Russian gas executive charged by U.S. with tax crimes

Novatek PJSC shares fell the most in about 16 months after the arrest of Deputy Chief Executive Officer Mark Gyetvay on US tax charges.

Gyetvay was arrested and charged Wednesday with a decade-long tax evasion scheme for failing to report more than $ 40 million in revenue to the Internal Revenue Service, according to US prosecutors. Novatek’s Moscow share price has plummeted the most since May 2020, even with world energy prices near seasonal highs. Gyetvay did not respond to a request for comment. It was not immediately clear whether he has an attorney representing him.

The Kremlin said it is following the case because Gyetvay has a Russian passport in addition to an American one. Novatek said the situation “is not and will not affect the company’s operations.” The current drop in stocks is likely temporary, Moscow-based analysts said.

Mark Gyetvay

Aaron M. Spokesperson / Bloomberg

Gyetvay, 64, has been a senior executive at Novatek for the past 18 years, where he has been instrumental in making the company the largest producer of liquefied natural gas in Russia. Gyetvay, one of the country’s most prominent American executives, received Russian citizenship in 2019.

“Of course we are interested in his fate,” Kremlin spokesman Dmitry Peskov said on Friday. “On the other hand, he is also a US citizen and, as such, he has some tax obligations and we cannot intervene in these processes.”

Novatek shares traded 3.8% lower at 1,832.2 rubles as of 1:55 p.m. in Moscow, cutting losses by as much as 5.4%, the biggest intraday drop since May 2020.

“He has played an important role in the strategic planning of the company and has been instrumental in establishing the excellent relationships that the company has with its shareholder base,” analysts at VTB Capital said in a note. “We expect a negative stock market reaction in the short term.”

Tax evasion charges

Gyetvay filed false tax returns, did not file any others, and kept funds in secret Swiss accounts in the name of the nominees, according to US prosecutors.

He was indicted in federal court in Fort Myers, Florida, on Thursday and the hearing is scheduled to continue on Friday. Prosecutors said in a court file that he should only be released if he pays a $ 80 million bond because he could flee the United States.

In addition to Russian and American citizenship, Gyetvay also has an Italian passport, has about $ 85 million in shares in a national financial account, has $ 4.4 million in other accounts, and owns valuable homes in Naples, Florida, according to the US. USA

“He has the resources to flee the United States and live generously for the rest of his life,” prosecutors said.

Prosecutors said the case is “extremely strong” against Gyetvay, who did not tell his accountants about his Swiss bank accounts and the income he entered into them. It was not immediately clear if Gyetvay has an attorney representing him.

“He repeatedly lied to his American accountants about the existence of the Swiss accounts,” prosecutors said. “In a final attempt to get away with it and avoid substantial financial penalties, he filed a false voluntary disclosure with the IRS under a program for which he did not qualify.”

Gyetvay used accounts at Swiss banks Coutts & Co. Ltd and Hyposwiss Private Bank, and established registered entities in Belize and the British Virgin Islands, according to the indictment.

The case is US v. Gyetvay, 21-cr-83, Middle District of Florida (Fort Myers).

– With the assistance of Jake Rudnitsky, Olga Tanas and Ilya Arkhipov

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