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Uhispank sentenced to pay 56.6 mln kroons once frozen in Russia

  • 2000-09-28
  • Kairi Kurm
TALLINN - A Tallinn municipal court made a landmark ruling Sept. 19 ordering Uhispank to pay 56.6 million kroons ($3.1 million) to A.O. Imbi for funds frozen in Russia's Vneshekonombank ten years ago.

The bankrupt A.O. Imbi acquired the claim from Latvian company Erkers, whose assets were frozen in Russia in a correspondent account with an Estonian commercial bank that was later merged with Uhispank.

Kalev Bachmann, a lawyer who represents A. O. Imbi, said that the two companies were business partners.

"It would have been very expensive and troublesome for a Latvian company to claim money from a foreign country, so Imbi acquired this claim for a certain amount of money," said Bachmann.

He said that it is the second time that the company has tried to get its money back.

"The lawsuit has lasted for two years. The lawyers of the bank have tried to put obstacles in the way several times," said Bachmann.

Bachmann said that the final court ruling failed to consider the monthly interest and the dollar exchange rate that would have raised the total amount of the claim to 72 million kroons.

"The Constitution of Estonia enacts the principles of expropriations. Expropriation shall be valid if it is done according to the statutes, in cases of public interest and in exchange for equitable and appropriate compensation. The decision of Riigikogu did not set any procedures for how the expropriation should be done. Also the formation of VEB-Fund was not in the public interest nor were certificates of VEB Fund equitable and appropriate for compensation," said Bachmann.

Uhispank promised to appeal the decision to Tallinn District Court, saying that Erkers did not have the credentials to surrender the claim to Imbi.

"Why don't they want to pay it directly to Erkers then?" Bachmann wondered.

Erkers acquired the claim from Baltic Uhispank (Union Bank of Baltics), whose claim was originally against Pohja-Eesti Pank (North Estonian Bank), one of the banks on the basis of which Uhispank was formed.

Eero Raun, head of PR department at Eesti Uhispank, said that the money has never actually passed through the bank.

"Pohja-Eesti Pank, that merged with Eesti Uhispank, never had the pertinent claims booked on its balance sheet as these claims had been transferred into VEB Fund from the balance sheet of Pohja-Eesti Aktsiapank, the predecessor of Pohja-Eesti Pank," said Raun.

"Whether the claims are booked on the balance sheet or not makes no difference. If all the debtors of Uhispank decide one day to transfer all the claims off their balance sheet, it does not mean that they will lose all their responsibilities," Bachmann said.

"The Estonian Parliament had established the VEB Fund next to the central bank to collect all the frozen accounts. Uhispank is not the legal person to ask money from," said Raun.

Bachmann said Parliament did not have any right to transfer claims to the VEB Fund in 1993.

He also said that during its seven years of existence, VEB Fund has never tried to get the money back from Russia.

Eesti Uhispank is of the opinion that the freezing of assets disputed in this case was a political decision by Russia in order to exercise pressure on Estonia and consequently the whole issue should be settled by both states.

"It is a dispute between the two countries, Estonia and Russia. A private company cannot do anything about it as long as a decision has not been made between the two countries," said Raun.

According to BNS, from 1991 till 1992 VEB Fund froze a total of $67 million belonging to Estonian clients. The Estonian government, the Bank of Estonia and the Baltic Uhispank have the biggest claims on VEB Fund.

Bachmann suspects that Uhispank has had access to the money in the correspondent bank all the time. "The amount of the so-called frozen money has decreased by today," said Bachmann.

"Pohja-Eesti Aktsiapank was a state bank. For a client it was purely a relationship between the bank and the client. It is not the client's decision, whether the bank keeps its money in New York or Moscow," said Bachmann.

Bachmann said that Russia froze the accounts of the correspondent bank and the clients and did not have any claims against the Russian banks. He said that Uhispank was wrong if it thought that it did not have the obligation to pay out the clients' money.

Uhispank is planning to file an appeal with Tallinn District Court. "The next level depends on many parties," said Raun. "It would be nice if the process would move further."

In the first half of 2000 Eesti Uhispank earned 45.5 million kroons consolidated profit. By June 30, the group's assets had reached 15.3 billion kroons.