Jsc Mezhdunarodniy Promyshlenniy Bank and Another v Sergei Viktorovich Pugachev
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Rose |
| Judgment Date | 08 February 2016 |
| Neutral Citation | [2016] EWHC 192 (Ch) |
| Docket Number | Case No: HC-2014000262 |
| Court | Chancery Division |
| Date | 08 February 2016 |
[2016] EWHC 192 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Rose
Case No: HC-2014000262
Stephen Smith QC, Ben Griffiths, Anna Scharnetzky (instructed by Hogan Lovells International LLP) for the Applicants
Stuart Isaacs QC, Nicholas Cherryman and Moeiz Farhan (instructed by King & Spalding International LLP) for the Defendant
Hearing dates: 8, 9, 10, 11, 15 and 22 December 2015
CONTENTS
|
| para |
| The background to the claim | 5 |
| The law | 41 |
| Mr Pugachev's evidence | 45 |
| Allegation A1:Mr Pugachev failed to deliver up his French passport | 50 |
| Allegation A2: Mr Pugachev left the jurisdiction in breach of the court- imposed travel restriction | 74 |
| Allegation A3: Mr Pugachev failed to identify and deliver up further travel documents | 94 |
| Allegation B1: Mr Pugachev procured and/or permitted the transfer of shares in LLC Petrovka-Rent held by Limebury Investments Ltd to another company | 97 |
| Allegation B2: Mr Pugachev removed or alternatively procured or permitted the removal of the Motor Vessel Victoria | 114 |
| Allegation B3: Mr Pugachev dealt with the proceeds of sale of Financiere Hediard | 124 |
| Allegation B4: Mr Pugachev sold two motor cars | 142 |
| Allegation B5: Mr Pugachev disposed of part of the proceeds of any recoveries from his Bilateral Investment Treaty arbitration claim | 154 |
| Allegation C1: Mr Pugachev failed to deliver up mobile devices, namely an iPad and a mobile phone | 168 |
| Allegation C2: Mr Pugachev failed to provide passwords to email accounts | 180 |
| Allegation D1: Mr Pugachev failed to set out to the best of his ability and having made all reasonable enquiries what happened to $500 million transferred to Safelight Enterprises Ltd | 186 |
| Allegation D2: Mr Pugachev failed to set out to the best of his ability and having made all reasonable enquiries what happened to RUR3.4 billion which was transferred from Creative Associates Services Ltd into an account in Mr Pugachev's name | 201 |
| Allegation D3: Mr Pugachev failed to set out to the best of his ability and having made all reasonable enquiries what happened to $146.7 million transferred from Devecom Ltd to Basterre Business Corporation | 207 |
| Allegation E1: Mr Pugachev gave false evidence in respect of EPK and Basterre | 216 |
| Allegation E2: Mr Pugachev gave false evidence in respect of Safelight and Oreon | 233 |
| Allegation E3: Mr Pugachev gave false evidence in respect of Creative | 238 |
| Allegation E4: Mr Pugachev gave false evidence in respect of his impecuniosity during his submissions to Hildyard J | 241 |
The Applicants have issued two applications to commit the Defendant, Mr Pugachev, to prison for contempt of court. The application lists 17 allegations of contempt made against Mr Pugachev, 13 of which relate to breaches of orders of the court and four of which relate to evidence given by Mr Pugachev in the course of these proceedings that the Applicants say is false and was dishonestly given by him.
These proceedings have already given rise to many judgments of the High Court and the Court of Appeal and many orders made by different judges. It is not necessary to relate the whole of the factual and procedural background to the claim in order to understand the committal applications. The account that follows therefore focuses on those parts of the proceedings that are most relevant. Annex 1 to this judgment sets out the allegations of contempt using a numbering system adopted by the parties and used in this judgment. Annex 2 sets out the orders which are relevant to the alleged contempts showing the abbreviations adopted in this judgment.
The hearing of the committal applications took place over six days. Mr Pugachev did not attend the hearing in person but was represented by leading and junior counsel. At the start of the hearing I ruled that Mr Pugachev should be able to listen to the proceedings by video link from what I was told was a conference room in central Paris. I ruled subsequently that he should be cross-examined over that video link.
Evidence in support of the applications was provided primarily in three witness statements of Christopher Hardman, a partner in Hogan Lovells International LLP, solicitors acting for the Applicants ('Hogan Lovells'). Evidence in opposition to the committal applications was mainly set out in Mr Pugachev's 11th and 12th affidavits and given by Mr Pugachev during the course of his cross-examination. Both sides also referred to some of the many other witness statements and affidavits that have been lodged with the court during the course of the proceedings.
The background to the claim
In the early 1990s Mr Pugachev founded JSC Mezhdunarodniy Promyshlenniy Bank ("the Bank") in Russia. It grew to become one of Russia's largest privately owned commercial banking groups. He describes himself as at the heart of power in Russia for many years and as having had a close relationship with President Putin and others within his inner circle. However, beginning in early 2009 Mr Pugachev says that he fell foul of President Putin's desire to expropriate the significant business assets and investments that Mr Pugachev owned, and that President Putin determined to destroy him 'economically, politically and, ultimately, personally'.
On 4 October 2010 the Russian Central Bank revoked the Bank's licence. On 30
November 2010 the Bank was declared to be insolvent by the Russian court and placed into temporary administration. The court appointed liquidator is the Second Claimant ("the DIA"). The Bank and the DIA are the two claimants in the action. The DIA is a Russian "state corporation", a non-profit organisation established by the Russian state for the benefit of the public welfare and accountable to the Russian Central Bank. The Russian liquidation of the Bank has been recognised by this court pursuant to the Cross-Border Insolvency Regulations 2006 (SI 2006/1030). The deficiency in the Bank's assets at the date of its entry into liquidation is said to be approximately RUR 70.1 billion (US$2.2 billion).
The DIA brought proceedings against Mr Pugachev in Russia alleging that, following receipt by the Bank of substantial loans from the Russian Central Bank in order to recapitalise it in about December 2008, Mr Pugachev who was then in control of the Bank carried out a scheme designed to extract money from the Bank for the benefit of himself and other companies under his control. The amounts claimed exceed US$2 billion. Mr Pugachev left Russia in early 2011. He strongly disputes the claims brought against him in Russia. However a civil judgment was awarded against Mr Pugachev in the Russian proceedings in April 2015. There have been two appeals by Mr Pugachev to successive appellate levels both of which have been dismissed. Mr Pugachev's application to appeal to the Russian Supreme Court was pending at the time of the committal hearing.
In support of those Russian proceedings the Applicants sought relief from the English court pursuant to section 25 of the Civil Jurisdiction and Judgments Act 1982. That gave rise to the first order made in these proceedings and the first order of which it is alleged that Mr Pugachev is in breach. On 11 July 2014 Henderson J made the Ex Parte Freezing Order. The provisions in that order which froze Mr Pugachev's assets were superseded by the Return Date WFO but some provisions of the Ex Parte Freezing Order are relevant to the committal application. Paragraph 9 of the Ex Parte Freezing Order required Mr Pugachev to inform Hogan Lovells, to the best of his ability, of all his assets worldwide exceeding £10,000 in value as at the time the order was served "whether in his own name or not and whether solely or jointly owned, giving the value, location and details of all such assets". The deadline set for compliance with paragraph 9 was at the latest by 5 pm on the third working day after the service of the order. Further, paragraph 10 of the Ex Parte Freezing Order provided that within two working days after that deadline, Mr Pugachev must swear and serve on Hogan Lovells an affidavit setting out that information.
Mr Pugachev's first response to the Ex Parte Freezing Order was a letter from his then solicitors Stephenson Harwood sent on 23 July 2014 ('the 23 July Letter'). The 23
July Letter contained a Schedule in different sections setting out Mr Pugachev's assets. These included various cars, yachts, houses and other properties in the United Kingdom and overseas and different businesses. The sections of the Schedule of Assets which are relevant to the committal application are those dealing with:
...i) two cars, which it is alleged in Allegation B4 Mr Pugachev has disposed of in breach of the Return Date Freezing Order;
ii) shares in a company called Petrovka-Rent LLP which it is alleged in Allegation B1 that Mr Pugachev has disposed of in breach of the Return Date Freezing Order;
iii) the proceeds of sale of a grocery business in France called Hediard which it is alleged in Allegation B3 Mr Pugachev has disposed of in breach of the Return Date Freezing Order;
iv) Mr Pugachev's shareholding in a company called Luxury Consulting of which he is the sole shareholder and of which he claims to be a creditor in respect of loans made. It is alleged further in Allegation B3 that Mr Pugachev procured or permitted Luxury Consulting to dispose of part of the proceeds of sale of the Financiere Hediard business when those monies were transferred to Luxury Consulting.
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