Court upholds arrest of accused PPF $15m fraudster

The Moscow City Court has upheld the arrest of Yekaterina Alabuzhina, accused of defrauding Мartin Schaffer, a representative of the PPF Group, of $15m, the court's press office told the Russian Agency for Legal and Court Information.

"The court rejected an appeal filed by lawyers for the accused, who requested that their client not be remanded in custody," the court said.

PPF controls 38.5% of Ingosstrakh and has a joint venture with Generali, which this week responded to a stock market request for further details on it deal with the group.

According to the case materials, the accused, in the period September-December 2007 acting under the alias Yekaterina Vavilova in conjunction with other persons, including one who presented himself as a police lieutenant general, "misled a representative of PPF Investments regarding their ability to involve leaders of the Russian government to settle a commercial dispute [between PPF and Ingosstrakh] and induced him to sign a credit agreement for $15m."

The conflict between the co-owners of Ingosstrakh - majority shareholder Basic Element and minority shareholders controlled by PPF Investments - has so far lasted more than two years, since Czech businessman Petr Kellner bought 38.5% of the insurer from Alexander Mamut.

Basic Element's owner, Oleg Deripaska, considered at the time that Mr Mamut should have sold him his shares. Basic Element challenged the deal in court, tried to dilute PPFI's stake with a supplementary share issue and barred its representatives from the board of directors, but to no avail.

Mr Alabuzhina was arrested on March 3 and charged under Section 4 Article 159 of the Criminal Code for fraud committed by an organized group or on a particularly large scale, which carries a maximum prison term of ten years.

The same day, officials from the Main Investigative Department of the Moscow City Internal Affairs Directorate seized paperwork from Mosstroy Econom Bank as part of a criminal case that had been opened earlier. The reports said the action was taken in the framework of a case on the embezzlement of $15m from representatives of PPF Investments.

Reports said that according to the investigation, Vladimir Korovin and Yekaterina Alabuzhina in 2007 persuaded the Czech company to deposit this amount on the accounts of firms under their control at Mosstroy Econom Bank, promising to help them to sort the conflict out regarding PPFI's shares in Ingosstrakh. Vladimir Korovin is already being tried under another large-scale fraud case.

Representatives of Generali PPF denied reports of any links between the fund and the raids at the bank.

PPF Investments is an independent, international private equity group, operating via the investment corporations PPF Alpha and PPF Beta. PPF Beta controls 38.46% of Ingosstrakh via three Russian limited liability companies. PPF Beta's investors are from the Czech Republic and Italy, brought together by Generali.