Ablyazov files: battle over cash resumes in London court, enter Trump and the Clintons

Ablyazov files: battle over cash resumes in London court, enter Trump and the Clintons

A new round of high-profile judicial proceedings has started in London concerning the multi-billion embezzlement scheme of former banker and master-swindler Mukhtar Ablyazov from Kaazakhstan, now hiding out in France under the dubious protection of the French government which overruled France’s very justice apparatus for the purpose. The aim is to clarify the role the Khrapunov family, also from Kazakhstan and hiding out in Switzerland, in the offshore fund diversion schemes initiated by Ablyazov. The string of cases now stretches across the Atlantic, where the Khrapunovs, possibly or even probably in conjunction with Ablyazov, are prominent in cases involving both Donald Trump and his foe Hillary Clinton and husband.

Written by Charles van der Leeuw, writer, news analyst

Ablyazov files: battle over cash resumes in London court, enter Trump and the Clintons

“The biggest fraud of our times” is among the qualifications given by commentators in the western mass media and in the cyberspace to the case of Mukhtar Ablyazov, the banker from Kazakhstan who embezzled worth between 10 and 12 billion US dollar in lent cash and submitted collateral from the local Bank TuranAlem (BTA), as the bank’s president, CEO and major shareholder. In early spring 2009, a $10 billion hole in the balance sheet was disclosed, leading to the bank’s bail-out by the Kazakh state and the latter becoming a 78 per cent majority shareholder in it.

Ablyazov fled to Britain, where the bank pursued numerous court cases against him with the aim to recover part of the stolen money and assets, about 3.5 million Sterling of which was stashed through circuits of offshore mailbox firms registered on British territory. In early 2012, faced with a 22-months prison term for perjury, Ablyazov fled the UK in turn. Looking back, his case reveals many connections with other criminal circuits both in Kazakhstan and abroad – leaving both the story proper and its wider context impressive but yet incomplete.

Worldwide Freezing Order

A fresh round of legal rope-pulling and arm-twisting in the bank’s endless attempts to make the actual seizure of the frozen funds, part of which have been identified but few of which have been located so far except for a long list of offshore mailbox firms most of which no longer exist, has now started before the Royal Court of England and Wales. In the latest round, the judge, later confirmed in appeal, ruled that Ilyas Khrapunov, son of another former public official from Kazakhstan named Viktor Khrapunov, can be considered a conscientious accomplice of Ablyazov. Their families are united not just by marriage (Iliyas is married to Ablyazov’s daughter) but the Khrapunovs have played a pivotal role since they fled to Switzerland where they are entrenched today in Ablyazov’s schemes to get his stolen funds out of reach from the bank’s grip.

It means that the English judge, in casu Sir Andrew Smith, has dismissed what he dubs a “stay application” by Khrapunov’s lawyers and an “amendment application” by those representing the bank. “In this action the Bank brings a claim against Mr Ablyazov and Mr Khrapunov, his son-in-law, alleging a conspiracy by unlawful means: the Bank has judgments for over $4.6 billions against Mr Ablyazov, and it alleges that he and Mr Khrapunov acted together to deal with assets in breach of court orders made against Mr Ablyazov so as to prevent it from enforcing the judgments,” the court document [http://www.bailii.org/ew/cases/EWHC/Comm/2017/2702.html] on the judge’s decision reads.

It appears that the entire proceedings to get the Khrapunov accounts included in the Worldwide Freezing Order (WFO) against Ablyazov will take considerable time. “The case was before me for a case management hearing on 20 June 2017, and on that occasion I ordered, inter alia, that: i) The parties make disclosure by 15 December 2017; ii) Witness statements be served by 30 April 2018; and iii) The trial be fixed to start not before 1 November 2018,” the document relates. “In the event, the trial has been fixed to start on 21 January 2019, the first reading day being 16 January 2019. On 8 August 2017 the Supreme Court granted Mr Khrapunov permission to appeal against the Court of Appeal’s judgment on jurisdiction. I was told that it is expected that the Supreme Court will hear the appeal in January or February 2018, and give its decision by May 2018. This timing is, of course, not certain, but both parties made submissions to me on the basis that this was probable and accepted that I should deal with the stay application accordingly.”

A Dubai connection, a Trump/Clinton link

In the course of the ongoing proceedings, a fresh link in the complex Ablyazov smoke screen and a key element in the evidence concerning Khrapunov’s involvement has appeared in the form of a Dubai connection. “The Bank applied to amend the particulars of claim inter alia to introduce claims that, as part of the conspiracy, in and after late 2011 Mr Khrapunov together with Mr Ablyazov dealt with assets through instructions given to Mr Aggarwal, an English accountant based in Dubai. […] According to Mr Aggarwal he was engaged by Mr Khrapunov to ‘develop a structure, which enabled the beneficial owners [of funds transferred to him] to hold their assets in an opaque way which maintained privacy’. The assets, the Bank alleges, were covered by court orders against Mr Ablyazov, but Mr Aggarwal was, he has said, misled about their beneficial ownership by Mr Khrapunov. […] According to the draft pleading, the assets that were laundered in this way amounted to some $495.8 millions, and Mr Aggarwal produced two flow charts apparently reflecting how the assets were dealt with. One flowchart concerns so-called ‘project A’ assets, which were to the value of some $56.21 millions. The other concerns the so-called ‘project N’ assets, said to be worth some $439.59 millions. The project N assets include monies paid to a company called Telford Investments Limited (a Marshall Islands company), and, according to Mr Aggarwal, as far as he recalls assisted by the flowcharts, Telford made a loan to Triadou SPV SA for the purpose of purchasing a mall in the USA. (Triadou is apparently incorporated in Luxembourg: the Bank so pleads and the US Federal Court describes it as a Luxembourg company, but Mr Peter Black, a solicitor and member of Hughmans Solicitors LLP, stated in his evidence that it is Swiss.) From the N project flowchart, the amount of the loan appears to be $71.69 millions.”

Lovers of conspiracy tales, pay attention now. The appearance of Triadou has enormous implications in the pursuance by BTA, which has now returned to state property after a brief ownership by its former rival Kazkommertsbank, itself under new ownership by another Kazakh tycoon named Kenes Rakishev under which the bank went into bankruptcy, mainly because along with the bank Rakishev had also inherited the gap caused by Ablyazov’s fund diversion schemes, to recover the stolen money. But this is not where the story ends, let alone where it can be expected to end.

For Triadou is the name of a pivotal real estate scandal in New York, involving no one less than President Donald Trump. Though New York courts of law dealing with the case, on which we reported earlier, have mentioned Viktor Khrapunov, through firms under control of his son Ilyas, has been the initiator of a money laundering operation, it has not been clearly pointed out whether this money is part of funds embezzled by Khrapunov when he used to be mayor of Almaty, the sum of which is supposed to have amounted to 600 million euro according to the most conservative estimations, or involved proceeds cashed in by Ablyazov in connection with, among other schemes, a scam in which uranium fields were sold by Mukhtar Dzhakishev, at the time at the helm of the Kazakh state nuclear corporation Kazatomprom, for next to nothing but later resold to a subsidiary of its Russian counterpart Rosatomprom. The entire operation had been masterminded by Ablyazov who is supposed to have pocketed a “commission” of several hundred million US dollars in the form of a kickback. A certain role is alleged to have been played in the entire scheme by Trump’s sworn enemies, namely the Clinton couple…

“Forum non conveniens”

“The background to the overlap point is this: on 7 July 2015 entities connected with Mr Joseph Chetrit, a New York property developer and referred to as the “Chetrit entities”, brought interpleader proceedings before the New York State Court,” the English judge relates. “They were later transferred to the Federal Court. It appears that the Chetrit entities had agreed with Triadou to pay $21 million in consideration of Triadou assigning to them an interest in a company connected with New York property development. The City of Almaty claimed that this payment represented monies stolen from it by Mr Viktor Khrapunov, Almaty’s former mayor and the step-father of the second defendant in this action. On 12 October 2015 the Bank sought to intervene in the New York proceedings to bring cross-claims against the Chetrit entities and also Triadou, Mr Viktor Khrapunov, Mr Khrapunov and Mr Ablyazov, alleging that monies that Mr Ablyazov had stolen from it had been laundered through property investments made in New York by Triadou. The Bank pleaded various causes of action, including RICO claims, that it to say claims based on contravention of the US Racketeer Influenced and Corrupt Organizations Act. On 7 September 2016 the Bank served amended cross-claims, and also sought to join FBME Bank.” The latter is a Cypriot bank, now under the local government’s scrutiny, which has been blacklisted as a laundering tool for a wide range of crime-related financial syndicates, including those controlled by Ablyazov and consorts.

Charles van der Leeuw. FUGITIVE LONG-FINGERED GENTRY FROM THE PLAINSNEW eBOOK on sale exclusively by KazWorld
Charles van der Leeuw
The story of Mukhtar Ablyazov, one-time major shareholder and chief executive of Kazakhstan’s BTA bank, tells how well over 10 billion US dollar is supposed to have been reaped through his network of close to 800 fake companies.

“On 26 September 2016 Mr Khrapunov applied to have the Bank’s claims against him dismissed on various grounds, including that the New York is forum non conveniens and that the RICO claims fail for want of domestic injury,” the English court document continues. “He also maintains that the American Court does not have personal jurisdiction over him, and he accepted that some discovery is needed before this jurisdiction challenge can be determined. On 23 December 2016 the Court has upheld Mr Khrapunov’s challenge to the RICO claims and dismissed them. On 25 September 2017, after the hearing before me had concluded, the US Federal District Court issued a ruling in the American proceedings and dismissed the challenge to the Court’s jurisdiction on the basis of forum non conveniens. This was one of the grounds on which Mr Khrapunov applied for me to revisit and reverse my decision of 22 September 2017 to allow the amendment application. Mr Jenkins gives evidence that, according to Mr Khrapunov’s New York attorneys, he will not appeal against this ruling.”

“A much wider scheme”

“The Bank’s claims in this action and the New York claims against Mr Khrapunov differ significantly: first, the basis of the New York claims is that Mr Khrapunov was party to laundering money that had been stolen, or ‘looted’, as it was put in the Bank’s New York pleading, and they include what, if not strictly a proprietary claim, is akin to one,” Judge Smith proceeds further down. “In this action, on the other hand, the alleged conspiracy was to deal with assets covered by the court’s orders against Mr Ablyazov so as to prevent the Bank from enforcing its judgment against him, and it is no part of that claim that the assets were the product of fraud or theft or other wrongdoing. Secondly, the New York claims concern only the monies said to have been lent by Telford to Triadou and invested by Triadou in New York property, and the amendment for which the Bank is seeking permission is concerned with a much wider scheme involving many other transactions and would introduce far greater claims: the project A allegations do not concern Telford, Triadou or any transaction between them, and the transaction represents only some $71 millions of the monies in excess of $400 millions with which the project N allegations are concerned.”

The English court now concludes that even though Khrapunov’s lawyers had raised the issue of jurisdiction, which would forbid it to include US court rulings in its own considerations, has no  ground. “Mr Khrapunov argued that, even the Bank’s claim in New York about the loan transaction between Triadou and Telford and the use of those funds raises issues that overlap with those which would be introduced by the draft amendment, and for this reason the amendment should not be permitted,” the English court document reads. “In both proceedings, it is argued, if the Bank is permitted to amend it will be alleging that Mr Khrapunov gave Mr Aggarwal instructions about dealing with money of Mr Ablyazov, and it would be unfairly onerous, it is said, for Mr Khrapunov to have to deal with this same issue in both actions.

One response to this argument is that Mr Khrapunov will have to deal with the issue in both jurisdictions only if his challenge to the jurisdiction of this court and his proposed challenge to the jurisdiction of the American Court both fail.”

What it all means is that the bell is sounding for a new chapter in the Ablyazov cycle, possibly shedding ore light on the laundering schemes he has been, and is still implementing from his hideout in France to set up a fresh circuit of laundering pit stops around the globe. “If the Bank’s claim against Mr Khrapunov succeeds, it would be for the Bank to consider whether the necessary implication is that Mr Khrapunov had given relevant instructions to Mr Aggarwal and whether it has any proper basis for deploying this (or otherwise deploying the New York decision) in these proceedings (for example, by seeking to raise an issue estoppel),” Judge Smith states in conclusion. “If the Bank’s claim is dismissed, Mr Khrapunov might be able to argue that in those circumstances the claim against him should be stayed in part in order to protect him from the possibility that, for example, the New York jury had rejected the allegation that he gave instructions in respect of the Triadou/Telford transaction to Mr Aggarwal. I should make clear that I am not expressing any view about whether such course would prove arguable, still less that it would be successful, but I can see that the Court might in the future properly be asked to consider in light of changed circumstances whether the risk of inconsistent judgments can and should be minimised by court orders. As it is, I was not persuaded that any risk of inconsistent judgments should lead me to refuse the Bank permission to amend its pleading and to introduce the new claims. I concluded that permission should be granted.” So here we go again – lawyers rejoice…!