MOSCOW – The head of Societe Generale's Russian unit Rosbank faced up to seven years in jail for bribery on Thursday after Russian investigators released a film of him with cash piled on his desk in what several bankers said may have been a set up.
The case could increase alarm among international investors and sheds a damaging light on business practices in Russia, where SocGen is one of the few Western banks left in a market dominated by homegrown state players.
Investigators said on Thursday they had opened an official criminal investigation against Vladimir Golubkov, who was detained on Wednesday, and his senior vice president, Tamara Polyanitsyna - a final step before formally charging them.
Golubkov, 47, worked through the ranks at Rosbank to take the helm in 2008 with the task of steering the bank into profit.
"I know him to be a good man," Garegin Tosunyan, president of the Association of Russian Banks, told Reuters. "The accusations simply don't fit - although the law enforcement authorities are entitled to their version and to investigate.
"If you ask me, it is unlikely that he would stoop to such commercial bribery. I hope that investigators will consider the possibility that he was deliberately set up."
The Interior Ministry took the increasingly common practice in high-profile cases of releasing video footage of a police raid. It showed officers with automatic weapons barging past security guards into Rosbank's headquarters in central Moscow.
The film then cut to a scene which showed Golubkov standing behind his desk, which had several wads of 5,000 rouble ($150) notes on it. The cash was said by investigators to total 5 million roubles ($160,000). Golubkov, wearing a light grey suit, looked into the camera but did not speak in the footage.
"Golubkov demanded, via his subordinate Polyanitsyna, more than $1 million from a businessman to extend the maturity and reduce the interest rate on a multi-million dollar loan," the Investigative Committee said.
Golubkov's lawyer, Dmitry Kharitonov, told Reuters he denied committing the crime. "He is being held for 48 hours by the Investigative Committee and faces up to seven years if convicted," Kharitonov said.
He said he did not know who was representing Polyanitsyna. Officials at Rosbank declined to comment on her behalf.
Rosbank moved swiftly to try to limit damage from the case, saying it was cooperating with the investigation and that First Deputy CEO Igor Antonov would replace Golubkov on an interim basis. Operations and client service continue, it said.
"We are disturbed and upset about what has happened," Antonov told the state owned Rossiya 24 news channel.
He described the arrest of Golubkov as a "raid" on Rosbank that was reminiscent of the chaotic years following the collapse of the Soviet Union. "It reminds me of the good old 1990s - we haven't seen anything like it for ages," he said.
The charges are likely to lead to soul-searching at SocGen headquarters in Paris, which has reaffirmed its commitment to Russia, a market it first entered at a high price in 2006 but where it has struggled to turn a profit.
Golubkov was in charge of a turnaround strategy at Rosbank, into which SocGen's other Russian banking interests were folded in 2011. But, plagued by high costs and declining market share, Russia's ninth-largest bank lost money last year.
Socgen has declined to comment.
"From SocGen's point of view, this is an affair that concerns only individuals, not Rosbank or its risk controls," a banking source said.
Western and Russian bankers say that loan 'facilitation' payments are commonplace in Russian banking, but they rarely come to light unless someone seeking to settle a score turns to the law enforcement authorities.
According to media reports on Thursday, an executive at a car dealership informed on Golubkov after paying several instalments of a bribe to restructure an $80 million loan.
The Kommersant financial daily, which often has detailed accounts of law-enforcement operations, said Polyanitsyna had been arrested the day before and agreed to cooperate with investigators in handing over the final tranche of the bribe.
A former Rosbank executive, who recently left the bank, told Reuters it could help the French bank in the long run, by helping to resolve longstanding disagreements between Paris and the local staff.
"This is such a scandal - though I must say it might help reinforce SocGen within this big Russian organization if Golubkov steps down," said the executive, who declined to be named.
($1 = 31.3252 Russian roubles)
(Additional reporting by Lionel Laurent in Paris; editing by Elizabeth Piper and Philippa Fletcher)