The European Bank for Reconstruction and Development (EBRD) is planning to sue Russian oligarch Roman Abramovich and oil company Sibneft to recover $17.5 million (£9.4 million) of money owed to the bank.
The lawsuit accuses Runicom SA, a company formerly directed by Abramovich, the reclusive Russian billionaire and owner of Chelsea football club, of forgery and incurring lavish expenses, such as the purchase of luxury yachts and beauty treatments for Abramovich's wife, rather than repaying its debt.
The EBRD had lent money to finance a Russian small business development programme through SBS Agro, a Russian bank which collapsed after the 1998 financial crisis. A loan which SBS Agro had made to Runicom SA, the main oil trader for Abramovich's Sibneft group, was taken by the EBRD as collateral. The latter started legal proceedings against the bank to retrieve the money in 1999, and a Moscow court found in favour of the EBRD in 2002. Runicom SA, however, declared itself bankrupt shortly after the ruling, and its assets were subsequently transferred to Sibneft.
Jean Lemierre, president of the EBRD, said in an interview with Reuters yesterday that the institution would take the matter to court in Switzerland, where Runicom is registered. The development bank also intends to take legal action against two former directors of Runicom, Abramovich and Eugene Shvidler.
Runicom, however, had previously produced documents which it claimed showed that the loan had already been repaid in an offset to a third party, Zoloto Platina Bank. A Sibneft spokesman in Moscow, responding to questions from Reuters, repeated the argument that the EBRD is owed nothing as the loan has already been paid in full.
A BBC documentary "Sweeny Investigates", to be aired on Thursday, is expected to shed light on the case's complexities.