Russia sues Bank of New York for $22.5 billion

[december]

Russian customs service sues Bank of New York for $22 bln

The Federal Customs Service of Russia
http://www.customs.ru/en



MOSCOW, May 17 (RIA Novosti) - Russia's Customs Service filed a suit with the Moscow Arbitration Court against the Bank of New York, a global leader in securities servicing, for $22.5 billion in damages, the service's lawyer said Thursday.

"In 1996-99, the bank organized an illegal scheme to launder the money received for Russian exported goods, which caused damages of $22.5 billion to the state," Maxim Smal said from the courtroom.

The Bank of New York dismissed the claims Thursday as unsubstantiated, saying it would appeal them.

"Based on our knowledge of the facts, we believe any such suit would be totally without merit, if not frivolous, and we would expect to defend it vigorously," the bank said in a statement.

The Bank of New York has been associated with a series of sensational cases. The bank managed the U.S. correspondent accounts of Incombank, formerly Russia's second-largest bank, which was declared bankrupt in the late 1990s. Bank employees were suspected of assisting Incombank's controversial activities, which allegedly led to its collapse.

Expert comments

Russian experts expressed surprise at the sum of the suit. "This is unprecedented -- $22.5 billion is a huge sum," said Pavel Medvedev, first deputy chairman of the lower house's committee for credit organizations.

Yevgeny Nadorshin, senior economist at the Trust investment bank, concurred with Medvedev. "This sum is really enormous, and this is why it is unlikely to be charged," he said.

Russian media on case history

Russian media said Thursday the Bank of New York case was the first "Russian mafia" inquiry that came into the focus of American justice in the late 1990s.

Russia heard about the case in August 1999 from publications in USA Today and The New York Times. The reports cited anonymous FBI sources as saying the bank had helped launder up to $10 billion from Russia and Eastern Europe in 1996-99.

There was speculation that the money could have included Russian loans from the International Monetary Fund, the Russian business daily Kommersant said.

In September, Russian law enforcement officials visited the U.S. to check the reports. But Russia's chief delegate, Deputy FSB Director Viktor Ivanov, said the FBI had refused to provide evidence in the case.

Prosecutor checks in Russian banks suspected of illegal money transfers overseas revealed no violations.

Investigators said $7 billion of Russian money had gone through the Bank of New York, but it later transpired that the funds did not belong to the "Russian mafia," but were untaxed profit of Russian exporters. Prosecutors said Russian citizens and companies had made more than 160,000 illegal transfers abroad in the three and a half years.

In September 1999, a federal court of New York opened criminal proceedings against Lucy Edwards, vice president of the Bank of New York's London branch who dealt with clients in Eastern Europe, and her husband Peter Berlin, a Russian emigre and head of the Benex and Becs companies.

The couple were accused of unlicensed bank operations and assistance in money laundering through the Bank of New York.

Edwards and Berlin pleaded guilty and got away with a brief arrest and insignificant fines. They acknowledged charges of illegally transferring Russian money and hiding it in offshore accounts for $1.8 million in kickbacks.

In November 2005, the bank itself pleaded guilty of violating U.S. laws on control over financial flows, and was ordered to pay a $38 million fine.

Maxim Smal, the Russian Customs Service lawyer, said Thursday the suit had been filed "on the basis of the agreement acknowledging guilt, which the Bank of New York had signed with the U.S. government, and on the basis of Lucy Edwards accepting her guilt."

http://en.rian.ru/russia/20070517/65663439.html


Russia sues Bank of New York for $22.5 billion

Tatyana Ustinova and Jonathan Stempel, Reuters
Published: Thursday, May 17, 2007
By Tatyana Ustinova and Jonathan Stempel

MOSCOW/NEW YORK (Reuters) - Russia's federal customs service said on Thursday it sued Bank of New York Co. and was seeking $22.5 billion in damages related to alleged money laundering in the late 1990s.

From 1996 to 1999, bank employees helped create a "system through which conditions were made for companies and Russian banks to not make the proper payments, thus inflicting a loss against the Russian Federation," Maxim Smal, a lawyer who said he works on behalf of the Russian agency, said in a telephone interview.

READ MORE -

http://www.canada.com/nationalpost/financialpost/story.html?id=b72083ba-a3a9-4bd9-88fe-bcce314f0560&k=14137

http://www.brandsoftheworld.com/brands/0002/1157/brand.gif

http://z.about.com/d/gonyc/1/0/F/I/building04.jpg

[december]

Bank of New York accused by Russians of money laundering

Tom Bawden in New York

Russia’s customs service said that it was suing the Bank of New York for $22.5 billion (Ј11.3 billion) in compensation for an alleged money-laundering scheme in which US companies colluded with Russian banks to defraud its Government.

The Federal Customs Service said that the Bank of New York, the world’s largest “custodian” of assets, played a central role in a laundering campaign in the late 1990s to help clients to avoid Russian taxes and import duties and to hide money obtained through crime.

Maxim Smal, a lawyer for the customs service, said that between 1996 and 1999 “an illegal scheme was organised to legalise monetary resources that were brought into Russia without paying taxes.

“Violations were discovered that, I think, border on the criminal and this is why we decided to file a claim in the court and seek damages.”
Russia’s suit, which will be detailed at a press conference today, stems from a previous case involving the Bank of New York, which is in the process of merging with Mellon Financial.

Lucy Edwards, a former vice-president in the bank’s Eastern European division, and her husband, Peter Berlin, pleaded guilty last year to conspiring to help to move $7 billion to small US companies from Russian banks in order to hide the money from the authorities.

The couple were sentenced to six months’ house arrest, put on probation for five years and ordered to pay a $20,000 fine and $685,000 in compensation.

Their sentencing came after the Bank of New York had admitted failing to report $7 billion in suspicious Russian transactions and agreeing a $38 million payout.

Before a press conference yesterday, Andrey Strukov, head of the customs service legal department, would only say: “The Federal Customs Service confirms the filing of the suit against the Bank of New York. [It] is filing the suit for $22.5 billion in damages inflicted against the Russian Federation.”

However, the Bank of New York questioned the merit of the Russian lawsuit, which it said it had not seen.
“We understand from press reports that a lawsuit has been filed against the company by a Russian agency described as the Federal Customs Service,” the bank said.

“While we have not seen the complaint, based on our knowledge of the facts, we believe any such suit would be totally without merit, if not frivolous, and we would expect to defend it vigorously.
“The company was previously approached by lawyers purporting to represent this agency, who claimed to be able to dispose of the matter for a tiny fraction of the amount now claimed.

“It should be noted that the events related to the lawsuit occurred more than ten years ago and were previously resolved by the company.”
Bank of New York’s $16.6 billion takeover of Mellon, first announced in December last year, brings together New York’s oldest bank, founded in 1784, with the Pittsburgh institution that bankrolled the Pennsylvanian steel industry in the 19th century.

It revives a failed attempt by Bank of New York to buy Mellon in 1998 for $23.7 billion, which foundered with a disagreement over the carve-up of senior positions. Mellon went on to sell its consumer banking division to Royal Bank of Scotland in 2001 for $2.1 billion.

The new entity will have $16.6 trillion of assets under custody for which it will carry out low-margin back-office functions, such as record-keeping and fund accounting.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article1805811.ece

The Federal Customs Service of Russia
http://www.customs.ru/en

[december]

So, this is how the US helped to establish freedoms in a post-soviet Russia -


RUSSIA'S Federal Customs Service has filed a $US22.5 billion ($27.32 billion) lawsuit against America's oldest bank for money laundering, a lawyer for the service said today.

"From 1996 to 1999, the Bank of New York took part in a money laundering scheme in which the Russian Federation suffered 22.5 billion dollars' worth of harm," lawyer Maxim Smal said after filing the suit at Moscow's arbitration court.

A spokeswoman for the court said she could not comment on the case as it had not yet been officially opened.

The bank has been at the centre of a series of Russian money-laundering investigations since 1998, when the FBI and US tax authorities launched a probe into the laundering of $US7 billion ($8.5 billion) through a Bank of New York (BNY) account by two Russians.

The account was opened in 1996 by Peter Berlin and Lucy Edwards, two Russians living in the United States, allowing billions of dollars in funds to be channelled out of Russia without the payment of taxes.

BNY agreed to pay $46.14 million to settle the case in a US court in November 2005, including $14.57 million in compensation to victims and a fine of $31.57 million.

In 2000, Swiss authorities targeted the bank in an investigation into the suspected embezzlement of a $5.83 billion International Monetary Fund loan to Russia via BNY accounts.

BNY, which is the oldest bank in the United States, has assets of $125.55 billion, according to the bank's website.

http://www.news.com.au/heraldsun/story/0,21985,21752745-5005961,00.html

[december]

Moscow court says registered suit vs. Bank of New York

23/ 05/ 2007


MOSCOW, May 23 (RIA Novosti) - The Moscow Arbitration Court said Wednesday it had registered the Russian customs service's $22.5 billion damage lawsuit against the Bank of New York (BoNY).

The Federal Customs Service accused last Thursday the bank of laundering untaxed profits of Russian exporters in 1996-99 and said it had filed the suit with the Moscow Arbitration Court. There was no immediate confirmation from the court last week.

"The lawsuit has been registered, and preliminary hearings will be fixed in the next few days," court spokesperson Maria Raben said.

Experts doubt that customs authorities would recover such a huge sum. But lawyers acting for the service said the sum was legitimate as the BoNY had admitted that $7.5 billion had been laundered at the time, and under U.S. law the plaintiff could demand compensation three times the original loss.

The bank, which pleaded guilty of violating U.S. laws on control over financial flows in 2005 and was ordered to pay a $38 million fine, dismissed the new claim Thursday, saying the case had been resolved.

http://en.rian.ru/russia/20070523/65967538.html

[december]

White House opposes 3rd party class-action suits

By Rachelle Younglai

WASHINGTON (Reuters) - The Bush administration said on Tuesday that it is not in favor of third-party class action lawsuits, dealing a blow to the plaintiffs who sought to sue banks that helped put together transactions for Enron before the company imploded in late 2001.

The president believes that excessive litigation costs hurt the American economy, cost American jobs, and discourage participation in the country's capital markets, said one White House official who asked not to be named.
"We don't want to expand the scope of class actions to include third parties," said the official, drawing the ire of the largest U.S. labor federation.
"The punchline here is that the president of the United States thinks that it's OK for investment bankers to participate in outrageous frauds on the public and walk away clean," said AFL-CIO associate general counsel Damon Silvers.
The comments came less than 24 hours after the Solicitor General, who represents the U.S. government before the Supreme Court, let a crucial deadline pass without filing a brief in support of plaintiffs as recommended by the country's top securities regulator.

The U.S. Securities and Exchange Commission wrote a legal brief urging the Solicitor General to support an appeal by shareholder plaintiffs that could have ramifications for plaintiffs in an Enron case.
The case centers around an appeal before the Supreme Court in which shareholders of Charter Communications Inc. sued Scientific Atlanta and Motorola Inc., accusing them of aiding a scheme to inflate Charter's revenues in 2000.

A lower court dismissed the case, saying the companies were not liable because they were not primary players in the alleged fraud.
Enron shareholders are watching the case as it could affect their own attempt to sue banks, including Merrill Lynch, Barclays Plc and Credit Suisse Group.
http://www.reuters.com/article/politicsNews/idUSN1230029720070613

[december]

U.S. Senate backs bill enabling govt. to sue OPEC

20/ 06/ 2007


WASHINGTON, June 20 (RIA Novosti) - The U.S. Senate approved a bill enabling the government to sue international oil and gas cartels in a move clearly directed against OPEC; however, but the bill is unlikely to receive presidential backing.

Known as "The No Oil Producing and Exporting Cartels Act" (NOPEC), the bill is a response to skyrocketing gasoline prices across the U.S., a tendency consumers blame largely on price-fixing by OPEC.

The Senate voted on Wednesday 72-23 in favor of the bill that would allow energy cartels to be prosecuted in U.S. courts for anticompetitive activities with regard to pricing, production and distribution of hydrocarbons.

It denies a foreign state engaged in such conduct sovereign immunity from the jurisdiction of U.S. courts in any action brought to enforce the act.

The House of Representatives voted 345-72 in favor of the bill in late May. House Judiciary Committee Chairman John Conyers Jr. said a U.S. federal court had rejected an antitrust lawsuit filed against OPEC in 1978, on the grounds that foreign states are protected against prosecution in the U.S. by jurisdictional immunities envisaged in the Foreign Services Immunity Act (FSIA). The new bill drops OPEC and other such cartels from FSIA protections.

The Bush administration argues, however, that legislation outlawing OPEC and other groups of oil and gas exporters could trigger retaliatory measures, leading to disruptions in supplies and further price hikes. The president has already made it clear he will veto the NOPEC bill.

Following the bill's approval in April by the Senate Judiciary Committee, the Russian Foreign Ministry said it was in breach of international law.

"If such a bill is enacted, stripping foreign states of immunity in American courts, then the U.S. will be in violation of one of the universally recognized principles of international law - that of states' sovereign equality," the ministry said in a statement.

A spokesperson for the Congressional Research Service earlier told RIA Novosti that if it does come into force, NOPEC could immediately be contested by foreign states through the World Trade Organization.

http://en.rian.ru/world/20070620/67532904.html

[december]

Foreign officials could be held liable for corruption in Russia

12/ 07/ 2007

http://img.rian.ru/images/4125/10/41251031.jpg



MOSCOW, July 12 (RIA Novosti) - Foreign officials could in the future be brought to account for corruption-related crimes they commit in Russia, the chairman of the anticorruption commission of Russia's lower house of parliament told RIA Novosti in an interview Thursday.

If the commission's proposals are adopted, it could mean that foreign officials involved in corruption scandals in Russia would, unlike past practice, be held legally responsible for their transgressions.

"An interdepartmental working group to counter corruption, established in February by presidential decree, is developing a number of proposals to fight corruption, and as a first order of business is a proposal to change Russian legislation in that regard," Mikhail Grishankov, who is also the first deputy chairman of the Duma security commission, said.

Grishankov said the working group, which answers to presidential aide Viktor Ivanov, includes both houses of parliament, judicial officials and Public Chamber representatives, as well as lawyers.

"In line with the working group's recommendations, those held accountable for corruption-related crimes must include foreign officials, in particular, parliamentary deputies and members of international organizations - provisions currently lacking in Russian legislation," he said.

Grishankov also said that Russian legislation should be changed in keeping with Russia's ratification of the UN Convention against Corruption and the Council of Europe's Criminal Law Convention on Corruption. Russia ratified both conventions last year.

Controls over Russian state officials could also be made stricter, and their families might have to declare their property and revenues, he said.

Grishankov said that Russia's Criminal Procedural Code could be amended to "simplify the procedure for returning assets taken abroad after corruption-related crimes."

As of March 2007, an anti-corruption drive in Russia resulted in the instigation of about 600 bribery and embezzlement cases dating back to last July, when President Vladimir Putin set the fight against corruption as a national priority and ordered the new prosecutor general, Yury Chaika, to draw up an anti-corruption strategy.

http://en.rian.ru/russia/20070712/68849923.html