Friday, March 25, 2016

Bank of Saint Petersburg Named Its Friends and Relatives

Justice Hildyard of the High Court of England and Wales continues proceedings on suit of Bank St. Petersburg vs Russian businessman Vitaly Arkhangelsky and Arkhangelsky's counterclaim against the bank.

On Monday, March 21, four-day cross-examination of the former chairman of the Bank's board Alexander Savelyev was finished. Savelyev, who headed the bank in 2001-14 he told the court that it was a period of the Bank's rapid growth at the rate of up to 100% a year. For the most part of that period the governor of St. Petersburg was Valentina Matvienko who headed the region in 2003-11.

Answering the questions of Arkhangelsky's representative, admitted that Matvienko was one of his old friends and they had event been business partners. Together they found KomAvtoServis Company. However, he stressed that they were the business partners for "very short time" before he came to the bank in 2001.

Savelyev called a "coincidence" the Bank's rapid growth in the time of Valentina Matvienko's governorship. He flatly denied Arkhangelsky representative's suggestion that the Bank used its contacts in the city administration to receive the exclusive access to St Petersburg subway databases that contributed to the BSP's success in the Visa card market in the city. Savelyev stressed that the bank's success was only the result of "hard work".

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When she served as the governor, Matvienko's son Sergey was invited to the Bank of Saint-Petersburg to take a vice-president position. According to Saveliev, Matvienko Jr. was responsible for installation of computer hardware and the Bahkir software bought for "a lot of money" by the bank that made nothing of them. Asked by Justice Hildyard about Sergei Matvienko's contribution to bank's development, Savelyev admitted that the new vice-president had to take software from the warehouse and install it on the existing hardware. Savelyev, however, pointed out that nobody could manage it before Sergey Matvienko and his team of "IT-experts" arrived in the bank. Answering Justice Hildyard's question whether Sergey Matvienko's team was selected at a tender of any kind Savelyev said the bank had no time to arrange any competition.

Inviting Sergey Matvienko to join the bank, the BSP offered him a shareholding as a reward for installing software. Answering Justice Hildyard's question who calculated the size of Matvienko's share against the value of the work performed, Savelyev said the BSP at that time was loss making and the share transfer was just a "gesture." According to him, Valentina Matvienko was not involved in that decision.

Until 2006, Matvienko Jr. owned 5% to 8% of shares. After several additional issues his shareholding was diluted and reduced to 3%, and he gave the shares to his father Vladimir Matvienko. Savelyev pointed out that was a gift as Sergey Matvienko is a "good son" who takes care of his parents. He denied that father and son had always been nominees while the actual shareholder of the bank was Valentina Matvienko.

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Savelyev, who now heads the BSP supervisory board, answering Arkhangelsky representative's questions, admitted that Sergey Serdyukov who owns 5.45% of the Bank shares is the son of former Russian defence minister Anatoly Serdyukov who resigned in 2012, after a notorious corruption scandal. Savelyev said he know the former minister personally as the latter earlier headed St Petersburg tax administration.

Since 2005, one of BSP shareholders has been Valery Puzikov, Anatoly Serdyukov's brother-in-law also involved in the corruption scandal in 2012.

Savelyev denied that Sergei Serdyukov and Valery Puzikov are Anatoly Serdyukov's nominee shareholders in the Bank.

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Saveliev and the Bank top managers formally control 53.15% stake in the BSP. Savelyev holds 23.7% of those shares. The executives mainly own their shares through the Vernye Druziya (Loyal Friends) management company. Through an offshore entity, a shareholder holding 19.95% stake in that company is Oksana Saveliev, the daughter of Alexander Saveliev. This is the official information posted on the bank's website.

Answering Arkhangelsky representative's questions, Saveliev admitted that the management company was established with the only purpose to control the bank's shares in his behalf. He told the court that his daughter received the shares in 2015, and he financed the purchase as she is a medical doctor and he has still given her a kind of financial support. He expressed hope that Oksana Saveliev and Vernye Druziya would control the Bank in the future.

The bank claims that Arkhangelsky, who, together with his family, left Russia in 2009 and was granted political asylum in France, did not settle with creditors and tries to recover a debt.

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Archangelsky in his statement of claim says that during the global financial crisis the bank agreed to defer payment on loans for six months. As a collateral, the bank demanded Archangelsky to transfer the shares of companies that were a part of his Oslo Marine Group - West Terminal port complex and Scandinavia insurance company, the owner of a half of Onega terminal. Before the stipulated term expired, the bank demanded loan repayment and later used its political contacts including top law enforcement officers and St. Petersburg Governor Valentina Matvienko, sold the shares to a sister firm at a lower price and changed the executive of Arkhangelsky's companies. He estimates the damages at $500 million.

The course of the trial will be covered by the press-office.
Contact: Natalia Khmelik

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