Court dismisses all charges against Outokumpu relating to export practices in Russian trade
Steel manufacturer was charged with money laundering in Russian dealings
On Wednesday, the Kymenlaakso District Court dismissed all charges laid against Outokumpu and five of its employees for alleged money laundering in connection with the company’s export practices in the Russian market.
The prosecutor accused five Outokumpu employees for either aggravated or negligent money laundering. The prosecution also called for the imposition of a corporate fine on the company itself.
Money laundering is the practice of disguising the origins of illegally-obtained money.
Outokumpu Stainless (OkS) practiced exports to Russia from 2004 to 2006 through middlemen.
According to the prosecutors, the go-betweens practiced so-called double billing, whereby they could evade Russian import tariffs on steel.
The prosecutors claimed that OkS had received criminal gain and thus been guilty of money laundering.
In order to have been involved in money laundering, the company should first have committed a crime.
The charges were dismissed, as the prosecutor was unable to offer any evidence of the suspected crime.
Accordingly, the prosecutor could not prove, either, that any criminal gain had come into being or been transferred to Outokumpu.
According to the District Court, the prosecution could only propose that double billing appears to have been practiced in connection with Outokumpu’s exports to Russia. However, this is not sufficient evidence of customs offences or duty evasion.
The case can be regarded as a large one. It was resolved by a strengthened composition of three judges, and the number of days on which the court was in session was considerable.
The Finnish State was ordered to pay a total of more than EUR 1.2 million in compensation to the defendants.
The court felt that the defendants had to do a considerable amount of additional work to clarify what had happened, which should all have been done already during the investigations of the case.
Prosecutors Malla Sunell and Tea Talvela will make a decision on whether or not they will appeal against the verdict at the beginning of next week.
In double-billing, the invoices presented at the customs of the export country (e.g. Finland) are different from those presented at the customs of the import country (e.g. Russia). In this way it is possible to avoid or evade import tariffs on exported goods.
The indications from the statistics are that such double-billing has gone on, given that the value of goods imported into Russia is lower than that of the items exported from Finland.
In recent years the disparity has admittedly grown smaller.
Previously in HS International Edition:
Outokumpu employees accused of money laundering in dealings with Russia (24.11.2010)
Outokumpu press release 22.6.2011