Financial consultant sentenced to 5 years in prison in foreign bribe scheme to European Bank official

Dmitrij Harder, former head of Chestnut Consulting Group, Inc. and a Russian naturalized German citizen and permanent resident alien in the U.S. was sentenced to 5 years in prison in a $3.5 million bribery scheme paid to a European Banking official, who has a joint UK Russian citizenship. The indictment said that Harder made corrupt payments to a senior banker working at the European Bank for Reconstruction and Development (EBRD), Andrey Ryjenko . EBRD was established in 1991 to finance market boosting projects in the former Soviet Union, now Russia. In June, Ryjenko was found guilty of conspiring to make or accept corrupt payments and sentence to 6 years by a UK Court.

Harder pled guilty to two violations of the Foreign Corrupt Practices Act (FCPA). The government says that the European bank apprved applications for two of Harder’s clients, Russian businesses Irkustsk Oil and Gas and Vostok Energy. One received an $85 million equity investment plus a $104 million loan. The other received a $40 million equity investment and $60 million loan. Chestnut Consulting got $8 million in fees from the clients for the bank’s approval of the applications. The moneys were paid to Tatjana Sanderson, sister of Ryjenko.

Russia owns 4% of the bank with a $1.2 billion contribution to EBRD’s $30 billion share capital. The US is a 10% shareholder and UK holds 8.7%. In 2014 the ERBD board voted to impose sanctions on Russia in line with US and European Union Sanctions for incursions into the Ukraine. The Russian portfolio in the bank was cut. Sanderson was not sentenced as she was deemed unfit mentally to stand trial. The case is unusual in that few cases of foreign bribes have resulted in significant jail time and in addition, there are two major Russian companies who benefitted from some of the transactions in the form of equity positions and loans.

Jeffrey Newman represents whistleblowers.