Ablyazov: accused fraudsters and their helpers – fat cats, fat rats

Where billions are at stake, millions may well look like crumbs. But while Kazakhstan’s one-time blue-chip bank BTA is battling in London courtrooms for its survival and its main foe and wrongdoer, former major shareholder and president Mukhtar Ablyazov, against the threat of losing well over 3 billion Sterling in  assets he diverted and of multiple prison terms from Pentonville via Motroshkaya to the Kazakh gulag, law firms and PR agencies are engaged in fierce competition to grab as many millions they can from either party involved, whether their services may or may not help. Affairs hitting such firms should at least raise some eyebrows about their motivation, and their level of readiness to cross the thin line between lawful defence and complicity. But the role of so-called lobbying firms, an industry against which recently a parliamentary investigation was opened in Britain, looks even more obscure – and might explain how crooks like Ablyazov can undergo their miraculous metamorphosis into persecuted democrats.

by Charles van der Leeuw, KZW senior contributor

Ablyazov: accused fraudsters and their helpers - fat cats, fat ratsThe lid of the Pandora’s box concerning law firms tending to overstep their line was tipped in late summer, as the London-based law firm Clyde & Co, one of the solicitors teams which used to represent Ablyazov’s brother-in-law and associate Syrym Shalabayev in BTA’s legal Battle of Britain, clashed with the UK High Court on allegations that it had helped its client hold out on information concerning the role of Shalabayev, who was later to be convicted to a mid-range prison term for contempt of court in connection to the issue. “Ruling in a preliminary matter relating to the mammoth case that is JSC BTA Bank v Ablyazov & Ors, Mr Justice Henderson told the firm it must give contact details for its client, Syrym Shalabayev, a defendant in the primary proceedings,” The Lawyer wrote on September 9. “In the primary case, JSC BTA Bank of Kazakhstan is attempting to recoup losses of $290m (?181.2m), which it alleges were fraudulently misappropriated by its -former chairman, Mukhtar Ablyazov, who is living in the UK. Hogan Lovells partner Chris Hardman has been instructed to pursue the losses for the bank. […] Clydes partner Julian Connerty is acting for the defendant, who was served a worldwide freezing order in November 2010 with committal proceedings launched against him in December. By May Shalabayev had not responded and Mr -Justice Briggs found him to be in contempt of court. Briggs J said the alleged contempt ‘is proven beyond reasonable doubt’. However, Shalabayev refused to comply with the freezing order and refused to pay the ?70,000 interim costs order made against him on 27 June. Consequently, the bank went to the High Court to force Clydes to disclose his contact details.”

The threat of being dragged into a complicity case drove Clyde & Co into a rather hilarious-looking situation in which it had to hire another law firm, Matrix Chambers, to defend its position with the argument that disclosure would “… pose an inherent conflict of interest for the firm”. Though the threat of complicity charges was thus avoided, the disclosure claim was upheld by the court. The information thus provided by Clyde has largely contributed to the names, facts figures now on the table in the contempt-of-court case against Mukhtar Ablyazov himself. The setback seems to have driven the main culprit in the multi-dimensional fraud scheme to change his law firm as well – shich, for all it matters, shed some light on the sums at stake for the law firms involved. “Stephenson Harwood (SH) has been ditched as adviser to the ousted chairman of Kazakhstan’s BTA Bank Mukhtar Ablyazov, in favour of Addleshaw Goddard,” The Lawyer reported on September 19. Sources close to the case claim the firm billed in excess of ?20m to the client in 2010. […] SH posted a rise in revenue of 16 per cent at the latest financial year-end to break the ?100m barrier for the first time.

Ablyazov’s new law firm is far from strange to scandals implying fraud allegations itself. “Addleshaw Goddard is working with the Solicitors Regulation Authority (SRA) over alleged discrepancies in the expenses and disbursements of a former partner. Gilbert resigned?Mark?Commercial real estate partner from Addleshaws’ LLP on 10 May following an internal investigation into alleged discrepancies in the equity partner’s claims. Gilbert is now a consultant at Devonshires, which he joined on 10 May. No details have been released as to the amount of and Devonshires said Gilbert denied any?Addleshaws?money in dispute and both wrongdoing. A spokesperson for Addleshaws said in a statement: “Mark Gilbert has resigned from the business after an internal investigation apparent -discrepancies relating to expenses and disbursements. This?-discovered is a discrete set of -circumstances; no similar set of circumstances has been identified and no clients will suffer any loss. The firm is cooperating with the SRA and will not be commenting further until its review has concluded. We understand that Mark, who denies any wrongdoing, is also -cooperating with the SRA.”

But the law firm speaking and acting in court on behalf of BTA, Hogan Lovels, has not been spared in the latest wave of scandals hitting high-brow City legal counsel companies. “This summer saw the exposure of three alleged cases of expenses fraud involving lawyers at big City firms,” The Lawyer wrote on December 12. “The first case to come to public attention was that Christopher -Grierson. Grierson was dismissed?litigator?of senior Hogan Lovells false?uncovered?from the firm’s partnership after an -internal investigation -expenses claims amounting to ?1m. Grierson is alleged to have filed claims mainly for flights booked and not taken, with the repayments from cancelling the flights going to his account rather than the firm’s. After coming under intense -pressure, Hogan Lovells went on to report Grierson to both the SRA and the City of London Police.”

Apart from the information obtained through Clyde’s forced contribution, the main treasure of Ali Baba for BTA’s defence was found later on. “A container with documents relating to the offshore companies owned by Mukhtar Ablyazov, the former head of Kazakhstan-based BTA Bank, has been found in London,” Interfax reported on December 6 this year. “The High Court of England interrogated Chris Hardman, a witness from BTA Bank in Ablyazov’s contempt of court case and a partner of Hogan Lovells, a legal firm, said the complainant’s representatives. Earlier the High Court of England obligated M.Ablyazov to transfer all his assets to KPMG under a management agreement until the hearings into the BTA case were over. […] Mr. Hardman told the Court that Hogan Lovells had come across a container where a great number of documents relating to the activities of over 600 offshore companies were stored. This container was frequented by Salim Shalabayev who was helping his elder brother Sarym Shalabayev (both are brothers of M.Ablyazov’s wife) to hide Ablyazov’s assets from the Court. As reported, Sarym Shalabayev was sentenced in absentia by the U.K. court to 18 months in prison for failure to perform a number of orders of the court. Currently, Sarym Shalabayev is hiding. It came to the knowledge of the Court that Salim Shalabayev had been seen a number of times moving boxes with documents out of a container in Big Yellow Box storage facility and taking them to Ablyazov’s house in Bishops Avenue. He was also seen taking the boxes back into the container. BTA lawyers, who had a suspicion that the container might contain the documents that had been hidden from the Court, obtained access to the place where they did find Ablyazov’s documents on a large number of offshore companies, through which he was hiding the fraudulently obtained money.”

It is not known whether the documentation thus obtained has been used in the latest case against Ablyazov for contempt of court which, in analogy to his brother-in-law and his Cyprus-based former associate, as reported earlier, could put him in jail for a year or two. As described in earlier episodes of this never-ending and ever-enriched Shakespearian chronicle, time, space and dimensional proportions are continuously becoming broader, more and more intertwined and more and more mystified by marginally multi-million engaged and interested parties. These parties are far from being confined to law firms. Even though Britain’s judges have repeatedly ruled out any suggestion that Ablyazov’s legal spiral should be considered to have any political dimension, law firms keep insisting that this should be exactly considered to be the case – though lacking any legal ground to say so. Therefore, other little helpers have been brought in with the entry of even murkier counsel.

The contradiction between British courts’ dismissal of any political connection in the cases brought against Ablyazov contradicts the status of political refugee which, as it seems with the stroke of a pen, was granted to him by the Home Office in July this year. In early December, Parliament opened an official investigation into the dodgy activities and relation networks of lobbying firms in the UK, following stunning reports on starling levels of intimacy between lobbyists on behalf of industries and entrepreneurial individuals as well as governments, all of whom are constantly engaged in a shadow battle of goodwill among politicians and state decision-makers around the world. “A parliamentary investigation is to be launched into lobbying firms, including Bell Pottinger, and their links with ministers,” The Independent reported on December 9 this year. “Senior staff at Bell Pottinger, including its head of public affairs, Tim Collins – who was caught on tape boasting of his links to David Cameron and the Foreign Secretary William Hague, among many others – and Lord Bell, who chairs its parent company Chime, are likely to be summoned by an influential House of Commons committee. […] The inquiry by the Political and Constitutional Reform Select Committee will follow the publication, expected next month, of the Government’s proposals for increasing scrutiny of Britain’s ?2bn-a-year lobbying industry.”

Bell Pottinger has been reported to have played a rather ambiguous role in attempts by Kazakhstan’s other black sheep and former son-in-law of President Nazarbayev Rakhat Aliyev, at home convicted to 40 years behind bars for fraud, murder and conspiracy against the state, to build a fence of goodwill around him in the UK, the USA and continental Europe. Aliyev scored by obtaining political asylum in Austria under dubious conditions, even though the controversy that followed made him flee, reputedly, to Malta where he remains entrenched these days. In the case of Ablyazov, also involving a suspected case of asylum-for-sale, the fresh parliamentary investigation should shed some light on the role the PR and goodwill company Gardant, reputedly earning millions of pounds each year on the services it renders for him, has played in the surprise decision, which is of an administrative level and can only be revoked by the Home Office that made it and is not liable to any parliamentary intervention.

“Gardant is a strategic communications consultancy specialising in the protection and safeguarding of your brand and reputation,” in the company’s own words. “Whatever your field, whatever your issue, we have the experience and the expertise to help you. And whatever your situation, we’ll know what to do.” And: “Gardant understands its clients, their public and the importance of perception. We understand the impact of bad news, the timing of good news, and the danger of no news. […] No-one understands more how communication has changed, and no-one understands more how to exploit it.” And how. “It might have been supposed that Paddy Clanwilliam, aka the Earl of Clanwilliam, would want the summer off after the unfortunate coverage of how he was attempting to cast Bahrain as a “beacon of democracy” shortly before the kingdom’s police began gunning down protesters,” The Evening Standard wrote as early as March 5 this year. “But the founder of lobbying firm Gardant Communications is clearly not one to rest on his laurels. His firm has the job of representing Mukhtar Ablyazov, the former banker from Kazakhstan accused of orchestrating a ?1.27 billion fraud. Highgate resident Ablyazov is facing six civil actions in the High Court. He claims they’re a “political stitch-up” by the Kazakh president. Gardant – mindful perhaps that the RBS lost more than ?1 billion in Ablyazov’s alleged fraud and is among creditors who will share in the payout should the suits succeed – has been garnering support where it can. So, in declarations by the Conservatives in Europe, Nick Vaughan, former chairman of Conservative Future and now an associate at Gardant, says he met with Tory MEP Charles Tannock. The pair discussed “EU-Kazakh relations” and the stated client was one Mukhtar Ablyazov.”

Back in Almaty, dark clouds seem to gather once more over the head of BTA as a result of the hole left behind by Ablyazov and associates. “BTA, Kazakhstan’s third-largest bank by assets, will propose a further debt restructuring at a shareholder meeting next month, a move seen requiring creditors to write off at least half their investment,” Reuters reported on December 22. “BTA said on Thursday shareholders would meet on Jan. 26 to decide whether to accept a proposal to restructure its debt to help the bank, majority owned by sovereign wealth fund Samruk-Kazyna, stay afloat. ‘Restructuring is an urgently needed measure which, if timely … should ensure further normal functioning of the bank, strengthen its financial position and potentially restore its position in the market,’ BTA said. […] Samruk-Kazyna’s deputy chief executive, Aidan Karibjanov, said the fund had analysed the financial situation at BTA and supported the bank’s proposal to initiate restructuring of some of its debt. […] Karibjanov said the debt restructuring would exclude depositors and trade finance creditors. ‘Samruk-Kazyna hopes that a second restructuring of certain of the bank’s financial indebtedness … will bring about the required level of capitalisation of the bank,’ he said. A separate source at Samruk-Kazyna, who declined to be identified, said details of the second debt restructuring would be a subject for negotiation between creditors and the bank.”