Oligarchs set for High Court showdown
Now Russian billionaires Oleg Deripaska and Michael Cherney bring their dispute to London
Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across the Independent titles. He writes a weekly column, Parliamentary Business, published on a Wednesday, that covers politics and the City. He is a multi-award winning reporter and was named Press Gazette's business magazine journalist of the year prior to joining The Independent on Sunday.
Sunday 23 September 2012
London will once again become the legal battleground for feuding Russian oligarchs this week, when Michael Cherney – speaking via videolink from Israel – takes on his former business partner, Oleg Deripaska, in the High Court.
On the face of it, the case is a breach-of-contract dispute. In reality it is more likely to be an epic legal drama lasting five months and featuring allegations of protection rackets and gangsterism, the creation of the one of the world's biggest companies and a vivid description of the so-called "aluminium wars" that defined the often violent free-for-all of Russian privatisation in the 1990s.
The first witness will take the stand on Thursday. Although, technically, he won't. Mr Cherney is the first witness, but will be giving his evidence via videolink from Israel. He is unable to set foot in the UK for fear of arrest, as the Spanish authorities want to question him over money-laundering allegations. Mr Deripaska has been questioned as part of the same investigation.
There has been a dispute over where the trial should be held. A senior Russian lawyer told The Independent on Sunday that the British judiciary cannot possibly comprehend how Russia, particularly Siberia, functioned 20 years ago as a people who had barely been fed under Communism made their grab for wealth.
Featuring in British newspaper headlines will not be a new experience for Mr Deripaska. In 2008, his name was all over the press when he hosted the former Labour minister Lord Mandelson and the future chancellor George Osborne on his £70m yacht off the coast of Corfu.
The trip provoked a political row when Mr Osborne claimed in Parliament that Lord Mandelson had been indiscreet about the Prime Minister at dinner with Mr Deripaska. Mr Osborne was later openly criticised in a letter to The Times by the banker Nat Rothschild who invited both Mr Osborne and Lord Mandelson to the dinner. Mr Rothschild accused Mr Osborne of inviting a Tory fundraiser to the dinner who was alleged to have solicited a donation from the oligarch, a claim denied by the Conservative Party.
Also in 2008, as commodity prices, and Mr Deripaska's aluminium company Rusal, were hit by the financial crisis, he had to get a $4.5bn bailout loan authorised by Vladimir Putin. The group has since been accused of being overburdened with debt by a former chairman – yet another oligarch, Viktor Vekselberg.
London's courts are popular with wealthy litigants from the former Soviet Union. Just last month, Roman Abramovich won a case against the billionaire Kremlin critic Boris Berezovsky, who had accused the Chelsea Football Club owner of intimidating him into selling shares in an oil company. This focused on the origins of a company called Sibneft in the early days of Boris Yeltsin's regime, and is thought to be the biggest private litigation battle in history.
For Abramovich, Berezovsky and Sibneft, read Deripaska, Cherney and United Company Rusal – the world's biggest aluminium company. Mr Cherney is claiming that Mr Deripaska owes him 20 per cent of Rusal's predecessor company, Russian Aluminium, after an agreement made in 2001 at a London Hotel related to their earlier empire-building as business partners. Mr Deripaska will argue that this was, in fact, extortion. Opening remarks were heard in July, but the trial was adjourned while the judge, Justice Peter Smith, tried to absorb the details of what will be a hugely complicated case.
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