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1 Jul, 2008 02:47

BoNY risks $US22.5 BLN in Russian fraud case

The big guns of the U.S. legal establishment have flown to Moscow to take sides in a massive money-laundering case against the Bank of New York. At stake is the reputation of America’s oldest bank, which is worried it won’t get a fair trial in Russia.

The Bank of New York settled in the U.S. for billion-dollar illegal transfers it facilitated from Russia in the 1990s.

Original evidence is thought to have been destroyed, so the Customs Service’s $US 22.5 BLN case against the Bank of New York boils down to one question – can a U.S. ruling be applied abroad?

According to one of America’s most qualified lawyers, Harvard Professor Alan Dershovitz, it can. He is backed by Professor Robert Blakey from Notre Dame Law School, who drafted the Rico organised сrime bill, which customs is seeking to apply at Moscow’s Court of Arbitration. He says if something occurs in two countries the law of either or both countries can be applied.
Former U.S. Attorney General Richard Thornburgh has flown over to back the Wall Street giant, which is worried about the legitimacy of Russia’s court system.

Jonathan Schiller, Lead Independent Counsel of the Bank Of New York, said they presented to the court a draft document prepared by the customs lawyers, with handwritten marks apparently from the judge.

“They [our Russian lawyers] asked the judge how her handwriting could have appeared on this document, and they asked if there were communications between the Court and the Customs outside of the Court that she should recuse herself. She did not do that,” he said.

The hearing continues on Thursday. Both sides believe the case may be decided within a month, with the customs sounding more confident of victory than the bank.