Russian bank Otkritie wins US$150m in damages from ex-employees

Employees of Russian lender siphoned off cash to buy villas, Ferraris and diamonds

PUBLISHED : Tuesday, 11 February, 2014, 10:23pm
UPDATED : Tuesday, 11 February, 2014, 11:22pm

Russian bank Otkritie Financial Corp has won US$150 million in damages from ex-employees after a London judge said the former staff siphoned off the bank's money to pay for luxury villas, diamonds and Ferraris.

Judge Bernard Eder said the trial, with more than 20 witnesses, was filled with allegations of money laundering, kidnap and murder. Otkritie sued former employees, including George Urumov and Ruslan Pinaev over what the company says was the mispricing of Argentine warrants and bonuses for colleagues.

When Urumov joined the bank in 2011 he said that he would bring four colleagues with him if they each received US$5 million in "golden hellos" while he secretly negotiated lower amounts with them, according to the lawsuit. The warrant fraud was committed by manipulating the US dollar-Argentine Peso exchange rates, the bank says.

"It is, in my judgment, nothing less than a brazen and carefully orchestrated deceit on the part of Mr Urumov on a grand scale," Eder said in his 200-page ruling on Monday.

"Anyone sitting in court listening to the evidence and the parties' respective submissions might have been forgiven for supposing that they were in the Old Bailey," London's Central Criminal Court, "rather than in the Commercial Court".

Lawyers representing Urumov and Pinaev didn't respond to a call for comment.

The fraud proceeds were laundered through offshore companies and bank accounts, Eder said.

The employees spent the proceeds of the fraud on luxury villas in Spain and yellow and pink diamonds while Pinaev spent over US$1.3 million on two Ferraris.

"We moved decisively to bring these people to account, to recover our funds and to ensure none of our clients were affected," Alexey Karakhan, a deputy chief executive officer of Otkritie, said in an e-mailed statement. "We will leave no stone unturned to recover the stolen assets from the fraudsters, their accomplices and third parties who gave or are still giving them assistance."

The bank said it has recovered US$52 million to date.