Bank Saint Petersburg Reveals Mechanisms for Protection of Assets Obtained from Arkhangelsky

Justice Hildyard of the High Court of England and Wales continued proceedings on suit of Bank St. Petersburg vs Russian businessman Vitaly Arkhangelsky and Arkhangelsky's counterclaim against the bank.

This week the bank's board chairman Vladislav Guz and the deputy head of the board Olga Volodina were cross-examined.

Answering the questions of Arkhangelsky's representative Mr Guz had to explain the aims of a lease agreement prepared in August 2009. Under the agreement all the West Terminal real estate would be transferred to the BVI-based Gunard Enterprises Limited Company. The agreement specified that the term of the lease was 49 years with the pay of $20,000 a month including VAT. The payment would be made on the last day for the term of the agreement the term extendable for the indefinite period.

Mr Guz admitted the agreement was not commercial, adding that its aim might only be the protection of the asset from any moves by Arkhangelsky or his OMG Group in Russian courts. "It could be arrested by any court, criminal, or arbitrage, or whatever," he said.

Mrs Volodina who in 2008 headed the bank's credit committee also said the bank wanted to "minimize the risks" and to protect the assets obtained from Arkhangelsky's companies transferring them to third parties. However, she stressed that the lease agreement on the West Terminal properties had never come in force.

Next week the court proceedings will continue in Paris.

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The bank claims that Arkhangelsky, who, together with his family, left Russia in 2009 and was granted political asylum in France, did not settle with creditors and tries to recover a debt.

Archangelsky in his statement of claim says that during the global financial crisis the bank agreed to defer payment on loans for six months. As a collateral, the bank demanded Archangelsky to transfer the shares of companies that were a part of his Oslo Marine Group - West Terminal port complex and Scandinavia insurance company, the owner of a half of Onega terminal. Before the stipulated term expired, the bank demanded loan repayment and later used its political contacts including top law enforcement officers and St. Petersburg Governor Valentina Matvienko, sold the shares to a sister firm at a lower price and changed the executive of Arkhangelsky's companies. He estimates the damages at $500 million.

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The course of the trial will be covered by the press-office.

Contact: Natalia Khmelik natalya.hmelik@gmail.com