in Hungary claimed that he participated in the Hungarian residency bond program, and the Hungarian Immigration Office confirmed to independent Hungarian MP Ákos Hadházy that he was one of their clients. Although Pavlov’s name is not widely known, the events of his 50th birthday party celebrated last autumn are revealing.

On the 17th of November 2017, there was a bloody shootout at a skyscraper in Moscow called Oko tower. On that night, in the Crystal Ballroom Restaurant in the tower, the 50th birthday party of Dmitry Borisovich Pavlov took place. According to the English-language Russian newspaper, Crimerussia, and other news sites, more than 200 guests attended the event, including many well-known figures of the Russian nightlife, politicians, and businessmen, for example, billionaire Gavril Yushvaev, vice-president of the World Congress of Mountain Jews. While the guests were partying in the restaurant, around 8.30 pm, an argument erupted between the bodyguards-drivers and the private security guards of the Oko tower over parking the guests’ luxury cars. The verbal argument first turned into a scuffle and then into a shootout, which moved first to the lower floors of the building and then also to the restaurant, the venue of the birthday party. One man was killed and five were injured, mostly security guards, but the party’s DJ was also wounded by the bullets.

Reports about the shootout also comment extensively on Pavlov’s background. Many papers mention that 20 years earlier, he was convicted for causing bodily harm, and that, according to Russian sources in the interior ministry, he led the “Izmailovskaya” organized crime group in Moscow at the beginning of the 2000s.

Dmitry Pavlov recently positions himself as a real estate developer who is keen on charity. His company Yurfinkollegiya operates shopping malls and provides legal assistance in real estate businesses. Pavlov himself supports the orthodox church through a foundation called Anastasios, which helps to reconstruct churches. According to his autobiography, Pavlov has also supported orphans, veterans and athletes, he sent aid to war-torn South Ossetia in 2008 and he organised a series of charity concerts for the Russian secret service FSB – all in all, he was ready to back issues important for the Kremlin. According to his website, in recent years he has received awards from the orthodox church, the Russian defense ministry and from the president’s office.

Pavlov did not respond to our questions.

The Duma and Hungary

Current and former members of the Russian parliament also received Hungarian residence permits. Vladimir Blotskiy – who confirmed his bond purchase to Novaya Gazeta in a phone call – said: “The procedure lasted approximately 3 months and the service was provided by Russian Sberbank for their clients. The bank got in touch with a Hungarian law firm and arranged everything,” Blotskiy told Novaya Gazeta, but he did not share the name of the Hungarian law firm and the exact date of their application.

Having foreign residence permit can be problematic for some Russian citizens, as the law doesn’t allow high ranking public officials to have second citizenship or residency in other countries. Referring to this regulation, Blotskiy emphasized that he gave back his residence permit when he became a deputy of the State Duma in 2016 September, as a member of the Communist Party. “A deputy cannot have foreign residency permit, we need to obey the law,” Blotskiy said. According to Forbes magazine, in 2017 Blotskiy was the 48th richest civil servant in Russia, his family’s estimated wealth amounting to 263 million rubles (4 million euros) by the end of 2016.

A former member of the Russian parliament, Iliaz Muslimov, whose name was also received by Direkt36 and 444, confirmed in a phone call that he applied for Hungarian residence permit, but did not specify whether he did so through the bond program. Muslimov was a deputy between 2007 and 2011 as a member of the pro-president United Russia political party. He stressed that he applied for a residence permit when he was no longer a deputy but declined to discuss further details about his application and whether it was successful.

Rosatom, Gazprom, Aeroflot

Evgenii Evstratov, the former deputy head of Rosatom, Russia’s state-owned nuclear power company, which is in charge of building Hungary’s new nuclear plant, also appeared among the names we received. Evstratov served as the deputy director of Rosatom between 2008 and 2011 when he was arrested on charges of embezzling 110 million rubles (2.7 million euros). After spending close to three months in prison, he was released on bail in November 2011, and the criminal case against him was only dismissed in 2016.

A source close to Evstratov said that after being released from prison, Evstratov applied for Hungarian residence permit because he “wished to find a way to save himself”, but he did not say whether Evstratov applied for Hungarian papers through the bond program. The source claimed that Evstratov application was refused by the Hungarian authorities on the grounds of being a politically exposed person. Evstratov currently leads state-owned Radiopriborsnab, which deals with the wholesale trade of electrical equipment.

The name of Alexey Yankevich, deputy CEO of Gazprom Neft, a subsidiary of state-owned Gazprom and the third largest oil producer in Russia, was also sent to Direkt36 and 444. A source with knowledge of the situation told Novaya Gazeta that Yankevich received a Hungarian residence permit but did not specify whether he did so through the bond program.

Andrei Kalmykov, head of a low-cost airline wholly owned by state-controlled Aeroflot, confirmed that he got residency permit through the Hungarian bond program. He said that it is not a violation of the law, because he is “not dealing with state secrets”. He also said that he had informed the Ministry of Internal Affairs about getting Hungarian residence permit. Kalmykov added that he purchased the documents for the convenience of traveling.

About the bond purchase, Kalmykov said that VolDan took care of everything, and the process lasted 3 months. According to Kalmykov, VolDan arranged the fingerprint taking at the Hungarian consulate in Moscow, and the residency permit was sent to him through a delivery service.

The Hungarian Golden Visa program

The law creating the Hungarian residency bond program, initiated by Antal Rogán, a powerful politician of the governing Fidesz party and now the head of cabinet of Prime Minister Viktor Orbán, was rushed through Parliament without substantial debate in 2012 and quickly became one of the most controversial initiatives of the Fidesz government. Under the scheme, those who invested 250-300 thousand euros in Hungarian state bonds were granted a Hungarian residence permit. Other European countries also have similar, so-called Golden Visa programs, which offer residence permit or even citizenship to foreigners in exchange for investment. Press reports have revealed that Russian businessmen close to president Putin obtained papers in Cyprus and Malta.

Hungary’s program differed from the Golden Visa schemes of most other countries in that applicants could get their money back: the investment was placed in a special government bond that would fully repay the amount after five years. The most heavily criticized aspect of the program was that foreigners did not invest in the residency government bonds directly but did so through designated intermediary companies with opaque ownership structures, handpicked by the Economic Committee of the Hungarian Parliament, led by Rogán Antal at the time of the program’s creation. Dealing with Hungarian residency bonds was a windfall for these companies, which charged service fees ranging between €40,000 and €60,000 per investor. Moreover, the companies were able to buy the bonds from the state at a discount. Hungarian journalists have discovered several links between the main beneficiaries of the residency bond program and Hungary’s political elite.

Between 2013 and 2017, when the Hungarian program was suspended, the state handed out nearly 20,000 permanent residence permits for residency bond investors and their family members. While Chinese nationals were the predominant customers, permits were also issued to hundreds of Russians and dozens of immigrants from the Middle East and Africa. The Hungarian authorities, citing privacy concerns, have been resisting calls for disclosing the names of the bond buyers.

Roman Shleynov is the investigations editor of Russian newspaper Novaya Gazeta.