Russia, US bank settle 22.5 billion dollar lawsuit

Russia and the Bank of New York Mellon said Thursday they had reached a settlement in a 22.5-billion-dollar lawsuit linked to an infamous 1990s money-laundering scandal.

Russia's Federal Customs Service withdrew its lawsuit in a Moscow court after the bank (BNY) agreed to pay it just 14 million dollars in an out-of-court settlement, the two sides announced in a joint statement.

"Under the agreement, without admission of liability, The Bank shall pay 14 million dollars as a compensation for trial costs," said the statement, which was posted on BNY's website.

A lawyer for the customs service asked a judge at Moscow arbitration court to drop the suit, Russian news agencies reported from the courtroom.

"This case is an example of the increased vigilance of the Russian Federation in international financial markets," Andrei Belyaninov, head of the customs service, said in the joint statement.

The service had sued BNY in a Moscow court in May 2007, claiming that Russia suffered 22.5 billion dollars in damages from a 1990s money laundering scheme run by a former BNY vice president and her husband.

The husband-and-wife team had earlier pleaded guilty after being accused by US authorities of operating an account through which billions of dollars of Russian money were laundered from 1996 to 1999.

In 2005, BNY admitted to a role in the laundering of 7.5 billion dollars in what is believed to be one of the biggest money-laundering schemes in history.

Russia filed the suit saying that it deserved 22.5 billion dollars because of a provision in US law that allows victims of money laundering to sue for three times the amount that was laundered.

Last month, the Kommersant daily newspaper reported that Russia agreed to the settlement after BNY agreed to extend Moscow a four-billion-dollar line of credit under favourable terms.

Thursday's joint statement made no mention of the line of credit, though it said Russia's decision to settle was influenced by "The Bank's positive contribution to the development of the Russian financial markets."

Source: MSN