London Cops Broke Law in Russian Cash Seizure, Court RulesBy
Funds were seized from companies accused of money laundering
Investigation led to arrest of an ADM London broker last year
London police broke the law when they seized cash from four companies at the center of allegations of Russian money-laundering that led to the dawn arrest of a broker, according to a ruling Tuesday.
Judge Peter Gross said City of London Police obtained a court order that forced a unit of Archer-Daniels-Midland Co. to unlawfully write checks for money in the accounts of Merida Oil Traders Ltd., Bunnvale Ltd. and Ticom Management LLC for the police to seize.
The companies sought a judicial review, complaining that police used improper methods to obtain the funds as cash when there was no threat to the money being withdrawn. Another firm, Intoil SA, didn’t join the case.
“The production orders were obtained through an improper procedure,” Gross said in the judgment. Police "misrepresentations and omissions amounted to a serious breach of the duty of disclosure."
In May 2016, London police said they’d seized about $22 million from five trading accounts of an unidentified broker who was arrested two months earlier on suspicion of using the Intercontinental Exchange Inc. futures market to launder money from a Russian organized crime gang.
Russian Oil Firm
Four companies, including a Russian oil firm and a Swiss investment company, were said to be acting as a front for the group to move money out of Russia through the U.K., police said at the time.
The identities of the companies-- Merida, Bunnvale, Ticom and Intoil -- all owned by Russian nationals, were made public for the first time last month after three of them sought the judicial review. The arrested broker, Dzmitry Niadzvetski, hasn’t been charged. Paul Osborne, an account executive at the firm, was also interviewed. Both men no longer work at ADM.
"It remains unclear why the police ever believed it was appropriate to engineer a situation so as to create, and then seize" our client’s money as cash, said Jasvinder Nakhwal, a lawyer at Peters & Peters representing Bunnvale and Ticom. The firm’s clients “have consistently maintained their innocence of any wrongdoing."
A judicial review allows a court to examine the actions of a public agency. The police have one month to decide if they want to try to retain the funds using a different legal procedure such as a property freezing order.
"When we commenced this activity, we were aware this was a test case with no existing legal precedent to follow," a spokeswoman for the City of London Police said in an emailed statement. "We are grateful to the court for clarity in this matter."
The investigation began in May 2015 when ICE alerted authorities to what they considered suspicious trading patterns involving Bunnvale. The oil-derivatives trader, along with its Russian-incorporated sister company, Ticom, appeared to be making money on all transactions with Merida and Intoil -- both identified in court documents as special-purpose vehicles set up for two of Russia’s largest independent oil refineries.
According to court filings, it wasn’t until February 2016, eight months after ICE made a so-called suspicious transaction report to the U.K. Financial Conduct Authority, that the City of London Police opened its investigation. No known action by the FCA was taken in response to the report.