The Ablyazov files: struggle over punishment in France, Russia – over cash in England

For the third time during the long time-span of proceedings against Kazakhstan’s master billionaire crook Mukhtar Ablyazov, now imprisoned in France pending appeal against a court decision to give the government the green light to extradite him to the Russian Federation or eventually to Ukraine, his lawyers in England have decided to abandon the case. The main reason seems to be that an English court has ruled that in cases like Ablyazov’s defence lawyers withholding evidence against their client can be considered accomplices and a court can declare so-called privileges (lawyers’ prerogative to withhold incriminating material against their clients) void. This obviously makes the ground a bit too hot for law firms, each of which have cashed in million after million for the defence of Ablyazov and consorts so far, and continue to do so in attempts by his former bank BTA, now in the process of being incorporated by its former rival and new majority-owner Kazkommertsbank, to recuperate the billions stolen at the time.

BY CHARLES VAN DER LEEUW, WRITER, NEWS ANALYST

The Ablyazov files: struggle over punishment in France, Russia – over cash in England“Addleshaw Goddard has decided to step away from the $6bn embezzlement fight against Kazakhstan’s JSC BTA Bank chair Mukhtar Ablyazov,” The Lawyer wrote in an article [http://www.thelawyer.com/news/lawyer-news-daily/addleshaws-cuts-ties-with-controversial-ablyazov-litigation/3028429.article?adfesuccess=1] published on November 14. “The firm is the third to disentangle itself from the long-running litigation. Clyde & Co was originally instructed in 2009, followed by Stephenson Harwood, which was brought in later that year. Addleshaws then stepped in to represent Ablyazov in 2011, months after he fled the country to avoid a 22-month jail sentence for contempt of court. The firm decided to make a strategic withdrawal during a hiatus in court proceedings while it established who is to fund the disclosure exercise ordered in a High Court judgment in August. In the meantime, BTA is trying to force disclosure of documents held by Addleshaws, Clydes and Stephensen Harwood on Ablyazov and his brother-in-law’s assets, which were previously withheld on the grounds of professional privilege. So who will take on the case? The firm’s decision to cut ties with the case comes at the same time as lead partner Richard Leedham quits to join Mishcon de Reya. Whether or not Mishcon will decide to take on Ablyazov with Leedham remains to be seen.”

But even if a fresh change in the guard takes place, neither Addleshaw Goddard nor its predecessors on Ablyazov’s side will be exempted of their responsibilities regarding the case in so far as concerning their obligation to declare all evidence they hold against the defendants in front of the court. “Clyde & Co LLP were first retained by Messrs Ablyazov and Shalabayev in about February 2009,” the latest London court ruling in an endless range dated August 8 of this year [http://www.bailii.org/ew/cases/EWHC/Comm/2014/2788.html] dated . Shortly after the Bank commenced its first set of proceedings in August 2009 (Claim number 2009 Folio 1099, the ‘Drey Proceedings’),” , Clyde & Co served a notice of acting on behalf of Mr Ablyazov. Clyde & Co remained on the record for him in the Drey Proceedings until 1 March 2010. Clyde & Co continued to act for Messrs Ablyazov and Shalabayev from time to time, in particular in connection with proceedings instituted by the Bank in the Chancery Division under claim number HC10C02462 until Master Teverson made an order that Clyde & Co had ceased to act for them on 24 November 2011 (the ‘AAA Proceedings’). Stephenson Harwood LLP were first retained by Mr Ablyazov in about late February 2010 and served a notice of acting on his behalf in the Drey Proceedings on 1 March 2010. Stephenson Harwood also acted for Mr Ablyazov in the other proceedings commenced by the Bank against him. Stephenson Harwood continued to act for Mr Ablyazov until Addleshaw Goddard LLP (“Addleshaw Goddard”) served a notice of change of solicitor on 6 September 2011. Addleshaw Goddard thereafter acted for Mr Ablyazov in the Drey Proceedings and the other proceedings instituted against him by the Bank.”

“The iniquity as alleged […] was furthered by the use of the solicitors because it was through the solicitors that Mukhtar Ablyazov and Syrym Shalabayev: (a) corresponded with the Bank and third parties, which correspondence was premised upon and/or made reference to their untruthful and/or deliberately misleading instructions and/or evidence; (b) provided false, backdated or concocted documents to the Bank and/or the Court; (c) prepared and submitted evidence to the Court, which evidence (where it was given by Messrs Ablyazov and/or Shalabayev) was untruthful and/or deliberately misleading and/or (where it was given by others) had been suborned by Messrs Ablyazov and/or Shalabayev and was untruthful and/or deliberately misleading and/or (in either case) relied on the documents referred to in (b);

(d) instructed counsel to make written and oral submissions to the Court, which submissions relied on correspondence sent on their instructions and/or false documentation and/or untruthful and/or deliberately misleading evidence (as described in (a) – (c) above); and

(e) were provided with legal services in relation to corporate transactions which were intended by Messrs Ablyazov and/or Shalabayev to put assets of which Mr Ablyazov was the ultimate beneficial owner beyond the reach of the Bank,” the Royal Court ruling reads further down. “[…] [The defendants’] Strategy was developed by (at the latest) about February 2009. At about that time, Messrs Ablyazov and Shalabayev consulted Clyde & Co as to freezing, receivership, search and/or disclosure orders which might be made against them, their assets and/or documents relating to their assets. Such advice was sought and (it is to be inferred from the matters set out in the Schedule hereto) acted upon for the purpose of avoiding and/or delaying and/or frustrating the enforcement of any judgment which the Bank might obtain against Mr Ablyazov.”

While the battle concerning the cash takes place across the channel, France has appeared in the spotlights where the main culprit himself is concerned since this the place where he has been nicked. “Traced to a Cote d’Azur villa by private detectives for the bank he once led, the Kazakh oligarch-turned-dissident is dwarfed by the masked French court guards flanking him. He is the smallest man in the room. Mukhtar Ablyazov is nonetheless a huge problem for Western governments, forced to choose between abetting a resource-rich authoritarian regime or defending a man who is known to have hidden millions — and happens to be a rare force for political opposition in his homeland,” a report by the Associated Press posted on December 6 in an American newspaper [http://www.denverpost.com/breakingnews/ci_27082621/kazakh-banker-saga-spins-intrigue-politics-cash] was to read. “[…] In 2009, amid the nationalization of BTA, Ablyazov sought asylum in Britain. The bank, which claims Ablyazov has siphoned off billions of dollars, went after him in English courts. With a jail sentence hanging over him for contempt in a civil case — and threats against his life — Ablyazov disappeared again. Detectives and French police found Ablyazov in a villa on the French Riviera in 2013. The government of Kazakhstan was also on his trail. During his incarceration in France, Kazakhstan commissioned plans to scrub Internet searches linking him to the dissident movement, target influential lawmakers and journalists to turn public opinion against him, and hire a non-governmental agency to draft a report linking Ablyazov for white-collar crime, according to documents provided by his lawyers. They say Kazakhstan has also been quietly pressuring Britain to lift his political asylum there.”

“But Ablyazov has done little to help his case, especially in Britain, where he has lost as many as 13 court decisions, depending on who is keeping count,” the article continues. “He skipped out on a prison term for contempt, was found to be shifting assets from one offshore entity to another and, an irritated English judge found, acted with ‘cynicism, opportunism and deviousness toward court orders’. British courts have granted BTA judgments totaling nearly $4 billion. Even as Ablyazov has lost in civil litigation, some in his inner circle — including his wife and little girl, and a top deputy co-accused with him — are winning cases elsewhere in Europe. Lawyers for BTA and the Kazakh government insist he’s an oligarch embezzler, and point to the pair of lavish English manors and to hundreds of shell companies they say he controls.

France is an unlikely participant in the struggle between Ablyazov and Nazarbayev. Ties between France and Kazakhstan are tangled in politics — the entourage of ex-President Nicolas Sarkozy is under investigation over suspected kickbacks in deals worth 2 billion euros that included the sale of 45 helicopters to Nazarbayev’s government. Hollande’s trip, like that of Sarkozy before him, reflects Kazakhstan’s outsize important to France, personified in the uranium mine owned by French nuclear giant Areva.”

“But the two countries have no extradition agreement, nor is one in the works,” the article concludes. “Kazakhstan’s human rights record, its judicial system and its authoritarian government have come under repeated criticism. An official with Hollande’s office, who spoke on condition of anonymity because trip details were sensitive, said the question of human rights was likely to come up when the two leaders meet. In France, courts have repeatedly ruled to extradite Ablyazov to either Russia or Ukraine. The latest ruling, in October, is under appeal. He and his lawyers insist that if he is extradited, he will end up in Kazakhstan. This time, they say, there will be no pardon. […] Lawyers for BTA, however, say Russia has nothing to gain by breaking its word on an extradition agreement. They say the bank is still digging out from the massive fraud that Ablyazov committed. They point to court ruling after court ruling that found that he systematically hid assets, and said whatever politics he has are beside the point. The bank loaned or paid money out to companies secretly controlled by Ablyazov, they say, including one that remains an unfinished construction site near the Moscow airport. ‘There is a long history of Ablyazov being evasive and lying to the English court,’ said Richard Lewis, a lawyer for BTA. ‘He has certainly blackened his reputation permanently’.”

Kazakh suthorities have recently denied any attempt on their behalf to get Ablyazov to justice in his country of origin. “Kazakhstan has not [negotiated] and is not negotiating re-extradition of the former BTA head Mukhtar Ablyazov from Russia,” the local independent news agency Tengrinews [http://en.tengrinews.kz/crime/Kazakhstan-isnt-negotiating-re-extradition-of-Ablyazov-from-Russia-257273/] reported on November 9 this year referring to the press service of the Prosecutor General’s Office of Kazakhstan. “A French court ordered extradition of the fugitive tycoon to Russia, where he is accused of embezzling $5 billion,” the report reminds. “The man was detained in Nice in 2013. ‘The Prosecutor General’s Office of Kazakhstan has not and is not negotiating re-extradition of Ablyazov from Russia or Ukraine and assures that it will strictly adheres to the principles of international legal cooperation, respecting all the agreements and obligations of the participants of the international legal cooperation,’ they said in a statement. They also said that Kazakhstan’s extradition request continued to remain at the initial stage at the French Ministry of Justice. ‘The Prosecutor General’s Office of Kazakhstan intends to continue further consultations with the competent authorities of France to expedite extradition procedures on the request submitted earlier by Kazakhstan,’ they added. In Kazakhstan Ablyazov he is accused of embezzling $6 billion from BTA Bank and other major financial crimes. He is facing up to 13 years in prison with confiscation of property. Ablyazov is also wanted in Ukraine, where he is accused of embezzling $400 million.”

While for France, Ablyazov’s extradition to Ukraine where some of the new powers-that-be are suspected of having been his associates under the previous regime remains a secondary option to Russia, in Moscow Ablyazov can expect some of his former associates jailed and, if they decide to cooperate with the authorities, a number of most troublesome testimonies against him. Such testimonies not just expose his financial manipulations but also once and for all deprive him of the image he built up for himself as a persecuted democrat by placing him amidst an obscure company of neofascist forces in the Russian Federation and beyond. The key witness is a former associate of Ablyazov with a very dark-looking political record indeed. But France is caught in a deadlock: following course after a court in Austria has seen itself obliged to judge that other notorious Kazakh Rakhat Aliyev following a government refusal to extradite him, if France’s government ignores the court verdict (it has the right to do so) it may well see itself obliged to take the entire Ablyazov case to a French court should it refrain from extradition.

“Moscow’s Tverskoy District Court on Friday extended until February 28 the detention of nationalist Alexander Belov (Potkin), accused of laundering money embezzled from BTA Bank,” Russia’s judicial newsreel RAPSI reported on the same day, November 28, from the courtroom. [http://rapsinews.com/judicial_news/20141128/272675108.html]. “The court thus granted the investigators’ motion. On October 15, Belov was arrested at Hotel Intourist Kolomenskoe in Moscow. The court initially placed Belov under house arrest, but later sent him in pre-trial detention. Investigators filed a motion to detain Belov alleging that he could flee Russia or try to destroy evidence. Attorneys asked the court to release Belov on 5-million rubles bail (about $105,000). Investigators believe that Belov (Potkin) was involved in laundering money embezzled from BTA Bank by its former chairman Mukhtar Ablyazov. Ablyazov who allegedly defrauded BTA Bank for more than $6 billion left Kazakhstan for the UK where he was granted political asylum in 2011. The Kazakh government acquired in 2009 a stake in defaulted BTA Bank, which came under the control of its sovereign wealth fund Samruk-Kazyna. Ablyazov was on the run for more than a year after he had been sentenced by a London court to 22 months in jail for contempt. Ablyazov was arrested in July 2013 in France. Kazakhstan, Russia and Ukraine are seeking his extradition. Last January a court in Aix-en-Provence gave priority to the application filed by Russia where a criminal case was opened against banker. However, in April a French appeals court blocked the extradition of Ablyazov due to procedural error.”

But Belov seems to have apprehended the “Ablyazov trick” and is now trying to depict himself as a sort of political martyr as well with the help of anti-Russian protagonists outside Russis, in particular in the USA. “Alexander Belov whose real surname is Potkin […] is currently sitting in a Moscow jail cell, awaiting trial for the launder and embezzlement of roughly five billion dollars,” an article posted on November 11 this year on the site of the American right-wing lobby Global Voices [http://globalvoicesonline.org/2014/11/11/police-say-he-helped-steal-5-billion-dollars-but-the-russian-opposition-wants-to-save-alexander-belov/] was to read. “Belov’s role in such a fantastic theft remains something of a mystery, but Russian police felt they had enough evidence to charge him with breaking criminal codes 174 and 159, which could send him to prison for seven years and ten years, respectively. How could a Russian nationalist—the former leader of the now-banned “Movement Against Illegal Immigration” (DPNI)—possibly help steal five billion dollar? Belov’s accusers say he was working for Mukhtar Ablyazov, the Kazakh oligarch who’s oftencompared to Boris Berezovsky and Mikhail Khodorkovsky. According to prosecutors, Ablyazov hired Belov in 2011 to study and foment nationalist unrest in Kazakhstan, with the aim of weakening President Nazarbaev’s regime. Over time, Ablyazov, who’s now in French custody and in danger of being extradited to Russia, supposedly placed more trust in Belov, eventually tasking him with managing his entire financial empire. Belov was first arrested on October 15 and placed under house arrest on October 17. Five days later, however, prosecutors added fraud charges that prompted a judge to relocate Belov’s pretrial detention to a state prison. According to the arresting officers, Belov’s behaviour during the search of his apartment was peculiar. Police say he refused to tell them where his passport was, tried to escape through the window (injuring his back in the process), and even ate a supposedly incriminating document, to keep it out of the authorities’ hands.”

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