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. Last Updated: 07/27/2016

Report: Russia Loses Compensation Case

A German businessman has won control of a $40 million apartment complex in Cologne owned by the Russian government in a court case he brought after his assets in St. Petersburg were seized 11 years ago, The Wall Street Journal reported Monday.

In a Feb. 15 ruling, a German court awarded Franz Sedelmayer, 42, the former owner of a security equipment firm in St. Petersburg, control over the apartment complex, which is a former KGB compound, in an upmarket Cologne neighborhood, the paper said.

The case was the latest in a series of compensation lawsuits brought by Sedelmayer against the Russian government after more than $3 million of his company's assets were seized in Russia, but it is the first time he has been successful.

Many major Western companies are still seeking large compensation for assets seized in Russia.

Under a presidential decree in December 1994, a St. Petersburg villa leased by Sedelmayer's company was confiscated and became part of a residence for then-President Boris Yeltsin. Sedelmayer's business in St. Petersburg was also closed down.

Sedelmayer first won compensation from the Stockholm International Arbitration Court in July 1998, but the Russian government refused to honor it. He then unsuccessfully targeted Russian assets in Germany, including Lufthansa Airlines' payments for overflying Russian airspace and Russia's value-added tax refunds in Germany, the paper said.

Sedelmayer's luck changed when he was tipped off by one of his spy friends about the former KGB compound, and in late 2002 he filed suit after spotting that the complex was listed in Cologne ownership lists as the property of the Russian state, The Wall Street Journal reported.

The apartment complex will be sold off and Sedelmayer paid out of the proceeds, the paper said.

"They tried every trick to thwart me," Sedelmayer said of Russian officials, the Journal reported. "But a building can't run away."

A week after Sedelmayer filed his case in a Cologne court, prosecutors in St. Petersburg began a money-laundering case against him, but no charges have yet been filed, the paper reported.