UK SUPREME COURT RULES IN FAVOUR OF BTA BANK IN FREEZING ORDER APPEAL21.10.2015 17:33:28
London, 21 October 2015 – The UK Supreme Court today handed down a new judgment against Mukhtar Ablyazov regarding the improper use of frozen assets. This is the first time the Supreme Court has been asked to interpret the standard form freezing injunction and the ruling sets a precedent for future English freezing orders.
BTA Bank challenged Mr Ablyazov's use of four loan facility agreements, worth £40 million in total, to circumvent the restrictions in an English High Court freezing order. Mr Ablyazov’s assets were frozen pending recovery of billions of dollars which he misappropriated during his tenure as Chairman of BTA Bank. The Supreme Court has today found in favour of BTA Bank and confirmed that the money borrowed under the loan agreements was caught by the freezing order and could not be freely spent by Mr Ablyazov.
A BTA Bank spokesperson, said:
“BTA Bank welcomes today’s decision by the UK Supreme Court as an important further step forward in its asset recovery action and its efforts to bring Mr Ablyazov to justice for the billions of dollars that he stole from the Bank. We have won judgments in England worth over $4bn and this latest ruling by the highest court in the UK confirms that the way in which Mr Ablyazov used loan facilities to bypass the freezing order was improper.”
Alex Sciannaca, partner at Hogan Lovells and legal consultant to BTA Bank, said:
“Mr Ablyazov has repeatedly disregarded court orders and fled the country to avoid a UK prison sentence for contempt of court. In this case, he used unusual loan structures to seek to sidestep the restrictions of a freezing order and gain access to significant sums of additional money. Today’s decision closes a loophole that Mr Ablyazov exploited to secretly fund himself and his associates, in breach of the court's freezing order over his assets.”
Notes to Editors:
* BTA Bank launched global legal proceedings against Mr Ablyazov in 2009 after accountants at PwC identified a massive hole – more than $10 billion – in the Bank’s balance sheets which led to the discovery of a large-scale fraud committed by Mukhtar Ablyazov while he was Chairman of the Bank.
* The Bank undertook a restructuring process which was agreed by creditors in 2009 and again in 2012. Lazard Freres was the Bank’s financial advisor in the restructuring.
* The asset recovery process was agreed and undertaken as part of the restructuring and involved legal action against Mukhtar Ablyazov. http://www.ft.com/cms/s/0/8b243288-6f72-11df-9f43-00144feabdc0.html#axzz2bHSOrhvG
* The most comprehensive legal proceedings are 11 claims filed by BTA Bank in the English High Court seeking to recover more than $6 billion in assets misappropriated by Mr Ablyazov. The Bank has secured numerous judgments for in excess of $4 billion against Mr Ablyazov and others and is in the process of seeking to enforce those judgments against assets currently held in receivership.
* In February 2012, the Bank secured an English High Court judgment, subsequently upheld by the Court of Appeal, to commit Mr Ablyazov to 22 months in prison for contempt of court. Rather than abide by the court’s ruling, he fled the UK and became a fugitive from justice. http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2012/237.html&query=BTA+and+Bank&method=boolean
* In November 2012, The UK Court of Appeal unanimously upheld the conviction of Ablyazov. Lord Justice Maurice Kay said: “It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr Ablyazov”. http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2012/1411.html&query=BTA+and+Bank&method=boolean
* After Mr Ablyazov fled the UK in February 2012 in violation of court orders, BTA Bank sought to locate him and eventually traced him to southern France.
* BTA Bank provided information about Mr Ablyazov’s whereabouts to French authorities who acted promptly to arrest him based on an Interpol “Red Notice” concerning frauds committed against the bank.
* Mr Ablyazov was arrested 31 July 2013 in France and is being held there in custody. He has been refused bail by the French courts three times on the basis that he is likely to flee France if released on bail.
* On 26 November 2013, Mr Justice Henderson ruled that Mr Ablyazov had misappropriated a further US$300 million in AAA-rated investment bonds from the Bank in 2008. In assessing the case, the Judge concluded that Mr Ablyazov's defence to the Bank's claims was variously "implausible", "untenable" and "frankly incredible". Mr Ablyazov defended these claims until shortly before they came to Court, but the judge found against him. http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2013/3691.html&query=BTA+and+Bank+and+v+and+Ablyazov&method=boolean
* On 9 January 2014, The Court in Aix-en-Provence granted both the Russian and Ukrainian requests to extradite Mr Ablyazov. However, the decision was annulled by the Court of Appeal in April because of a procedural error made by the court. The case was sent for re-trial in the Court of Lyon.
* On 24 October 2014, The Court of Lyon granted both Russia and Ukraine’s requests to extradite Mr Ablyazov. Mr Ablyazov once again appealed the decision.
* On 4 March 2015, the French Supreme Court upheld the earlier ruling by the Court of Lyon to extradite Mukhtar Ablyazov to Russia or Ukraine.
* On 12 October 2015, it was reported in the French media that the French Prime Minister had issued a decree for the extradition of Mukhtar Ablyazov to Russia.
* Hogan Lovells has been acting for the Bank since May 2009 in its series of major fraud cases before the English Courts. The Bank was represented in this appeal by Hogan Lovells partners Chris Hardman and Alex Sciannaca.
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