King & Spalding “repaid” $800,000 of fees from ‘Putin’s banker’ Sergei Pugachev, judgments handed down last week have revealed.

The payment breached a $2bn global freezing order on Pugachev’s assets secured by Hogan Lovells in 2014 and was found to be in contempt of court.

A sentencing judgment, handed down by Mrs Justice Rose on Friday (12 February), also revealed King & Spalding was removed as Pugachev’s lawyers late last month, after an application submitted by the firm.

Monday’s ruling sentenced Pugachev to two years imprisonment for 12 counts of contempt of court, the maximum sentence permitted.

Rose J said Pugachev had entered into a funding arrangement in which he had disposed of a proportion of future proceeds from a bilateral investment treaty (BIT) claim in return for an immediate payment of $800,000, which was a breach of a freezing order.

King & Spalding had repaid the $800,000 into a bank account held by the relevant New Zealand trust where it was frozen by a court order.

Rose J said Pugachev had told her that he had entered into the funding arrangement “in desperation and to keep King & Spalding as his lawyers”.

King & Spalding was also instructed on a $12bn BIT arbitration launched by Pugachev against Russia at the Hague PCA, which was also found to be in contempt earlier this month.

Pugachev instructed the US firm to fight the freezing injunction in June 2015 after leaving Fried Frank Harris Shriver & Jacobson last February after he could no longer pay the firm’s fees. The instruction marked the second lawyer swap on the case after Pugachev parted ways with original counsel Stephenson Harwood.

King & Spalding London partner Nick Cherryman was handling the case for the Russian banker. Cherryman joined King & Spalding from Fried Frank in April last year.

The ruling marks a success for Hogan Lovells client the Russian Deposit Insurance Agency (DIA), which has pursued Pugachev through the English courts since 2013 over his role in the collapse of Russian bank Mezhprombank.

The High Court ordered Pugachev to give up his Russian and French passports last year while the DIA case against him continued.

The firm secured a freezing order against Pugachev’s assets in 2014 but has since been battling for disclosure related to trusts held around the globe.

Pugachev represented himself in the most recent stage of the case. He has dismissed the sentence, claiming it is academic as he is a citizen of France.

Hogan Lovells partner Michael Roberts, who led the team for the DIA, said: “The sentence imposed on Mr Pugachev reinforces the seriousness of Pugachev’s wrongdoing. The judge found him guilty of a staggering and quite possibly unprecedented number and range of allegations of contempt of court, confirming that he has repeatedly lied to the court, breached the court’s orders and cannot be trusted.

“It is a step forward in the DIA’s ongoing efforts to recover assets for the bank’s creditors.”

King & Spalding declined to comment.

The legal line-up

For the claimant, the Russian Deposit Insurance Agency and Mezhprombank

Erskine Chambers’ Stephen Smith QC, Ben Griffiths and Anna Scharnetsky, instructed by Hogan Lovells’ partner Michael Roberts

For the defendant, Sergei Pugachev

Pugachev represented himself in the sentencing hearing. Previously his counsel was: King & Spalding partner Stewart Isaacs QC, instructed by partners Nick Cherryman and Moeiz Farhan