Swiss tribunal says Russian minister ‘laundered money to buy mobile stake’

24 May 2006

According to a statement by LV Finance Group, a subsidiary of Russia’s Alfa Group, the Arbitration Tribunal in Zurich has ruled that Russian Communications Minister Leonid Reiman used money laundering schemes to attempt to buy a 25% stake in mobile operator MegaFon. LV’s statement reads: ‘The Tribunal’s decision has confirmed that the only beneficiary of the Bermuda-based IPOC fund and its alleged option over a 25% stake in MegaFon is Reiman.’ LV has been in a dispute with IPOC over the stake for nearly three years. A statement released by IPOC said it would consider appealing the verdict to the Swiss Supreme Court. It also accused Alfa Group of using ‘bribery and corruption’ to try to derail legal proceedings. According to Cellular News, Alfa Group bought LV, the ultimate owner of 25% of MegaFon, in 2003 for USD200 million. IPOC, which owns 8% of the Russian cellco, claimed that this not only violated an option agreement it had with LV, but also MegaFon’s shareholder agreement, and a series of tit-for-tat lawsuits followed.

Recently, the focus of the ongoing litigation has shifted from the legality of Alfa’s deal with LV to the real identity of the owners of IPOC, which has consistently claimed to be owned by Danish lawyer Jeffrey Galmond, a long-standing friend of Reiman. However, Galmond’s own legal team recently admitted that this was not the case. LV’s statement added that the Tribunal ‘also concluded that [Reiman] is the ultimate owner of a number of offshore companies in different jurisdictions involved in IPOC’s business.’ LV noted that the Tribunal found that the minister had acted illegally in granting an operating licence to Telecom XXI, ‘a company in which he is a financial beneficiary,’ and that the ruling ‘shows that Reiman was in breach of his official responsibilities as minister of communications, by abusing his position for personal gain.’ It said that the Tribunal found that the money used by IPOC to make the downpayments on the stake option payments had been ‘criminally sourced.’

Russia, MegaFon