Government Minister May Be Secret Telecoms Fund Investor
MOSCOW, Jan 19 (Prime-Tass) -- Russia's IT and Telecommunications Minister Leonid Reiman was secretly named by his own law firm as the true owner of a Bermuda-based mutual fund that has amassed control of a large share of Russia's mobile-phone industry, according to a filing in a London court, The Wall Street Journal reported Thursday.
Reiman, a longtime close confidant of Russian President Vladimir Putin, also was described by his own lawyers during a confidential meeting as standing to gain financially from companies since accused of stripping Russian state telecom assets, according to records of the meeting obtained by German prosecutors in a separate criminal investigation, the newspaper said.
The developments have prompted the Bermuda fund to abandon its longstanding legal position that Reiman couldn't be one of its owners. For years, the fund has claimed its only owner is Reiman's onetime lawyer, Jeffrey Galmond. In a sworn affidavit signed last week, a director of the fund, Swiss fiduciary David Hauenstein, said the fund's board had determined that "the point has come when it can no longer maintain" that position.
The document disclosures come amid criminal investigations by several countries into the movement of U.S. $1 billion or more of Russian telecom assets to the Bermuda fund, through a series of European tax havens, trusts and holding companies. The developments also emerge against a backdrop of mounting concern in Western capitals about perceived abuse of power in Russia, The Wall Street Journal reported.
Hauenstein's affidavit said Galmond's earlier sworn statements claiming sole ownership of the fund "could give a misleading impression." But he added that he doesn't know for certain whether Reiman is an owner of the fund, IPOC International Growth Fund Ltd. In a statement emailed late Wednesday, Reiman said, "I have no relation to IPOC," adding that, while he used Galmond's law firm in the 1990s, "we are not linked by any business relationship at present," the newspaper reported.
He added that "it distresses me that because of someone's poorly thought-out, possibly unprofessional actions, my name is mentioned in a conflict with which I am in no way connected." Galmond, in an interview with The Wall Street Journal Wednesday, repeated his assertions that he is the sole owner of the fund and that Reiman doesn't stand to benefit financially from any IPOC-affiliated trusts and companies.
He acknowledged his Denmark-based firm sent a letter to a Liechtenstein bank in June 2002 describing Reiman as "the ultimate beneficial owner of IPOC," as well as "the economic beneficiary" of some Galmond-controlled companies, but he said the statements were made by his staff in error. Liechtenstein police seized the document from the bank and seized a similar document from a Liechtenstein law firm. The contents of the documents were described in the Hauenstein affidavit, though the documents themselves haven't been introduced in court.
Galmond also disputed the accuracy of a 2001 internal memorandum that police seized from the office of Liechtenstein lawyer Daniel Kieber, which is also described in the affidavit. Hauenstein stated that the memo claims Galmond himself, or one of his partners, "indicated that Leonid Reiman was the 'economic beneficiary' " of three different trusts later used to set up IPOC. Galmond's legal partner, F. Michael Boemke, who the memorandum said was also at the meeting, declined to comment. Reached Wednesday by The Wall Street Journal, Hauenstein said his affidavit, signed last Friday, is accurate, but he declined to comment further. It was filed to the Privy Council of the United Kingdom, a civil court.
The fund's legal retreat also followed the emergence of a previously undisclosed trust that Galmond set up in 1996 to benefit Reiman called Meridium. The Hauenstein affidavit alleges that, in meeting with an associate in 2001, Galmond "represented Leonid Reiman to be the economic beneficiary of Meridium." In at least five depositions or affidavits totaling thousands of pages that Galmond has filed in the past three years regarding IPOC and Mr. Reiman, he never disclosed the existence of Meridium.
In the interview Wednesday, Galmond said he had forgotten to disclose the trust, and that it never paid any money to Reiman. At a separate press briefing, he publicly apologized to Reiman for any embarrassment he has caused Reiman. The criminal inquiries grew out of a civil-court dispute between IPOC and Russian conglomerate Alfa Group over ownership of a stake in Russia's third-largest mobile operator, Megafon.
Alfa has claimed in court filings that Reiman and Galmond are illicitly depleting Russian state telecom assets to fund a private telecom empire. Both men have denied the charge. In a 2004 affidavit, Galmond called allegations of money laundering or other improprieties "wholly unfounded and untrue." In the investigations, authorities in Germany, the U.S. and elsewhere are looking among other things at the role played by Germany's Commerzbank AG and other financial institutions in those transactions, which could involve money laundering to obscure the origin of the funds.
The Hauenstein affidavit asserts that Commerzbank officials had at least partial knowledge of Reiman's financial stake. At one point in the late 1990s, Galmond has previously testified, he brought Reiman to a meeting with Commerzbank's chief executive, where they discussed Russian telecom investments. Subsequently, Commerzbank began to publicly pose as the owner of Russian telecom assets that were secretly controlled by Galmond and his associates. Commerzbank has denied doing anything improper, but the new Hauenstein filing states that, in the 2001 law-firm meeting memorandum, one of the participants claimed Commerzbank "had carried out due diligence on Leonid Reiman as the economic beneficiary." If true, that could suggest Commerzbank knew it was fronting for Reiman. A Commerzbank official declined to comment. Galmond said Reiman was a potential beneficiary of a trust holding some of those assets, but never received disbursements.
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Posted to the site on 19th January 2006