The Russian energy giant OAO Gazprom wants a federal appeals court in Washington to revive the company’s claim to more than $140 million that prosecutors contend is tied to the criminal exploits of a former Ukranian prime minister.
The U.S. Justice Department is mired in a long-running dispute over the propriety of more than $250 million in assets allegedly rooted in extortion and money laundering by former Ukranian leader Pavel Lazarenko.
Several individuals and business groups have asserted claims to the funds the government wants forfeited. Those claims remain unresolved in U.S. District Court for the District of Columbia. The money is scattered in banks around the world. Lazarenko was sentenced in November 2009 in federal district court in San Francisco to 97 months in prison.
In Washington, U.S. District Judge Paul Friedman earlier this year dismissed Gazprom from the civil forfeiture proceedings. Friedman ruled in March that Gazprom, represented by Winston & Strawn, has failed to prove a property interest in the disputed funds.
The energy company’s lawyers, including Winston litigation partner W. Gordon Dobie, said in the U.S. Court of Appeals for the D.C. Circuit that Gazprom, a state-owned utility, supplied natural gas to Ukraine during Lazarenko’s time in office. Lazarenko unlawfully acquired money that belonged to Gazprom, the lawyers said.
Gazprom’s lawyers argue that the United Energy Systems of Ukraine did not pay the company the full cost of the gas under certain contracts, instead diverting money to Lazarenko. The company’s attorneys claim Gazprom is a fraud victim. But Friedman said in his decision that “Gazprom nowhere contends that the funds transferred from UESU to Mr. Lazarenko were the only financial resources with which UESU could have paid its contractual debt to Gazprom.”
The attorneys for Gazprom also said the Justice Department is “largely ignoring the overwhelmingly foreign character of the case.” The company’s lawyers said in a brief filed this month that “the wrongdoers, the victims, the source of the proceeds, the current location of the proceeds and the substantive unlawful conduct are all entirely foreign.”
“The government has not argued, and there is no reason to think, that litigating the rights to the foreign assets in the courts of Russia or the asset-holding countries would allow the wrongdoers (Lazarenko and his associates) to retain their ill-gotten gains,” Gazprom’s attorneys said. The lawyers also said in the brief that “rather than acknowledge that it is in it for the money, the government implies that its ‘public policy interests’ involve criminal law enforcement.”
Prosecutors in the DOJ asset-forfeiture and money-laundering section said Gazprom is an unsecured creditor. Federal courts, DOJ lawyers said, “have consistently held that unsecured creditors lack standing to claim against the defendant-assets of their debtors in civil forfeiture proceedings.”
A DOJ Criminal Division attorney, Anthony Vitarelli, also said in a court filing in November that Lazarenko did not steal from Gazprom and therefore the company is not a victim.
“The fact that UESU owed Gazprom money—as, presumably, it owed to several parties—does not put Gazprom in UESU’s shoes regarding the legal effects of Lazarenko’s criminal conduct,” Vitarelli said in the brief.
D.C. Circuit judges Merrick Garland and Janice Rogers Brown, sitting with Senior Judge Harry Edwards, will hear the dispute in January.