A US court has ruled to release a high-ranking official with Russia's largest independent gas producer on an $80 million bail a day after he was arrested on tax charges.

Mark Gyetvay, first deputy executive board chairman at Novatek, was detained for domestic tax matters, the US Department of Justice said late on Thursday.

The gas producer remains under scrutiny following the introduction of US and European sanctions against it and its core shareholder, Gennady Timchenko, since the Russian annexation of the Crimea Peninsula from Ukraine in 2014.

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Identifying Gyetvay as “a Florida businessman”, the department said that he defrauded US tax authorities by not disclosing "his substantial offshore assets", thereby avoiding millions of dollars in taxes.

The Justice Department said Gyetvay also submitted “a false offshore compliance filing with the Internal Revenue Service in an attempt to avoid substantial penalties and criminal prosecution”.

It added that Gyetvay may face dozens of years in prison if convicted.

The Novatek executive made a court appearance before Magistrate Judge Douglas Frazier of the US District Court for the Middle District of Florida on Friday morning.

The judge has then agreed to release him on the $80 million bail, provided Gyetvay wears a GPS monitoring bracelet and surrenders his US passport. A next hearing has been scheduled for 30 September.

Russia has no extradition treaty with the US, but Gyetvay is also a citizen of Italy and Russia and thus can easily flee their “without suffering a serious financial burden”, prosecutors warned earlier.

Gyetvay's importance

Gyetvay is a US citizen who was granted Russian citizenship by President Vladimir Putin in 2019 in apparent recognition of his efforts of international promotion of the Novatek’s first liquefied natural gas project, Yamal LNG, on the Yamal Peninsula in West Siberia.

The project, which is personally overseen by Putin and that began operations at the end of 2017, has been cut off from western project-financing options since sanctions were imposed on Novatek.

A certified public accountant, Gyetvay moved to Moscow in the early 1990s. He joined Novatek in 2003 and soon become key in the company’s financial, investor relations and strategy interests.

US outlines charges

Authorities allege that part of Gyetvay's compensation package included lucrative stock options or stock-based compensation.

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 more than $93 million, the Justice Department said.

Over a period of several years, Gyetvay 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, according to the department.

The US said Gyetvay also neglected to report overseas financial assets, as required by law.

US taxpayers are required to file forms that disclose their control over assets maintained in foreign bank accounts annually. Some of the tax returns Gyetvay did file are false, the Justice Department alleged.

Novatek's statement

Novatek said in a statement that the company is not involved in the litigation and does not have any details of the court hearings. However, it "monitors the situation and will give all necessary support".

"For many years, Gyetvay has been a main representative of Novatek for professional and investment community, making invaluable contribution to its success", the company said.

However, the company said that in 2014, Gyetvay left its board of directors and the position of chief financial officer, and subsequently had not involved in Novatek's financial activities, including attracting financing.

"The situation has absolutely no effect on Novatek’s operational and financial activities", the statement concluded.

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