In a ruling delivered on Monday, a Zurich Arbitration Tribunal concluded that Reiman, known as "witness #7", was the only beneficiary of the Bermuda-based IPOC fund and its option over a 25 percent stake in MegaFon, Russia's third largest mobile operator.

LV Finance Group, which has been locked in a legal battle with IPOC for more than three years, is disputing IPOC's claim that it has an option on a 25% Megafon stake, in a complex case which has involved a string of associated shell and associate companies and led to several suits and counter-suits in Switzerland, Bermuda and the British Virgin Islands.

The current dispute is part of a wider battle between IPOC and Alpha Group, an industrial holding firm which owns LV Finance Group. Alpha Group also owns a 25% share in Russian mobile operator VimpelCom, a rival to MegaFon, which, in 2004, became the recipient of a $158 million claim for back taxes in what observers suggested at the time was a politically-motivated attack against Mikhail Fridman, the billionaire tycoon who owns Alpha Group and who came into direct conflict with Reiman when he acquired the MegaFon stake in 2003.

MegaFon's current shareholders are Swedish-Finnish TeliaSonera with 35.6%, Russia's Telecominvest with 31.3%, CT-Mobile, fully owned by Alfa Group, with 25.1%, and IPOC with 8%.

In a statement issued late Monday, LV claimed that the tribunal supported its accusations that payments on IPOC's stake option had been "criminally sourced," while the tribunal itself concluded that Reiman allowed his "personal enrichment" to take precedence over the state assets which he, as a high-ranking public official, had an obligation to protect.

Reiman, however, denies that he is the beneficiary of the IPOC fund and has said that he was not invited either officially or unofficially to testify before the tribunal.

The affair is being seen as a key test of President Putin's anti-corruption drive, announced in his recent state of the nation address. Putin and Reiman were close associates when the former was deputy mayor of St Petersburg and the latter was on the board of a state-owned telecoms firm. Putin has also worked for one of Reiman's companies.

IPOC expressed "surprise" at the tribunal's verdict, and indicated that it would be prepared to appeal to the Swiss Supreme Court.

"We are also reviewing the damage and other issues left open for IPOC to pursue under the just issued Award. This is just the latest stage in what is an ongoing legal process," a spokesman said.