One of Russia’s largest independent financial groups has won $150m in damages after a UK High Court judge found it was the victim of a “cunning and well-orchestrated fraud” committed by former employees.
Otkritie, Russia’s largest private bank by assets, sued former staff including George Urumov and Ruslan Pinaev as well as former Threadneedle fund manager Vladimir Gersamia.
The case centred around two allegations – a “sign on” fraud whereby Mr Urumov and four other traders were said to have received $25m to move from Knight Capital to Otkritie. It was claimed Mr Urumov funnelled the bulk of this money to Mr Pinaev and Sergey Kondratyuk, who were existing Otkritie employees.
The second allegation was that Otkritie was deceived into purchasing Argentine denominated warrants on which it made a huge loss and which were in fact worth $150m less than the company paid for them.
Following testimony from 20 witnesses, Mr Justice Eder found that the fraud proceeds were laundered through offshore companies and bank accounts, and money was spent on luxury villas and pink and yellow diamonds while Mr Pinaev spent $1.3m on two Ferraris.
The judge said in his ruling that the “extraordinary” civil trial had heard “wide-ranging” claims and counter claims of “alleged dishonesty, deceit, conspiracy, fraud, misrepresentation, bribery, forgery, blackmail, money-laundering. kidnap and even murder”.
He added: “Anyone sitting in court listening to the evidence and the parties’ respective submissions might have been forgiven for supposing they were in the Old Bailey [where criminal cases are heard] rather than in the Commercial Court sitting in the Rolls Building.”
Mr Justice Eder wrote that “beyond any reasonable doubt whatsoever that (together with Mr Kondratyuk) Mr Urumov and Mr Pinaev were at the heart of the fraud inflicted on Otkritie and received a huge share of the fraud proceeds.”
He also found that former Threadneedle employee, Mr Gersamia “was an active participant in the fraud by providing dishonest assistance generally” although he accepted he “may not have been aware” of all the elements of the Argentine warrants fraud.
The court awarded Otkritie $150m in damages from various defendants, including offshore companies and the wives of Mr Pinaev and Mr Urumov. The defendants had denied wrongdoing.
Otkritie has already recovered $52m through settlements and rulings and it said in a statement the civil judgment will help it recover more assets which it has traced and frozen around the world in countries such as Switzerland, Spain, Luxembourg and Gibraltar.
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