Mukhtar Ablyazov case in France: extradition on the crossroads/I

For Mukhtar Ablyazov, Kazakhstan’s fugitive ex-banker and (as far as known so far) the world’s champion swindler, D-Day has been set for January 16 of the upcoming year. But even in case at least one request will be honoured – probably that of Ukraine which has a better judicial case even though the amounts at stake are much lower than those in the Russian Federation – it might well be the beginning of a long and laborious string of appeal procedures ending at the European Human Rights Court. Since such a reel takes years, it will be good news for lawyers who on similar proceeds in the United Kingdom have already earned millions of Sterling – taken, bitterly enough, from the funds stolen by the culprit and his associates. Meanwhile, attempts by the latter to present himself as a “political” martyr in Kazakhstan are looking less and less credible and more and more ludicrous – even in the eyes of French prosecutors engaged in the extradition procedures.

BY CHARLES VAN DER LEEUW, WRITER, NEWS ANALYST

Mukhtar Ablyazov case in France: extradition on the crossroads/I“France’s public prosecutors are to  recommend the extradition of Kazakh oligarch Mukhtar Ablyazov, who was arrested in a spectacular raid on his riviera villa in July, it was announced on Thursday,” Radio-Télévision France’s English language service (http://www.english.rfi.fr/asia-pacific/20131213-france-extradite-kazakh-tycoon) reported on December 13. “Ablyazov, the former chief of Kazakhstan’s BTA bank, is accused of having embezzled billions of dollars and fleeing Kazakhstan. He was granted political asylum by Britain in 2009 but fled London last year after being sentenced to 22 months in prison for contempt of the court. The 50-year-old has been in custody at the Aix-Luynes jail in southern France since his arrest near the French riviera resort of Cannes in July this year. During the court hearing Ablyazov’s lawyers accused Ukraine and Russia of acting as the ‘long arm’ of Kazakhstan, as the country does not have an extradition treaty with France, but wants him sent home indirectly. But public prosecutor Solange Legras said Ablyazov, a former minister, should be seen as a ‘criminal on a grand scale’ rather than as a dissident opposed to Kazakhstan’s President Nursultan Nazarbayev. The court adjourned the ruling until 16 January when it will also rule on the Russian extradition request.”

Reuters in a parallel report (http://www.reuters.com/article/2013/12/12/us-france-ablyazov-idUSBRE9BB13E20131212) quoted the prosecutor as saying: “When you have so much money, you can buy everything. But you cannot buy the French justice system. You will have to submit to its rules.”

“The court favoured extradition to Russia because it had suffered a greater financial loss, at $5 billion, rather than Ukraine, which lost $400 million, as a result of Ablyazov’s alleged embezzlement, Solange Legras said in Reuters’ words. “The budget of the French justice system is less than the sum diverted by Mr. Ablyazov from the Russian Federation alone.” The news report further quotes Solange Legras as stating that “…both Kiev and Moscow [are] bound by the Geneva Convention and the European Convention on Human Rights which barred returning a political refugee to his home country, or transferring him to a third country without the agreement of the extraditing power, in this case France. “It is easy to be an opponent to hide one’s true nature as a fraudster,” the report quoted her as observing.

Details on what is in store for Ablyazov, once arrived in Ukrainian courtrooms, have been summarised, by an author named Andrey Logins on contur.kz (http://www.nomad.su/?a=3-201311190019) on November 15 this year. Apart from assets and pseudo-owners reported on earlier (see below), new mailbox firms as well as their pseudo-owners, in reality Ablyazov’s hired proxies for the occasion, pop up here. According to the report, there were six façade firms named Eurasia-Ukraine Investment Industrial Group, MT Investment, Jupiter Trade, Absolute Investment Corp., Athena Trade and Drobo Trade. Together, they “owned” 50 per cent in BTA Ukraine, plus worth approximately 17 million US dollar in property and another $8 million in cash. Did they really? None of the mentioned firms so far appeared on the blacklist of BTA – a long list of firms and persons the bank warns the world not to engage in any business with at the cost of possible legal action by BTA – now majority-controlled by the Kazakh state. But according to both English and Ukraine, the author argues, it follows that they definitely fall under the category included in the much-discussed English freezing order granting BTA the option to claim control over the assets at stake.

The case of the six offshore firms came to light in Lithuania, when in February 2012 a married couple, judging by the name of Central-Asian and probably Kazakh origin, filed for divorce at a court of law with the argument that divorce would “ease both partners’ business interest – in Login’s words. The judge must have been rather astounded when he read in the property declaration handed over by Rinat and Galina Batyrgarayev that together they owned not less than 68 offshore enterprises in various locations of the world – including the six firms mentioned above. Nevertheless, he granted the divorce and, with the pair’s consent, divided the firms between them with giving 53 companies to the wife and the remaining 15 to the husband. What had been hidden from the judge, though, was the fact that the Batyrgarayev couple had no property rights over the assets of any of the companies under their name, which in turn were controlled by a separate string of offshore firms, which in the end could all be traced back to Ablyazov. A court of appeal was seized (assumedly by BTA lawyers in Lithuania even though the author does not specify this) and the divorce ruling declared void. By then, though, the couple had disappeared reputedly to Belarus, and was never seen in any courtroom ever since.

In how far the new names form part of attempts by Ablyazov to wipe out traces consisting of earlier phony enterprises acting as nominal asset owners by replacing them by new ones with new physical persons in the window remains to be guessed. Regarding the older structure, as things became known as of  late 2011, the pieces of the puzzle concerning Ablyazov’s Ukrainian connection started to fit in as the search was on for a number of unnamed associates, crucial among whom seems to be one dubbed Mr.P, apparently a key instrument behind a Ukraine-based firm called the Lankom Group, which represents one of the links allowing Ablyazov recuperate substantial amounts of money detoured from the collateral that initially supported it – in the end at the expense of BTA proper. “In respect of Mr P, he says that he, together with others, held an interest in the “Iceberg” business centre in Kiev, Ukraine which is funded by a company called Neshani Investments Limited (”Neshani”) in which Mr P and two others have an interest,” The Royal Court’s report on its session on the case held on October 26 reads. “In April 2010, the Treppides & Co corporate services provider confirmed to Euroguard Assets Ltd. (”Euroguard”), which provides asset management services, that Gaziz Zharimbetov had been appointed as the Wintop ‘contact person’. Gaziz Zharimbetov, who is related to Mr Zharimbetov, the third defendant, has been working in Tower 42, (formerly the Natwest Tower) in London, alongside Mr Ablyazov for months, which suggests that Mr P is being used by Mr Ablyazov to disguise his assets. […] In order to preserve anonymity, payments to Fitcherly were channelled from Neshani through two conduit companies called Vaida Trading Limited and Constance Trading Limited, Mr P having agreed with his associates to guarantee the repayment of the loans made to Mr Ablyazov to the extent of their proportionate participation. Vaida and Constance were introduced to Mr P by a Russian associate of his who ‘is not Mr Ablyazov or Mr Shalabayev’.”

This, combined with the new information on the Batyrgareyev case, drove Ukraine’s court to a historic move. “The Kiev Economic Court on March 22, 2011 satisfied a claim of Kazakhstan’s BTA Bank asking it to collect some 1.5 billion Ukrainian hryvna [1 US dollar = approx. 8 hryvna – ChvdL] in compensation from GMSI Ltd. (Ukraine) for losses caused by the improper fulfillment of that company’s liabilities,” Interfax’s Ukraine branch reported on March 23 2011, quoting the press service of the Ilyashev & Partners law firm, which represented the interests of BTA Bank. “The above-mentioned 1.5 billion would be collected from the previous leadership of GMSI, which ran the company into the ground,” the report read further. “The property was arrested to satisfy a claim for some 1.5 billion Ukrainian hryvna to cover the bank’s losses. Earlier the Kiev Economic Court ruled that BTA Bank had the ownership rights to a 99.99% stake in the statutory fund of GMSI.” The news agency added that Oleg Driukov, the former head of GMSI, had been dismissed and was subject to prosecution on charges of embezzlement and related violations of the law. The agency also observed that “GMSI was a structure affiliated with Mukhtar Ablyazov” in its report’s words.

More details on the highly sophisticated manner in which Ablyazov’s fund diversion networks were constructed were given, as we reported earlier, by the London court. “The Bank says that it can demonstrate that it has a strong case (i) that Mr Ablyazov owns Neshani and the Iceberg group of companies and that the funds loaned by Fitcherly to Mr Ablyazov emanated from one of Mr Ablyazov’s own assets,” the Royal Court’s report quoted earlier read – adding that: “…the Iceberg Business Centre is owned by LLC GMSI, which is in turn owned by companies called Urbas Industrial Limited (as to 1.01%) and Batitrav Resources Limited (as to 98.89%), which are in turn owned by a company called Lankom Limited. There is strong evidence to suggest that Mr Ablyazov owns (through Mr Shalabayev acting as his nominee) the Lankom group of companies and therefore the Iceberg Business Centre. By way of example: a)A declaration signed by Mr Shalabayev on 11th December 2009 records Mr Shalabayev as being the beneficial owner of Lankom; b)Various press reports link the Iceberg Business Centre with Mr Ablyazov or companies of which he has admitted ownership, in particular the Eurasia-Ukraine investment and industrial group of companies; and c)Mr Shalabayev regularly gives instructions in relation to the Lankom group of companies, for instance by sending emails to the eduardpakhomov@yahoo.co.uk email address (which Mr Shalabayev also seems to control) for execution.”

All this should open the way to get the full picture – including if and if so how the Iceberg case could be brought in connection with the Batyrgareyev case. “There is strong evidence to suggest that Mr Ablyazov also owns Neshani [Investments] Limited, principally in the form of various instructions having been issued by Mr Shalabayev in relation to this company’s business,” the English court document quoted above continues. “The evidence as to Mr Ablyazov’s ultimate ownership of Urbas, Batitrav, Lankom and Neshani has already been accepted by the Court, when it added the shares of these companies to the receivership on the basis that there was good reason to believe that they were owned by Mr Ablyazov. Mr Shalabayev was responsible for giving instructions for the execution of loan agreements between Neshani, on the one hand, and Vaida and Constance, on the other. Mr Shalabayev gave instructions for the sale of part of the so-called Iceberg debt owed by GMSI with a value of € 29,200,000 from Neshani to BTA Ukraine in return for the payment by BTA Ukraine of the same amount. BTA Ukraine made the payment on 17th December 2010. This, it is said, shows that the €29,200,000 used by Neshani to pay Mr Ablyazov’s legal and personal expenses in fact derived from BTA Ukraine, one of Mr Ablyazov’s principal assets.”

It all seems to have been set now: BTA-Ukraine can be expected to be returned to its former parent bank, the culprit will sit out a jail term in Ukraine and thereafter possibly handed over to Russia, where he can expect similar procedures. However, there remain some tricky angles in connection to the affair. First of all, Ablyazov’s French lawyers can be expected to appeal at least twice – meaning once to the court of appeal and finally to the Supreme Court – after which they can opt for appeal at the European Court of Human Rights, where dozens of similar cases are pending. All this can take years – meaning good news for the lawyers but bad news for justice. Even though the English Royal Court has ruled that such procedures do not prevent the return of assets to their rightful owner, in Ablyazov’s case BTA, unraveling the pattern with all names, account locations and assets identifications in place, is a much harder job in the absence of the main culprit than in its presence – event though Ablyazov has proven to be a skillful teller of lies in courtrooms…

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