Theft, not “Risk Shifting” — Debunking bad narratives

An article by The Insider and an interview of Andrey Zayakin with Alexander Plyushchev featured two very odd—and in my view flatly wrong—narratives.

Since they’re spreading, I’d like to comment briefly.

The first narrative concerns asset transfers out of Probusinessbank. They’re described as “shifting risks onto shareholders and depositors,” known as “risk shifting,” or “privatizing gains and socializing losses.”

That description is fundamentally incorrect.

In this case there was no “risk shifting”; we’re looking at straightforward theft.

The example in The Insider illustrates this perfectly. Wonderworks, controlled by Leontiev, received USD 360 million in loans from affiliated parties, notably using funds siphoned from the bank. The company didn’t show losses—on the contrary, it reported USD 190 million in profit. Yet the funds disbursed as loans never made it back to the bank. In effect, shareholders “privatized” not only the profits but the principal itself. Everything was privatized.

This isn’t “risk shifting,” it’s theft.

Moreover, the schemes were legally tailored precisely to make this theft possible. Formally, loans were issued to offshores with no operating activity, no collateral, and no guarantees—creating no incentives for recipients to repay, and leaving the bank without practical means of recovery. The only incentive to return any money at all would be in a contrived scenario: “issue a subordinated loan to patch capital, attract even more funds, and then steal even more.”

All three offshores had no operating activity and no balance‑sheet assets—just accounts from which any funds could be pushed elsewhere before default, leaving the creditor bank with nothing.

The Ambika and Merrianol setups were even more absurd: if an offshore didn’t repay, the bank’s assets held in brokerage accounts, equivalent to the offshore’s debt, simply passed to the broker. Thus, the offshores could choose never to pay. Repayment became optional—if the offshore didn’t want to return the funds, there were no consequences for it or its owners; the bank’s assets just went to the broker. How convenient.

In essence, the bank lost its assets either way unless the shareholders voluntarily decided to return the stolen funds.

“Risk shifting” might be relevant if shareholders had taken loans under personal guarantees or collateral, implying obligations to repay, and then invested in risky assets. But that wasn’t the case here.

The second false narrative is: “we can’t confirm theft because the money disappeared without a trace.”

Given the illegal nature of the schemes (including repeated regulatory breaches, concealment in reporting, lying to the regulator, and the absence of reserves) by which bank money covertly passed to its shareholders and didn’t come back, this is akin to saying: “Burglars illegally broke into my home at night and stole my TV, but we cannot establish the fact of theft because the TV disappeared without a trace.”

I honestly don’t know how to comment on that.

It’s very, very strange that such narratives appeared in the article and interview.

Let me add why this can’t be risk shifting from a technical perspective.

In these deals the bank’s assets were stolen at deal inception; there was no true market risk for the bank, because the future payoff to the bank on these positions didn’t depend on market prices, had near‑zero deltas to anything market—indeed non‑market as well—and was approximately zero (aside from minor coupon flows in some transactions).