Did $3 tax demand ‘paralyse’ Vyborg?

April 7th, 2016 17:00 GMT

by Paul Berrill London

A London High Court trial heard allegations this week that Bank St Petersburg (BSP) used fraudulent methods to sell Oslo Marine Group (OMG) companies to related firms.

BSP claims OMG owner Vitaly Arkhangelsky is liable for $90m in loan guarantees that he defaulted on, while the Russian businessman is counterclaiming for damages of $500m. The bank denies it illegally appropriated OMG assets.

Questioning Kristina Mironova, director of credit risk at BSP unit Investrbank from November 2008 to March 2009 and who then headed a client-monitoring directorate to oversee distressed debt, Arkhangelsky’s legal representative, Pavel Stroilov, asked about a tax demand for RUB 99.63 (about $3) that was instrumental in OMG firm Vyborg Shipping defaulting on loans.

Stroilov claimed it was very unlikely Vyborg Shipping could not pay such a small amount. Mironova said she could not agree, as the bill was not paid — adding that no cash was coming into the firm’s accounts at the time.

“Isn’t the true explanation, Ms Mironova, that the tax service manufactured that decision to assist the bank to paralyse the operations of Vyborg Shipping and to create the conditions for a default?” Stroilov alleged.

“Mr Stroilov, can I ask you, are you joking?” Mironova replied.

But when pressed on whether Vyborg Shipping’s income was above or below RUB 99.63, she said: “I am almost sure that it was higher than $3.”

Stroilov then asked whether in that case Vyborg Shipping would not have had any difficulty in discharging its obligation to the Federal Tax Service, and releasing its accounts from arrest.

“Yes, likely, so it’s doubly surprising for me why such a demand for $3 arose to such a big company which possessed two billion [Roubles] in loans and three container vessels,” Mironova replied.

Later Stroilov asked Mironova about a series of auction sales of another OMG firm, Western Terminal, to subsidiaries of Renord Invest — a company he alleges is linked to BSP.

One of two berths at Western Terminal had been pledged as collateral for loans to Vyborg Shipping, and in 2011 Renord group firm Sevzapalians bought creditor’s rights from another creditor, Morskoy Bank.

Stroilov alleged it was part of a move to recover against all Western Terminal’s assets by then selling them to another Renord unit, Nefte-Oil, for a low price of RUB 161,497.

Mironova said the sale was a “fair market price” given “that the asset was sold encumbered to St Petersburg Bank. Any new owner would have had to pay the bank over $30m.”

She added that the process was intended to ensure BSP got “the highest price when [Western was] sold to any final buyer” and do away with the rival creditor bank’s claim of RUB 50m.

In August 2011, the assets were offered to another Renord firm Vector Invest for RUB 1.2m, but then BSP made a claim against Vector, and they were sold to another alleged Renord firm Kontur for RUB 674.5m at an auction in September where it was the only bidder.

Stroilov alleged: “The settlement with Vector Invest and then an alleged — a purported — breach of that settlement and then enforcement proceedings was precisely to arrange for a sale from Renord to Renord at gross undervalue.”

“My Lord, this does not correspond to the reality,” Mironova replied — denying all the allegations.

The case continues until 22 April.

Paul Berrill

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