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European courts stage for #Russia oligarchs’ extraordinary legal battles




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In a fresh twist on one of the world’s bitterest—and most expensive—divorces, Russian oil and gas billionaire Farkhad Akhmedov’s estranged wife Tatiana (pictured) is suing her own son Temur, hoping that his private emails to his father will hold the key to a £453 million payout. Not to be outdone, fellow Russian oligarch Sergei Pugachev has also been facing allegations from both his two ex-spouses and from numerous creditors.

Even before Tatiana Akhmedova took legal action against her eldest son, the spectacular implosion of the Akhmedovs’ marriage had all the trappings of a Hollywood film. The British courts handling the case have waded through everything from forged documents, to a tussle over a £350m bulletproof superyacht, to Akhmedov’s claims that the British ruling is “worth as much as toilet paper”.

The High Court in London ruled in 2016 that Tatiana Akhmedova, a British citizen, was entitled to a 41.5% share of her ex-husband’s fortune—at £453m, the largest divorce settlement in British history. Actually recouping a penny of the money the UK High Court awarded her, however, has been another story.

The oil and gas tycoon has repeatedly refused to comply with the High Court’s order, highlighting a growing trend: that of Russian tycoons who have long flocked to luxury flats in London or villas on the Riviera and are now fighting their most combative legal battles there. Indeed, Akhmedov’s refusal to hand over half his fortune to his ex-wife is just one recent example of the lengths which oligarchs will go to avoid complying with unpleasant court orders.

Had it not been for the coronavirus, a court in Nice, France would have delivered this week a new instalment in the saga of Sergei Pugachev, a one-time “Kremlin banker”, as he prefers to be called. Pugachev has claimed to have been a one-time member of Putin’s inner circle and is now chased by the regime after the bank he co-founded, Mezhprombank or MPB, went bankrupt in 2010. The Russian central bank offered MPB a 40 billion ruble lifeline after the bank defaulted on its Eurobonds, but much of the money was siphoned off into front companies. According to the bank’s liquidator, the Deposit Insurance Agency (DIA), some of these funds found their way into Pugachev's personal accounts.

Worse, the alleged financial mismanagement goes beyond assertions that Pugachev embezzled the bailout funds for his bank. MPB allegedly granted some $2bn in unsecured loans to shell companies. On paper, the directors of these front companies were everyone from security guards at the bank to pizza delivery men—none of which had any actual involvement in the companies they “directed”, and some of which had no idea they were listed as directors. The bank also reportedly loaned its owner money to buy a yacht and a French villa—a loan which the DIA says Pugachev never paid back.


Amid the furore over the missing monies, Pugachev traded Moscow for two luxury London flats and a château in the south of France. His smorgasbord of legal woes followed him to the UK, however. In 2014, the High Court in London froze Pugachev’s worldwide assets and forbade him from leaving the UK— an order the banking tycoon quickly violated.

In a slick publicity campaign roping in influential publications like the Financial Times, Pugachev has cast himself as a victim of political persecution, claiming that he was forced to flee to France in defiance of the UK court order because his erstwhile friend Putin was hatching elaborate plots to murder him. This claim worked well to obscure the substance of the accusations against him, which center on the fact that he is accused of what amounts to stealing money from both private companies and individuals.

Playing David to the Russian state’s Goliath may have worked well for Pugachev in the court of public opinion, but it’s failed to win over judges in the courtroom. Skeptical that the oligarch’s claims of persecution justified his illegal departure from the UK, one judge determined that Pugachev was an unreliable witness, whose “evidence […] changes depending on what he perceives to be the most useful version of events at any given time”.

Another judge, from London’s High Court, found the tycoon guilty of violating twelve court orders, sentencing him in absentia to 2 years in prison. In the words of a source close to Credit Suisse, one of MPB’s creditors, “in trying to portray himself as a political victim, Pugachev is just trying to evade justice in both Russia and the UK where he was convicted and sentenced”.

Pugachev may have escaped the outstanding warrant for his arrest by fleeing to France, but his legal problems continue to snowball. Ex-wife Galina Arkhipova has mounted a campaign in British and French courts to recover what she insists were joint matrimonial assets, while former partner Alexandra Tolstoy has accused Pugachev of physically attacking her and failing to pay child support for their three children.

The decision of the Nice court is now expected in late May, amid hopes that a resolution to the over €800m - that creditors as diverse as VTB and Credit Suisse are claiming -  is at hand.

Even as the UK High Court increasingly finds itself called on to adjudicate these long running battles—other high-profile disputes before the court include billionaire Vitaly Orlov’s feud with former friend Alexander Tugushev over the fishing empire they cofounded—the examples of Pugachev and Akhmedov highlight how difficult it is to enforce verdicts against oligarchs – especially if they market themselves as victims of the Russian state as it has happened in the Pugachev case.

A spokesman for Farkhad Akhmedov told the EU Reporter:

“Tatiana and Farkhad were married in Moscow in 1992 and divorced there in 2000. At the time of the marriage and divorce both were Russian citizens. Following the divorce, Mr Akhmedov provided generously for his ex-wife and their two sons, providing her with a £20 million Surrey mansion and a lavish lifestyle.

“In 2012, three days after Mr Akhmedov completed the sale of further oil and gas assets built up since the couple’s divorce, Mrs Akhmedov hired lawyers including celebrity divorce specialist Baroness “Fiona Shackleton, to seek a ‘second’ English divorce settlement. Four years later in 2016, the High Court awarded Tatiana £453 million. Mr Akhmedov believes the English High Court was wrong to impose such a settlement relating to the couple’s previous marriage and divorce.

“Since then, lawyers acting for acting for Mr Akhmedov and the Akhmedov family trusts have since successfully resisted multi-jurisdictional attempts by his ex-wife and her City financial backers, Burford Capital, to recover assets in connection with the English High Court award.”

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