The Federal Customs Service accused the bank of laundering money received from Russian exported goods in 1996-99. The bank dismissed the claim Thursday, saying case had been resolve. Experts have been wondering about the size of the sum and making suggestions on the possible political and economic implications of the revived scandal.
Speaking at a RIA Novosto news conference, Steven Marx, a Podhurst Orseck lawyer, admitted the sum was huge but legitimate. He said the BoNY board chairman had acknowledged the laundering of about $7.5 billion at the time, and the plaintiff could demand compensation three times as much as the damage under U.S. law.
In November 2005, the bank pleaded guilty of violating U.S. laws on control over financial flows, and was ordered to pay a $38 million fine.
The Bank of New York case was the first "Russian mafia" inquiry that came into the focus of American justice in the late 1990s. But it later transpired that the funds did not belong to the mafia, but were untaxed profits of Russian exporters.
Marx also said the bank had not hurried to fire the vice president of its London branch, who dealt with clients in Eastern Europe and assisted in money laundering through the Bank of New York, despite auditors' recommendations, thereby exacerbating Russia's damage.
He said Lucy Edwards had instead been allowed to use bank software and was able to conduct billion-dollar transactions from her home.
After facing criminal proceedings in 1999, Edwards pleaded guilty and got away with a brief detention and insignificant fines. She acknowledged charges of illegally transferring Russian money and hiding it in offshore accounts for $1.8 million in kickbacks.
The bank said the case had been resolved, and that the new claims were unsubstantiated: "Based on our knowledge of the facts, we believe any such suit would be totally without merit, if not frivolous, and we would expect to defend it vigorously."
But the lawyers said the statute of limitation had not expired under both Russian and U.S. law. They also denied the bank's accusations of blackmail, when some lawyers had allegedly suggested that bank officials "settling" the affair for a portion of the damage sum.
Marx said they did hold confidential talks with the bank, but that that was the usual practice before referring the case to a court of law.
Media speculation
The Russian media suggested Friday the case could have serious political implications, releasing data on now established companies and business people involved in the murky transactions in the late 1990s.
"Names were not disclosed at the time, but many of those now on the Forbes list of billionaires could surface [in connection with the scandal]," Kommersant daily said.
Suggestions were also made on the possibly negative financial effects. The Bank of New York, a global leader in securities servicing, was selected as the depositary bank for the Russian foreign trade VTB bank's global depositary receipt program, and is the depositary for a total of 30 GDR programs.
