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16 Jan, 2008 02:21

French court locks Russian bank accounts

Russia's Finance Ministry is promising to appeal a French court ruling which freezes Russian government assets in dispute with a Swiss trading company, Noga. It accuses Russia of refusing to pay millions of dollars in debts linked to an oil-for-food progr

Russia’s Foreign Minister, Sergey Lavrov, said there will be legal solution to the seizure of assets belonging to Russian companies in France.

The frozen bank accounts are believed to belong to divisions of the Russian Finance Ministry, the Russian Central Bank, RIA Novosti news agency and state exporter of military products, Rosoboronexport.

The Geneva-based firm says Russia owes around $US 70 millions in oil-for-food deals signed in the early 90s.

“On January 7 our office in Paris received a letter from a French bailiff that our accounts at VTB Bank France have been frozen due to a law suit filed by the Swiss company Noga against the Russian government,” said Aleksandr Babinsky, Deputy Director General of RIA Novosti.

Noga, in all its legal actions, refers to a ruling by the Stockholm Arbitration Court in 1997 which was in its favour. The Russian Finance Ministry though insists that decision is now void.

“Noga deceived the French court – because according to the Stockholm court of arbitration Noga has no right to claim the debt. Some time ago Noga handed the rights to several Swiss banks, and the debt was then bought back by the Russian Federation,” said Andrey Matveev, Finance Ministry spokesman.

Russia's Foreign Ministry has handed over a formal complaint to the French authorities.

Meanwhile, a Russian-born American businessman Aleksandr Kogan says he purchased all Russia's debts to Noga company.

“We bought all Russia's debts from all the banks that owned them,” he said.

However, the owner of Noga, Nessim Gaon, says Kogan's actions weren't legal.

“Aleksandr Kogan should've done it differently. He should have come to us, paid us so that we could pay to the bank. But he went another way and bought the debt from the bank directly. We appealed to a Paris court and this also became a subject of a court hearing. The verdict of a Paris court was that his actions were illegitimate,” Gaon said.

Noga went bankrupt in 1996 and has since been attempting to seize Russian assets, including ships, jets and paintings from the Pushkin Museum of Fine Arts.

Garegin Tosunyan, President of the Russian Banks Association, has urged the country to apply to international courts to resolve the Noga claim, either by paying the debt or suing the Swiss company for defamation.

“If they do have a case we should definitely pay off the debt, however if they don't we should by all means make a counterclaim and tell them they have to compensate for the harm caused to Russia's image by their repeated claims and attacks,” he said.