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Today's paper. Last Updated: 05/23/2012

Customs Officials Search S7 Office for Info on Jets

Customs officials seized documents Tuesday from the Moscow office of S7, the country’s second-largest airline, which is suspected of lowering its payments to the customs service.

About 10 officials — some in civilian clothes, some wearing camouflage and rapid-response force badges — arrived at 10 a.m. and were at the office until after working hours, an S7 employee said. They were particularly interested in the accounting, legal and IT departments, where they were “looking for something” on the computers, the employee said.

“Seizing documents is a traditional type of inspection, and it’s yet another chance for the company to show that all of the group’s activity is transparent and strictly within the bounds of the law,” S7 spokesman Kirill Alyavdin said.

The airline is majority owned by Natalya Filyova, with 63.26 percent, while the state has a blocking stake of 25.5 percent.

A source close to the company’s board of directors told Vedomosti that the searches were done by customs officials and other law enforcement officers, who were accompanied by members of the customs service’s rapid-response force. They seized documents relating to customs payments for imported Airbus A320s.

A spokesman for the Federal Customs Service declined comment. A customs service official said a search was carried out in the company’s office in Novosibirsk, as well. The S7 source confirmed the information, saying the search was done last week.

A source in one of S7’s partner companies and the S7 employee said the customs officials suspected the airline of paying less than required.

In June 2008, S7 shareholders approved the purchase of six A320s for a combined $192.9 million. Given the planes’ 20 percent import duty, the payment would have been $38.6 million.

Customs officials regularly conduct such checks, although they rarely lead to serious consequences, said Boris Rybak, head of consulting company Infomost. Airlines make customs and leasing payments monthly, he said.

In November 2008, the Federal Customs Service carried out checks at Sky Express and the now-bankrupt KrasAir and subsequently fined them 1.2 billion rubles ($38 million) and 638 million rubles ($20.3 million), respectively.

Sky Express successfully contested the fine in court and was not required to pay any penalties, chief executive Marina Bukalova said.

“The service comes at us and other airlines with several complaints per month, but they only manage to prove in court that they’re right one time in 50,” she said.





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