Attorney Updates Status of Russian Federation’s Lawsuit against Bank of New York

The Judge Rules to Hear Plaintiff’s Motions Despite BoNY’s Legal Maneuverings

MOSCOW–LAWFUEL – The Litigation & Legal Newswire – The Moscow Arbitration Court officially began proceedings and heard plaintiff’s opening motions regarding the Russian Federation’s $22.5 billion claim against the Bank of New York despite the notable absence of BoNY’s legal representation.

“An attorney attending the hearing at the request of the Bank of New York refused to acknowledge the Court when the call was made for the defendant’s legal representatives to be identified,” said Maxim Smal, a Moscow-based attorney representing Russia’s Federal Customs Services. “The Honorable Judge Pulova then called out the attorney by name from a counsel pass the Bank had requested. The young man rose in the back of the courtroom and claimed that while he was present at the request of the Bank, he did not possess an official power of attorney. This prompted the Judge to officially open the preliminary hearing despite BoNY’s decision to once again boycott the proceedings.”

After hearing several motions by plaintiff’s attorneys, the Judge ruled that the proceedings be adjourned until tomorrow. The Judge then strongly advised the BoNY representative that he attend tomorrow’s hearing with the proper power of attorney.

According to Smal, “The defendant has again tried to delay these proceedings by claiming improper service. In their own documents submitted to the Court they admit to being served on four separate occasions including directly from the Court itself. The fact that the Bank sent an attorney to attend today’s proceedings clearly demonstrates that the Bank received proper notice; BoNY is attempting to improperly use the 1935 convention on service to delay the inevitable.”

“It is our firm belief that no matter how long or complex these proceedings may end up, the Russian justice system will act as the American justice system did and require that the Bank of New York compensate the Russian Government and its citizens for the extensive nature of its crimes,” said Smal.

On May 17, the Federal Customs Service for the Russian Federation filed a lawsuit with the Moscow Arbitration Court against the Bank of New York, the world’s second-largest custodian of investor assets. The lawsuit stems from a 2005 U.S. Department of Justice investigation that ended with a non-prosecution agreement forcing the Bank to pay $38 million to the U.S. government to settle two criminal probes and admitting it failed to report $7.5 billion in illegal Russian transactions.

Federal investigators determined several accounts that existed at the Bank of New York were used illegally to transfer funds in and out of Russia in violation of currency controls causing The Russian Federation billions in damages.

“Although the suit is being heard in a Russian court, the Court is being asked to apply American law, which the Bank of New York has already admitted to its criminal violation,” said Smal. “Bank of New York’s involvement in money laundering also has resulted in the criminal conviction of its New York officer who was in charge of the Bank’s Eastern European Division.”

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