FSUOGM: Novatek deputy chairman faces US tax charges

The deputy chairman of Russia’s second-largest gas producer Novatek, Florida businessman Mark Gyetvay, has been arrested in the US on tax charges relating to $93mn that was hidden in offshore accounts.

Gyetvay played a key role in arranging financing for Novatek’s ambitious $27bn Yamal LNG export project in the Russian Arctic, which came online in December 2017. His arrest comes as the Russian gas company continues its search for external financing for its next scheme, Arctic LNG-2, which is expected to start production in 2023.

The US Department of Justice (DoJ) said in a statement on September 23 that a federal grand jury in Fort Myers, Florida, was charging Gyetvay “with defrauding the US by not disclosing his substantial offshore assets, failing to report substantial income on his tax returns, failing to pay millions of dollars of taxes and submitting a false offshore compliance filing with the IRS in an attempt to avoid substantial penalties and criminal prosecution.”

The tax charges relate to Gyetvay’s activities between 2005, two years after he was appointed as Novatek's CFO, and 2016. The DoJ said he had “allegedly received lucrative stock options and/or stock-based compensation” as part of his compensation for the role.

“Beginning in 2005, Gyetvay allegedly opened the first of two different Swiss bank accounts to hold these assets, which at one point had an aggregate value of over $93mn,” the DoJ said. “Over a period of several years, Gyetvay allegedly took steps to conceal his ownership and control over the foreign accounts and associated assets, such as removing himself and making his then-wife, a Russian citizen, the beneficial owner of the accounts.”

Despite being a certified public accountant, the department continued, the indictment states that Gyetvay did not file his US tax returns on time, or the required Reports of Foreign Bank and Financial Accounts (FBARs) forms that some US taxpayers have to submit to disclose control over assets maintained in foreign bank accounts. Those tax returns he did file were false, according to the indictment, and he also submitted a false offshore compliance filing with the IRS, in which he “attested that his prior failure to file FBARs and tax returns was non-wilful.”

If he is convicted, Gyetvay faces up to 20 years in prison for each count of wire fraud, five years in prison for each failure to file FBAR count, five years in prison for tax evasion, five years in prison for making a false statement, three years in prison for each count of assisting in the preparation of a false tax return and one year in prison for each wilful failure to file a tax return count, the DoJ said.

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