Russia: Bank of N.Y. Mellon settles money laundering case

ByABC News
September 16, 2009, 1:29 PM

MOSCOW -- Russia has reached a settlement with Bank of New York Mellon over a $22.5 billion lawsuit against the bank stemming from a 1990s money laundering scheme by one of its executives, Finance Minister Alexei Kudrin said Wednesday.

Russia would receive no less than $14 million for court costs under the long-anticipated, out-of-court deal, Kudrin said only a fraction of the billions it was claiming. But he said the government would also get a $4 billion discounted loan from the bank, an "act of goodwill" Kudrin insisted is not related to the case.

The two-year court case stems from a decade-old scandal in which a Bank of New York vice president and her husband were convicted of illegally wiring $7.5 billion of Russian money into accounts at the bank. The Russian federal customs service went to court in 2007 to claim lost tax revenue on those transfers, but the judge overseeing the hearings urged the two sides to reach a settlement.

Kudrin told parliament "there is not enough information to win such litigation."

"The guilt has not been proven," he said. "An out-of-court settlement will be signed."

The government would receive no less than the amount the bank paid as a non-prosecution fee in the United States, which he said was $14 million.

The loan is unrelated to the case or expenses the government has incurred during the trial, Kudrin said, but would be extended "as an act of good will" and would show the bank's "relation to Russia in a difficult time when Russia's economy needs financial resources."

Kudrin gave no details about the loan. Citing unnamed sources, business daily Kommersant reported earlier this week that the New York bank would provide the loan to Russian state banks in $400 million tranches every six months for five years.

Bank of New York, which later merged with Mellon, was never charged with any wrongdoing in the United States. It reached a non-prosecution agreement with U.S. federal prosecutors in 2005.