Russia's customs sues Bank of New York for 22 bln dollars

Russia's customs service has sued the Bank of New York for $22 billion over alleged misdeeds dating from the 1990s, Russian news agencies reported Thursday.

Between 1996 and 1999 "an illegal scheme was organized ... to legalize monetary resources that were brought into Russia without paying taxes," the RIA-Novosti news agency quoted Maxim Smal, a lawyer for he customs service, as saying.

"Violations were discovered that, I think, border on the criminal, and this is why we decided to file a claim in court and seek damages," Smal was quoted as saying.

He said the case had been filed in Moscow Arbitration Court because the bank has an office in the capital.
The scheme "was organized through the bank," Smal said.

Customs service officials were not immediately available for comment.

The bank said in a statement that it had not seen the complaint but that "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 added that it previously was "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 added that the claims relate to a lawsuit that was resolved long ago.

The suit apparently stems from an international scheme that U.S. authorities said involved $7 billion in illicit transfers from Russia in the late 1990s. The case resulted in a Bank of New York executive and her husband pleading guilty in 2000 to money laundering.

The couple acknowledged helping Russian bankers wash billions through accounts at the bank in order to avoid Russian taxes and to cover up the money's connection to crimes - including money used as ransom for a kidnapping in Russia, the AP reports.

Some analysts downplayed the lawsuit's significance.

"Although we can't completely ignore the potential ... for some type of financial responsibility to Bank of New York, on the surface, we believe the stock move is overdone on the downside," Bank of America Securities analyst Kenneth Usdin wrote in a research report. He rates Bank of New York "buy."

The U.S. money laundering probe began in 1998 and concerned accounts once controlled by Lucy Edwards, a former vice president in the bank's Eastern European division, and her husband Peter Berlin, as well as others.

In 2000, Edwards and Berlin pleaded guilty to being part of a conspiracy to move $7 billion through Bank of New York accounts, and to helping two Russian banks conduct illegal activities in the United States.

A federal judge sentenced the couple last July to six months home confinement and ordered them to pay $725,000 in restitution and fines, Reuters reports.

Source: agencies

Prepared by Alexander Timoshik

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Author`s name Alex Naumov