Russia’s Finance Ministry Buys Noga Debts
// Their amount might grow up to $1.26 billion on the way from Paris to Geneva
Kommersant keeps discovering the details of the arrest of Russian companies’ accounts in Paris at the suit of Swiss company Noga. Russia’s Ministry of Finance said Tuesday that it had bought out rights of claim on the Russian Federation’s debt to Noga in December 2007. It is the Finance Ministry that now represents Russia in the legal dispute with Noga’s owner Nessim Gaon. The ministry is most likely to face real difficulties with Noga not in Paris but in Geneva. According to the documents of Switzerland’s Federal Tribunal, the court there will acknowledge that Russia owes at least 1.38 billion Swiss francs ($1.26 billion) to Noga, and the current arrests in Paris are linked to it.
The parties that have relation to the arrest of assets of Russia’s Central Bank in Calyon bank and of RIA Novosti news agency in VTB Paris SA bank kept specifying their positions on Tuesday. U.S. businessman Alex Kogan, who began buying out the rights of claims to Noga secured by Russia’s debt to Noga from three French banks in 2006, is already out of the game, as it turned out. Kogan confirmed that the deal in which Russia’s Finance Ministry became the debt’s owner took place in late 2007, while the ministry became the direct acquirer of claim rights. The businessman said the debt is “around $70 million plus interest and penalty provision”. In total, it should amount to some $100-120 million. However, Kogan refused to specify the deal’s terms. “We became the debt’s owners in December 2007, and Alex Kogan no longer plays any part in settling the debt to Noga,” the Finance Ministry said Tuesday. Yet, the businessman himself intends to recover other $21 million from Noga (these are other Noga debts bought by Kogan), and to achieve the company’s liquidation.
Thus, the Russian state represented by the Finance Ministry will directly counteract Noga. The ministry believes the Noga debt is settled and the arrest of assets in Paris is illegal. Meanwhile, the ministry will face chief difficulties not so much in France as in Switzerland, because it was a court in that country that delivered on December 24 a ruling on the legal dispute related to asset arrests in France.
Kommersant obtained a copy of documents of the court hearings on Noga vs. Russia’s organizations case that went on in Geneva from February 2003 to December 24, 2007. The court examined the claim by Geneva’s court proceedings department to Russia to pay 1.185 billion Swiss francs plus 5 percent interest per annum of arrears to Noga.
The Geneva court proceedings department referred to an agreement between Russia and Noga signed on July 31, 2002, which stipulates the claim. The Finance Ministry has been denying the agreement’s existence and competence since 2004. The ministry does not comment on the content of the agreement mentioned in the Swiss court ruling as of August 15, 2007. Kogan said Tuesday that the agreement “was signed by someone who had no right to sign it” – a certain Swiss lawyer whose name he “cannot remember”. According to some sources, Deputy Finance Minister Sergei Storchak later took part in negotiations in 2002. However, his comment could not be obtained, because he is under investigation in Lefortovo pre-trial prison now.
Swiss courts believe the agreement is in force. According to the document, the Russian Federation filed a lawsuit on July 30, 2003, to the International Arbitration Court of the International Trade Chamber in Paris, and the agreement contained a reference to the lawsuit. It was due to the fact that a number of Russia’s assets in Swiss banks CIM and UBS had already been arrested on December 22, 2003, along the writ of execution # 3 116062 A. On November 3, 2005, the Geneva department notified the International Air Transport Association (IATA) that it arrests all property, assets, and shares which the IATA might have possessed on behalf of the Russian Federation, worth up to 1,378,594,263 Swiss francs. Investigators discovered in the IATA just the funds of Moscow Center for Air Movement Automatic Control, a branch of Interior Department Administration federal state unitary enterprise, which represented Russia in Swiss courts, trying to prove that its assets are not state property. In the court ruling as of August 15, 2007, the second chamber on civil disputes of the Federal Tribunal of Switzerland refuted that assumption. Moreover, it thoroughly analyzed the content of the Russia-Noga agreement of 2002, pointing out that Russia for the second time waived sovereign immunity by signing the agreement (for the first time, it happened in 1992 when signing agreements with Noga).
Lawyers of PTAC legal company, who defended Russian organizations’ interests in court in Geneva, refrained from giving comments on Tuesday. According to Nessim Gaon’s statements made earlier (he did not comment on the situation on Tuesday, just like recently), Russia lost the dispute with Noga in July 2007 in the CIA ICC arbitration court as well. Gaon said the Supreme Court of France also confirmed that decision in late 2007. Apparently, the court in Switzerland, about which Kommersant wrote yesterday, took that circumstance into account on December 24 (the ruling has not been published yet). Anyway, the Finance Ministry will have to deal with the Swiss court: according to its ruling, Russia is to pay around $1.26 billion (at least 1.38 billion Swiss francs). It raises the stakes in the game with Nessim Gaon by 15 times. By the way, Gaon said he would lift his claims in exchange for ˆ40–50 million.
Dmitry Butrin, Seda Egikyan, Maxim Shishkin, Petr Netreba
All the Article in Russian as of Jan. 16, 2008
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