Bermuda fund ordered to give up $45 million after guilty plea

SAN JUAN, Puerto Rico: A Caribbean court has issued a US$45.5 million (euro29 million) confiscation order against a Bermuda fund that pleaded guilty to providing false information and perverting the course of justice, the British Virgin Islands' state-run news agency said.

The Eastern Caribbean Supreme Court in the British Virgin Islands issued the judgment Thursday against IPOC International Growth Fund Ltd.

A lawyer for the Bermuda-registered mutual fund acknowledged Wednesday that it had furnished false information to the Caribbean court between 2004 and 2005 regarding the sources of a US$40 million (euro25.8 million) security deposit, the British Virgin Islands' information service said.

A British barrister representing the fund, Andrew Mitchell, said in a Sunday e-mail that court rules prohibit him commenting on the case.

The fraud by IPOC occurred during a long-running court battle for a one-fourth stake in MegaFon, Russia's third largest mobile provider. The Caribbean court had required that IPOC pay the deposit in case it failed to prove it had a legal right to the MegaFon shares.

The Bermuda fund's guilty plea and ensuing confiscation order by Supreme Court Justice Indra Hariprashad-Charles followed a 17-month fraud investigation.

Terrence Williams, chief public prosecutor for the British Virgin Islands, said the hefty confiscation order demonstrated the territory's commitment to preventing the islands' corporate vehicles from being used improperly.

Meanwhile, IPOC has sought unspecified damages from the Russian corporation, Alfa Group Consortium, and its American counterpart, Alfa Capital Markets Inc.

In a 2006 lawsuit filed in U.S. District Court in Manhattan, IPOC accused the Alfa Group and others of trying to illegally take control of the Russian cellular telecommunications industry.

The fund alleged that it lost a 25.1 percent stake in MegaFon when Russian tycoon Mikhail Fridman's Alfa Group induced IPOC to pay millions, only to misappropriate the money and transfer the ownership interest to Fridman and associates.

MegaFon officials were not available Sunday. Alfa Group did not respond to calls and e-mail.