Banks shun U.S. law firm trying to represent Russian lender VTB

Katie R. Ochoa

The logo of VTB bank is seen at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 3, 2021. REUTERS/Evgenia Novozhenina

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  • New York’s Brafman & Associates says it was already rejected by three banks and is asking others to facilitate client payments
  • The bank is fighting claims it helped send money to Russian separatists that allegedly shot down a plane in 2014

(Reuters) – Lawyers who have agreed to represent Russia’s sanctioned VTB Bank in U.S. litigation say a third bank has refused to work with them to handle legal fee payments, forcing them to request more time to enter the case.

Manhattan law firm Brafman & Associates has been trying since early June to formally sign on as defense counsel for VTB in a lawsuit claiming the bank facilitated payments connected with the 2014 downing of a Malaysia Airlines flight over eastern Ukraine.

International law firm Latham & Watkins said in April that it intended to withdraw from representing the sanctioned bank. The Brafman firm has said it cannot enter the case until it is paid.

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In a court filing Friday, Brafman lawyer Marc Agnifilo said he and another attorney at the firm have “spoken repeatedly” with officials at the U.S. Treasury Department’s Office of Foreign Assets Control, which oversees sanctions. He said the agency confirmed that payments to the firm for its representation of VTB would be legal, despite U.S. sanctions, because the bank is named in a federal lawsuit, according to court papers.

Still, two U.S. banks have outright declined to process a payment from Russia, Agnifilo said. Another bank said the law firm was too small to take on as a client, and the attorneys are waiting to hear back from a fourth bank. The firm has contacted two more banks about accepting VTB’s payment, according to Agnifilo.

OFAC officials told one of the banks that the payment from Russia would be legal, but the financial institution would still not accept it “due to its own internal ‘risk framework,’” Agnifilo said.

The filings do not name the banks involved, and Agnifilo declined to identify them to Reuters.

“VTB deserves legal representation, the plaintiff deserves to have the claim resolved and the court deserves to have the case move forward, and we will continue to search for a solution,” he said in an email.

A magistrate judge in Manhattan has now given VTB until Aug. 4 to have new lawyers enter the case.

Law firm Jenner & Block, representing the relatives of American Quinn Schansman who was killed in the Malaysia Airlines flight, opposed the request for more time, according to a letter filed with the court. The Jenner lawyers argued that the “continued delay prejudices the Schansman family’s ability to timely pursue necessary discovery from VTB.”

A Jenner spokesperson did not immediately return a request for comment.

Several global law firms stopped representing sanctioned Russian clients following the invasion of Ukraine. Another sanctioned Russian lender in the same case, Sberbank, also saw its attorneys with the global law firms White & Case and Debevoise & Plimpton exit the litigation.

They have been replaced with lawyers at Wilk Auslander, another small Manhattan law firm.

Both Russian banks are fighting claims they facilitated money transfers to Russian separatists that allegedly shot down the plane.

Read more:

Russia says U.S. law firm White & Case can’t walk away from Yukos case

Sanctioned Russian bank gets new U.S. lawyers in downed airliner case

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