BoNY Asks Court to Dismiss Suit

A lawyer for the Bank of New York Mellon asked a Moscow court on Monday to dismiss a $22.5 billion money-laundering case against the bank on a technicality.

The lawyer, Ivan Marisin, also insisted that the Federal Customs Service, which filed the lawsuit in May, had yet to serve a proper notice, but he said the bank would agree to take part in the hearings anyway.

Customs officials accuse the bank of money laundering, saying it had accepted illicit money transfers from Russia into accounts held by dummy U.S. firms.

The bank dismisses the accusation.

At the start of Monday's hearing, Marisin raised his eyebrows in visible astonishment when the court turned down his motion to dismiss a Federal Customs Service lawyer from the case.

Marisin said the lawyer, Maxim Polev, had no authority to represent the customs service in the case. The customs service authorized Polev to represent it in a case against the Bank of New York Company Inc., but the court later changed the defendant to the Bank of New York, a different legal entity, Marisin argued.

He likened the change to making VTB the defendant instead of Sberbank. "Mr. Polev must join the journalists," said Marisin, a lawyer at Clifford Chance's Moscow office.

Polev countered that the names were very similar and that the case number had remained the same.

Presiding Judge Lyudmila Pulova and two other judges in the trial did not say why they had rejected Marisin's motion.

Marisin then asked the court to dismiss the case, launching into an hour-long speech to explain why he felt it was void. His points were also outlined in a motion passed out to the other lawyers, who fanatically flipped through the pages of their copies as Marisin spoke.

Marisin said Steven Marks, a U.S. lawyer who signed the lawsuit on behalf of the Federal Customs Service, did not have the right to represent the agency under Russian law and the agency's internal regulations. The customs service should have authorized Marks directly, but it only gave representative powers to his employer, Miami-based law firm Podhurst Orseck, he said.

Furthermore, the contract between the customs service and Podhurst Orseck should be considered nonbinding because the service did not conduct a mandatory tender to hire a lawyer and promised the firm 29 percent of any funds that it collected from BoNY, Marisin said. Such a promise is against Russian law, he said.

"There's no other way to correct the situation but to dismiss the case," he told the judges.

Customs service lawyers asked the court for a recess to prepare a response, and the judges adjourned the case until next Monday.

Marks, whose translator whispered into his ear throughout the session, said outside the courtroom that his firm's contract and his authority were in full compliance with U.S. bar rules. If the bank got its way, it would be a "travesty of justice," he said.

The Federal Customs Service asked the court to apply U. S. law in the case, and Polev said after the trial that if the court agreed, this would help the service's lawyers push the case ahead.

The charges stem from a money-laundering case in the United States against former Bank of New York vice president Lucy Edwards, who has admitted to helping launder the money from Russia with her husband. The customs service maintains that the bank owes it $7.5 billion in lost taxes and penalties and wants triple damages under U.S. law. In the U.S. case, the bank admitted to failures in monitoring its staff and paid $38 million in penalties under a deal with the U.S. Justice Department, but it was never charged with fraud or money laundering.