JSC BTA Bank v Roman Vladimirovich Solodchenko and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Vos |
| Judgment Date | 10 July 2012 |
| Neutral Citation | [2012] EWHC 1891 (Ch) |
| Docket Number | Case No: HC10C02462 |
| Court | Chancery Division |
| Date | 10 July 2012 |
[2012] EWHC 1891 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Vos
Case No: HC10C02462
Mr Stephen Smith Q.C. and Ms Emily Gillett (instructed by Hogan Lovells LLP) for the Claimant
Mr Paul Lowenstein Q.C. (instructed by Stewarts Law LLP) for the 17 th Defendant
The remaining Defendants did not appear and were not represented
Hearing dates: 20 th to 22 nd, 25 th to 29 th June 2012
Introduction
This is an application by JSC BTA Bank, a leading Kazakhstan bank now owned by the Government of that country (the "Bank"), to commit Mr Anatoly Ereshchenko ("Mr Ereshchenko") to prison for a number of criminal contempts of court. In essence, the Bank says that Mr Ereshchenko deliberately lied when he responded to a Norwich Pharmacal order for disclosure made against him on 3 rd November 2010 (the "Disclosure Order"). The lies that Mr Ereshchenko is alleged to have told were effectively twofold: first, that so far as he could recall he knew nothing about the transactions in question (the so-called "AAA Transactions"), and secondly that he did not have access to any documents that might assist.
It may be noted by way of background that this is the 4 th committal application in the 11 sets of English proceedings that the Bank has issued against those that are said to have been involved in multiple frauds of which it has been the victim. This particular set of proceedings was issued in the Chancery Division, but the remaining 8 sets of proceedings are being litigated in the Commercial Court.
The background to the AAA Transactions is inevitably complicated. But I shall seek to set out the Bank's basic claims and the chronology as succinctly as possible. Before doing so, it is important to understand a little of Mr Ereshchenko's alleged role. He is a Russian national, who was one of three directors of an English corporate services company called Eastbridge Capital Limited ("Eastbridge"). Whilst he was always based in London, he travelled extensively during the relevant periods. Moreover, Eastbridge had offices in Moscow, and later in Cyprus. Mr Ereshchenko's case is that another of Eastbridge's directors, a Mr Aleksander Udovenko, the 15 th Defendant ("Mr Udovenko"), was primarily involved in the corporate services activities of Eastbridge, and that his own role was peripheral and limited and took up only a minimal amount of his time. In answering the extensive questions posed by the Disclosure Order, Mr Ereshchenko says now that he genuinely could not remember the entities involved or what might have occurred in relation to them. Later disclosures of documentation by the Bank have, says Mr Ereshchenko, to some extent jogged his recollection, and he has been increasingly forthcoming as matters have progressed. But ultimately, he still says that he was mostly only copied in to emails, was never in charge of Eastbridge's activities in relation to the AAA Transactions, and was generally only involved when a proponent of the AAA Transactions, one Mr Timur Surapbergenov ("Mr Surapbergenov") of JSC TuranAlem Securities ("TAS") a subsidiary of the Bank, wanted to chase some specific action that Eastbridge was supposed to be undertaking.
The Bank, for its part, submits that Mr Ereshchenko's position is wholly implausible. It points to numerous documents that were sent to or by Mr Ereshchenko, and says that he cannot possibly have forgotten the names of the BVI Defendants and the Further Recipients, nor the fact that he had been involved in numerous dealings in relation to them. It points to the fact that he, amongst others, held a Power of Attorney, to act for them (which Mr Ereshchenko denies he knew about). More importantly, perhaps, the Bank points to the events that were known to Mr Ereshchenko between the nationalisation of the Bank in February 2009 and the grant of the Disclosure Order in November 2010, and submits that it is inconceivable that he cannot have known when he was served with that order that it concerned the AAA Transactions in which he had been involved. The Bank contends that Mr Ereshchenko decided deliberately to lie about the extent of his knowledge because he feared the consequences if he told the truth.
The AAA Transactions
The Bank's claims in relation to the AAA Transactions may be summarised as follows:-
i) Between 21 st and 22 nd May 2008, the Bank acquired a portfolio of AAA rated investment bonds (the "AAA Investments") with a value of some US$300 million. On or about 22 nd May 2008, the AAA Investments were transferred to an account in the Bank's name at OJSC Alfa-Bank's ("Alfa Bank") affiliate in Kazakhstan, Alfa Russia ("Alfa Russia").
ii) Between 23 rd May and 10 th June 2008, Mr Roman Solodchenko, the 1 st Defendant, who was then a director of the Bank and Chairman of its Management Board ("Mr Solodchenko"), transferred the AAA Investments from the Bank's account at Alfa Russia to an account in the name of the Bank at Alfa Equity Investments Limited, a BVI company ("Alfa Equity").
iii) Between 10 th and 17 th June 2008, 5 BVI companies (the 4 th to 8 th Defendants – referred to hereafter as the "BVI Defendants") sold securities of the same descriptions and amounts as the AAA Investments to Alfa Equity. It appears that these were short sales, in that the BVI Defendants did not at that time own securities of the descriptions and amounts of the AAA Investments (the "short sales").
iv) In June 2008, the sums payable by Alfa Equity to the BVI Defendants in respect of the short sales were paid into accounts held by the BVI Defendants at Alfa Equity and were then transferred to accounts held by the BVI Defendants at Trasta Komercbanka in Riga in Latvia ("TKB" or "Trasta").
v) The Bank suggests that what lies behind these arrangements in June 2008 must have been the grant by the Bank of security over the AAA Investments to Alfa Equity to secure the obligations owed by BVI Defendants to Alfa Equity under the short sales.
vi) Some US$250 million of the proceeds of the transfers to the BVI Defendants' accounts at TKB were then paid in mid-June 2008 to further accounts at TKB in the names of the 9 th to 12 th Defendants (known as the "Further Recipients"). The Bank says that these payments were made pursuant to sham unsecured loan agreements dated 9 th June 2008.
vii) On 22 nd January 2009, the AAA Investments were transferred, on the instructions of Mr Solodchenko, from the Bank's account at Alfa Equity to the BVI Defendants. The Bank alleges that it received neither payment nor other consideration for the AAA Investments.
viii) Eastbridge allegedly gave instructions in relation to all the actions of the BVI Defendants. The directors of Eastbridge were Mr Ereshchenko, Mr Anuar Aizhulov ("Mr Aizhulov") and Mr Udovenko, who left the UK at the end of 2009, and who has neither been traced nor served with these proceedings.
The Disclosure Order
The Disclosure Order that was made by Henderson J on 3 rd November 2010, required Mr Ereshchenko within 21 days of service of it to:-
i) "[t]o the best of his … ability, and after making all reasonable enquiries, provide the answers in writing to the questions set out in Schedule A and C hereto; and
ii) Supply to the [Bank's] solicitors copies of all documents in his … control (which for these purposes shall mean documents which are or were in his … physical possession and/or to which he … has a right to possession and/or which he … has a right to inspect or take a copy) which evidence the matters set out in [(1)] above".
The Disclosure Order also required Mr Ereshchenko to make an affidavit setting out the answers within 28 days of service of the order.
Schedules A, B and C are reproduced in Appendix 1 to this judgment. In outline, Schedule A asked a series of detailed questions concerning the transfers of money and of the AAA Investments that made up the AAA Transactions between June 2008 and January 2009, and Schedule C required Mr Ereshchenko to provide details of the ownership and management over each of the BVI Defendants and the Further Recipients and Eastbridge. At the beginning of the hearing, Mr Paul Lowenstein Q.C., counsel for Mr Ereshchenko, provided me with a list of some 199 individual questions comprised within the terms of the Disclosure Order. The exercise that Mr Lowenstein had undertaken demonstrated the level of detailed knowledge that the Disclosure Order demanded in relation to numerous transfers and transactions over the period. I was struck, in reading Mr Lowenstein's document, and indeed the Disclosure Order itself, that nobody could reasonably be expected to hold in his head the detailed answers to many of these questions, even if that person had been intimately involved in the transactions at the time. That said, the Bank's allegations on this application do not really turn on Mr Ereshchenko's failure to provide the details, but more on his failure to accept at the outset that he was involved at all – or at least to any significant extent.
The 8 allegations of contempt of court
The Bank's first generic allegation is that Mr Ereshchenko gave false...
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