Post-Soviet deals come to light as Russian oligarchs go to High Court
Chelsea FC's owner, Roman Abramovich, and exiled businessman Boris Berezovsky go toe to toe tomorrow
Sunday 02 October 2011
It may lack the devastation of the Battle of Stalingrad or the bloody field of Borodino, but courtroom 26 of London's High Court will witness an epic battle when two Russian oligarchs go toe to toe in what is being billed as Britain's legal battle of the year.
When the case opens tomorrow it will see businessman Boris Berezovsky, an outspoken critic of the Kremlin who lives in London, pitched against Roman Abramovich, one of the wealthiest men in the world, best known as the owner of Chelsea FC.
The case hinges on a web of labyrinthine deals and promises made following the collapse of communism and the privatisation of former Soviet state assets in the 1990s.
Mr Berezovsky, 65, once arguably the most powerful of Russia's oligarchs, says he was forced to flee Russia in 2000 after a row with Vladimir Putin, then president. The rift was sparked by highly critical reports of the explosion that sank the Russian Navy's nuclear submarine Kursk in 2000, killing 118 crew members. The criticism, on a television channel Mr Berezovsky owned jointly with the reclusive Georgian oligarch Arkady Patarkatsishvili, angered Putin.
As a result of threats allegedly made by Mr Putin and other senior Russian officials, Mr Berezovsky fled to France and then to Britain, which granted him asylum. After fleeing, he claims he was forced to sell his stakes in two of Russia's biggest oil and aluminium companies to Mr Abramovich at greatly reduced prices.
Mr Abramovich, 45, denies intimidating Mr Berezovsky. He denies Mr Berezovsky ever held a stake in the oil company. His lawyers, led by Jonathan Sumption QC, have argued that the High Court in London should not hear the case as it was a matter for the Russian legal system.
However, the court was told about a meeting at London's Dorchester Hotel in March 2000 between Mr Abramovich, Mr Berezovsky, Oleg Deripaska, Mr Patarkatsishvili and a fifth man, Eugene Shivdler, a business associate of Mr Abramovich. According to Mr Berezovsky, it was agreed that his shares in the aluminium company Rusal would be held in a trust governed by English law. Mr Abramovich disputes this. The court ruled that this meeting meant that an English court was the appropriate venue to hear the case.
Mr Berezovsky alleges that Mr Abramovich breached an agreement by selling shares he held in trust for him without letting him know. These allegations are denied.
Judges are also expected to hear the evidence of Mr Berezovsky's friend and business associate, Nikolai Glushkov, who was jailed in Moscow. It has been alleged that in a meeting at Munich airport in May 2001, Mr Abramovich said that if Mr Berezovsky and a colleague were to sell their interest in the oil company Sibneft to him, Mr Glushkov would be released. The claim is denied by Mr Abramovich.
The Abramovich legal team has argued Mr Berezovsky is bringing the case for political reasons, regarding himself as the main leader of the opposition to the Russian leadership. Mr Berezovsky has claimed Moscow kills its opponents, citing the 2006 assassination in London of Alexander Litvinenko. He claims he himself is a target and is forced to employ former members of the French Foreign Legion as bodyguards.
According to court documents seen by The IoS, Mr Berezovsky and Mr Abramovich are believed to have first met in 1994 on a cruise in the Caribbean organised by another Russian businessman and politician. Mr Abramovich, then 28, had started his career as a mechanic, but had grown wealthy in oil trading and transport. He had spotted opportunities to create a better oil company but lacked political influence to merge Russian state-owned firms. He claims he discussed his idea with Mr Berezovsky on the cruise and that Mr Berezovsky's high-level political connections and lobbying of President Boris Yeltsin enabled him to create the oil giant Sibneft. In return, President Yeltsin received support for his re-election campaign in June 1996. Mr Abramovich claims he paid large sums to Mr Berezovsky not as dividends for his share of the business but for protection.
In 2005 Mr Abramovich sold off all his oil interests in Russia to the Gazprom energy giant, controlled by the Kremlin, for an estimated £7.4bn. The deal, then Russia's largest corporate deal, reportedly doubled his personal fortune to an estimated £15.9bn. His current wealth is estimated at £11.7bn.
Orphaned aged four, Mr Abramovich is now ranked the third richest person in the UK. His wealth has allowed him to buy a luxury home in one of the most exclusive streets in central London. In 2003 he bought Chelsea FC and has funded a spectacular transformation of the club's fortunes. Mr Abramovich's millions have resulted in Chelsea winning eight major trophies, although the ultimate prize in club football, the European Champions League, has continued to elude his team.
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