Nov 16, 2022
Alias-Using Financier Tied to Kyrgyz Bank’s Collapse Joins UK Fintech’s Board
(Bloomberg) -- In Kyrgyzstan, Mikhail Nadel is known for his alleged role in a political and banking scandal that shook the central Asian country. In the UK, the financier has just joined the board of an authorized payments firm.
Nadel, 53, using the name Mikhail Strogonov, became a director of Dzing Finance Ltd. on Nov. 1, according to a filing with Companies House. He helped incorporate the London-based firm in 2018 but hasn’t served on its board since then despite helping to run the business, Bloomberg reported earlier this year.
Dzing is among hundreds of electronic-money institutions, or EMIs, that have been authorized by the UK’s Financial Conduct Authority in recent years. Approved to hold customer funds, issue e-money and process payments, they now help to move about £1.4 billion ($1.7 billion) every day, according to the most recent data.
But the fast-growing, lightly regulated sector has drawn questions about its corporate governance and whether regulators are paying enough attention to controls and who’s in charge.
EMIs have to tell the FCA when they’re adding a new director or senior manager and must disclose whether the person has been convicted of any criminal offence or the subject of any related proceedings. The regulator declined to comment on whether Dzing had disclosed details of the Kyrgyzstan case.
“The FCA expects high standards of conduct, character and propriety from those who work in the financial services industry,” a spokesperson for the regulator said in an emailed statement. “This remains a key focus for us in our supervision of firms and their cultures.”
Dzing said in an emailed statement that internal staffing arrangements are confidential but that the company is “confident that all relevant information was presented to the FCA prior to Mr. Strogonov’s appointment.”
Nadel was chairman and controlling shareholder of Kyrgyzstan’s biggest bank, AsiaUniversalBank, or AUB, during the first decade of the 2000s. Authorities seized the lender, which was known for its links to then-President Kurmanbek Bakiyev and his son Maxim, in 2010 amid a political crisis that saw that the Bakiyev regime collapse.
The banker was later convicted in absentia of fraud and money laundering and sentenced to 16 years in jail. Nadel has denied any wrongdoing at AUB and has always maintained the allegations against him were malicious and politically motivated.
A lawyer for Dzing previously told Bloomberg that Nadel officially changed his name to Strogonov -- his mother’s maiden name -- several years ago. The Nov. 1 filing lists Nadel as a “former” name. His LinkedIn profile still uses Nadel, however. The lawyer added that he uses Nadel for private affairs but switches to Strogonov for business matters.
When Nadel helped to found Dzing in 2018 under the Strogonov name, he described himself as a Russian based in Italy. He is now based in Israel with Israeli nationality, the filings show.
While Nadel helps to oversee Dzing, the company is owned by Tatjana Orlova, the former wife of Russian fishing billionaire Vitaly Orlov. The firm deals in payments and digital wallets through a partnership with Mastercard Inc., according to its website. Jim Issokson, a spokesman for the global payments giant, confirmed the relationship and didn’t comment further.
Nadel developed close ties to the Bakiyev regime during his time at AUB until an uprising in April 2010 triggered its downfall. The lender was used for “large-scale criminal activities” and was “likely insolvent,” the International Monetary Fund wrote in 2011.
“He was a crucial part of the political elite’s self-enrichment scheme, which gave him a substantial amount of influence over Kyrgyzstan’s domestic and foreign policy,” said Temur Umarov, a fellow at the Carnegie Endowment for International Peace who focuses on Central Asia. “AsiaUniversalBank was known to be used as a main instrument of money laundering by the political elite of Kyrgyzstan.”
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