Russia’s richest oligarch, Leonid Mikhelson, had a private jet secretly registered in the United States and he did it with the help of Bank of Utah, based in Ogden.
The community bank, with 19 locations, has a side business creating aircraft trusts, largely for people who don’t want their names on any public documents. Such transactions, while legal, have been criticized by some members of Congress and federal auditors as major security risks.
The transaction involving Mikhelson, who is close to Russian President Vladimir Putin, is the subject of a New York Times article published Monday as part of the “Paradise Papers” leak, where a cache of records from Appleby, an offshore law firm, were leaked to a German newspaper, which then brought in the International Consortium of Investigative Journalists.
Bank of Utah manages at least 1,390 aircraft trusts, making millions in fees. This is not the first time one of its trusts caused an international stir. In 2014, a small jet was spotted at the airport in Tehran, Iran, that was registered to Bank of Utah, which may have violated of U.S. sanctions.
At that time, Bank of Utah spokesman Scott Parkinson wouldn’t comment on the jet’s ownership or the details of the trust, citing contractual and legal obligations, but he did promote the bank’s aircraft trusts.
“In terms of our bread and butter, we’re very much a commercial lending, small-business bank,” Parkinson told The Salt Lake Tribune. “But this is a line of business we’ve chosen to specialize in that allows us to compete with larger banks.”
The New York Times interviewed Branden Hansen, the bank’s chief financial officer, who said the bank considered whether “to shut this whole thing down” to avoid risks to its reputation following the incident in Iran.
But the bank decided to keep offering the trusts, though with more oversight.
The bank confirmed that the shell company Mikhelson used had been a client since 2013, but said that his name wasn’t attached to any documents it had.
The Times reported that the ownership chain of Mikhelson’s plane started in Panama and eventually went through six countries before the trust was created at Bank of Utah.
The bank filed a registration renewal with the Federal Aviation Administration last summer. Hansen said this particular trust would likely not have been approved under new standards.
“Russian involvement would score as a high risk by itself,” he told The Times.
The bank issued a statement Monday, which in part, said: “Bank of Utah works diligently to follow all FAA and bank regulations and procedures, and continues to update policies and practices to be the best in the industry. If any account is found non-compliant by the FAA or if questions arise, Bank of Utah works hand-in-hand with the FAA and takes immediate, appropriate action. Also, the Bank’s internal risk-management processes are considered to be “a living and breathing methodology,” always growing to implement best practices and enhancing our risk-assessment of countries as the world changes.“