Telling Tale About Russian Client Lands Swiss Lawyer in Jail

(Bloomberg) -- A Geneva lawyer will spend the next two months in a Swiss jail after telling British and U.S. agencies that his Russian clients violated sanctions on Iran, putting the spotlight on the tough secrecy rules in Switzerland.

Matthew Parish is accused of extortion, libel and breaking attorney-client privilege, according to a criminal complaint filed against him by two Russian oil traders. The two men, Murat Seitnepesov and Konstantin Ryndin, said in the May 8 complaint that Parish went public with false allegations to blackmail them into paying a grossly inflated legal bill.

The case underscores how breaking corporate secrecy and attorney-client privilege laws can land you in prison in Switzerland, a country that has long attracted those seeking the discretion such stiff criminal laws provide. On the other hand, its light-touch approach to regulation has also drawn commodity traders, making Switzerland a global oil and raw materials trading hub worth 24 billion Swiss francs ($24.3 billion) annually, close to 4 percent of the economy.

Swiss prosecutors have previously gone after whistleblowers and leakers of corporate secrets including Herve Falciani and Bradley Birkenfeld. Parish, whose allegations against his former clients haven’t been substantiated, faces as long as three years in prison if found guilty of violating attorney-client privilege, and 10 years for extortion.

Flight Risk

“It’s always surprising to see a lawyer get into trouble but extortion is a very serious offense,” said Ursula Cassani, a law professor at the University of Geneva. “Moreover, pretrial detention is much more common in Switzerland than the U.S., even for a lawyer.”

A Geneva judge last week said Parish should spend two months in the city’s Champs-Dollon prison as the investigation continues because he’s considered a flight risk. Last year, Parish’s offices were searched and he was questioned by prosecutor Stephane Grodecki over his involvement in a separate case, according to Swiss newspaper Le Temps.

The complaint against Parish, who once worked as a legal adviser to a United Nations agency in the former Yugoslavia in the 1990s, stems from a March 26 letter he wrote to the director-general of MI5, Britain’s top security service. After carefully weighing his professional obligations to his clients, Parish wrote, he said he felt “legally and professionally entitled, or even obliged, to provide this information,” according to a copy of the letter seen by Bloomberg.

Marc Henzelin, Parish’s lawyer, declined to comment.

Parish said in the letter that Seitnepesov, the managing director of Integral Petroleum SA, “runs a sophisticated fraudulent array of offshore companies as part of his oil trading business, the purposes of which are or have been to evade” sanctions on trading with Iran and “to conceal the fact that he is transacting with sanctioned persons or entities” in Russia and Iran. Parish followed up with a letter on May 1 to the U.S. Office of Foreign Assets Control, which monitors possible sanctions violations with U.S. links, making similar allegations.

Spokespeople for MI5 and OFAC didn’t respond to messages seeking comment.

Integral Petroleum hid the origins of sanctioned Iranian oil by mixing it with crude from Turkmenistan and passed off cargoes of Russian origin that were subject to sanctions as being unsanctioned Turkmeni oil, Parish alleges. Integral and related companies also provided financing to an organization associated with Iran’s Islamic Revolutionary Guard, he wrote.

‘26-Hour Days’

The claims are false and simply attempted extortion, according to Seitnepesov and Ryndin’s complaint. The two Russians said they were “stunned” last year when Parish billed more than 720,000 Swiss francs for work in March and April 2017, which they said would amount to 51 straight days of 26-hour a day billing at 700 francs an hour. The bill later climbed to more than 898,000 francs, the Russians said in their complaint.

“Intent on reaching the widest possible audience, Mr. Parish has cast doubt on the complaint’s probity by accusing them of having committed serious criminal offenses, which is clearly not the case,” according to the complaint.

To back up the extortion allegation, Seitnepesov and Ryndin cite an email from Parish in which he writes that upon payment, “I will withdraw all my various complaints to different authorities, and I will use my reasonable endeavours to ensure that those complaints are not thereafter pursued.”

The charges against Parish “are all the more serious given that they are made about a lawyer by his former clients” said David Bitton, the Russians’ lawyer.

Parish, in a partially-redacted press release dated July 10, 2017, and previously posted on the website of his firm Gentium Law Group, claimed that his firm was the “victim of a fraud by a Geneva oil-trading company” for the sum of 890,000 Swiss francs. Gentium wasn’t paid for its work in an arbitration case on behalf of the oil-trading firm, it alleged.

In France and Germany breaking client privilege carries a criminal sentence of as much as one year. Parish, a British citizen, would not face any criminal charges for breaching client privilege in the U.K., according to Richard Moorhead, a professor of law and ethics at University College London.

The nuance as to whether a lawyer can be sued in civil proceedings depends on whether the lawyer subsequently found out he or she was helping perpetrate a crime.

“‘If’ the lawyer was wittingly or unwittingly helping the client breach sanctions, it would likely not be privileged,” Moorhead said.

A U.S. attorney who breaches client privilege can only be professionally disciplined or sued but nothing more, says Stephen Gillers, a professor of legal ethics at New York University.

“In no U.S. jurisdiction is this lawyer’s conduct a crime,” said Gillers, broadly referencing the Swiss case.

To contact the reporters on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net;Andy Hoffman in Geneva at ahoffman31@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

©2018 Bloomberg L.P.