News (#03 March 2017)


Ukraine won lawsuit on hazardous waste collection

The US District Court for the Southern District of New York passed a verdict in favor of the State of Ukraine in a lawsuit filed by SI Group Consort to the sum of USD 36.8 million.

The company SI Group Consort LTD filed a lawsuit against Ukraine and Ivano-Frankivsk Regional State Administration with requirement to perform a decision of the Economic Court of Ivano-Frankivsk Region on debt collection for provision of services on hazardous waste collection on the territory of USA. The company claimed back USD 36.8 million at the expense of the State of Ukraine funds deposited in US banks, as well as property and funds of Ukrainian state-owned enterprises on the territory of this country.

The Court acknowledged that the State of Ukraine has sovereign immunity in these proceedings and refused all claims asserted by the plaintiff.


Deutsche Bank pays penalty for scheme resulting in USD 10 billion withdrawal from Russia

The largest German bank, Deutsche Bank, will pay a fine of USD 630 million for an illegal scheme resulting in the withdrawal of USD 10 billion from Russia.

The financial institution agreed to pay USD 425 million under the agreement concluded with New York State Department of Financial Services. The bank will pay a further USD 204 million to the Financial Services Authority (FSA), Great Britain.

The New York regulator said in its statement that USD 10 billion were illegally taken out of Russia by means of “mirror” transactions that were concluded through Moscow, London and New York offices of the bank.

American and British financial regulators found that “mirror” transactions were performed at Deutsche Bank in the period from 2011 to 2015. In the course of such transactions clients of the Moscow branch of the bank placed orders for purchase of shares of Russian companies in rubles.

After that – often later on the same day — the buyer’s associated companies sold the same shares at the same price in London. The seller, as a rule, was registered offshore and paid in dollars.

About 12 companies were involved in this scheme. None of transactions bear signs of economic feasibility, said in the statement issued by the New York State Department of Financial Services.

The US authorities believe that Deutsche Bank had “plenty of opportunities” to detect and prevent the illegal scheme, but the bank’s management did not make use of these opportunities.

In December, Bank of Russia fined Deutsche Bank RUB 300,000 for violating internal control rules.


AMCU investigates case against the Ministry of Justice of Ukraine

The Antimonopoly Committee of Ukraine began considering a case suggesting possible violation of legislation on economic competition protection by the Ministry of Justice of Ukraine.

A reminder that in May 2016, in response to numerous requests from companies-organizers of electronic trades complaining that the seized property market was being monopolized by the State Enterprise SETAM, the AMCU began a review of sales on the seized property market via the conducting of electronic trades.

In September 2016 the AMCU obliged the Ministry of Justice to stop the monopoly of SETAM. At a meeting of the Committee of 20 September 2016, a decision was adopted, according to which the Ministry of Justice was provided with recommendations, mandatory for consideration, to stop actions that contain signs of violation of legislation on economic competition protection, to eliminate the causes of such violations and conditions that contribute to them, namely, to distinguish between the functions of a company-organizer of trades and a party providing software maintenance for electronic trading system, technological support, retention and protection of data contained therein.

The Committee also obliged the introduction of changes to laws and regulations, which would provide: the possibility to carry out sale activities on the seized property market by way of electronic trades conducted not only by SE SETAM, but by other economic entities; objective non-discriminatory criteria of economic entities – organizers of trades, which may be participants on the seized property sale market, as well as a competitive procedure for their selection; an upper limit for the organizer’s remuneration amount for organizing and conducting electronic trades, which will provide opportunity to economic entities — organizers of trades to compete in terms of price.


Samsung chief arrested in corruption case

One of the richest businessmen in South Korea, Vice President and de facto head of Samsung Electronics Company, Lee Jae-yong, was arrested in connection with a corruption scandal that led to the impeachment of President Park Geun-hye.

In January a court in South Korea dismissed a request for the arrest of Lee Jae-yong, but since then, as already mentioned, the court got new evidence at its disposal.

Lee Jae-yong formally holds the post of Vice President of Samsung, and is considered to be the de facto head of the corporation.

He is accused of illegal transfer of monetary means to funds controlled by Choi Soon-sil, a friend of South Korean President Park Geun-hye. Lee Jae-yong denies accusations of abuse of his official position.

Previously, the investigation determined that Choi Soon-sil illegally forced big business to make multi-million dollar donations to two non-government funds associated with her. It was investigation of these funds’ activities that began the corruption scandal that resulted in the impeachment of Park Geun-hye.

According to the prosecution, Lee transferred USD 36 million to one of the funds of Choi Soon-sil.

The investigation does not rule out the fact that the donations could be regarded as a bribe.

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