Russian economist Sergei Guriev (pictured) has accused Bank St Petersburg of “grossly improper” behaviour in its long running battle over the Oslo Marine Group assets of shipping, insurance and ports entrepreneur Vitaly Arkhangelsky, who, like Guriev, is in exile in France.
Exiled economist Sergei Guriev issues expert report in Vitaly Arkhangelsky case but Bank St Petersburg insists it used legal means to repossess collateral.
A high-profile Russian economist has identified irregularities and «grossly improper» behavior in the disputed repossession of Oslo Marine Group (OMG) assets by Bank St Petersburg, according to a report filed as part of the litigation between the companies.
Sergei Guriev, who was asked by lawyers for OMG chief executive Vitaly Arkhangelsky to carry out the report, submitted it shortly before he was announced this week as the new chief economist for the European Bank for Reconstruction and Development (EBRD).
Bank St. Petersburg chairman Alexander Savelyev, however, has insisted that his company used legal means to repossess collateral.
Arkhangelsky, who like Guriev is in exile in France, has been in a fierce legal battle with the bank in the UK High Court, where the Russian financial institution has frozen his assets in a lawsuit that claims he misappropriated funds and is liable for some $90m in loan guarantees.
The Russian shipping investor, however, is pursuing counterclaims alleging fraud and political persecution.
Legal papers show that, amid the financial crisis of 2008, the bank seized OMG’s Western Terminal port subsidiary and an insurance company, and transferred them to affiliates of Renord-Invest, an investment banking and private-equity firm founded by Vladimir Malyshev.
But Guriev wrote that a Russian bank’s board of directors would consider the transfer of collateral on loans to a third party rather than the bank’s own subsidiaries as «wrongful».
«As a long-serving board member of Sberbank and Russian Agricultural Bank, I have no doubt that neither of these boards would ever have approved such a transaction», - the economist wrote. «Moreover, in case the board were to learn about such a transaction, it would consider it was likely to have been fraudulent, and initiate an investigation of the executives involved.»
Bank St. Petersburg’s lawyers have submitted a rival expert report, but TradeWinds could not obtain it by press time. A trial is set to take place next year.
When contacted by TradeWinds, Bank St. Petersburg said it would be inappropriate for it to comment on the Guriev report.
«Arkhangelsky’s allegations are entirely without merit and will be vigorously defended by the bank», - the company said through London law firm RPC.
Bank St. Petersburg deputy chairman Irina Malysheva said in a witness statement to the High Court that the bank asked independent third parties to take the shares of the repossessed OMG assets because «it was not the business of the bank to be a shareholder in its borrowers, and it could not take the liabilities of the group onto its balance sheet». But Guriev wrote that the irregularities included Russian banks transfering such collateral to a third-party company rather than to the bank or a subsidiary, particularly without a written agreement. He also said there was no evidence that safeguards for transactions with affiliated parties was applied, given that Renord-Invest was founded by Malysheva’s husband.
«The bank’s own evidence suggests that the purpose of using several different companies, ostensibly independent of the bank and each other, was grossly improper — effectively to deceive the regulator, the shareholders and the market», - Guriev wrote.
Guriev has served as a professor of economics at Sciences Po since he fled Russia in 2014 after he was interviewed by police as part of a new inquiry into then-jailed Yukos Oil billionaire Mikhail Khodorkovsky. The economist had been a prestigious rector of the New Economic School in Moscow.
In another witness statement, bank chairman Alexander Savelyev strongly denied Arkhangelsky’s long-standing claims that the bank was involved in a conspiracy with the Russian government to seize OMG’s assets. He said OMG and Arkhangelsky owed a large amount of money to the bank and showed no signs of repaying.
«The bank, of course, has tried to recoup the money that it is owed under lawful procedures, through levying of execution on the assets pledged and guarantees provided by companies of the group and by Mr. Arkhangelsky personally», - the chairman wrote in a witness statement.
"TradeWinds". Release of 6 November 2015. (click to image for .pdf version)