Russia Offers Bank Of NY $800 Mln Settlement

The U.S. bank says the case is without merit and rejected an initial offer to settle for $600 million before the case was filed.

Russia would accept $800 million to settle its $22.5 billion lawsuit against, a move prompted by the state's need for money during the economic turmoil, Kommersant reported on Tuesday.

"We are talking about a political decision, which is fully logical in a period of global financial crisis," the business daily quoted a source in the government of Prime Minister Vladimir Putin as saying.

A Bank of New York Mellon spokeswoman said she could not comment on the report, and the Miami-based legal team for the Russian government was not available to comment.

Since May of 2007, Russia has been seeking compensation from the U.S. bank after a former vice president helped transfer $7 billion out of Russia in the late 1990s through Bank of New York accounts.

The U.S. bank says the case is without merit and rejected an initial offer to settle for $600 million before the case was filed.

Russia is facing a budget deficit of 8 percent this year. In order to raise cash for its anti-crisis measures, the government has moved to cut back the budgets of some state corporations and frozen several long-term spending programmes.