VTB Accounts Frozen Over Swiss Debt Claim

A Swiss trading company that tried to seize art and warplanes to recover debts from Russia has won a French court order to freeze accounts at a unit of state-controlled VTB.

In Moscow, the Foreign Ministry issued a formal complaint to France over the seizure Monday, RIA-Novosti reported.

VTB, Russia's No. 2 bank, said a number of accounts held at its French unit had been frozen on the orders of a Paris court after a suit brought by Geneva-based Noga.

The total sum of frozen assets was worth 49 million euros ($73 million), RIA-Novosti reported.

Noga owner Nessim Gaon has said he is seeking at least $60 million in Russian debts.

RIA-Novosti -- whose Paris bureau's accounts were among those frozen -- reported that others account holders included the Finance Ministry, state arms trading agency Rosoboronexport, the Federal Space Agency and the nuclear energy agency Rosatom. RIA-Novosti's Paris bureau said it was notified by VTB France of the decision after a French appeals court confirmed a 1997 Swedish arbitration court's decision in Noga's favor.

A VTB spokesman in Moscow declined to identify the account holders. "We consider it unethical to name the companies," he said.

A Russian government official in Paris said French bailiffs last week ordered VTB France to freeze the accounts of some Russian entities with ties to the government.

The official would not name the account holders and spoke on condition of anonymity because he was not authorized to speak to the media.

Reached by telephone in Geneva, a Noga representative had no immediate comment.

The dispute dates back to deals signed in 1991, the year the Soviet Union dissolved, and 1992. The Russian government says the debts were linked to the now-defunct Soviet state.

The long-running dispute appeared to end in 2006 when a Russian-born U.S. businessman announced that he had negotiated to buy some $70 million in debt owed by Noga to three European banks. It seemed that the move by Alexander Kogan, then-president of St. Louis, Missouri-based IPD Capital, would leave Noga without the backing of major financial organizations.

Kogan said he was buying Noga's debts to France's BNP Paribas and Credit Lyonnais and Switzerland's Banque Cantonal de Geneve. In doing so, he said, he was acting with the knowledge of Russia's Finance Ministry and Cleary Gottlieb Steen & Hamilton, an international law firm that advises the Russian government on debt issues.

Adding a wrinkle to the saga, Kogan said Monday that he transferred Noga's debt claim to the Russian government in the 1990s.

Kogan, speaking by telephone from St. Louis, said that in 1993 Gaon's mandate to collect the debt was revoked by three banks after he went bankrupt and filed for protection. "I bought all the rights and transferred them to the Finance Ministry," he said.

He said Russia would be able to unfreeze the assets and sue Noga for this. "Noga is playing a game," he said.

Noga's previous attempts to seize assets have proved futile, but they have forced Russia to structure a rainy-day budget fund, which gathers windfall oil revenues, to protect it from litigation.

Noga won a Swedish arbitration ruling in 1997 that upheld claims then worth $63 million, and has since sought the seizure of, among others, a famous sailing ship in Brest and Russian planes due to fly at France's Le Bourget air show.

The sailing ship impounded in Brest in 2000 was later released. The fighter jets were allowed to return to Russia after the 2003 incident, but Russia refused to take part in subsequent international air shows for fear of similar troubles.

In 2005, a court froze the accounts of the Russian Embassy in Paris, its trade representation and its delegation to UNESCO at Noga's request.

Russia successfully appealed, arguing that the freeze violated treaties on diplomatic rights and immunity.

Also in 2005, Noga succeeded in briefly arresting a $1 billion collection of paintings from the Pushkin Museum of Fine Arts.

AP, MT, Reuters