HSBC and manager of firm formerly controlled by Browder aim to settle dispute amicably
MOSCOW, May 7 (RAPSI, Nikita Shiryayev) – HSBC Bank (RR) and Kirill Nogotkov, the bankruptcy manager of Dalnaya Step, a company believed to be formerly controlled by William Browder’s Hermitage Capital Management, are to consider settling their dispute in an amicable way, RAPSI correspondent reports from the Russian Supreme Court on Monday.
According to the Supreme Court’s panel dealing with economic disputes, the case is to be adjourned until June 28 to give the parties time to prepare an amicable settlement as the hearings over a lower court’s ruling to recover assets from persons that were in control of Dalnaya Step continue.
Cassation appeals against the ruling in question were filed both by Nogotkov and HSBC Bank (RR).
In June 2017, the acting manager of Dalnaya Step filed a claim to collect funds totaling to 1.2 billion rubles (about $19 million at the present exchange rate), $255,500 and £1,800,000 from HSBC Management (Guernsey) and HSBC Bank (RR), who were formerly in control of the company. In August of that year, the Commercial Court of the Republic of Kalmykia granted the lawsuit.
The Sixteenth Commercial Court of Appeals upheld the ruling in October 2017. However, in November, the North Caucasus District Commercial Court reduced the amount to be collected from the defendants in favor of Dalnaya Step by $255,500 and £1,800,000 respectively.
On March 21, 2016, the court ruled to resume bankruptcy proceedings with regard to Dalnaya Step. According to an acting manager back then, proceedings were still in effect and there was a need to make former controllers of the company accountable.
In 2015, the department of Russia’s Federal Tax Service (FTS) for the Republic of Kalmykia filed a motion with the court to declare void a decision made in October 2007 to complete the liquidation of Dalnaya Step. The FTS department said the reason for the petition was that Russia’s Interior Ministry was investigating Alexander Dolzhenko, a former bankruptcy manager at Dalnaya Step, on suspicion of premeditated bankruptcy.
On December 29, the Tverskoy District Court of Moscow passed the sentence on Browder and his business partner Ivan Cherkasov in absentia for deliberate bankruptcy and tax evasion. Browder was sentenced to 9 years in prison and Cherkasov received 8 years in prison. The defendants were also fined 200,000 rubles (about $3,500) each. Moreover, the court granted a civil lawsuit and recovered 4.3 billion rubles (about $75 million) from the defendants in favor of the Russian Federation.
Prosecutors claimed that the defendants caused damage estimated at over 4 billion rubles.
In 2013, a Russian court sentenced Browder in absentia to 9 years in a penal colony. The court found that between 1997 and 2002, Hermitage Capital auditor Sergey Magnitsky created and applied an illegal tax evasion scheme in the interests of Browder.
Magnitsky worked for Firestone Duncan and represented Hermitage Capital, which the Russian authorities accused of tax evasion. Magnitsky was arrested on fraud charges in November 2008 and found dead in a Moscow detention center in November 2009. The lawyer’s death provoked an international outcry.
In July 2013, Moscow’s Tverskoy District Court found Magnitsky guilty of tax evasion and closed the case due to his death. According to the case materials, Magnitsky’s and Hermitage Capital director William Browder’s actions cost Russia over 500 million rubles (about $8 million).