By John Helmer, Moscow
@bears_with
The Russian oligarchs created by the Yeltsin Administration and continued by the Putin Administration (with a handful of deductions) have never trusted Russia.
That’s why they have been willing to pay exorbitant prices for offshore assets – mines, steelmills, jet planes, motor yachts, Old Master paintings, and mansions with sea views – because the cash had been transferred out of Russia tax free, often stolen from other Russians or the state, sometimes in suitcases, concealed in chains of transfers between impenetrable holding companies, trusts and cutouts, laundered in violation of the Russian statutes on money laundering, which on Kremlin and Central Bank orders are not enforced. In other words, money that was hot and cheap.
Naturally, this lucrative cashflow has been vulnerable to raiding by individuals, especially Russians, acting on the principle that it isn’t illegal to steal from a thief and on the method that it is easy to raid when asset ownership depended on whispers and handshakes.
When these Russian robbers have fallen out, however, they have taken their disputes to the High Court of London to adjudicate. But why would such Russians trust the British courts and lawyers? Of course, they haven’t; they don’t. But they trust the Russian courts and lawyers much less.
The most famous of the High Court cases between two Russian robbers was Boris Berezovsky versus Roman Abramovich. That was decided in 2011 by the judge on her conclusion that while on the evidence testified to, the two were grand larcenists, especially from the Russian state, Abramovich was the more convincing liar of the two. Berezovsky lost, and as he faced bankruptcy, he killed himself in his London mansion full of paintings which he couldn’t sell because they were all forgeries. Altogether, the case lasted for five years, 2007-2012; Berezovsky’s losing claim totalled $5.6 billion, and more than twenty barristers were engaged for all sides, and more than that number of solicitors. The legal costs of the case came to more than $100 million.
This is how it ended. Then-Prime Minister Vladimir Putin added his finale months before the judge: “What can I say? It would be better if they held this trial in Russia. [Question: Would Russia gain from this economically?] This would be more honest – both for them and our country. The money was made and stolen here – let them divide it here, too.”
Less famous, but much longer and more costly, was the group of London court cases revolving around the Russian state shipping group Sovcomflot and its associated companies which, altogether, run the largest energy tanker fleet in the world. The cases ran for sixteen years (2005-2021); were heard by thirteen judges in the High Court, the Court of Appeal, and the Supreme Court; in legal fees and penalties they cost more than $200 million. Two Russian shipping executives and a Russian charterer were acquitted and compensated. They were then tried in a Moscow court; convicted on evidence the London courts had dismissed; and sentenced to long prison terms in absentia, because they had won refuge from the injustice and granted asylum in the UK.
President Putin has had nothing at all to say about the two outcomes of the case. For his reasons and the conflicting directions he has given over the years on Russian shipping policy, read the book.
The Russian aluminium (Rusal) oligarch Oleg Deripaska (lead image, right) has probably run more cases in the High Court and over more years than any other Russian litigant. They can be followed in this archive. In one of these lawsuits decided last year, the judge opened his ruling by saying: “It is fair to say that the Claimants (“the Deripaska Parties”) and Vladimir Chernukhin and his company Navigator Equities Ltd (“Navigator”) (“the Chernukhin Parties”) are not the best of friends. It is also fair to say that the honesty and integrity of both of Mr. Deripaska and Mr. Chernukhin has from time to time been found to be wanting in cases before the English Courts, not least in previous proceedings before this court under sections 67 and 68 of the Arbitration Act 1996.” — Para 1. Deripaska won his case as the judgement concluded that “the Deripaska Parties wish to discover the identity of the persons who, it is strongly arguable, forged a document designed to deceive this court and an arbitral tribunal, and to defraud them of some US$300m. I consider that the granting of the relief sought in this case is a necessary and proportionate response to this serious wrongdoing in all the circumstances.” — Para 123.
The notoriety of these cases and of the litigants has advertised the availability of the British courts and lawyers to serve increasingly large numbers of corporations and individuals with big-money claims and personal axes to grind. Better and more predictable value, they calculate, to spend their money on British lawyers in London courts than on bribes and other “administrative measures” in the Russian courts.
In practice, the escalation of the British Government’s war against Russia on the Ukraine battlefield and in economic sanctions, especially against the oligarchs, ought to have stopped the lawyers from taking on new cases and the courts from hearing them. But this hasn’t happened.
The big reason is the war itself — the Russians are retaliating against the sanctions by refusing to repay British and other banks for the credits they received before they were sanctioned. The principle is the same – it isn’t illegal to steal from a thief. The foreign banks are also using the sanctions to shield themselves from the judgements of the Russian courts in paying their obligations to Russian companies.
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