In a sworn statement to courts in the British Virgin Islands, Danish lawyer Jeffrey Galmond has alleged that Russia’s telecoms minister Leonid Reiman was a principal beneficiary of Liechtenstein-based Fiduciare Commerce Trust (FCT) that, until 2003, held shares in one of Russia’s biggest privately owned telcos, Telecominvest. According to the Financial Times, Galmond has provided testimony that he established FCT in 1997 to hold stock in First National Holdings, which controlled Telecominvest, making Reiman the ‘primary beneficiary under the terms of a letter of wishes’. He goes on to say that Reiman, then a director of Telecominvest, stood to make a gain from the proposed sale of First National Holdings’ shares worth USD150 million to PLD Telekom. The deal subsequently collapsed following the Russian financial crisis of August 1998, although Mr Galmond says FCT swapped its First National Holdings for non-voting shares in Comtel Eastern in December 2001, which it held until they were redeemed in October 2003 – since when the trust has been dormant. As a result, no appointments and no distributions were made to Mr Reiman.
The details of the Danish lawyer’s affidavit may be crucial in determining the outcome of a legal challenge, which begins in the British Virgin Islands today, in the ongoing battle for a stake in Russian mobile operator MegaFon. Russia’s Alfa Group is vying for a stake of the cellco, in which both Telecominvest and TeliaSonera hold shares. Galmond’s statement has now been produced to prove that Mr Reiman was linked to Telecominvest: the minister has always denied a link but has struggled to shake off allegations of involvement in criminal and corrupt activities. However, Mr Galmond contends that he is the owner of the First National Holding shares and other stakes in MegaFon held via IPOC, a Bermuda-based fund. IPOC is challenging last year’s sale of a 25% interest in MegaFon to Alfa Group by British Virgin Islands group LV Finance. It has won an arbitration in Geneva, but has lost a court case in the Bahamas and is facing separate arbitration in Zurich. As a result it is continuing its fight in the British Virgin Islands, even though LV Finance and Alfa have countered that IPOC it using monies derived from money laundering to underpin its appeal.