THE international embarrassment to the island brought by the money-laundering scandal surrounding the Bermuda-based IPOC International Growth Fund shows no signs of abating, as a Swiss arbitration tribunal this week implicated two more locally registered companies.

The private commercial tribunal in Zurich spelled out how two Bermuda companies in the IPOC Group, Comitas and Honestas, were instrumental in transferring funds gleaned by the activities of Russian IT Minister Leonid Reiman into the IPOC Fund.

The tribunal also ruled that Mr. Reiman is the "sole beneficial owner" of the $1-billion Fund. This is despite IPOC's repeated claims that Danish lawyer Jeffrey Galmond, a friend of Mr. Reiman who has been doing business in Russia since the 1990s, is the owner.

The three-member tribunal also clearly stated its opinion that the money in the Bermuda fund included the laundered proceeds of crime.

And it said Mr. Reiman, a close ally of Russian President Vladimir Putin, had pursued his own "personal enrichment" at the expense of state assets he had an obligation to protect.

IPOC is reportedly "surprised" by the ruling, has vowed to continue its fight to assert its right over the Megafon stake and is considering an appeal to the Swiss Supreme Court.

The financial affairs of IPOC and 11 affiliated companies are being investigated by KPMG Advisory Services on behalf of the Finance Ministry.

Two months ago, Finance Secretary Donald Scott said the probe was at the stage where those criticised in the report were being given an opportunity to submit their comments.

Yesterday, we asked the Ministry whether the report was complete and whether it would be made public.

We also asked whether Finance Minister Paula Cox considered the Swiss tribunal's findings to be damaging to the island's reputation.

Assistant Finance Secretary Wayne Brown answered by saying only: "Please note that completion of the Inspector's report is now imminent and the Ministry will comment after it is in hand."

The tribunal's 350-page ruling referred to a dispute between IPOC and LV Finance Group. It is the latest episode in a three-year legal battle over a 25 per cent stake in Megafon, Russia's third largest mobile operator.

Alfa Group bought LV's stake in Megafon in 2003, but IPOC claims it signed option agreements to obtain those same stocks back in 2001.

The dispute has sparked lawsuits in the Bahamas, the British Virgin Islands and Switzerland, as well as the investigation by the Bermuda Government.

The Swiss tribunal does not have the same authority as a court, but its ruling, which explicitly states that Mr. Reiman amassed great personal wealth in the IPOC Fund by taking advantage of his role in public office, is a blow to the Minister and to IPOC.

Its ruling is also acutely embarrassing for President Putin, who just two weeks ago announced an anti-corruption drive in an address to the nation.

The tribunal found that in April 2000, Mr. Reiman granted a valuable telecommunications licence to a company he controlled through two of his Bermuda companies, Comitas and Honestas.

That company was Telecom 21, a small firm bought by Comitas for $3 million. Its value soared after Mr. Reiman's Ministry granted it the GSM 900 licence.

In January 2001 Russian telecom giant MTS purchased Telecom 21 for around $40 million, chiefly because it wanted to acquire the licence. MTS' own application for the same licence had been rejected by Mr. Reiman in May 2000.

Mr. Reiman had "resold the company at a profit of well over 1,000 per cent", stated the tribunal, something he had achieved by using his official powers to grant Telecom 21 a GSM 900 licence, while rejecting the application for the same licence from Telecom 21's acquirer MTS.

Mr. Reiman then transferred the majority of the proceeds from the transaction, some $30.5 million, from Comitas, through its parent company Augmentation Investments and into the IPOC Fund.

The Minister's actions meant that he broke Russian laws, as well as Swiss money-laundering laws, ruled the tribunal.

The Bermuda Registrar of Companies web site shows that a company called Comitas Investments, which was incorporated seven years ago, has since been dissolved. There was no record of Honestas.