High Court hands $2.5bn win to Hogan Lovells client BTA Bank
19 March 2013 | By Katy Dowell
8 August 2014
12 December 2013
2 April 2014
6 November 2013
12 February 2014
The High Court has handed another victory to Hogan Lovells in its ongoing legal battle for Kazakhstan’s BTA Bank against its former chairman Mukhtar Ablyazov.
Today’s judgment comes after a four-month trial in the High Court covering three tranches of proceedings, the ‘Drey’, ‘Grantino’ and Vitino’ actions. The combined total of claims brought by BTA Bank runs to billions of pounds, making it the highest-value fraud case to have been heard in London’s High Court. The case, listed as one to watch by The Lawyer in 2011 (3 January 2011), has taken the time of more than 50 lawyers.
In the latest judgment Mr Justice Teare paved the way for the bank to recover more than $1bn from the defendants. New Square Chambers’ Stephen Smith QC And Serle Court’s Phillip Marshall QC were instructed by Hogan Lovells partner Chris Hardman for the claimants.
Peters & Peters partner Keith Oliver instructed Serle Court’s Hugh Norbury QC for Zhaksylyk Zharimbetov, the former deputy chairman of the bank’s management board. Zharimbetov was found to be liable to the bank for $1.5bn.
Cyril Kinsky QC of 3 Verulam Buildings was instructed by Edwin Coe partner Nick Neocleous for Usarel Investments. The Cyprus-based company owns, indirectly, the Vitino port facility on the White Sea in Russia. It was ordered to transfer to BTA shares in the companies that own and operate the port and to compensate the bank in the event that the value of those shares does not exceed $120m
Fountain Court’s Jeffrey Chapman QC was instructed by Olswang partner Steven Corney for Ildar Khazhaev, the former head of BTA’s representative office in Moscow. He was ordered to compensate the bank to the extent that the value of the Vitino shares were valued at less than $120m.
Teare J also indicated that the court would grant further judgments against Ablyazov, former chairman of the board of BTA, who was jailed in his absence in February last year for contempt of court (16 February 2012). Those judgments are expected to exceed $15bn and come in addition to the judgments already granted against Ablyazov in November last year for approximately $2bn.
Ablyazov has been represented by Addleshaw Goddard partners Richard Leedham and Ian Hargreaves, who instructed 20 Essex Street’s Duncan Matthews QC for the battle.
The court found that in 2008 Ablyazov, with the assistance of Zharimbetov, made a series of fraudulent payments totalling more than $400m from BTA to companies he secretly owned.
It was also found that a series of improper loans, totalling over $1bn, were made in 2008 to companies secretly owned by Ablyazov with the assistance of Zharimbetov. These were then used by Ablyazov to repay various loans that had previously been fraudulently granted to other companies he also owned.
Ablyazov was also found to have made another improper loan in 2008 to the value of $120m, which was used by him to acquire the Vitino port facility.
The companies controlling and operating the port were purchased by Usarel, which was also secretly owned by Ablyazov, along with two Russian citizens Maxim Pouchikov and Sergey Shekhlanov. The court held that Usarel, together with Khazhaev, had knowingly assisted and facilitated Ablyazov in making the fraudulent loan.
A total of 11 claims have been issued in the Commercial Court and Chancery Divisions against Ablyazov and others by BTA for a total of approximately $6bn.
Hogan Lovells partner Cary Kochberg commented: “Our client has invested heavily in the strength and reputation of the English legal system in its attempts to recover the huge sums that were wrongfully taken from it by Mr Ablyazov and his associates. Today’s decision has reaffirmed the robust legal system we have.”
For more on this see: BTA v Ablyazov: the secret billionaire
The legal line-up:
For the claimant BTA Bank: New Square’s Stephen Smith QC, Serle Court’s Philip Marshall QC, New Square’s Nigel Hood, Tim Akkouh, Serle Court’s Ruth den Besten and New Square’s Emily Gillett (instructed by Hogan Lovells International partners Chris Hardman, Cary Kochberg, Jeremy Cole, Michael Roberts and Alex Sciannaca.
For the defendant Zhaksylyk Zharimbetov: Serle Court’s Hugh Norbury QC instructed by Peters & Peters Solicitors partner Keith Oliver.
For the defendant Ildar Gayarevich: Fountain Court’s Jeffrey Chapman QC and Simon Atrill instructed by Olswang legal partner Steven Corney.
For the defendant Usarel Investments: 3 Verulam Buildings’ Cyril Kinsky QC leading 4 Stone Buildings’ Peter Griffiths instructed by Edwin Coe.