SocGen's Russian head faces jail over alleged bribe

16th May 2013, Comments 0 comments

The head of Societe Generale's Russian unit was facing up to seven years in prison after investigators charged him Thursday with soliciting a $1.5-million bribe in what one banking source said was a possible setup to muscle the French lender out of the country.

The detention of Rosbank chief Vladimir Golubkov has sent shock waves through Russia's banking community, and a senior Western banker said the arrests appeared to be a state-orchestrated move to drive out Societe Generale amid a Kremlin drive to consolidate strategic assets.

The charges were pressed against Golubkov and Rosbank senior vice-president Tamara Polyanitsyna after both were detained by police Wednesday in a dramatic sting operation which found stacks of 5,000-ruble ($158) notes laid out on Golubkov's desk.

Police and investigators said Golubkov had demanded $1.5 million from a businessman in return for extending the maturity and reducing the interest rate on a major loan, but the businessman tipped off the authorities.

The charges carry a maximum sentence of seven years in prison.

Golubkov has not admitted guilt, his lawyer Dmitry Kharitonov said, adding his client was questioned for more than 10 hours on Thursday.

A senior Western banker said Golubkov's arrest appeared to be a coordinated move against Societe Generale which owns an estimated 82 percent stake in Rosbank.

"For 100 percent certain this is a game to get control of the bank," the banker told AFP.

Along with Austria's Raiffeissen and US banking giant Citi, Societe Generale is one of the few Western banks still operating in Russia, where the dominant players are controlled by the state.

HSBC and Barclays have pulled out of the country in recent years, unable to compete.

But in contrast with Societe Generale, Raiffeissen and Citi built their own operations in Russia.

"SocGen is vulnerable because it acquired an existing Russian bank and in the eyes of the Russian predators that makes it fair game," the Western banker said.

Analysts have expressed concern over the government's drive to increase control over the economy as the Kremlin seeks to consolidate what it deems strategic assets during Vladimir Putin's 13 years in power.

State-controlled oil giant Rosneft earlier this year became the world's largest public oil company by production and reserves after it completed a $56-billion acquisition of the British and Russian stakes in the TNK-BP joint venture.

"SocGen is the odd one out. Just like BP was the odd one out in the oil sector," said the banker.

Rosbank is Russia's 10th-biggest bank by assets and the third-biggest among commercial banks, according to independent Moscow-based rating agency Rus Rating.

Societe Generale said it was closely monitoring with the situation and cooperating with Russian authorities.

"Societe Generale reaffirms its commitment to Russia as one of its core markets, in which it sees a strong growth potential."

-- 'Another blemish on Russia' --

Acting Rosbank chief executive Igor Antonov said in televised comments that "we are surprised and upset by what happened."

He likened the detentions to a "raid", adding it made the "'good old' 90s come to mind," referring to a decade seen by Russians as synonymous with chaos.

Police on Wednesday released video footage showing armed men dressed in black rushing through the bank's revolving doors and then entering what appeared to be Golubkov's offices.

The camera then cut to stacks of 5,000-ruble notes on his desk, with grim-looking Golubkov standing nearby, hands in his pockets.

The Western banker said the Rosbank arrests may also be an attack on oligarch Mikhail Prokhorov, who recently entered politics.

Rosbank was previously controlled by Prokhorov and metals magnate Vladimir Potanin, although Prokhorov's Onexim has now sold all of its shares in Rosbank.

Prokhorov declined to comment except to defend the character of Golubkov.

Commentators said it was unprecedented for the head of a major bank to be caught red-handed while taking a bribe.

A Russian banking source said the sting looked staged and suggested the state might be putting pressure on banks to lower interest rates.

"This is yet another blemish on Russia's reputation," the source said.

© 2013 AFP

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