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. Last Updated: 07/27/2016

Report Links Reiman With Telekominvest

For MTIT and Communications Minister Leonid Reiman
IT and Communications Minister Leonid Reiman was the main beneficiary owner of a trust company that held shares in Telekominvest, one of the nation's biggest telecom companies, the Financial Times reported Tuesday, citing court testimony given by one of his colleagues.

The disclosure could potentially be very damaging for Reiman, who has long denied any ownership links, and it could prove crucial in a vicious legal dispute over the rights to a 25 percent stake in the country's No. 3 mobile phone operator, MegaFon, between Mikhail Fridman's Alfa Group and a little-known Bermuda-based company, IPOC International Growth Fund. In court cases filed in Switzerland and the British Virgin Islands, IPOC is disputing Alfa's rights to the stake in MegaFon, which is owned by Telekominvest and Sweden's TeliaSonera.

During hearings Monday in the British Virgin Islands, the court was told that earlier hearings in Zurich received "serious, though not conclusive, indications of the existence of illegal activities, such as money laundering, corruption and misappropriation of state property" that could affect IPOC's claims to the MegaFon stake, Alfa Telecom said in a statement Tuesday.

In an affidavit filed in the British Virgin Islands, Danish lawyer Jeffrey Galmond claimed that Reiman was a beneficiary of Fiduciare Commerce Trust, or FCT, in Liechtenstein, which controlled Telekominvest indirectly, the FT said.

The affidavit came in response to allegations made during court proceedings that Reiman was involved in corrupt and criminal practices, the FT said.

Galmond's testimony comes after months of media speculation that Reiman had ownership links to Telekominvest, and that, as the chief regulator of Russia's telecom market, could have been involved in a series of probes launched by prosecutors earlier this year against VimpelCom, the mobile phone operator owned by Alfa.

Reiman has repeatedly denied having any financial interest in MegaFon or in Telekominvest, which he ran while President Vladimir Putin's wife, Lyudmila, worked there. In a statement published in a separate story in The Wall Street Journal on Tuesday, Reiman said: "Active attempts are underway to drag me and the ministry into a fierce competitive battle." He said would defend his reputation "by all legal means" and again denied any financial connection to MegaFon or IPOC.

Galmond, however, in his affidavit said that he set up FCT in 1997 as a trust company to hold shares in First National Holdings, which directly owned Telekominvest, and made Reiman FCT's "primary beneficiary," the FT said. He said Reiman was to gain a bonus in a planned sale of First National Holding shares to PLD Telekom, but the deal fell through during the 1998 crisis, the FT reported.

FCT later swapped its shares in First National Holding in December 2001 for a stake in Comtel Eastern, which it held until October 2003, when the company became dormant, the FT cited him as saying. The FT also cited him as saying: "No appointments and no distributions whatsoever were made to Mr. Reiman." Galmond also said he is the owner of the First National Holding shares and other holdings in MegaFon held through IPOC, the FT said.

In a telephone interview with The Wall Street Journal, Galmond also said he was the owner of IPOC and a close friend of Reiman's.

The FT on Tuesday cited an IPOC spokesman as saying: "Mr. Reiman at no time past or present had any share options or entitlement to any financial reward from a sale of Telekominvest."

In an interim ruling in a separate court case into the MegaFon dispute, a private arbitration court in Zurich found "that there might be a group of corrupt government officials in the telecommunication industry acting in a concerted way" to benefit IPOC and themselves, the WSJ reported.