English court dismisses appeals of Mukhtar Ablyazov and others and requires disclosure of their assets worldwide

Oct 08. BTA Bank

English court dismisses appeals of Mukhtar Ablyazov and others and requires disclosure of their assets worldwideIn August this year, JSC BTA Bank commenced legal proceedings in the High Court in London against Mukhtar Ablyazov, the former Chairman of its Board of Directors, Roman Solodchenko, the former Chairman of its Management Board and Zhaksylyk Zharimbetov, the former Vice-Chairman of its Management Board, all of whom have fled Kazakhstan and are now living in England. On 13 August 2009, the English High Court granted an injunction order to the Bank freezing the assets of Messrs Ablyazov, Solodchenko and Zharimbetov (as well as three English individuals and one English company, who the Bank believes have been assisting them) around the world. This was on the basis of evidence put to the court that they have defrauded the Bank of close to US$300 million through a series of questionable agreements entered into last year in favour of a company in which these former managers secretly held an interest. Through these legal proceedings, the Bank is seeking to recover the money paid out under those agreements. The Bank fully expects that further claims in relation to other aspects of the former management’s fraudulent activity will be issued in due course.

The injunction order granted to the Bank required the defendants, including Mr Ablyazov, to disclose details of their assets worldwide. Those defendants objected to having to do so, amongst other reasons on the basis that that information might be used by police or prosecutors to incriminate them in wrong-doing. Last Wednesday, 30 September 2009, the Court of Appeal in London dismissed those objections and ruled that the information on the defendants’ assets should be passed to the Bank’s legal team in London, which is headed by the international law firm, Lovells LLP. This was so that the Bank’s lawyers can monitor the defendants’ property and ensure that it is not dissipated before the Court can rule on the Bank’s fraud claims.

Notes: A controlling stake in JSC BTA Bank was acquired in February 2009 by the Kazakh sovereign wealth fund, Samruk-Kazyna, as part of the process of easing the liquidity problems being experienced by the major banks in Kazakhstan. Not long after new management was put in place, it became clear that the former management of BTA Bank, including Messrs Ablyazov, Solodchenko and Zharimbetov, had widely mismanaged the Bank, with many loan and other arrangements having been put in place that were not in the best interests of the Bank, but rather in their own interests. The Bank has retained international specialists, including the international law firm Lovells LLP, and the accountancy firm, PriceWaterhouseCoopers, to advise in relation to its asset recovery programme.