Trust files $1 bln claims against large int'l traders, Shishkhanov's offshore cos

MOSCOW. May 5 (Interfax) - Trust Bank has filed a lawsuit with the Supreme Court of the British Virgin Islands against large international traders and offshore companies of the former owner of B&N Bank and Rost Bank, Mikail Shishkhanov, for damages in excess of $1 billion, Trust said in a statement.

It claims that in the period from 2013 to 2017, Shishkhanov colluded with international agricultural and commodity traders Cargill, Louis Dreyfus, Bunge, Quadra, Xangbo and Liberty Commodities, to conceal the withdrawal of funds from B&N Bank.

The scheme, according to Trust, was follows: B&N Bank provided funds to international traders under the guise of trade finance transactions, and traders, in turn, sent the funds received to offshore companies associated with Shishkhanov, under the guise of commercial transactions with them. When the trade finance transactions matured after 6-12 months, B&N Bank issued an interbank loan to Rost, a bank from the same group as it. Rost diverted these funds to traders through a network of other companies. Traders used these funds to pay off their obligations to B&N Bank. The money sent through Rost Bank was never returned to it, Trust said.

Trust believes that international traders knew about the fraudulent nature of the transactions and voluntarily participated in illegal transactions, freeing themselves from any financial risks and receiving commission. The traders, it said, gave the impression they were doing genuine deals for the purchase and sale of commodities like grain, raw rubber and others, but no deliveries actually took place.

It was impossible to trace the illegal withdrawal of B&N Bank assets, as its trade finance transactions were displayed in its reporting as properly executed by traders. Rost Bank's debt to B&N Bank has consistently increased, and Rost Bank itself has not received any real counter-submissions from the offshore companies to which it transferred funds for traders, Trust said.

Trust believes the scheme enabled B&N Bank to manipulate reporting, displaying in it the high credit rating of nominal counterparties (international traders) instead of the credit rating of real counterparties (offshore companies without assets).

The Central Bank of Russia in September 2017 put B&N Bank and Rost Bank under temporary administration, and provided Rost Bank with funds to pay off debt to B&N Bank. As a result, Rost suffered the bulk of the financial damage from the scheme, as it was forced to recognize losses from transactions with the relevant counterparties, Trust said. It is the legal successor of Rost Bank, therefore, it believes that it is entitled to claim compensation for the losses inflicted on this bank.

A bank for non-core assets was created on the basis of Trust. Non-core assets of the banks being bailed out - Otkritie, B&N Bank, Rost Bank and Avtovazbank, and a portion of the assets of Promsvyazbank - were transferred to its balance sheet.