07 Apr 2021
Two former Societe Generale SA bankers are challenging Swiss fines issued for failing to report suspicious deposits worth more than $700 million made by a one-time ally of Russian President Vladimir Putin.
The former head of SocGen’s Swiss private bank and the ex-head of compliance, who can only be named as L. and K. under Swiss reporting restrictions, are appealing fines totaling 90,000 swiss francs ($96,000) at a trial starting Wednesday in Bellinzona.
Sergei Pugachyov, a former Russian senator, was once a close confidant of Putin and amassed a fortune of more than $1 billion in the 2000s. Russian prosecutors, however, claim his fortune is based on theft and have been seeking his extradition from France, so he can face charges that he embezzled at least $1.5 billion from his Moscow-based International Industrial Bank before it collapsed.
Between 2007 and 2010, SocGen opened 30 accounts in the name of 22 companies on behalf of Pugachyov and his family, according to Swiss prosecutors. In the first few months of 2009, $713 million was deposited by Pugachyov’s companies, ostensibly intended for Russian construction projects, according to the indictment.
Lawyers for the pair declined to comment ahead of the hearing. A spokesman for SocGen declined to comment.
Over the course of 2009 it became clear that those construction projects weren’t going forward, the prosecutors said. During 2010, SocGen’s Swiss executives learned more about the ties between Pugachyov’s companies and troubled Mejprombank, as International Industrial Bank is known in Russia, which eventually filed for bankruptcy in late 2010. Then in January 2011, Pugachyov lost his Russian senate seat and was stripped of his parliamentary immunity as a criminal investigation was opened against him over his role in the collapse of Mejprombank, according to prosecutors.
By Hugo Miller, Bloomberg, 7 April 2021
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