The Ablyazov files: Sing A Song Of Sixpence – A Pocket Full Of Billions
Following the shameful move by the French government to trample on its own entire justice apparatus and, apparently finding the commands of the Pentagon more valid than the law, let one of Kazakhstan’s most fatal criminals go free to continue his laundering operations of the billions he has stolen. But the last word about Mukhtar Ablyazov has not been said. Unable to bring the culprit to justice, his former bank, now the property of Kazakhstan’s banking major Kazkommertsbank, keeps trying to get as much of the stolen money back. In the process, more and ore details keep popping up in front of England’s Royal Court, The most recent case concerns that regarding Ablyazov’s young son – thereby demonstrating how ruthless the culprit is where it comes to exploiting his own family for his criminal schemes.
When Mukhtar Ablyazov’s spouse was “kidnapped” from Italy to Kazakhstan ahead of her husband’s arrest in France, the couple’s son Madiyar was not part of the scene. Only other and daughter were brought to Almaty, and after a couple of months the Kazakh Prosecutor-General cancelled the order that had led to the abduction and allowed the pair to return to Italy. Once there, the Italian government granted them political asylum with the stroke of a pen. Madiyar’s name only appeared in the headlines after his father had been put under arrest in France. All that took place in 2014, but justice failed to prevail. With a bit of help from American military and French diplomacy, crime does pay – a lot, that is.
In the third week of December, less than a week after Ablyazov’s release from jail and justice, his son’s name reappeared in a court case in London. The case, brought in by BTA, concerned “… the latest of a number of claims to have come before the English courts in recent years arising out of the dispute between the First Defendant, Mr Mukhtar Ablyazov (Mr Ablyazov) and the Claimant, a Kazakhstan bank known as JSC BTA Bank (BTA), as a consequence of what BTA has alleged was a massive fraud perpetrated against it by Mr Ablyazov. The present case, however, is different from those that have come before in that, although Mr Ablyazov is again a defendant to BTA’s claim, the real target of this action is not Mr Ablyazov but rather the Second Defendant, his son Madiyar,” in the words of the verdict on the case, ruled on December 19 and posted [http://www.bailii.org/ew/cases/EWHC/Comm/2016/3071.html] later. “More particularly, the dispute concerns a payment of £1.1 million made on 26 February 2009 (the Transfer) from an account held jointly by Mr Ablyazov and Madiyar (the Swiss Account) with EFG Private Bank SA in Geneva (EFG Geneva) to an account in Madiyar’s name (the Account) at EFG Private Bank Limited in London (EFG London). Madiyar was 17 at the time of the Transfer, living and attending school in London. He held a Tier 4 student visa.”
“Interfering with the administration of justice”
The whole story reveals that Madiyar was not just in place to shed crocodile’s tears while his father was duly behind bars in France. From an early stage on, the teenage son was prepared to be abused as a vehicle to hide his father’s stolen funds in a most shameless manner, as the court document relates in a reminder of Ablyazov’s misdeeds. “In August 2009, BTA commenced proceedings against Mr Ablyazov in the Commercial Court and at about the same time obtained a worldwide freezing injunction against him (the Freezing Order). Mr Ablyazov was also ordered to provide disclosure of his worldwide assets and to answer a schedule of specific questions designed to assist BTA in tracing certain assets. Mr Ablyazov appears from the outset to have been concerned to do whatever he could to delay or avoid complying with these Court orders. On 27 October and 18 November 2009, Mr Ablyazov was cross-examined on his asset disclosure. It has subsequently been held by this Court that much of the evidence given by Mr Ablyazov in the course of that cross examination was false and given with an intention of interfering with the administration of justice. Mr Ablyazov continued to purport to give further asset disclosure until 15 December 2009. However, a letter from Clyde & Co on that date made clear that it was Mr Ablyazov’s intention not to answer any further questions about his assets. This prompted BTA to seek the appointment of receivers over Mr Ablyazov’s assets. Receivers were duly appointed over Mr Ablyazov’s assets in support of the Freezing Order.”
From there on, there remained little doubt about Ablyazov’s criminal intentions. “On 16 May 2011, BTA applied for Mr Ablyazov’s committal for contempt of court alleging 35 separate heads of contempt, including failing to disclose assets, lying in cross-examination and dealing with assets in breach of the Freezing Order,” the court document reads further. “In December 2011, a trial of three sample heads of contempt, so restricted for case management purposes, took place over 3 weeks. On 16 February 2012, Teare J found Mr Ablyazov guilty of contempt as alleged. Mr Ablyazov was sentenced to three concurrent terms of 22 months’ imprisonment. In the event, Mr Ablyazov fled the jurisdiction on sight of the Court’s draft judgment. He did so notwithstanding an injunction and the imposition on him of other requirements intended to prevent this, and despite also a specific assurance given to Teare J at the conclusion of closing submissions. Teare J was therefore left to sentence Mr Ablyazov in absentia. Mr Ablyazov was subsequently ordered to provide proper asset disclosure and surrender himself to the Tipstaff so that he could commence his sentence for contempt. That order was made on ‘unless’ terms, providing for Mr Ablyazov’s defences to BTA’s Commercial Court claims to be struck out in default of compliance. In the event, Mr Ablyazov failed to comply and his defences were struck out. When the matter came before the Court of Appeal, the Vice President of the Court of Appeal observed of Mr Ablyazov that it “is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness than Mr Ablyazov”. Rix LJ made similar observations about Mr Ablyazov and his witnesses.” Simply said: the man is a crook and a ruthless one on top of it. With the man once more gone into hiding, chances to get the bounty of his swindle campaign back are also looking bleaker than before.
“The total value of the judgments entered against Mr Ablyazov is now approximately US$4.9 billion, including interest,” the court document reads further down. “No part of this sum has been paid voluntarily, although BTA and the receivers have been able to recover a relatively small proportion by enforcement against certain assets belonging to Mr Ablyazov,” in the December 2016 court document’s words. The judge further refers to “… the fact that Mr Ablyazov, by 2008, had been knowingly involved in the dishonest embezzlement of very substantial sums of money from BTA. No evidence has been put before me that would lead me to reach any decision different to those reached by the English courts in the earlier decisions.”
The court document also reveals a few more names of people associated with Ablyazov and family. Thus, paragraph 27 concerning Madyar’s defence reads: “So far as concerns the evidence adduced by Madiyar, in addition to giving evidence himself, Madiyar also adduced a witness statement from Mr Ablyazov, which was admitted as a hearsay statement. […] Madiyar also put in a witness statement from Mr William Bartlett, an Ablyazov family employee. Shortly before the hearing, BTA was informed that Mr Bartlett was not willing to attend to give his evidence.” So-called visa brokers, who help applicants for entry documents to the UK through the formalities including, if needed, ways to bypass the rules, are also mentioned. “In January 2008, Gherson & Co (Gherson), a firm of immigration solicitors, were engaged by or on behalf of Mr Ablyazov to assist in obtaining an investor visa for Madiyar. Gherson had previously been involved in dealing with Madiyar’s immigration status; in October 2007, they had been engaged to assist Madiyar in his application for an extension of his student visa. The nature of the instruction had changed. In particular, by letter dated 24 January 2008, Gherson were instructed to assist Madiyar with an application for an investor visa.”
“Used by Mr Ablyazov to hide assets”
BTA had meant to demonstrate that the “gift” to Madiyar (a mere trifle from someone with billions at his disposition) was indeed part of the embezzled cash and assets, which would enable them to nail Ablyazov on much larger amounts. “On 20 February 2009, £1.3 million was received into the Swiss Account. BTA’s case is that the money originated from a BVI company known as Sunstone Ventures Ltd (Sunstone), a company BTA contends was in the ownership and/or control of Mr Ablyazov, found in earlier proceedings to have been an entity used by Mr Ablyazov to hide assets. The payment from Sunstone was routed into the Swiss Account via an account held in the name of Mr Shalabayev, Mr Ablyazov’s brother in law,” the court document relates. It is necessary at this point to note, as foreshadowed above, that at about the same time as steps were being taken in early 2009 to progress the visa application, Mr Ablyazov had become sufficiently concerned about events in Kazakhstan, that, at the very end of January 2009, he had left Kazakhstan for London and, in early February 2009, had approached Clyde & Co. for advice in relation to what has been described by Popplewell J as a strategy of concealment and deceit in relation to his assets, a strategy that was according to Popplewell J within his, Mr Ablyazov’s, contemplation at and from that time.”
British authorities all but served Ablyazov’s interests on a silver plate, by making the investor trick redundant. “Although, prior to the making of the Freezing Order, Madiyar did not appear to make any withdrawals from the Account other than to make the investment in UK Gilts, in the period thereafter, Madiyar did make a number of withdrawals, including to pay for a BMW motor car, to pay for his university fees and to meet his everyday living expenses. In early 2012, Madiyar applied for and was successful in extending his leave to remain in the UK until 10 October 2014. In September 2012, 10 years after his arrival in the UK, Madiyar became eligible to apply for indefinite leave to remain and, having made the application, on 16 September 2013, this was granted. This meant that Madiyar’s right to remain in the UK no longer depended on his status as an investor so that the need for him to have £1 million invested in UK Gilts fell away.”
The rest of the case remains ambiguous. “There is in my view a serious difficulty with the evidence given by both Madiyar and Mr Ablyazov about these discussions. In particular, as already noted above, it is plain that the reason the amount transferred in February 2009 was £1.1 million rather than £1 million was because EFG London asked that this be done to cover the dealing costs involved in acquiring the investments. It had nothing whatever to do with providing Madiyar with university fees or other living expenses, and I therefore cannot accept the evidence from either Madiyar or Mr Ablyazov in relation to those discussions, which I regard as unreliable,” the ruling reads. But it adds: “What of the fact that the Transfer was made in late February 2009, at a time after Mr Ablyazov had fled Kazakhstan and when he would have had well in contemplation that he was likely to face claims alleging fraud and seeking the return of assets? As noted above, by the time of the Transfer Mr Ablyazov, according to Popplewell J, already had in contemplation a strategy of concealment and deceit in relation to his assets. Insofar as it is necessary for me to do so, I accept what Popplewell J concluded in this regard as to the state of Mr Ablyazov’s mind at that time.” However, BTA’s quest to prove the illegal origin of sonny-boy’s million has stranded: “I conclude that BTA’s claims, both the Trust Claim and the Section 423 Claim, must fail. I accordingly decide (1) that BTA is not entitled to the relief it has sought and (2) that Madiyar is entitled to a declaration that he is the owner of the Fund.”
Multi-billion money laundering
It means that the “English leak” allowing mega-thugs to find refuge for themselves and their bounties remains fully intact. Any court is free to call in a prosecutor and prepare criminal charges should proceedings demonstrate that a criminal offence has taken place within English jurisdiction. In Ablyazov’s proceedings, this is definitely the case – if it were only in the form of multi-billion money laundering which is a criminal offence. The court’s reluctance to call in a prosecutor remains difficult to explain, as does the attitude of Scotland Yard’s “serious fraud office” which in any case has not just the right but the duty to open investigations once strong suspicions of criminal acts exist. The fact that they look the other way makes one think that if the fraud is serious enough, the office is not…
This view is being shared by a growing number of observers. In a recent opinion piece posted by the New York Times [http://www.nytimes.com/2016/12/29/opinion/london-rolls-out-the-blood-red-carpet-for-kleptocrats.html?_r=0] under the headline “London Rolls Out the Blood-Red Carpet for Kleptocrats” an author named Ben Judah notes that the Ablyazov scheme is part of a mechanism in which some 125 billion in US dollar is being whitewashed each year. “British law is on the side of the kleptocrats,” the article reads. “All an autocrat on the run has to do is create a shell company to hide his identity and the source of his illicit wealth, and then use this instrument to purchase property incognito. Britain’s best-paid brokers and lawyers are here to help — and will ask no awkward questions about the provenance of their clients’ cash.
Such anonymous companies now own nearly 40,000 London properties. Some of these purchases may be entirely legitimate and innocent, but these tools of secrecy are well known to be favored by money launderers: The anticorruption organization Transparency International has found that this technique has been used for three-quarters of properties whose owners have been investigated for corruption in Britain. […] The British establishment has long feigned ignorance of the business, but the London Laundromat is destroying the country’s reputation. Across the former Soviet Union, Britain is now seen as a partner in corruption, not democracy, for elites seeking to asset-strip their own states.” An attempt to apprehend thugs and their baits in the form of an amendment in the Criminal Finances Bill is now making its way through Parliament in a bid to
Amid this shame and gloom, one ray of light has emerged: a serious chance of the reforms we need to stop human rights abusers from using London real estate to hide their wealth. In Parliament, a growing cross-party band of members is seeking to amend the Criminal Finances Bill, now making its way through the legislative process. I will oblige ministers to act if anyone files a case with sufficient evidence. “Whether this reform is adopted will tell us much about who Prime Minister Theresa May really is,” Judah opines. “If her government kills the amendment, it will show that she is content for Britain to remain a safe haven for dictators — while London’s bankers, lawyers and real estate brokers make commissions on their blood money. It’s time London rolled up the red carpet.” The funny thing is in this context that present legislation also allows, even obliges the authorities to act, which they apparently ignore – especially when in the cases of Ablyazov and the likes of him the victimes “are only Kazakhs”…