Banks avoid US law firm trying to represent Russian lender VTB

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The VTB bank logo is seen at the Saint Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 3, 2021. REUTERS/Evgenia Novozhenina

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  • New York’s Brafman & Associates says it’s already been rejected by three banks and is asking others to facilitate customer payments
  • Bank disputes claims it helped send money to Russian separatists who allegedly shot down a plane in 2014

(Reuters) – Lawyers who agreed to represent Russia-sanctioned VTB Bank in a dispute in the United States said a third bank refused to work with them to handle the payment of legal fees, forcing them to ask for more time to pursue the case.

Manhattan law firm Brafman & Associates has been trying since early June to formally sign on as defense counsel for VTB in a lawsuit alleging the bank facilitated payments related to the 2014 downing of a Malaysia flight. Airlines over Eastern Ukraine.

International law firm Latham & Watkins said in April it intended to withdraw from representing the sanctioned bank. The Brafman company said it could not enter the business until it was paid.

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In a court filing on Friday, Brafman’s attorney, Marc Agnifilo, said he and another attorney at the firm had “spoken several times” with officials from the U.S. Treasury Department’s Office of Foreign Assets Control, which oversees penalties. He said the agency confirmed that payments to the firm for its representation of VTB would be legal, despite US sanctions, because the bank is named in a federal lawsuit, according to court documents.

Yet two U.S. banks flatly refused to process a payment from Russia, Agnifilo said. Another bank said the law firm was too small to be accepted as a client, and the lawyers are awaiting a response from a fourth bank. The company contacted two other banks to accept payment from VTB, according to Agnifilo.

OFAC officials told one of the banks that the payment from Russia would be legal, but the financial institution still wouldn’t accept it “due to its own internal ‘risk framework’,” a statement said. said Agnifilo.

The filings do not name the banks involved and Agnifilo declined to identify them to Reuters.

“VTB deserves legal representation, the plaintiff deserves the claim resolved, and the court deserves to move the case forward, and we will continue to seek a resolution,” he said in an email.

A Manhattan magistrate has now given VTB until August 4 for new attorneys to enter the case.

Law firm Jenner & Block, representing relatives of American Quinn Schansman who was killed in the Malaysia Airlines flight, opposed the request for more time, according to a letter filed with the court. Jenner’s attorneys argued that “the continued delay impairs the Schansman family’s ability to pursue the necessary discovery from VTB in a timely manner.”

A spokesperson for Jenner did not immediately return a request for comment.

Several international law firms stopped representing sanctioned Russian clients after the invasion of Ukraine. Another Russian lender sanctioned in the same case, Sberbank, also saw its lawyers from global law firms White & Case and Debevoise & Plimpton walk out of the litigation.

They were replaced by attorneys from Wilk Auslander, another small Manhattan law firm.

Both Russian banks dispute allegations that they facilitated money transfers to Russian separatists who allegedly shot down the plane.

Read more:

Russia says US law firm White & Case cannot drop Yukos case

Sanctioned Russian bank gets new US lawyers in downed airliner case

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Jacqueline Thomson

Thomson Reuters

Washington, DC-based Jacqueline Thomsen covers legal news related to politics, the courts, and the legal profession. Follow her on Twitter at @jacq_thomsen and email her at jacqueline.thomsen@thomsonreuters.com.

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