Freedom Holding Corp, whose shares are traded on the American stock exchange Nasdaq, has come under scrutiny from the US Department of Justice and the US Securities and Exchange Commission (SEC) over compliance issues, insider share movements, and an offshore affiliate linked to sanctioned individuals.
US MEDIA HAVE REPORTED THE START OF AN INVESTIGATION INTO FREEDOM HOLDING CORP.
According to the American television channel "CNBC" citing an investigation by Hindenburg Research, four months after the US imposed sanctions on Russia, Timur Turlov founded a private company in Belize, "FFIN Belize", later acknowledging in documents that this organisation helps Russians bypass "restrictions" on access to US markets.
In 2015, as a newly registered US company, Freedom Holding expanded its business by buying a bank from Vladimir Putin. Freedom Finance in Russia and Kazakhstan also helped divert funds from banks that had been sanctioned.
For example, in April 2022, the US imposed severe international "full blocking sanctions" on Alfa Bank and froze its assets. A few days later, Freedom openly advertised a simple service to help clients withdraw assets from Alfa Bank.
Representatives of the Russian "financial elite" linked to "Alfa Group" were sanctioned by the US Treasury Department in August 2023. Despite this, FFIN Belize still advertises the ability to send roubles via Alfa Bank, allowing clients to easily transfer money through the Russian bank directly to the US stock market.
It is noted that a few months after the imposition of "full blocking" sanctions on VTB Bank, its clients shared advice on a Telegram channel on how to transfer money via Freedom Finance in Kazakhstan. Similarly, Tinkoff Bank, which is on the sanctions list, also recommended its premium clients to open accounts remotely with Freedom Bank Kazakhstan.
According to the media, in addition to evading sanctions, Freedom Holding appears to be involved in a wide range of corporate abuses involving the same Belizean company, which is privately owned by its chairman and CEO.
The investigation states that Freedom Holding reported an increase in related-party revenues from FFIN Belize by 306% since 2020. Furthermore, in the 2023 financial year, fee and commission income from FFIN Belize amounted to $196.3 million. Freedom Holding channelled this money back to FFIN Belize through margin loans totalling $289 million.
According to the latest annual financial reports of Freedom Holding Corp, 25% of the company's stated revenues come from this related party in Belize. FFIN Belize has not provided its own financial statements since 2020, despite being managed by the chairman and CEO of Freedom Holding.
The lack of related-party disclosure led to Freedom Holding's auditors subsequently being barred and fined by the Public Company Accounting Oversight Board (PCAOB) for violating auditing standards.
Finally, Freedom Holding Corp itself has been subject to numerous sanctions from regulatory bodies. Four Freedom entities in Kazakhstan were issued 244 fines, resulting in 121 sanctions being imposed on charges ranging from money laundering to terrorist financing.
Overall, as US media noted, Freedom Holding Corp has displayed a staggering number of red flags concerning nearly every category of financial crime warranting investigation.
TIMUR TURLOV HAS DENIED THE INVESTIGATION INTO FREEDOM HOLDING CORP.
The majority owner of Freedom Holding Corp, Kazakh billionaire Timur Turlov, commented on the information about the inquiry launched against the company, calling it all an information war. In his opinion, interested parties are engaged in negative PR with the aim of tarnishing the reputation of both the company itself and its representatives, using corrupt media and blatant manipulation of facts.
On social media, Timur Turlov outlined the scheme of this information war in detail. The head of Freedom Holding stated that it all begins with leaks of information to the media, while simultaneously complaints about alleged legal violations are sent to regulators and law enforcement agencies, and before the authorities can verify the facts, the public is told about the start of a "high-profile investigation".
"Just recently, a highly respected journalist, preparing material based on the report, almost took my 'interview' from my fake Twitter account, complete with a 'blue tick'. Yes, it's simply sold to anyone now. That account contacted him just as the material was being prepared, which it couldn't possibly have known about! It all came to light at the last moment!" - Turlov complained.
The businessman noted that the holding has received clean audit opinions and works with normal first-tier banks in Europe and the US. Furthermore, he denied the information that Freedom Holding Corp's shares fell after the publication by the "CNBC" channel. Turlov also emphasised that every time someone manages to create a high-profile news story, the media publishes dozens of articles supporting the narrative, aiming to sow confusion.
"'Experts' start discussing the dangers of possible consequences. The craftiest 'PR people' push texts into Telegram, trying to pit you against some competitor. So much energy and talent, if only it could be channelled into peaceful endeavours! We would have taken the internet, the stock market, and corporate lending to a new level! But instead, those who should be protecting the reputation of their jurisdiction are applying all their efforts to achieve a loss of trust and to take revenge", wrote the head of Freedom Holding.
In conclusion, Timur Turlov deduced that the witch hunt directed at Freedom Holding Corp does not stem from personal motives on the part of experts and media, but rather has a mercantile nature and financial self-interest.
"I often thought for a long time that many 'experts' dislike me completely selflessly and join in the mud-slinging for the hype. But then I learned that this is not the case at all. Many people make money from it. Not all, but many. And, in general, everyone is ready to cross over to the light side. It's just that no one pays for positivity around here, but they pay for negativity. Therefore, the best way to get the attention of a major entrepreneur is to provoke them into coming to negotiate", the businessman concluded.