How a London fund with a thorny history in Russia won global influence
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
In December 2018 Atanas Bostandjiev stepped aboard a Bombardier Global 5000 private jet at Moscow’s Vnukovo airport and flew to London.
The following afternoon the shaven-headed Bulgarian financier gathered the executives at his investment fund in their glass-fronted offices close to Savile Row.
Ahead of the meeting, one of his employees had drafted a memo on a sensitive issue: how to buy influence in politics.
Gemcorp, the emerging markets investment group Bostandjiev had founded four years earlier, was seeking to build “informal channels of communication at a senior level of government” in a range of countries, including some of the most corrupt in the world.
“Which individuals we target for this role will vary from country to country, and will depend on our range of contacts and the nature of the regime,” the memo said, according to a copy seen by the FT.
But British politicians were a special case.
“While there is certainly a deep pool of ex-ministers and officials ready to take our money in return for some vague ‘access’ to government, in most cases they add little value . . . Of course”, the note concluded, “if money is no object we can easily buy access via contributions to Conservative/Labour funds”.
Six years later Gemcorp is one of Europe’s most daring emerging markets funds, having made $6bn of bets on some of the world’s riskiest frontier economies. And as it has grown it has found there is no shortage of UK politicians and ex-government officials willing to join its payroll.
As senior members of the Conservative government seek shelter in the private sector ahead of an expected landslide defeat in the coming election, over the past 12 months Gemcorp has hired several former senior Tory politicians and officials — including some who until recently had access to the inner workings of Downing Street.
These include former UK prime minister Boris Johnson’s chief of staff, Lord Edward Lister, ex-investment minister and City grandee Lord Gerry Grimstone, and Gaj Wallooppillai, a former chief of staff to successive Conservative party chairmen.
These alumni of the Conservative party now work for a company that engaged in activity seemingly aligned with Vladimir Putin’s diplomatic and commercial push into Africa, as the Kremlin sought to minimise the impact of western sanctions.
Gemcorp launched with a fund backed by two Russian oligarchs with links to Sergei Chemezov, the powerful boss of Rostec, Russia’s state weapons giant. He is a close friend of Putin and served with the Russian president in the KGB.
One of these two founding investors was last year sanctioned by the US government for being “a financier to Russian President Vladimir Putin and Rostec State Corporation head Sergei Chemezov”.
Bostandjiev met the head of Russia’s sanctioned state weapons export agency in Africa in 2018 as Moscow sought to ramp up arms sales to the continent, and cultivated relationships with powerful Angolan generals.
This investigation by the Financial Times, in co-operation with the Dossier Centre, a London-based Russian opposition research organisation, is based on leaked documents, financial and legal filings, Russian flight records, and interviews.
In 2022 Gemcorp announced it had cut its ties with Russia the previous year and closed down its office in Moscow. But the origins of its success show how money from businessmen who are now alleged to be connected to the Kremlin was used to establish a foothold in Britain’s financial sector.
It also raises fresh questions about the willingness of officials from Britain’s ruling party to accept paid roles in companies which, until the year before Putin’s full-scale invasion of Ukraine, had close ties to Russia.
Gemcorp said that neither it nor Bostandjiev have ever acted in support of the Russian state, broken sanctions, or engaged in deals for military equipment or with Kremlin-backed companies. It said the lobbying strategy memo drafted by its employee in 2018 was never discussed or implemented, and was not representative of its or Bostandjiev’s views.
The early life of Bostandjiev, who was born in Communist Bulgaria in 1975, is a story of how the post-Soviet world opened up to western finance after the cold war. US-educated, Russian-speaking and highly ambitious, Bostandjiev rose up the ranks of emerging-market investment banking at Merrill Lynch and then Goldman Sachs, where he made partner in his early 30s.
His big break was being headhunted to lead VTB Capital, the international arm of VTB, the Russia state-owned lender.
Moving from Goldman to a Kremlin-linked lender was not the most obvious choice for an ambitious young banker. “As you can imagine, it is quite a change switching from one of the leading US investment banks to a government-owned financial institution,” Bostandjiev said in an interview not long after joining VTB.
The Russian bank for years had been used as a tool for the Kremlin to increase its influence in emerging markets by arranging financing with diplomatic strings attached, according to people with knowledge of the bank at this time.
They said it was common for Sergei Lavrov, Russia’s gruff, veteran foreign minister, to ring up senior executives to request deals for particular countries, some relating to the financing of sales of Russian military equipment. VTB has always denied the Russian state had any influence on its business decisions.
In the years Bostandjiev was in charge of VTB Capital in London, the bank was particularly focused on business in Africa, especially with countries with historical ties to Russia such as Angola.
VTB Capital during this time also worked closely with large Russian companies including Chemezov’s Rostec, helping the state arms conglomerate, with interests in selling military equipment ranging from Kalashnikovs to Sukhoi fighter jets, bid for investments in natural resources projects in countries like Uganda and the Democratic Republic of Congo.
Gemcorp said that Bostandjiev’s actions at VTB were never influenced by the Russian state, and he had never had any professional contact with Rostec or Chemezov.
In February 2014, Vladimir Putin decided to annex Crimea, prompting a diplomatic crisis between Russia and the west. In response, the US Treasury imposed sanctions on VTB Capital’s parent company, VTB Bank, as well as some of its important state-owned clients such as Rostec, severely curtailing their ability to deal with international investors.
With his employer’s international ambitions in tatters due to sanctions, Bostandjiev was quick to get out.
That same month he announced he was resigning from VTB, and later in 2014 he launched Gemcorp — a new emerging markets investment fund based in London with a focus on doing private lending to governments in Sub-Saharan Africa.
Bostandjiev was backed with $250mn of seed money from two Russian businessmen, Albert Avdolyan and Sergei Adoniev, both with long-standing ties to Chemezov and Rostec, which had backed a Russian telecoms company they founded.
Avdolyan later invested alongside Rostec in several projects in Russia, and he has described himself to the FT as a family friend of Chemezov who “respect[s] his human qualities and rich life experience”. Chemezov has chaired Avdolyan’s charitable foundation, which has worked on projects in the Rostec chief’s home region of Irkutsk.
He said his companies had always acted in accordance with sanctions and had never acted for the Rostec CEO.
Adoniev, who was put under US sanctions last year for being a financier for Putin and Chemezov, denies the allegations in the sanctions. He exited the companies through which he and Avdolyan invested in Gemcorp in 2017.
Gemcorp told the FT that it has never managed money either directly or indirectly connected to Putin or Chemezov, and said neither Avdolyan nor Adoniev ever had any influence over its business.
With Gemcorp up and running in London, Bostandjiev’s new fund began cultivating relationships in key markets, including in Russia.
It was an opportune time for a fund like Gemcorp to arrive in Moscow. With western markets less accessible following Putin’s annexation of Crimea in 2014, the Russian leader declared it a strategic priority for state-owned companies to pivot towards Africa.
Gemcorp opened an office in the Imperia Tower, a 60-floor building in the Moscow International Business Centre, and began to hire a local team.
Gemcorp’s most senior executive there soon demonstrated his ability to rub shoulders with Putin’s inner circle of siloviki, or strongmen forged in Russia’s intelligence agencies.
In 2016 the then head of Gemcorp in Russia took part in a charity basketball tournament in Moscow. His team’s coach that day was Sergei Ivanov, who at the time of the game was Vladimir Putin’s chief of staff and a career KGB spy who had worked in Africa.
Bostandjiev during this time was making regular visits to Russia — often travelling there for a day or less.
Data from Russia’s Sirena-Travel flight booking system, which was leaked during the Russia-Ukraine war and shared with the FT by the Dossier Centre, shows that in 2016, the year of the basketball match, the Gemcorp boss flew to Russia nine times.
The FT has cross-referenced Bostandjiev’s Russian travel records with data from Flightradar24 tracking the movement of Gemcorp’s corporate jet, controlled through a Maltese company called Sabazios Ltd, and owned by a Gemcorp entity in the Cayman Islands.
This shows that from the end of 2018 up until the invasion of Ukraine in 2022, the Gemcorp-owned Bombardier Global 5000 travelled to Russia over 30 times, to destinations ranging from Moscow and St Petersburg to Chulman, Khabarovsk, Sochi and Novosibirsk.
Soon Gemcorp’s Moscow office was growing rapidly — a rare feat for a London-based fund.
Gemcorp in 2018 launched a Russian grain trading operation, which the following year posted revenues of Rbs7bn, before more than tripling sales in 2020 to Rbs24bn, according to Russian corporate filings, vaulting it into the country’s top 20 largest grain traders by sales.
Gemcorp’s ties to Russian money also began to attract unwanted attention. In 2017 Barclays bank in Jersey sent a report to the US Treasury’s FinCEN unit, which monitors suspicious financial activity. Banks are obliged to routinely file such reports confidentially to law enforcement to highlight money flows they deem suspicious.
The report, included in leaked documents which formed part of the International Consortium of Investigative Journalists’ FinCEN Files investigation, raised concerns about Gemcorp’s Russian connections. It said the firm had, at that time, a “vast organisational structure which has numerous management companies that do not appear to serve any legitimate business or economic purpose”.
Gemcorp said it had never previously been made aware of the report. It noted that FinCEN receives around 2mn reports on financial institutions every year, and there had been no regulatory investigation of the firm in response to it. It also said that its commodities business never relied on any connections with Russian officials, and that it was eventually closed down for not being profitable.
Gemcorp added that the jet used by Bostandjiev was primarily used for corporate purposes, but was also on occasion flown for personal use. It said there were no restrictions on flying to Russia at the time.
While Gemcorp was building its presence in Russia, the real engine of its growth was in Angola, Africa’s second-biggest oil producer.
In June 2018 Bostandjiev flew from the UK to Moscow. One of the people he was meeting in the Russian capital was an important business contact from Angola: Leopoldino Fragoso do Nascimento, an Angolan military man and powerbroker commonly known as “General Dino”.
Days later the Bulgarian and General Dino watched from a VIP box at the Luzhniki Stadium as France defeated Croatia 4-2 in the World Cup final. Gemcorp told the FT that Bostandjiev “did not accompany” the Angolan general to the match, but “was sat in close proximity to him”.
Three years before the two men enjoyed the football together Angola had suffered a severe financial crisis after an oil price collapse and concerns about corruption, and all but lost access to international capital markets.
Gemcorp, backed in part with money from Russian businessmen, was one of the few foreign investors not to flee.
Its faith was quickly rewarded. Soon Gemcorp had established itself as one of the top investors in Angola. By 2018, it had supplied more than $4bn to the Angolan state, and was already being paid back hundreds of millions of dollars in interest on its loans.
Gemcorp’s influence in Angola grew to such an extent that later that year, according to documents seen by the FT, Bostandjiev was confident enough to pitch his investment fund as an exclusive adviser to the finance ministry to negotiate with the IMF. (Angola went on to secure a $3.7bn IMF bailout later that year, but did so without Gemcorp’s help).
Soon a different opportunity would present itself for a fund like Gemcorp that straddled Russia and Angola: Putin’s pivot to Africa.
The centrepiece of Putin’s new vision for Africa as a growth market for Russian investment, military sales and diplomatic weight would be the inaugural Russia-Africa summit held in the Black Sea resort of Sochi in October 2019.
A critical part of the Sochi conference’s success would be wooing Angola, a country with deep historical ties to the Soviet Union and an important customer for Russian arms. In the year leading up to the event Russia’s diplomats engaged in a burst of activity focused on Angola.
The offer of weapons would be one of Putin’s most powerful tools in his efforts to woo African leaders. And the man the Kremlin relied on to market Rostec’s fighter jets, helicopters and assault rifles to the continent was Alexander Mikheev, the director-general of the state arms export agency Rosoboronexport.
The US put Rosoboronexport — which is fully owned by Rostec — on its sanctions blacklist in September 2015, in an attempt to limit its ability to sell arms overseas.
In December 2018 Mikheev travelled to Angola, according to Russian flight records provided by the Dossier Centre. Gemcorp’s private jet flew to Angola on 4 December, with Bostandijev’s stay overlapping with Mikheev’s visit, public flight tracking data confirms.
The following day, Russia’s top state arms dealer visited Gemcorp’s office in the Angolan capital where he met with Bostandjiev, three people with knowledge of the meeting said. Gemcorp staff also met with Russian officials in preparation for the meeting, they added.
Gemcorp told the FT that Bostandjiev had been “briefly introduced” to Mikheev once “in the presence of other people” in Angola at this time, but said it could find no evidence that the Russian arms dealer ever visited the company’s offices.
The fund said the Angolan government had asked it to finance “the supply of non-lethal military equipment from Rosoboronexport” using a $1bn credit facility provided by the fund.
It added that “it declined on the basis that Rosoboronexport was subject to US sanctions,” and that Gemcorp had never been “involved in any transaction in Angola that involved Rosoboronexport and illegality”.
Gemcorp said that if any other “meetings or facilitations” had taken place between Russian officials and Gemcorp employees, then Bostandjiev had no knowledge of them and they could only have been authorised by its local staff acting on their own account.
Mikheev was not personally under western sanctions at the time. In 2022 he was sanctioned by the US, EU and UK. Gemcorp said Bostandjiev’s meeting with the Rosoboronexport boss broke no laws or rules, and he has “no recollection of any other meetings with representatives of Rosoboronexport”.
A few months after the meeting, in April 2019, Angola’s president João Lourenço, a former defence minister who in the Soviet era had studied at the Lenin Military-Political Academy, made his first state visit to Moscow, where he was warmly welcomed by Putin.
During Lourenço’s visit, the Angolan president announced that his country wanted “Russian weapons and other hardware crucial for the protection of our territory”, declaring that “this is a field where we would like to build up co-operation with Moscow.”
On the same day that Lourenço arrived in Russia, Gemcorp’s private jet landed in Moscow, according to flight tracking data. Gemcorp confirmed to the FT that Bostandjiev did fly to Russia where he met the Angolan president and other Angolan officials “to discuss transactions contemplated with Angola but unconnected with Russia”.
That October, more than 40 African heads of state, including Angolan president Lourenço, travelled to Sochi to hear Putin outline his vision for a new era of collaboration with Moscow. On the eve of the summit Angola announced it had received several Su-30K fighter jets from Rosoboronexport.
Also in attendance at the conference was Bostandjiev, who had been invited to speak at the event. There Gemcorp announced a deal with the Russian state-owned banks VEB and Sberbank to provide trade financing to African countries.
Gemcorp said the Sochi conference had been attended by “a great number of senior government officials from all over Africa”, as well as other business leaders and investors, and that “as an emerging markets investor, this was a good opportunity to meet such officials and discuss with them a number of ongoing projects.” The agreement announced between the Russian banks and Gemcorp was never consummated.
Several months after the Sochi conference, in early 2020, Gemcorp was awarded its most significant deal ever in Angola — a participation in developing a refinery in the oil-rich region of Cabinda, a critical infrastructure project which would slash reliance on expensive fuel imports. Gemcorp said this deal had no connection with Bostandjiev’s presence at the Sochi conference.
Things were less favourable for General Dino, the powerful Angolan with whom Bostandjiev had watched the World Cup final in Moscow in 2018.
In 2021 the US government imposed sanctions on the general for being a “former government official that stole billions of dollars through embezzlement”.
Gemcorp said that Bostandjiev had met General Dino several times but they were not close, and that Gemcorp had never engaged in any transactions with him. Nascimento did not respond to a request for comment.
By 2020 Avdolyan, the close ally of Rostec’s Chemezov, brought his relationship with Gemcorp to a close by redeeming his capital. This marked the end of the Mayfair-based fund’s connection with its seed investors, and by mid-2021 it had closed its Moscow office. But its relationship to Russia took longer to break off.
On January 12 2022, Nato’s secretary-general, Jens Stoltenberg, warned that there was “a real risk for a new armed conflict in Europe” as Putin amassed his troops on Russia’s border with Ukraine.
That evening Gemcorp’s corporate jet took off from Edinburgh airport and landed in Luxembourg, where it waited for just over half an hour before taking off again towards Russia. By early next morning, Bostandjiev was in Novosibirsk, in the midst of Siberia. He stayed in Russia for three nights, stopping over in St Petersburg.
Gemcorp said that Bostandjiev decided to travel to Russia because he was visiting a company the fund had invested in which had a facility in Siberia. That company, Gemcorp said, no longer has operations in Russia.
After war broke out a few weeks later, Gemcorp issued a statement in March 2022 saying it was “appalled by the tragedy taking place in Ukraine following Russia’s invasion, which we condemn wholeheartedly”.
Gemcorp says it no longer has any investors from Russia. It said its Russian investors fully redeemed their money in 2020 and their investment “went through stringent [Know Your Customer] and enhanced compliance checks”.
With Gemcorp having renounced its ties with Russia it has begun to pivot towards a new opportunity: the Middle East.
In doing so, it has hired a slew of former British officials and advisers tied to the Conservative party, some with deep connections in Saudi Arabia and the UAE.
These include Lister as a non-executive director, Grimstone as its chair, and Wallooppillai as its head of strategy. It also hired Simon Penney, Gemcorp’s new head of Middle East, who until 2023 was the UK’s diplomatic trade envoy to the region.
Contacted by the FT, each of the four said they had not engaged in lobbying on behalf of Gemcorp, and that they had conducted due diligence ahead of accepting their roles and were satisfied Gemcorp had no ties to Russia or individuals under sanctions.
Gemcorp said the former UK officials were hired to help strengthen its board, and not to lobby the government on its behalf.
Lister, it said, “has considerable experience in the Middle East and was employed by Gemcorp to use his extensive business contacts to assist the Company establish a regulated entity in the UAE”.
Gemcorp said its appointment of Grimstone, who is a member of Saudi Arabia’s Investment Council, was approved by the UK’s watchdog that monitors private sector jobs taken by former public servants.
It appears that the firm’s new strategy is bearing fruit. Last year Gemcorp announced that it had signed an agreement with the Saudi ministry of investment with the target of raising a new $1bn fund to deploy in the country.
In January the British government held a networking reception in Saudi Arabia. In attendance for Gemcorp was Penney, formerly the UK’s diplomatic trade envoy to the Middle East.
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