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Creditors demand seizure of Fabergй eggs  July 3, 2004

The clients of a failed Russian bank say their assets were transferred to a company allegedly controlled by Viktor Vekselberg

The clients of a failed Russian bank have filed a lawsuit in Moscow against Russian billionaire Viktor Vekselberg. They are asking that his newly acquired Fabergй imperial eggs be confiscated by the authorities and auctioned to recoup the money they say they lost through their business with the bank.

The suit was filed just days after the nine Imperial eggs and some of the approximately 180 other Fabergй pieces belonging to Mr Vekselberg went on display in the Kremlin, in a whirlwind of flashbulbs, publicity, and panegyrics about the restoration of Russia’s historical legacy. Mr Vekselberg purchased the collection, from the Malcolm Forbes family, through Sotheby’s late last year. Although the sum he paid was not disclosed, several dealers suggest it was around $120 million.

The claimants say that $40 million from their accounts with the Pervy Gorodskoi Bank, First City, which went bankrupt in 2002, was siphoned into accounts and an off-shore company affiliated with the Moscow-based Aljba Alliance Bank in which, they say, Mr Vekselberg owns a majority share. First City Bank creditors say they have reason to believe that some of their money was used for Mr Vekselberg’s Fabergй purchase. The bank has denied that the oligarch’s stake is as large as the claimants say.

His prize Faberge egg, commissioned for Empress Alexandra in 1897, and valued at around $24 million
Dmitry Baranovsky, a businessman representing First City Bank shareholders who believe they were also defrauded, says that serious inquiries are now being made about auctioning the Fabergй hoard in Russia, should the court order its seizure.

Speaking to The Art Newspaper he said, “We are talking to Gelos, a Russian auction house. We have also sent documents to Sotheby’s and Christie’s.” Mr Baranovsky added that the creditors decided to target the Fabergй collection after discovering that Vekselberg’s other assets are registered off-shore. A Moscow art lawyer said it would, in fact, be almost legally impossible for the creditors to hold such an auction.

At a press conference held to announce the suit on 26 May, angry protestors waved placards reading, “Don’t be tight-fisted Vekselberg, share your eggs with us.”

Their demands underscore the still tenuous legal status of private art collections in Russia, despite the introduction of new customs regulations in January which eliminated the 30% tax on private imports of works of art, a move which has been widely welcomed and which, it is hoped, will clear the way for the repatriation of many works of Russian art.

In a press release issued by Aljba Alliance Bank the day after the creditors’ announcement, Armen Rshtuni, who is leading the group of creditors, was accused of joining them on false pretensions, according to the business daily Kommersant. The bank said he is under investigation by the FSB, the agency that succeeded the KGB.

Mr Vekelsberg certainly has plenty of his own money to spend on art. He did well out of the $6.5 billion merger of the Tyumen oil company, which he partially owns, with British Petroleum. He is Russia’s third richest man, and Forbes estimates his fortune at $5.9 billion.

Since the arrest of Mikhail Khordorkovsky, former head of Yukos and Russia’s richest man, whose trial on charges of corruption was just beginning as the paper went to press, the country’s oligarchs have been making conciliatory gestures towards the government, such as Mr Vekselberg’s repatriation of the Fabergй works.

Indeed Mr Vekselberg has set up an organisation, the Svyaz Vremyon foundation, which exists solely to repatriate Russian art. The organisation’s spokesman Andrei Shtorkh told The Art Newspaper that the Fabergй works will not be donated to a museum as had been widely expected.

No decision has been made, he said, on where the objects will be permanently displayed. For now they will go on tour to various Russian cities.

The chairman of Svyaz Vremyon, Vladimir Voronchenko, a luxury goods entrepreneur, said the foundation is preparing to make new acquisitions, “maybe even more significant than the first.” Mr Shtorkh would say only that one of the acquisitions is being negotiated in the US and that a second is being arranged in another foreign country.

Itogi, a weekly news magazine, speculated that the American deal may be to repatriate bells originally from Moscow’s Danilovsky Monastery, the seat of the Russian Orthodox Church, which ended up at Harvard University after the Revolution.

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