The High Court today ruled that Kazakh billionaire Mukhtar Ablyazov has been in contempt of court orders because he failed to disclose the full extent of his assets.
He has been sentenced to 22 months in prison and a committal warrant will now be served.
The ruling comes six months ahead of what is widely anticipated to be the biggest commercial case of the year, with Kazakh-based JSC BTA Bank pursuing its former chairman Ablyazov after, it claims, he embezzled funds from the bank.
BTA instructed Hogan Lovells partner Chris Hardman to pursue the claim in May 2009. The High Court granted the bank a worldwide freezing order against Ablyazov, who had been granted asylum status in the UK, but the bank argued that Ablyazov had broken the order.
According to the judgment, New Square Chambers’ Stephen Smith QC, instructed for the claimant, told the bank that Ablyazov had failed to declare ownership of companies based in the British Virgin Islands; had lied to the court about ownership of residential properties; and, contrary to the order, dealt with loans held by Stantis Ltd, based in Cyprus.
Mr Justice Teare accepted the arguments before him and stated: “I find Mr Ablyazov has acted in contempt of court as alleged by the bank.”
It will be a bitter blow to Addleshaw Goddard, which inherited the case from Stephenson Harwood last September (19 September 2011). Addleshaws partner Richard Leedham instructed 20 Essex Street’s Duncan Matthews QC and Cloth Fair Chambers’ Ian Winter QC for the defendant.
In a hotly contested case, Ablyazov’s camp vigorously denied he held any assets in breach of the world freezing order.
The court heard how the email traffic sent by Ablyazov’s aides was obtained by the claimant lawyers without the defendant’s prior notification.
Matthews argued that the documentation was “cherry picked” to support the claim, and, according to the judgment, the silk also contended that: “The bank’s solicitors have not been frank with the court as to the source of certain documents.”
The judge retorted “My conclusion is that I do not accept the criticisms which have been made against Mr Hardman.”
Further criticisms were made of Hardman’s conduct to which the judge concluded: “While he has pursued this matter with energy, rigour and indeed aggression and may have pursued some lines of argument which have not found favour with me or which have been given up at a late stage, he gave his evidence honestly and carefully.
“Mr Matthews criticised Mr. Hardman’s conduct in his cross-examination of Mr Hardman and in his closing submissions with regard to the obtaining and presentation of certain evidence.”
On the evidence given by Ablyazov, Teare J said: “Mr Ablyazov uses offshore companies and trusted associates for the very purpose of keeping his ownership of companies and assets hidden from view.
“Holding companies and assets in that manner necessarily involves the creation of documents which state untruths, namely, that X is the ultimate beneficial owner of a company when X is not the ultimate beneficial owner and Mr Ablyazov is.
“Moreover, his trusted associates are willing to change the apparent ultimate beneficial owner and backdate the change. Whether or not assets are held in this way to avoid the reach of the president of Kazakhstan Mr. Ablyazov is prepared to make false statements to this court based on the documents created by his associates.”
For the claimant JSC BTA Bank: Hogan Lovells partner Chris Hardman instructed New Square Chambers’ Stephen Smith QC to lead Tim Akkouh and Caley Wright of the same set.
For the defendant Mukhtar Ablyaov: Addleshaw Goddard partmer Richard Leedham instructed 20 Essex Street’s Duncan Matthews QC, Cloth Fair Chambers’ Ian Winter QC, Maitland Chambers’ George Hayman and James Sheehan
For more on this see BTA v Ablyazov: the secret billionaire.