BVI Offshore Business: Grey Area

The public prosecutions’ office in the British Virgin Islands has told it has an overwhelming evidence that Russian Telecommunications Minister Leonid Reiman is the main beneficiary of an offshore fund which owns substantial assets in companies regulated by his ministry. Reiman has denied having investments in companies he regulates.

BVI’s director of public prosecution Terrence F.Williams sent a request for legal assistance to the US Justice Department; the letter was dated August 21 and filed in a US district court in Delaware on October 31. He told that he was preparing charges against Jeffrey Galmond, Danish lawyer and close associate of Reiman. The lawyer is accused of allegedly covering up the fact that the Russian minister is the beneficial owner of the Bermuda-based IPOC International Growth Fund Ltd., which is said to hold substantial stakes in Russian telecommunication firms. The BVI prosecutor states that IPOC is owned by Reiman through Jeffrey Galmond.

At the centre of the legal case there is a long dispute between IPOC and Alpha Group, an industrial holding firm owned by the billionaire tycoon M.Fridman, which has investments not only to Russian oil companies but also to Russian telecoms firms. Through its lawyers in the BVI, Alpha is alleging that $40 million in legal costs put up by IPOC were sourced from the proceeds of crime, but IPOC argues that the money originated from consultancy services supplied to a number of companies, including those registered in the U.S. This involvement of some US companies in the three-year investigation in the BVI became also the reason for asking legal assistance from the US Justice Department.

Now BVI prosecutors believe that these consultancy agreements were in fact “shams”. Also, a civil tribunal in Switzerland has concluded that Reiman secretly owns stakes in Russian telecoms through the IPOC fund. This ruling of a Swiss court, in its turn, came as a result of a legal battle between IPOC and LV Finance Group, which was owned by Alpha Group, and probably was a politically-motivated attack against M.Fridman.