The High Court this week began hearing the case of Tajik Aluminium Plant v Abdukadir Ganievich Ermatov. While it has failed to make many UK headlines (as yet), its tale of intrigue, corruption and even a potential murder is topping newspapers across most of central Asia.
Not only is it expected to price-in as one of the UK’s most expensive cases ever (some estimate at about £90m in legal fees), it could offer an intriguing insight into the affairs of some of the world’s most secretive business characters. For one, the case is linked to the familiar name (of late) of Oleg Deripaska via his control of Russian aluminium group Rusal.
At issue is control of the Talco aluminium smelter in Tajikistan, one of the smaller former soviet republics. The smelter itself, formerly known as TadAz, accounts for more than half of Tajikistan export revenues, making it one of the country’s prized assets.
According to the Times the case centres on allegations of bribery and corruption amounting to £500m against its former business partner Azar Nazarov, a Tajik businessman now based in the UK.
Talco claims Nazarov via his Guernsey holding company Ansol siphoned profits from the smelter between 1996 and 2004 using a corrupt relationship with the plant’s former manager Abdukadir Ermatov. The FT reports:
Talco claims that its supplier, a Guernsey-based company run by Avaz Nazarov, a Tajik national, siphoned off as much as $485m (£245m) in profits through the arrangement, assisted by an obscure UK consultancy known as Ashton Investments.
Mr Nazarov, Ashton and several other defendants deny wrongdoing and are pursuing their own multi-million pound counterclaim.
As well as siphoning profits via a scheme in which the smelter sold aluminium far above market-prices to Ashton, Talco alleges lavish bribes were paid including the gift of a £300,000 flat in Marylebone for use by the manager’s son. Meanwhile, in a separate action in the British Virgin Islands, Talco has accused Deripaska’s Rusal, Ansol’s former joint venture partner, of involvement in the fraud too.
On Monday, the Talco defence team openly accused Deripaska of knowingly participating in the “grubby” scheme. The FT adds that while neither Rusal nor Mr Derispaska are defendants in the high-profile proceedings, the team characterised them as important players in the alleged conspiracy.
“Accomplices came and went,” Murray Rosen QC told the court. “They constitute a colourful cast including some of the biggest and most ruthless operators in Russia and central Asia. Foremost among them was Rusal, previously called Sibal, owned by its chairman, Mr Oleg Deripaska.”
Metal Bulletin goes on to say the lawyers accused Nazarov and Ermatov of exploiting Talco as a “cash cow” via a series of “daisy chains” of companies associated with Ansol.
But what of the Tajik government’s role in the case? The FT article says many have expressed outrage that the Tajik government is spending millions on legal fees abroad while many of its citizens may face crippling shortages of food, heat and electricity this winter. Furthermore:
The case had been dogged by rumours an important witness — Hassan Saduloev, brother-in-law of Tajik president Emomali Rakhmon, had been shot dead in a family feud. Mr Rosen on Monday gestured toward Mr Saduloev in his opening statement. “Reports of his death have been greatly exaggerated,” Mr Rosen told the High Court.
On the cost front, legal experts currently project the case to rank as the third most-expensive lawsuit contested in English courts. Curiously, the judge hearing the case Mr. Justice Tomlinson also presided over the UK’s most expensive, which just happened to be the last time anyone ever tried to sue the Bank of England in BoE vs Liquidators of BCCI (Deloitte). The case lasted 13 years but failed to reach a verdict. In the end Deloitte was forced to pull out after a ruling said the case was no longer in the best interests of creditors. They were charged with over £110m in total legal fees, verus an initial claim of £1bn.
That time, according to the Guardian, Justice Tomlinson said some of the claims were “simply bizarre” with the structure they were based upon “built on occasion not even on sand, but rather air”.
It will be interesting to see what he makes of the Talco case. The case continues tomorrow…
Related Links
Tajikistan smelter case adds to Deripaska woes – FT.com
Tajikistan case set to test fee records – FT.com