Mukhtar Ablyazov’s little Indians: how lies can reveal truth/I

Back in the 1920s and 1930s, whenever one of Chicago’s chief-mobsters was apprehended by police, he was said to be able to manage his criminal network and keep it up and running from his prison cell, since those networks consisted of fool-proof associates who needed but a nod to know what to do. With the aim to prevent that from happening again, authorities in a number of countries are seeking to identify and detain as many as possible associated with the fund diversion circuits of Mukhtar Ablyazov, Kazakhstan’s ex-banker and master swindler who snatched billions in US dollar (some estimates go up to $12bn) and who is now under arrest in France biding his eventual extradition to Ukraine or another one of the countries having requested him to be handed over, with Ukraine topping the list. The main culprit’s two brothers in law have now been sentenced in England to 22 months in prison for contempt of court (read: perjury) but both of them have been on the run. Strangely enough, the UK has not demanded the extradition of Ablyazov and there does not seem to be a worldwide arrest warrant against his two relatives.


Mukhtar Ablyazov’s little Indians: how lies can reveal truth/I“The English High Court has found Salim Shalabayev, the brother in law of Kazakh fugitive and former BTA Bank Chairman Mukhtar Ablyazov, to be in contempt of court and sentenced him to 22 months in prison,” a press release from the bank ( dated November 21 read. “On 18 October 2013, Mr Shalabayev was found to be in contempt of court for his consistent failure to comply with numerous orders of the Court.  He had been ordered not to leave England and Wales until he had provided information on the whereabouts of millions of dollars that passed through companies believed by the High Court to belong to Mr Ablyazov. Despite this, he refused to answer and absconded. In the Committal Judgement, Mr Justice Eder found that Salim’s wrongful conduct took place over an extended period, included lying to the Court of Appeal and was ‘committed deliberately and knowingly’. In sentencing him, Mr Justice Eder rejected Mr Shalabayev’s claims that he was unable to comply with Court orders because of fears for his safety, noting that those claims were only untested assertions and, even if true, the fact that ‘Salim was very fearful, as he says, is, to my mind, of no relevance whatsoever in light of the orders that have been made’.”

Fears of revenge by his lord and master may well indeed have inspired Salim to mislead English courts of law – since a number of his peers are still running free and could well harm him if they would get the chance to do so. Curiously, such fears are becoming less and less grounded since more and more of those are being nailed, mainly with the aim to take as many links out of the chain of fund diversions. “Mr Shalabayev is the third associate of Mr Ablyazov to be committed to prison for contempt of court. His brother Syrym Shalabayev was found to be in contempt of court in May 2011, and Paul Kythreotis was found in contempt of court in the UK and in Cyprus (where he served a three month prison sentence),” the press release continues. “Mr Ablyazov was sentenced by the High Court to 22 months imprisonment before fleeing the jurisdiction in February 2012.” The press release further quoted Pavel Prosyankin, BTA Bank Managing Director overseeing the asset recovery process and Member of the Management Board of the bank, as commenting: “We welcome this judgment against Salim Shalabayev. We will continue to pursue these committal actions to help break the networks through which Mr Ablyazov and his associates can improperly hide and disperse assets. The Bank is determined to seek redress against those who have been instrumental in the losses that it has suffered from alleged fraud, as well as those who are assisting in the concealment of monies or assets misappropriated from the Bank.”

Among those who are now running around with the law on their heels are many of the first-category among Ablyazov’s former associates, i.e. those who were authorised to make decisions about the directions funds and assets were to go next and manage the immensely complicated account-to-account schemes and Potemkin companies led by shadow entrepreneurs. It seems, however, that in contrast to his brother Syrym, Salim Shalabayev played only a secondary role in most of the arrairs in which he has been involved. Thus, on March 19 this year, Justice Teare, who has handled the bulk of the Ablyazov files at the Royal Court of England and Wales since the very beginning, mentioned Salim’s name only in a sideline while resuming the Eastbridge case, which concerns one of Ablyazov’s key hubs in his fund diversion schemes, the main figurehead in the structure being a Ukrainian of Russian nationality by the name of Udovenko. The weird thing in this reard is that as far as known Udovenko is not (yet) subject to a case for contempt of court in England.

“Mr. Alexander Udovenko was one of Mr. Ablyazov’s most trusted associates until sometime in late 2009 (when, it seems, he disappeared),” the court document reads. “He was a Russian lawyer who had practised with an American firm in Moscow and had then worked for an American bank in Moscow. From 2001-2003 he studied in London obtaining a diploma in law and an MBA. From 2003 he worked at Eastbridge Capital Limited in London. He appears to have provided his services to Mr. Ablyazov in London at the offices of Eastbridge. He was the nominee UBO [ultimate beneficial owner] of at least some of Mr. Ablyazov’s companies and as such made use of corporate service providers in off-shore jurisdictions, in particular in Cyprus and the BVI. He was assisted by Syrym Shalabayev, Mr. Ablyazov’s brother-in-law who, in the Autumn of 2008, replaced Mr. Udovenko as the nominee ‘beneficial owner’ of at least some of Mr. Ablyazov’s companies and was perceived by at least one person familiar with the workings of Eastbridge as Mr. Udovenko’s ‘successor’. The family connection was continued by the assistance given from time to time by Salim Shalabayev, a younger brother of Syrym, whose name was either used or suggested as a nominee UBO of at least two companies. In the Autumn of 2009, after the WFO [worldwide freezing order] had been granted and Mr. Udovenko had disappeared, Syrym Shalabayev appears to have transferred the work of Eastbridge Capital in London to Euroguard in Cyprus.

In these proceedings Mr. Ablyazov has disclosed ownership of a valuable portfolio of 17 assets through a trusted associate but, as was found in the contempt judgment, he in fact owned further assets through a trusted associate which he had not disclosed.”

The cases in respect to which Salim Salabayev has been convicted for contempt are among those for which Ablyazov has been convicted as well. Salim’s name particularly appears in Ablyazov’s real estate purchases by proxy in the United Kingdom. “When in October 2009 Mr Ablyazov had faced cross-examination, he was asked about certain residential properties in London which he had not disclosed in his schedule of assets, and his evidence was that he owned none of them,” a verdict in appeal dated November 6 2012 and ruled by Lord Justice Rix and two peers was to read. “The bank alleged that this evidence was untrue and deliberately false to his knowledge. The four properties concerned were all owned by foreign companies, and the question was as to the true UBO of those companies. The four properties, the relevant owning companies, and Mr Ablyazov’s case as to the true owner of the respective shares in the companies, are as follows:

(a) Carlton House, a grand house[1] in The Bishop’s Avenue, Hampstead, was purchased in April 2006 for £15.5 million by Mount Properties Limited, a BVI company, whose shares are said by Mr Ablyazov to be owned by Syrym Shalabayev. Mr Ablyazov lived in Carlton House with his family. It is common ground that he did so since May 2009, and the bank says that was so since at least 2007. Mr Ablyazov says that he leased the house from his brother-in-law on a short-term basis. The purchase monies were provided by Sunstone Ventures Limited (“Sunstone”).

(b) Oaklands Park Estate, a country house and 100 acre estate in Surrey, was purchased in about March/April 2006. The registered proprietor is Lafe Technology Limited, a Seychelles company, whose shares were purchased for £18.15 million with funds paid by Sunstone Ventures Limited, Mega Property Limited and Widley Worldwide Inc. The estate, that is to say the shares in Lafe, is said by Mr Ablyazov also to be owned by Syrym Shalabayev. It is common ground that Mr Ablyazov and members of his family visited Oaklands Park at weekends until the New Year of 2011.

(c) 17 Alberts Court is a flat bought on 27 June 2008 for £965,000. The registered proprietor is Bensborough Trading Inc, a BVI company. The declared UBO of Bensbourogh is Syrym Shalabayev’s brother, Salim. Salim gave oral evidence at trial that he was the true beneficial owner of the company and thus the flat. The bank says that the true UBO is Mr Ablyazov. It appears (from Salim’s evidence) that the only persons to have lived in the flat were Mr Ablyazov’s driver and his wife, at any rate for a while. When they moved out, Salim did not move in: he was living at Carlton House and then at Elizabeth Court

(d) 79 Elizabeth Court is a flat which was purchased for £650,000 in January 2002. The registered proprietor was Rocklane Properties Limited, a BVI company. The bank said that the true UBO of Rocklane was Mr Ablyazov: the declared UBO was Mr Udovenko (up to October 2008) and Syrym Shalabayev thereafter. Mr Ablyazov, supported by Syrym’s evidence, said that the beneficial owner was Syrym, from 2003 to December 2009, when Syrym sold it. The judge said that the changes of declared UBO from one trusted associate of Mr Ablyazov to another, in tandem with many other companies, suggested a single true UBO, namely Mr Ablyazov. Nevertheless, there was no evidence as to the source of the purchase monies, and the judge concluded that, despite matters which “strongly support” the bank’s case and “odd aspects” of Mr Ablyazov’s evidence, there was insufficient evidence to dispel all reasonable doubts. This appeal is therefore concerned only with the first three properties.”

Within the real estate schemes, the two Shalabayev brothers appear to have worked closely together. “The position of the flat at Alberts Court is somewhat different, because it is a much less grand property, cost only £965,000, and was bought in 2008, two years after Carlton House and Oaklands Park,” the court document proceeds. “The apparent UBO of the registered proprietor, Bensbourogh Trading, was said to be Salim Shalabayev, Syrym’s brother: but he never appears to have lived at Alberts Court. Instead, Mr Ablyazov’s driver and his wife lived there, for at any rate some of the time. The judge considered that he could not rely on the declared UBO, just as he disbelieved that Syrym Shalabayev, the declared UBO of the corporate owners of the other properties, held those properties for himself rather than Mr Ablyazov. The judge was also not impressed by the evidence that Salim never saw the flat before it was bought. His brother Syrym selected the property and negotiated the price. When asked about a draft lease of the flat, Salim said that he was proposing to rent the flat “from myself”. After living in Carlton House, he moved to Elizabeth Court, a block in the same development, and paid rent for it. The judge said that was an odd thing to do, if he was the owner of the flat in Alberts Court. There was in any event no evidence that he had funded the purchase or was even capable of affording the million pound price. The purchase price was provided by Syrym. The judge reasoned that Syrym must therefore have purchased it on behalf of Mr Ablyazov: after all, Syrym did not claim to have purchased it for himself or someone else. The judge considered that the circumstantial evidence that Mr Ablyazov was the beneficial owner of this flat was less compelling than in the case of the other two properties, but even so he was sure that Mr Ablyazov was the owner.”

At present, BTA is working on the liquidation of Ablyazov’s property in and around London, and use the revenue as compensation for part of the lost funds. As for Ablyazov’s lying little Indians, to make a comparison with the American nursery rhyme, the perjury cases ruled so far should make it clear that a number of Ablyazov’s former associates have lied no less in court than those convicted for it so far. In a follow-up, we shall therefore try to put together a list of those who have plenty to worry about becoming the next defendant in contempt-for-court cases downtown London. The low speed with which such meticulous proceedings are being carried out, however, also gives plenty of reason to worry for BTA’s current management since as long as time is on the perpetrators’ side, they may well have more than enough opportunity to organise a next round of fund diversions – something which can be done virtually overnight – and escape through the back door once more. (to be continued)