wmlro.com: BoNY to settle with Russia?
Reports in Russia say that the Bank of New York is on the verge of settling the action brought by Russian customs for USD22,500 million resulting from the Lucy Edwards affair at the end of the 1990s.
Finance Minister Alexei Kudrin has reportedly said that Russian Customs has agreed to settle on a much reduced sum having failed to prove the bank's guilt in alleged money laundering.
In the USA, the bank was never found guilty of laundering but paid a series of penalties to settle allegations.
In 2005, BoNY paid USD38 million in penalties and other payments due to failures in a range of activities. In that global sum was USD14 million for transaction monitoring and other compliance failures. Two BoNY executives were prosecuted for money laundering related activities - but no one was ever convicted of money laundering per se arising from the channelling of USD7,000 million of money from Russian state coffers via BoNY.
Kudrin is reported as saying that Russia's failure to prove BoNY guilty of laundering is no different to the failure of the US authorities.
However, there are two substantial differences: the Russian case was conducted in Moscow - where prosecutors have sought to apply the USA's RICO statute in a Moscow court. This course of action has been fraught with difficulty.
The second difference is the reluctance of US authorities, in particular the Manhattan DA's office, to prosecute US headquartered banks with laundering.
The original case was uncovered in London but rumour at the time indicated that UK investigators were obstructed by US authorities and that the reason action was ultimately taken was that frustrated UK investigators leaked the story to the press, causing public pressure to result in action.
At the time, Russia was trying to secure emergency funding from the IMF which said that it would not release a second tranche of funding until the Russians could account for the previous tranche - and it was said that the stolen money may have come from that source.
The terms of the agreement between Russian customs and BoNY have not yet been finalised.
Download PDF version of this page