Delay in Moscow May Be Bad Sign for Bank of New York

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The New York Sun

MOSCOW — Bad news was on the docket for the Bank of New York Mellon in Moscow early yesterday, as hearings in a racketeering case against the bank were postponed until Thursday, a move that may impede the ability of the bank to put on the stand a number of witnesses who flew to Moscow to help in its defense.

RELATED: Alan Dershowitz’s Testimony (pdf) | Richard Thornburgh’s Testimony (pdf) | The New York Sun’s Special Coverage.

Among the legal luminaries who sat in the crowded, stuffy courtroom for several hours without testifying were a former U.S. attorney general and governor of Pennsylvania, Richard Thornburgh, and a former chief justice of the U.S. Court of Appeals for the District of Columbia Circuit and congressman of Illinois, Abner Mikva. Notably absent was a famed Harvard Law School professor, Alan Dershowitz, whose testimony for the plaintiffs was not handed to the court until yesterday morning and was later withdrawn. (An article on the testimony is on page 10.)

“We temporarily withdrew the testimony because we didn’t want to give the court an excuse for a continuance. However, it will absolutely be submitted,” a lawyer for the plaintiffs, Steven Marks, said. The testimony — which consists of 19 pages outlining Mr. Dershowitz’s argument and nearly 70 pages of curriculum vitae — was handed in late because of technical difficulties with the translation, he said.

At issue is a $22.5 billion lawsuit brought by the Federal Customs Service of the Russian Federation against the Bank of New York Mellon over money laundering that occurred in the 1990s. The Russians are basing their argument on the Racketeer Influenced and Corrupt Organizations Act, and it is believed to be one of the first times a RICO claim has been filed in a court outside America.

In an apparent break from previous statements, the managing partner at the law firm Boies, Schiller & Flexner, Jonathan Schiller, who represents the Bank of New York Mellon, gave some indication that the bank may be willing to discuss a settlement during a press briefing following the hearing.

“No agreement has been reached between the Bank of New York and the Russian Federation to arbitrate the case — which I would gladly do,” he said at the briefing. Mr. Schiller added that although he believed the plaintiffs were wrong, it “doesn’t mean that there shouldn’t be a resolution” to the case. The bank plays an important role in Russia, he added, “so there should be a resolution to put this behind us.”

Mr. Marks said this offer was news to him: He said he had expressed some of the same sentiment in April but was rebuffed by Mr. Schiller in an e-mail message.

Some 50 observers were squeezed into the drab, stiflingly hot room on the seventh floor of the Moscow Arbitration Court, a commercial court in downtown Moscow, for a four-hour hearing that was peppered with intermittent banging from a nearby construction site.

Helming the defense team was a partner in Moscow at the white-shoe law firm Clifford Chance, Ivan Marisin, who was joined by Mr. Schiller and a half-dozen experts, a press team, translators, and assistants.

Leading the charge for the plaintiffs was Ekaterina Dukhova, who said she has her own practice. The Russian side boasted a far smaller entourage, including two American experts, G. Robert Blakey, widely considered the author of the RICO statute, and a lawyer who is based in Moscow and Philadelphia, Bruce Marks, who is best known for representing several Russian oligarchs. Bruce Marks has no relation to Steven Marks.

The teams sat waiting more than 30 minutes until the panel of three judges arrived and appeared shocked when the hearing was concluded before they were able to speak. In fact, only one expert testified before the court adjourned: a professor at Moscow State Institute of International Relations, Evgeny Vasilyev, who spoke on behalf of the plaintiffs.

Dressed in a black turtleneck, the mustachioed Mr. Vasilyev gave a broad history of the RICO statute for some 45 minutes, before standing up to a stiff cross-examination by Mr. Marisin.

The lead judge, Lyudmila Pulova, who sat expressionless during the hearing while sandwiched between two junior associates, then dismissed the court. She explained that one of the associates, as the lower-level judges are called, had a prior commitment and that the hearing would be adjourned until Thursday.

“The court took a two-day recess, which we didn’t expect and weren’t notified of in advance,” Mr. Schiller said at the press briefing following the hearing.

While expressing some willingness to discuss a settlement, Mr. Schiller also said he expected the case “will drag on for a long time because we want to be heard.” He added that the defendants would appeal should they lose, in a process he foresees “lasting months, if not years.”

The associate general counsel for the Bank of New York Mellon, Matthew Biben, spoke during the press briefing of “this disease of American trial lawyers,” warning that “this could be the beginning” of another wave of the “frivolous lawsuits” that have plagued American companies and reduced their competitive edge. He said that if the Russian Federation were to win, it would be a “tragedy” that would “wreak damage on the economy here.” After being prevented from pursuing similar suits in America because of successful torte reform, the trial lawyers are now going “forum shopping” by pursing similar cases abroad in countries like Russia, Mr. Biben said.

Mr. Marks said those statements were part of a “brilliant, twisted strategy” by the defense that “lays out a threat that unless the bank wins, it is evident that they didn’t get a fair trial.”


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