Russia drops $22.5B suit against BNY Mellon

Russia dropped a $22.5 billion lawsuit Thursday against Bank of New York Mellon after the company agreed to pay $14 million to settle a decade-old money-laundering case involving one of its former executives.

The agreement, announced in a joint statement, was expected after Finance Minister Alexei Kudrin said in September that Russia had reached a settlement with the bank under which it would receive no less than $14 million for court costs — the amount of a non-prosecution fee that the bank paid in the United States.

Kudrin said the government would also receive a $4 billion discounted loan from the bank, which he insisted was not related to the lawsuit.

Russia’s federal customs service formally asked the Moscow Arbitration Court to close the case Thursday and the court agreed, bank spokeswoman Natalya Miroyevskaya said from the courtroom.

The case stems from a 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 in the 1990s. The customs service went to court in 2007 to claim lost tax revenues on those transfers.

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.

The litigation in Russia raised concern among investors about the rule of law.

Andrei Belyaninov, chief of the customs service, said in the joint statement that the case demonstrated Russia’s “vigilance in international financial markets” and “the efficiency and independence of Russian courts.”

An official explanation of the case from the U.S. Attorney’s Office had helped the customs service conclude that “there is no basis to hold the bank liable,” Belyaninov said.

Matthew Biben, executive vice president of Bank of New York Mellon, said the bank is “pleased to have this matter behind us.”

Related Topics: Bank Of New York Mellon Corp.