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Rep. Pascrell Responds to National Basketball Association With Evidence Of Prokhorov Business Dealings in Zimbabwe, New Allegations of Ties to Organized Crime

U.S. Rep. Bill Pascrell, Jr. (D-NJ-8) today responded to the National Basketball Association with a letter outlining the public record business dealings of Mikhail Prokhorov, the Russian billionaire and prospective owner of the New Jersey Nets.  The letter cites specific examples of Renaissance Capital’s business with individuals and entities that have close ties to the Mugabe regime.  U.S. economic sanctions in Zimbabwe have been in place since 2003.

Furthermore, the letter asks the NBA whether they have examined documents filed last year in the Southern District of New York alleging Renaissance Capital has had a long-standing relationship with Russian organized crime, and in particular, its ties to a scheme that led to the embezzlement of over $100 million from the Russian treasury.

The response from the NBA to Rep. Pascrell last week is attached.  The text of today’s letter is attached and follows below:

April 19, 2010

Mr. David J. Stern
National Basketball Association
645 Fifth Ave
New York, NY 10022

Dear Mr. Stern:

I am in receipt of a letter from Mr. Joel M. Litvin, the President of League and Basketball Operations, dated April 13th in response to my inquiry regarding the National Basketball’s vetting of Mr. Mikhail Prokhorov and his reported business dealings in Zimbabwe.  I appreciate the quick nature of your reply, although I must express my disappointment in the lack of seriousness which the NBA appears to be approaching these new and troubling allegations against Mr. Prokhorov and his business affairs.

Since I was first elected to the House of Representatives, I have been a member of the Human Rights Caucus, and followed closely the devastation and suffering that the regime of Mr. Mugabe has brought upon the people of Zimbabwe.  Consequently, I believe that any allegations that Mr. Prokhorov has engaged in sanction busting in Zimbabwe must be investigated with the seriousness and respect that the laws of the United States deserve.

While Mr. Prokhorov has categorically stated that he has no dealings whatsoever with anyone on the sanctions list in Zimbabwe, there is significant evidence to the contrary.   He is a 50% owner of Renaissance Capital, which in June 2009, reportedly sponsored an economic forum in Harare, Zimbabwe, and offered foreign investors special access to government officials, including those on the United States’ sanctions list.  Renaissance Capital is also reportedly a shareholder in CBZ Holdings, one of the largest banks in Zimbabwe.  The Government of Zimbabwe is the bank’s largest shareholder.

It is clear to me that Mr. Prokhorov has violated the spirit of the sanctions the U.S. has in place against the brutal regime of Robert Mugabe in Zimbabwe.   It is unlikely that anyone can do business successfully in the Zimbabwe financial services sector without engaging the Mugabe government and its henchmen.  Zimbabwe remains an emerging market with poorly defined institutional and regulatory environments which Mr. Mugabe has actively worked to dominate both politically and economically.

In  addition  to  the  concerns  raised by Renaissance’s connections to the Mugabe  regime,  we  have become aware of additional disturbing allegations made  against  Mr.  Prokhorov’s investment bank here in the United States.

Specifically, based on documents filed last year in the Southern District of New York, it appears that Renaissance may have long-standing working relationships with Russian organized crime. The court filings in New York describe  in  detail Renaissance’s connection to a complex tax rebate fraud in  Russia  through which it is believed at least $106.9 million in taxes paid  from  a  Renaissance-managed investment fund was later embezzled from the  Russian  treasury  through  the  payment of fraudulent tax refunds. In addition, the New York filing highlights an apparent working relationship between senior executives of Renaissance and the convicted Russian mobster, Dmitri Klyuyev, who has been described in Russian courts as a “business partner” of Renaissance who had “regular dealings” with senior Renaissance executives. It is alleged that the proceeds of the $106.9 million fraud and similar schemes were ultimately channeled out of Russia via U.S. banks based in New York.

I make no judgments as to whether Mr. Prokhorov violated our laws, which is why I have asked the Secretary of the Treasury to investigate his business in Zimbabwe and make a determination.  However, your assertion that because Mr. Prokhorov is a Russian national he is immune to the laws of our land is unfounded.  Mr. Prokhorov will most certainly have U.S. business interests after becoming the owner of the New Jersey Nets.  Renaissance Capital operates a US subsidiary and leases office space in New York.  To my knowledge, Brooklyn, not overseas, is the only possible future home for the Nets under consideration, so if Mr. Prokhorov hopes to attend games he will certainly be within the United States’ jurisdiction.

In the face of all this information, which was gathered only from public documents and press reports, I find the NBA’s apparent non-investigation of Mr. Prokhorov’s businesses very troubling.  I would assume that a business relationship between a potential owner and a country subject to U.S. sanctions and links to organized crime would raise red flags in your vetting process.  However, according to press reports, a Renaissance Capital spokesman has stated that the company was not even contacted by the NBA’s investigators.  Your most recent letter brushes off these accusations as if they are of little importance or merit, as if the only qualification to be an owner of an NBA franchise is to not be found guilty of violating our sanctions laws.  

I expect the NBA to hold its business partners to a higher standard.  The NBA occupies a unique place in the public life of the United States, and every team in the league – and their owners – are holders of a special trust.  The connections drawn between Russian organized crime and Mr.  Prokhorov’s Russian investment bank, as well as the prior allegations of sanctions busting in Zimbabwe deserve the close scrutiny of your organization.

I would like to inquire again as to the nature of your vetting process into Mr. Prokhorov’s business and finances, and whether his business activities in Zimbabwe and his investment bank’s relationship to Russian organized crime were scrutinized by the League.

Thank you.  

Bill Pascrell, Jr.
Member of Congress


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