* Financial services firm Otkritie defrauded of $175 mln
* Fraud relates to a $25 mln sign on fee, mispricing of Argentine warrants
LONDON Feb 10 A British subsidiary of Otkritie, one of Russia's largest financial groups, was awarded provisional damages of over $150 million on Monday, after a London court ruled it was the victim of "a cunning and well-orchestrated fraud" by former employees.
Justice Bernard Eder ruled that Otkritie Securities Limited, part of Russia's Otkritie Financial Corporation, had been defrauded through two schemes spearheaded by trader George Urumov.
In the first, Russian-born Urumov, a former executive at Knight Capital's emerging markets fixed income desk, was found liable for $23 million for failing to split a "sign-on fee" evenly between himself and four bond traders when he was recruited by the firm in 2010.
Instead he kept $20 million of it for himself and used it to pay more than $12 million in bribes to two Otkritie employees, Ruslan Pinaev and Sergey Kondratyuk, who had supported his recruitment, Otkritie argued.
Giving testimony in July, Urumov denied any wrongdoing, saying it was agreed that the sign-on fee would be handed out at his discretion. He paid Pinaev and Kondratyuk to compensate them because he was taking over a large portion of trading that earned the pair substantial profits, he said.
But in his judgment, Justice Eder disagreed, saying the trio acted with "nothing less than blatant dishonesty ... driven by simple greed and self-interest."
The three, along with another colleague, Eugene Jemai, were also found liable for damages of almost $151 million for mispricing Argentinian government securities.
The group paid $213 million for Argentinian warrants in 2011, saying there was a binding forward trade to sell them to a third party at a higher price, according to court documents. But no forward sale was arranged and Otkritie said it later found out the warrants were worth only $62 million.
Justice Eder said it was "beyond any reasonable doubt whatsoever that (together with Mr Kondratyuk) Mr Urumov and Mr Pinaev were at the heart of the fraud inflicted on Otkritie and received a huge share of the fraud proceeds."
The defendants used offshore companies to launder the profit of the fraud, which were used to buy luxury properties, diamonds and sports cars, according to the judgment.
In a statement following the judgment, Otkritie said the decision was "complete vindication" of its claim and the judgment had opened the door to a criminal prosecution.
Urumov was not in court to hear the judgment. His legal team at London law firm Farrer & Co, did not immediately respond to a telephone request for comment.
The final damages figure will be agreed at a hearing on March 14. Otkritie earlier said none of its clients had suffered any loss in the alleged frauds and it has already recovered more than $52 million. (Reporting by Clare Hutchison, editing by David Evans)