Russia Update: ‘Putin’s Banker’ Files $10 Billion Suit Against Russia

Sergei Pugachev, founder of the failed Mezhprombank, has filed a suit for $10 billion in the Permanent Court of Arbitration in the Hague, RBC.ru reported, citing Pugachev’s representative Dmitry Morochenko. Reuters cited a statement Pugachev released:

“Over the past few years, Russia has pursued a multi-pronged attack against me, my family, and my investments. I refuse to be intimidated by Russia’s tactics.”

Pugachev said devices had been found under his car which were investigated by Scotland Yard.

Pugachev, a former friend of President Vladimir Putin who is said to have served as his banker, fled Russia in 2013 when a criminal case was launched against him on charges of embezzling 28 billion rubles which the Bank of Russia had given Mezhprombank as collateral-free loans. (The amount is currently the equivalent $420 million but was worth more at the time, before this year’s collapse of the ruble.)

Subsequently additional charges were filed against him relating to 120 loans totaling 64 billion rubles ($960 million) taken by businesses he controlled which were backed by shares in a Cyprus-registered company ORK Mining, Ltd.

In June, the UK agreed to review the issue of extraditing Pugachev to Russia and he was barred from leaving England and Wales. In July, he fled London saying he was threatened with murder, and is reportedly in France where he says he has had citizenship since 2009. Pugachev gave an interview to the Guardian July 28 in which he said back in 1996, he was part of a tiny group including Boris Yeltsin’s daughter Tatyana and her future husband Valentin Yumashev who selected Putin — now his “bitter opponent” — to be Yeltsin’s successor. He acknowledged this was a “tragedy for Russia.”

Meanwhile, presidential spokesman Dmitry Peskov denied that Pugachev’s personal relations with Putin were related to the criminal investigation, Novaya Gazeta reported. “From all indications, the investigative agencies have some questions for Mr. Pugachev,” he told reporters.

Novaya Gazeta reported that the lawsuit in the Hague is related to a bilateral investment agreement with France in which Pugachev lost some assets. In 2010, the Central Bank revoked Mezhprombank’s license and it declared bankruptcy, owing more than 80 billion rubles. An insurance company was said to have sued Pugachev for 1.171 billion pounds and demanded the freezing of his assets.

Pugachev said he was “down to his last $70 million,” and accused the Russian government of seizing his shipyards and real estate assets.

— Catherine A. Fitzpatrick