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By John Helmer, Moscow

Rusal has lost another round in its international litigation against Andrei Raikov, the former head of bauxite and alumina supplies for Rusal’s smelters, as a New York judge ordered last week more disclosures of secret Rusal bank payments by the Bank of New York.

Raikov, a 20-year friend of Oleg Deripaska, Rusal’s chief executive, has been accused by Rusal lawyers in Moscow and Cyprus of having arranged over-market freight charges and kickbacks on shipping contracts fixed by several shipping companies – Natica Shipping, Aldi Marine, Mercury Shipping and Trading — and their owner, Dmitry Osipov. The shipments took place between 2003 and 2006. In November of 2007 Rusal signed an agreement in London releasing Osipov and the shipping companies “in respect of all claims including fraud”. In 2008 in Moscow a Russian police investigation of the Rusal allegations was terminated with a formal rejection of the allegations for lack of proof.

Rusal, plus three associated trading companies and two mystery entities — Calibre Properties Worldwide Ltd., and Mont Cervin-Consultadoria E Servicos Unipessoal LDA – have pursued Raikov and Osipov in a Cyprus court, and obtained local bank account information about them. US lawyers for Rusal, Timothy Pfeifer and Mary Howe of the Baker & Hostetler firm, then filed for more bank account disclosure from Natica in the federal US District Court for the Southern District (Manhattan). That claim is still being argued on appeal. Rusal claims in its appeal filing that the Natica companies were engaged in “a network of fraud and corruption”, and that they have practised “deception” on the US courts.

In parallel, a counter-claim by Osipov and Natica in the New York court has required several US banks for the Rusal companies to release reams of transaction data in support of Natica’s defence in the Cyprus court, as well as in a London arbitration. As the Rusal secrets have poured out, Deripaska ordered his lawyers to try to stem the flood. “Natica has acted in bad faith,” Pfeifer for Rusal has claimed, “and attempted to circumvent the policies of the U.S. legal system by misleading this Court, propounded overbroad and intrusive discovery requests far outstripping the claims at issue in the Foreign Proceedings, and has made no showing that the foreign tribunals are receptive to this Court’s assistance or are even interested in the discovery Natica seeks.”

In a hearing on February 19, Judge John Koeltl tossed the Rusal arguments out of court, rejecting the company’s application for the return of all its bank documents. Reading his judgement out in court, Koeltl rejected Rusal’s claim that Natica has been acting deceptively or in bad faith. “The movants [Rusal] have not shown that Natica failed to disclose any material facts” to the New York court, the judge ruled. Natica’s arguments have been “plausible”, he added, ruling that the remaining disclosures by the Bank of New York should proceed. He noted that “four of the five banks [JPMorgan Chase, Deusche Bank, Citibank, Bank of America ] have already complied with the subpoenas and the Bank of New York has already prepared a protective order should it also be required to comply. None of the banks have appeared in support of the current [Rusal] motions… The court has carefully considered all the parties’ arguments. To the extent not specifically addressed, they are either moot or without merit.”

Raikov will not speak publicly about the case, nor about the reasons for Deripaska’s campaign against him. In a warning letter to Rusal, a lawyer for Natica called the Rusal campaign “an illegal conspiracy” to remove the Osipov group of companies from competing with Rusal and Glencore shipping companies in the business of transporting bauxite and alumina. The letter also charges Rusal with “the use of unlawful surveillance and cyber-attacks to extract commercially sensitive data from Osipov Group company computers.”

For more on the significance of the Rusal bank account secrets, read this.

At the Moscow headquarters of Rusal, sources inside the company claim the breach of secrecy and the failures by the company’s US lawyers to repair the damage have intensified Deripaska’s suspicion that his subordinates are in league with his rivals and enemies. The insiders report that two women employees of Rusal were fired this month on this suspicion. Calls to their desks were not picked up this week. The sources claim the two women were obliged to sign statements that they were resigning voluntarily.

Captain Vladimir Shabanov has also been reported by Rusal sources as having been removed from his job in charge of loading and shipping the bauxite mined at Rusal’s Aroaima mine in Guyana. Shabanov became an international figure in 2005 after surviving attack and capture by Somali pirates when he was master of the cargo vessel, Panagia. After his release he was decorated for bravery for his actions in defence of the vessel and its crew.

Rusal insiders are also responding with additional details of the shooting death on December 27 of Yury Rogov, another of Deripaska’s longtime friends. Rogov was responsible for Deripaska’s farm and property businesses in the Krasnodar region, says another former friend of Deripaska’s.

Note: The Russian in the headline can be translated as: “Who’s the goat here?”

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