In a case stemming from more than a dozen years ago, Semtek International Inc. is proceeding against various Russian entities to collect a $381 million civil judgment awarded by a U.S. federal court. Unfortunately, however, the plaintiff estimates less than a one-in-five chance of ever seeing a ruble of it.
“Trying to go to Russia and get them to pay and collect is a daunting task,” said Semtek executive Pierre Quintana.
With interest, the money owed to Boston-based Semtek could exceed $700 million, the company’s lawyer claimed.
“We will ask a court to seize Russian assets in the United States,” said Brian Alexander, an attorney for Semtek and a partner with the New York firm Kreindler & Kreindler LLP.
Semtek’s legal battle began more than 12 years ago, after the collapse of a joint venture that would have enabled Semtek to make commercial use of transmitting capacity to broadcasters and other interested parties on Russian military satellites. The Russian player, Merkury, reneged on the agreement; Semtek subsequently charged, among other complaints, that the action violated the Racketeering Influenced Corrupt Organizations Act (civil RICO).
Despite a federal judge’s ruling against Merkury, the defendant has failed to pay any part of the judgment. "Merkury’s violation was determined by a federal judge, and we believe the Russian company is merely an instrument of several Russian Federation-controlled entities,” Alexander said. “Proving those relationships gives us the right to seize Russian assets in the United States.”
Throughout the breakup of the Soviet Union in the early 1990s, government assets were being exploited for commercial ventures. Officials with the Russian Space Agency and NPO-PM, manufacturer of the nation’s satellites, established Merkury to sell the use of military satellites for broadcast clients like CNN, CBS and ABC to transmit worldwide news footage.
In 1994, Semtek leased capacity on a Luch spacecraft located at 16° West when “we started getting bad vibes,” Quintana said. “We had a deal and then we became concerned after they announced an agreement with Lockheed Martin,” which also was in negotiations with the Russians for capacity providing coverage over the eastern and midwest United States plus eastern South America and Europe.
Semtek has also sued Lockheed Martin for its separate role in steering Merkury away from Semtek. That case remains unresolved pending an appeal in Maryland.
For the past decade, Russia has aggressively commercialized its space industry creating partnerships with American companies like Boeing and public agencies like NASA.
“In a global economy, business contracts must conducted in good faith and be honestly fulfilled otherwise, people will not invest there,” said Quintana. “Our action tells the Russian government to play by the rules or pay the price.”
