Putin ally Matviyenko faces "raiding" claims in UK High Court

By bne IntelliNews March 19, 2014

Mark Watts and Tim Wood of Exaro -

Russia's highest-ranking woman politician who appears on the US sanctions list released March 17 is facing accusations in the High Court in London of helping to "raid" assets worth more than £300m, according to Exaro, the investigative website.


An application to the court to dismiss the accusations has failed. So, the allegations against Valentina Matviyenko - the third most powerful politician in Russia - are set to feature in a bitter court battle in a trial that is expected to be heard later this year.


Matviyenko is a long-time ally of the Russian president, Vladimir Putin, and has since 2011 been the speaker of the Federation Council, the upper house of the country's parliament. She had previously been deputy prime minister of Russia until, with Putin's help, she was elected governor of St Petersburg in 2003, formerly Leningrad. She remained as governor of St Petersburg, Putin's birthplace, until just before she became the head of the Federation Council.


Described as the most powerful woman in Russia since Catherine the Great, Matviyenko has also been dubbed Russia's Margaret Thatcher or Angela Merkel. She is also one of 11 Russian and Ukrainian individuals that the US is placing sanctions on following the annexation of the Ukrainian peninsula of Crimea. The March 17 executive order issued by the White House says, "Matviyenko is being sanctioned for her status as Head of the Federation Council."

In the UK court case, she is accused of helping a powerful group, with the backing of the authorities, to raid assets that belonged to Vitaly Arkhangelsky, a Russian businessman, and his wife, Julia.

The couple set out the accusations in their defence and counter-claim to an action brought against them by the Bank St Petersburg.

The bank is suing the couple for £33.2m, accusing them of defaulting on loans.


But the Arkhangelskys reject the claim, counter-suing for £304.5m and alleging that the bank stole assets to that value from them on the pretext of default of loans.


The case follows the high-profile court battle between Roman Abramovich, Chelsea football club's Russian owner, and the late businessman, Boris Berezovsky. The UK is promoting London as a global legal centre for such commercial disputes.


The Arkhangelskys claim that Bank St Petersburg raided their assets - with the backing of senior figures in the Russian government, including Matviyenko. They say that they were forced to flee Russia, and were granted a form of asylum in France in 2012.


In their counter-claim, they say that the bank is "closely linked" to Matviyenko, "at the material time, the governor of St Petersburg and now the chairwoman of Federation Council in Russia".


It continues: "Mrs Matviyenko and members of her family have a degree of control over the bank and its activities. The bank, in turn, enjoys privileged relations with state authorities of Russia and especially in St Petersburg due to the influence of Mrs Matviyenko and her political allies."


"Members of Mrs Matviyenko's family are, or were, major shareholders of the bank. Her role was to use her influence to facilitate unlawful assistance of corrupt law enforcement officers, authorities, and courts, in furthering the conspiracy."


The assets include Zapadny Terminal, or Western Terminal, a Russian company that owns and runs an eight-hectare site in the port of St Petersburg valued at £135m, an insurance company said to be worth £135.5m, and assets such as ships and real estate.


"The takeover of the companies was accompanied by a campaign of unlawful persecution of the defendants by Russian authorities," continues the counter-claim.


"The persecution was co-ordinated", it says, by the bank and "corrupt Russian officials". Matviyenko is alleged to have ordered a Russian federal court to sanction the "sham transfer" of Western Terminal shares.


The bank denies the claims, and asked the High Court to dismiss them for being "vexatious and scurrilous" and "an abuse of process".


While denying the allegations, the bank also argued that even if they were true, the court had no right to adjudicate. If the claims were true, said the bank, it was operating at the direction of the Russian state, and the court could not interfere with such acts.


The judge, Mr Justice Hildyard, rejected the application to dismiss the claims, but ordered the Arkhangelskys to provide further details of their allegations.


He said that the "gist of the claim" by the couple is that the bank, together with influential figures, engineered a takeover of their companies.


The bank is to appeal the ruling at a hearing next month, when a date for the trial is expected to be set.

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