Ural Federal District’s division of the General Prosecutor’s office produced an official preliminary account of their investigation involving Bank Severnaya Kazna management’s alleged offenses. This is what the statement says:

‘Ural Federal District’s division of the General Prosecutor’s office has been informed about Bank Severnaya Kazna’s former top managers’ illegal practice attempts; therefore Sverdlovsk Region’s public prosecution authorities looked into the case in accordance with the Russian Federation Deputy General Prosecutor Yu. Zolotov’s request.

The reports proved to be truthful. It was detected that the bank’s Supervisory Board Chairman signed some illegal agreements with seven top managers regarding their monthly pay rise up to 750,000 RUR in October 2008. In addition to the pay rise, the managers were promised a life time medical insurance and eighteen-million-ruble redundancy payments. The Chairman never consulted the Board of Directors on the matter.

Later on, four Supervisory Board members who had been fired actually tried to use these papers (compiled with no respect for the federal legislation) in court to claim a total of 70 million RUR from Bank Severnaya Kazna. The claims were rejected and the agreements declared void.

It was also revealed that the bank’s managers used the company’s money to buy over 100 million RUR worth of promissory notes (not backed by any assets whatsoever), which made the bank unable to pay back its customer deposits last year.

As a result, the authorities took legal action, with the charge based on Article 201 of the Russian Federation Criminal Code (abuse of power). The course of the investigation and the criminal lawsuit proceedings are being monitored by Ural Federal District’s division of the General Prosecutor’s office.’

Thus Ural Federal District’s division of the General Prosecutor’s office confirmed the reports that stated the bank’s management’s actions were at the root of the company’s financial problems in October-December 2008.