Russia, Bank of New York Mellon to sign settlement

[September 16, 2009]  MOSCOW (AP) -- An out-of-court settlement has been reached in the $22.5 billion Russian government lawsuit against Bank of New York Mellon and an agreement is to be signed soon, the Finance Minister said Wednesday .

The Russian government would receive no less than $14 million for trial expenses, Alexei Kudrin said. That is only a fraction of the billions it was claiming, although the government would also get a $4 billion discounted loan from the bank, which Kudrin called "an act of goodwill" at a tough time for the economy. He said the loan is not directly related to the case.

The two-year-long case stems from a decade-old scandal in which a Bank of New York vice president and her husband were convicted of illegally wiring $7.5 billion of Russian money into accounts at the bank. The Russian authorities claimed lost tax revenues on those transfers.

Kudrin told parliament "there is not enough information to win such litigation."

"The guilt has not been proven," the finance minister said. "An out-of-court settlement will be signed."

He said the government would receive no less than the amount the bank paid as a non-prosecution fee in the United States, which he said was $14 million.

Kudrin also said that Bank of New York Mellon would allocate a $4 billion discounted loan for the Russian government.

The loan is unrelated to the case or expenses the government has incurred during the trial, he said, but would be extended "as an act of good will" and to show the bank's "relation to Russia in a difficult time when Russia's economy needs financial resources."

Bank of New York, which later merged with Mellon, was never charged with any wrongdoing in the United States. It reached a non-prosecution agreement with U.S. federal prosecutors in 2005.

The Russian court case, launched by the Federal Customs Service two years ago, has been regarded by some investors and analysts as unlawful persecution of a foreign company's interests in Russia.

[Associated Press]

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