On this 25 day of March 2019, the Second Civil Chamber of the Tribunal de Grande Instance of Nice granted the claim filed by former senator Sergei Pugachev against the Russian Federation, represented by the State corporation DIA (Deposit Insurance Agency), and ordered DIA to pay the costs.
Russia has once more attempted to abuse the rule of law in using a foreign jurisdiction to persecute Sergei Pugachev. In 2015 the latter initiated proceedings before the Hague International Court, suing the Russian Federation for the expropriation of his assets in the amount of 12 billion dollars.
In 2015 Mr Pugachev was illegally condemned by the Russian justice to pay over 75 million dollars. The State corporation DIA subsequently filed a claim before the French court, accusing Mr Pugachev of dissimulating his assets in France.
It is widely known that Russia is using its legal system to persecute the regime’s political opponents.
In its decision dated 25 March the French court pointed out that the decision on former senator Pugachev’s subsidiary liability, issued on 30 April 2015, is illegal, as are all the other decisions issued in that case between 2012 and 2016, because the Russian court, contrary to the law, failed to have the case examined by a panel of judges.
Mr Pugachev is convinced that this case was trumped up against him after he filed a claim for 12 billion before the Hague court against Russia. He believes that all the legal proceedings brought against him by the Russian authorities are politically motivated. Over the course of the past few years, the Russian authorities have filed law suits against the former senator in foreign jurisdictions, on the basis of illegal and politically motivated decisions issued by Russian courts.
Nevertheless, some foreign courts and international organisations, that are not subservient to the Kremlin, have repeatedly refused to persecute Mr Pugachev. Thus in 2015 the Interpol commission wrote his name off the Interpol register, having established the political nature of the proceedings.
The Second Civil Chamber of the Tribunal de Grande Instance of Nice established that the decision of the Russian court dated 30 April 2015, condemning Mr Pugachev to pay over 75 million dollars, was rendered in blatant violation of the Russian laws. The said decision is thus illegal in Russia and, therefore, has no legal value outside Russia.
The State corporation DIA has already spent 2.9 billion rubles on trying to have the above-mentioned illegal decision recognised in foreign jurisdictions, thereby causing substantial material prejudice to Mr Pugachev.
Mr Pugachev’s lawyers are currently getting ready to file a claim against DIA for the compensation of the material prejudice caused to Mr Pugachev by DIA’s illegal actions in various jurisdictions. In 2014 the State corporation DIA pledged, of its own free will, to compensate Mr Pugachev for the prejudice potentially caused to him, within the limit of 75 million US dollars.
The aforementioned pledge was confirmed by the High Court of London on 11 July 2014.
On Tuesday 29 January, the Civil Court of Nice, France, rejected as void the claim filed against the 56-year-old Russian billionaire Sergei Pugachev by the Deposit Insurance Agency (DIA), a State agency of the Russian Federation. DIA notably requested the seizure of the oligarch’s property on the French Riviera.
Sergei Pugachev, former owner of the French luxury grocery brand Hediard and of the daily newspaper France Soir, currently owns the Château de Gairaut in Nice, a chalet in Valberg, a yacht, as well as real estate in Saint-Jean-Cap-Ferrat.
The once almighty business tycoon, formerly known as ‘Yeltsin’s banker’, today complains that he has been put on President Putin’s black list.
Since the Mezhprombank bank, founded by Pugachev in 1990, went bankrupt in 2010, the Russian justice has been claiming from Sergei Pugachev the payment of 1.14 billion dollars. The Moscow Commercial Court hopes to have its decision executed in France.
Russian agency’s claim rejected by court
It seems that proceedings have come to a halt as the Nice Court of the first instance rejected DIA’s claim. According to Sergei Pugachev’s lawyer Anne-Jessica Fauré, ‘DIA is a governmental agency. It has no authority to represent a bank under bankruptcy proceedings!’. She is adamant that ‘the Agency is not entitled to undertake legal action against my client in France’ and describes DIA as a ‘weapon’ in President Putin’s hands.
‘An illegal decision of the Russian court’
The Parisian lawyer insists that the case is clearly a political one. ‘Mr Pugachev is sued for the bankruptcy of Mezhprombank, whereas he withdrew from the Bank’s leadership in 2003. The person accusing him of being de facto involved in the bank’s management has not only been set free by the Russian court, but has also been given a job in a different bank. Strange coincidence, isn’t it?’
In a press release published on Tuesday night, the oligarch’s press service made a strong counter-statement: ‘All legal proceedings launched by the Russian authorities against Sergei Pugachev are nothing but attempts to prevent the examination of the case filed by Mr Pugachev’s against the Russian Federation before the International Court at The Hague.’
‘Blatant procedural violations’
Pugachev’s press service also stressed that ‘the decision condemning Mr Pugachev to pay over one billion dollars was rendered by a single judge, instead of a panel of three judges, which constitutes a blatant violation of the law. The decision is, therefore, illegal in Russia and can have no legal consequences outside the territory of the Russian Federation.’
On 21 September 2015 Sergei Pugachev, who now lives in Nice, initiated legal proceedings against the Russian Federation for ‘expropriation of assets by the Russian authorities, that began in the early 2000’.
The law firm Betto Seraglini filed a claim for over 10 billion euros on behalf of the oligarch.
A legal battle has just come to an end in Nice, but the war between Pugachev and Putin is far from being over yet.
Former oligarch Sergei Pugachev won Tuesday a French ruling against Russian judicial proceedings that might save him from having to pay a 1.3 billion euro ($1.5 billion) fine.
Pugachev had petitioned a civil court in Nice, southern France, where he now lives, to block the execution of a fine for fraudulent bankruptcy that stemmed from the failure of his Mejprombank in 2010.
Once considered the Kremlin’s “banker,” Pugachev was ordered by Russian judicial authorities in 2015 to pay 1.3 billion euros and turn over assets, for fraud and embezzlement.
But the French court said in a ruling seen by AFP that a Russian lawsuit against Mejprombank had to be validated every six months after being examined by several judges, whereas up until July 15, 2016 decisions on prolongation were handed down by the Moscow trade court presided by a single judge.
The French court “recognises that the initial ruling, illegal in Russia, cannot be legal in France or anywhere else,” Pugachev told AFP.
Following the failure of Mejprombank in 2010, he fled first to Britain and then to France, which had granted him French nationality in 2009.
He lives in a chateau in hills overlooking the Mediterranean city, which along with a yacht, a ski chalet and a second residence in the nearby coastal town of Saint-Jean-Cap-Ferrat, had been seized preventively in 2016 to serve as collateral in case of a ruling favourable to the Russian authorities.
On 29 of January 2019 the Tribunal de Grande Instance of Nice, France, granted Sergei Pugachev’s claim against the Russian Federation (represented in this case by a governmental agency).
In 2018 Sergei Pugachev initiated legal action against the Russian Federation before the Court of first instance (Tribunal de Grande Instance) of Nice, on the ground, sustained by his lawyers Anne-Jessica Fauré and Mazvydas Michalauskas, that the governmental agency acting on behalf of the Russian Federation has no right to sue Mr Pugachev in France.
All legal proceedings and actions launched by the Russian authorities against Sergei Pugachev before various jurisdictions are nothing but attempts to prevent the examination of the case filed by Mr Pugachev’s against the Russian Federation before the International Court at The Hague. Indeed, Russia’s actions are aimed at deflecting the attention as well as the intellectual and material resources of Mr Pugachev and his lawyers from the proceedings at The Hague.
On 10 December 2014 Mr Pugachev, faced with the expropriation of this assets by the Russian authorities that began in the early 2000, initiated proceedings against the Russian Federation before the Court at The Hague, based on the bilateral agreement on the protection and promotion of foreign investments concluded between France and the Russian Federation. The claim amounts to 12 billion dollars. Mr Pugachev’s interests are represented in France by the law firm Betto Seraglini.
Notwithstanding various attempts by Russia and its lawyers (White&Case, Hogan Lovells, London) to delay the examination of the case, as well as various claims filed against Mr Pugachev in different jurisdictions, the proceedings at The Hague are progressing in accordance with the established schedule.
The Nice Court ruled that the decision of the Russian court dated 30 April 2015, that condemns Mr Pugachev to pay over one billion dollars, was rendered in blatant violation of the law (the decision was rendered by a single judge, whereas it ought to have been rendered by a panel of three judges). The latter decision of the Russian court is, therefore, illegal in Russia, and furthermore can have no legal consequences outside the territory of the Russian Federation.
This may exacerbate the outflow of capital from Russia.
“Today, Russia is threatening the entrepreneur with confiscation of all his property in France,” writes the newspaper Le Figaro, Vincent-Xavier Morvantalked to Sergey Pugachev in nice (translation – inopressa.ru).
“The name of the 55-year-old Sergei Pugachev sounded again on November 29, the Tribunal de Grande instance of nice,” writes Le Figaro, Recalling that the decision of the Moscow court on April 30, 2015, he was sentenced to pay the liquidator lost his license and bankrupt Bank Mezhprombank considerable amounts to 75.6 billion rubles, which is approximately 1 billion euros. It’s been two and a half years, Russia is seeking to implement this solution in France, the procedure of “exequatur” (execution of a judgment rendered in another state) .
“Counter the appeal of the defenders of Pugachev, filed in the court of nice, intended to avoid consideration of the merits, which could result in the confiscation of all his property in France. The first decision is expected on 29 January,” – says the journalist.
“Russia is trying to move to France its completely paradoxical decision, which was recognized as politically motivated. I believe in the French justice and that it is unable to believe in such unreasonable decision”, – says Sergey Pugachev who received French citizenship in 2009.
“Today, all his attention focused on another process launched in 2015 in the Hague court. Sergei Pugachev, who at the time of its luster dominated the industrial Empire, which consisted of shipyards and coal mines, where he worked for nearly 350 thousand people filed this arbitration court the claim to Russia in the amount of 12 billion euros, to which she allegedly was robbed,” – said in the article. “I hope that there will be obtained a decision before the end of 2019”, – calculates Pugachev, highlighting his French citizenship.
“The amount may seem huge, but if Russia does not pay, it runs the risk that all foreign investors it will go away, because they have no more guarantees to feel protected”, – said Sergey Pugachev.
In his opinion, there is no doubt that the alleged attempts to interfere in the country’s West should be seen hand of the current owner of the Kremlin. “When you talk about Skripal’s case or to intervene in the American or French policy, it is necessary to understand that dozens and dozens of people come to Putin with ideas about destabilization, “you can do it do it”, Putin still reasoning at the secondary level KGB officer responds like a true businessman, trying to see what is its benefit,” – says a former confidant of the Russian President.
“Putin is only interested in what concerns him personally. If we talk about Boris Nemtsov, the opposition leader, zastresenom next to the Kremlin, it is obvious that the Germans could not make a revolution and change the existing order of things, but he had the gall to explain how Putin is a miserable and dangerous, and it concerned him personally”, – said Pugachev between two SIPS of Sancerre white wine. The French President is also not in favor of Putin. “No leader of such a scale didn’t talk to him as it did him during their first meeting. Putin never will not forgive him. Even if the Makron will hug him and give him half of France, it will not change anything, he touched him”.
On 29 November the Tribunal de Grande Instance of Nice, the French court of the first instance, held its first hearing in connection with the attempts undertaken by the Russian State corporation to carry out the decision of the Moscow Commercial Court against French citizen and former senator Sergei Pugachev. The Moscow court’s decision was rendered on 30 of April 2015 and declared the Sergei Pugachev’s subsidiary liability.
The Mezhprombank bank, founded by Sergei Pugachev in 1992, was declared bankrupt in 2010. By that time, however, the bank no longer belonged to Sergei Pugachev, who had left the Board of Directors some nine years earlier.
On 30 April 2015 the Moscow Commercial Court issued a ruling that declared Sergei Pugachev, as well as three of the Bank’s managers, responsible for the Bank’s liabilities amounting to over 1 billion euros.
The case was heard by a sole judge, namely I.I. Kleandrov, even though the Russian law prescribes that bankruptcy cases be heard exclusively by a panel of judges. The ruling was issued by Judge Kleandrov after a hearing of about three hours, suggesting that in the course of some 200 minutes the judge was able to analyse 342 volumes of documentary evidence and study over 200 of the Bank’s contracts, to which the representatives of the Russian Federation referred. All the rulings issued by Judge Kleandrov as a sole judge were subsequently cancelled by the Supreme Court of the Russian Federation (decision dated 19 December 2016).
On 29 November Sergei Pugachev’s counsels challenged the competence of the Russian State agency to initiate proceedings against Sergei Pugachev in France, on the grounds that the Russian Federation had failed to comply with a number of compulsory legal requirements, thereby violating French and international law.
Sergei Pugachev’s lawyers also claimed that the interests of an objective and fair trial did not allow to examine the issue of carrying out in France the decision of the Moscow Commercial Court, until the French justice was able to complete the previously initiated enquiry against the managers of the Russian State Agency, and until the arbitral tribunal comprised of distinguished international arbitrators Eduardo Zuleta-Jaramillo, Thomas Clay and Bernardo Cremades, sitting at the Hague International Court, had come to a decision on the violation by the Russian Federation of its international obligations regarding the protection of Sergei Pugachev’s investments in Russia. It should be recalled that in 2015, before any attempts were made to have the decision of the Moscow Commercial Court carried out in France, Sergei Pugachev had initiated arbitration proceedings against the Russian Federation before the Hague International Court for an amount in excess of 12 billion dollars, in connection with the expropriation of his assets in the territory of the Russian Federation and damages caused to him in other jurisdictions, including France. The arbitration court is due to issue a ruling the the course of 2019.
According to David Goldberg from the law firm White&Case, who represents the interests of the Russian Federation before the Hague International Court in the case Pugachev v Russia, “this is Pugachev’s personal dispute with Putin”.
In addition Sergei Pugachev’s lawyers stress that an attempt to have the Russian ruling recognised in France is, of itself, one more element in the grand-scale process of expropriating Pugachev’s assets, which was begun by Putin back in the late 2000s and early 2010s.
It must be said that Russia does not limit itself to strictly legal methods. In 2014 Sergei Pugachev filed a claim before the Tribunal de Grande Instance of Paris for the crimes of extortion, kidnapping and death threats, committed in the territory of the French Republic by a group of persons belonging to the leadership of the Russian State agency. The claim rests on documentary evidence and the investigation is underway, with the claim being examined by investigating judge Charlotte Bilger. After an explosive device was found under former senator Pugachev’s car, only extreme security measures provided by France’s special services have been able to guarantee the safety of Sergei Pugachev and his family.
The vice president of the Court of Nice, Hicham Melhem is expected to render his decision on 29 January 2019, after which it will become clear whether Russia is able to take part in judicial proceedings in the territory of France or whether its claims against Sergei Pugachev will be definitively rejected.
The interests of Sergei Pugachev in France are represented by the law firm De Baecque Fauré Bellec Avocats.
The interests of the Russian Federation are represented by the law firm Hogan Lovells.
“I advised him to leave Russia with the money”: Sergei Pugachev, former advisor to Putin, talks about Khodorkovsky’s arrest, the roots of the Russian business in the UK and the High Court of London
15 years ago, on 25 October 2003, Mikhail Khodorkovsky was arrested. Back then, in 2003, Sergei Pugachev was not yet an émigré in exile, as he is today, but Vladimir Putin’s trusted banker and a close acquaintance of his. This week, the London court has ruled that Pugachev’s London mansion be sold to repay creditors, whose interests are represented by the Russian Deposit Insurance Agency (DIA), i.e. that very same State to which Pugachev was once so close. Mikhail Fischman asks Pugachev about the trial, the current status of the Russian oligarchs in the West and that historical day of 25 October 2003.
Sergei, how are we to understand the court’s ruling, after all? Was there or wasn’t there a ruling? Was your London house confiscated, or wasn’t it? Did the claimants from Russia, i.e. the DIA, win the case, or didn’t they? Please do explain.
Good evening, Mikhail. Currently, at this particular moment in time, there is no final ruling, no official ruling exists. Something was announced at the hearing, but I was unfortunately unable to take part in it, because I was debarred participation by the judge. For about a couple of hours the judge and the court, who had the obligation to provide a video link, had been telling me of some technical issues. Some time later it was finally announced that the judge refused that I be heard by the court, even though I am the first defendant in that case.
And so? What happened eventually? Who won, in the end? Who is currently winning? Are you losing?
Well, it is complicated: I wish to reiterate that there is no decision. The important question here is not whether we are winning or losing – I don’t know what will eventually happen, I don’t know what the final decision will be – but the important fact is that the DIA, which is representing the Russian Federation, continues with the expropriation, which began fifteen years ago (it is a memorable date) with the expropriation of YUKOS’s assets. So, in short, the process goes on steadily, except that today it has taken on a different form, now it is based on a manipulation of the Western judicial system, especially of the British one. Because the High Court of London, is favoured – well, I wouldn’t quite say by the Russians – but certainly by the Russian Federation.
I will ask you the question later, specifically, but you too, in fact – in your statement of defence, which I have here before me – you bluntly state that pursuits against you are politically motivated in Russia, that your assets are being expropriated on political grounds – i.e. property is being taken, which, in one way or another, belongs to you. Logically, today one would expect the West and Britain, the British justice in this specific case, to take your side. Yet it seems that this is not what is happening.
I do not quite agree. The point is: what is happening in the media, the mutual accusations at the highest state level, it does not affect the judicial system at all so far, nor does it affect the middle levels or the business world – nothing. You have to understand that especially in Britain, in the realm of common law – as opposed to France, for example, with its civil law – you have the most expensive lawyers of all, it is a gigantic business, worth billions. And it not a system that one can break on the grounds of foreign policy matters, because of relations between Russia and the UK. I think it will take years, even decades.
So, if I understand correctly – and you are welcome to comment – these two processes are running parallel to each other, as it were. On the one hand we have political declarations made by the British government about increased pressure on the business connected with Vladimir Putin’s entourage, about looking for corrupt businessmen among those who have settled in Britain and making them… And in fact this process is already underway, as some decisions have demonstrated. On the other hand, claims against entrepreneurs such as yourself are being granted, claims in which the Russian Federation is a claimant, in one manner or another.
Yes, the Russian Federation is the claimant in this specific case. And one has to understand that those accusations being thrown at each other – even if you let aside the murder of British citizens in the territory of Britain – they will not have a prompt effect. We see, for example, that after the adoption of the law on checking the origin of funds above 50 thousand pounds, only three information requests have been sent, as far as I know.
Of course Great-Britain, because of Brexit and many other reasons, is interested in keeping the funds, and evidently is not interested in expelling the remaining investors, or simply those people who keep their assets in the UK, in the British banks, etc. Of course the real estate prices have gone down substantially and so on, so all this rhetoric has already brought about a number of consequences. But this has no influence whatsoever, of course, on legal proceedings and on the lawyers’ attitude.
The firm Hogan Lovells have a longstanding history with Russia, which they actually confirmed during a cross-examination. This is their only business, they will not manage to find some new clients by magic, and so they carry on. Here’s an interesting question asked by Justice Wilson to one of the partners of Hogan Lovells, Mike Roberts: how much he had earned for that hearing. Roberts said: 10 million pounds, to say the least. This is quite impressive; and the most interesting is that we were unable to find the corresponding line in the DIA’s budget, whereas this is supposed to be public information and the DIA is supposed to be financing this litigation.
This is quite intriguing. But in that same defence statement you write that attempts were made to kill you. Therewas attempted murder, so you are, essentially, on the same list with other enemies of the Russian political regime. But this does not affect the position of the British justice, this is not taken into account at all in those proceedings, or so it seems.
It absolutely isn’t taken into account. When an attempt to kill me was made in the UK in 2015, it was investigated by the anti-terrorist section of Scotland Yard, quite independently from myself, criminal proceedings were started, which currently continue in France. So the investigation continues in France. The investigation process in Britain was stopped after I left Britain to return to France. The case was dropped, despite the fact that the crime had been committed in the territory of Great Britain. So, no, of course, it is not taken into account.
You also write, this is a direct quotation, you write that “the Russian regime is deeply rooted in the Western countries, including Great-Britain; about 300 thousand of the richest Russians either live or have their assets in Britain, which testifies to Putin’s considerable influence over that country” – end of quote. Is something changing in terms of this situation and Putin’s influence, as described by you? After all, much has happened, especially after the Skripal events surfaced in March and became widely publicised. Do you see the situation evolving, or not at all?
I think not. I do not see the situation evolving. I think that actually it never changed, this is how it always was: you will recall the Litvinenko case and his widow needing some ten years to convince the courts to have his case heard publicly…
Yes, I remember it well. I even remember reading articles in the British press, which harshly criticised the British Home office, which was then headed by the current Prime minister. It was said that the investigation was impeded, and so forth… This was a notorious issue then.
Yes, but still, you have to understand that this throwing of unpleasant accusations at each other will of course continue, there is no doubt about it, because this is what politics are like, you have upcoming elections and all that. Yet the mundane level, if you can call it this, is not at all affected. Of course it isn’t. We know well that a huge number of Russian officials, of their children, whose fortunes amount to billions – they live in Britain, they own a lot of property, real estate property in Britain… so clearly no sensational revirement has taken place so far.
And the fact that Berezovky, earlier, and Khodorkovsky now, and maybe some others are still in Britain, this is pretty much exotic. This is quite small, compared to some 300 thousand Russians, among the wealthiest, who are of course drawing their income from Russia and spending it in Britain.
Yes, this I understand quite well. It just seems to me that you can see a difference today in political terms, between the Litvinenko case and its consequences – when the diplomatic relations were frozen, when some diplomatic consequences ensued, but the case was not investigated, as you have just reminded us yourself – and the utterly different consequences of the Salisbury poisoning case, when Theresa May is leading the attack against Russia, when she is demanding sanctions and urging her European partners to follow suit, and so on and so forth. I think the difference is noticeable. And I imagine it should also manifest itself in an increased pressure on the corrupt Russian business in Britain. Or shouldn’t it?
It should indeed, yet it still hasn’t, in any manner. And I doubt we shall see anything of the kind in the near future. If we do, it would be a sensation. We know that Putin’s friends, people close to him, who have amassed enormous fortunes in Russia, live peacefully and happily in Britain and are even on good terms with the ruling elite. Here’s a recent article in The Times, writing that members of the British elite are lobbying for an improvement of relations with Russia. What this means is that Russia has considerably strengthened its foothold in Britain over the past twenty years, since Putin’s arrival to power. And this certainly is not going to be sabotaged by some declarations made by Theresa May, it is practically impossible.
You also mention – one more quote – that Putin personally told you about his intention to acquire the Chelsea football club, in order to increase his influence in Britain and improve Russia’s image, not only with the ruling class, but also with the ordinary British. I imagine you mean the early 2000s here, 2002-2003, I suppose. Do you?
Yes, just before the acquisition…
Yes, just before Roman Abramovich bought the Chelsea club. There are currently rumours that he might have to sell it. Sky News has just now contradicted it, but the rumours are flourishing, and apparently some potential buyers have come forth. So was it all a political scheme, right from the very beginning? Is that what you’re saying?
It certainly was. I think it was a sort of a special operation to infiltrate the British society, as it were. Except that is was not aimed at the ruling elite, but at the common British people. As Putin said, it was perceived as a means to improve Russia’s image with the ordinary British. Putin thinks the operation was a success and you have to grant him that: it actually went rather well, it was an infiltration based on common interests, as it were, because the English do love football. So it did work rather well.
Yes, but now we are facing the opposite situation when Abramovich is seemingly contemplating to part with Chelsea. What is you impression of it?
I think that it is, in the first place, linked with his personal situation, because he is still the owner, somehow. We know that he has had a number of problems, that he failed to have his visa extended, that he obtained Israeli citizenship, and so forth. This has most probably complicated communications with Britain, with the club. Then there is the financial situation, which also matters, inevitably. And Russia’s self-isolation policy also leads to the fact that Abramovich has started taking personal decisions. I don’t know how accurate the rumours are, whether he does indeed intend to sell, but it sounds logical to me. Today not even the ownership of Chelsea will help Russia to improve those relations… This is a public relations thing, and it will not help.
Coming back to my previous question about the big Russian business… Of course, there are officials, or just people, who have money in the West and who want to keep it there somehow. But the really big Russian businesses, the major companies – they are having a much harder time today in the West, business has become much more difficult, hasn’t it? Or is the situation still bearable and it is too early to think of going back home?
The situation has indeed become much more complicated for the big Russian business, the business that belongs to Putin’s closest circle, the major companies, whether public or private. Yes, of course the situation has worsened. It has also grown worse on the middle level. I talk to people quite a lot and I see that they cannot even open a bank account now, in some cases the accounts they already have are being closed, in spite of a 20-years’ flawless banking history. So, yes, on that level the situation is much worse now. I think this has to do with Russia’s self-isolation course, returning to Russia or the other way round, but this is a process that is actively underway.
You mentioned a kind of anniversary that we have: 15 years will have passed this week since Khodorkovsky was arrested on 25 October 2003. This was a point in time which I personally, and many others, too, hold to be a turning point. Not only for the relationship between the State and big business in Russia, but also a turning point for all of Russian politics and Russian life thereafter. Back then you were on the other side of the barricades, you were still an ally of Putin’s back then, if I understand correctly. Looking back today, do you think… What do you think of those days, of those times? And to what extent would you say that the difficulties and the self-isolation you have just mentioned are a direct consequence of those decisions taken fifteen years ago, a consequence of that arrest?
I absolutely agree, except for the fact that I was not on the other side of the barricades. I was on neither side of any barricade. I was involved in politics, it is true, I was Putin’s adviser, but this does not mean that I supported his position on YUKOS. Moreover, he did not inform me about it, this was a case managed by the special services, so everything was kept utterly secret. Moreover, when I met Khodorkovsky and we had a chance to discuss it, my advice to him was to leave the country with the money, so that he could later influence the situation somehow, perhaps support his former collaborators, who will have been facing difficulties (and this is what actually happened).
In that respect nothing changed. I still maintain that this was a turning point and a critical stage in Russia’s development. This is a fact. I remember how it all unfolded, I saw it from the inside, as it were, being still in close contact with Putin. Putin could not have acted differently, I mean that this was his perception of it. And it was not a political issue, it was not a matter of supporting Khodorkovsky, or the communist party or whatever. It was, purely and simply, a straightforward decision on expropriation of assets. And the same thing happened over and over again later.
The cases may not have been so visible and so important, but what definitely has changed… Why do we remember this case so vividly, I mean the YUKOS case? Because back then the courts were not yet so subdued, the judicial power had not become part of the President’s administration, so to speak. YUKOS’s lawyers, Khodorkovsky’s lawyers were not able to plead, to convey their position; the judges were trying to subtly twist the law somehow, but this was still happening within the existing legal framework. Now we see that this has been lost, that the situation has changed. If the YUKOS case happened today, I think that we would only have seen a couple of short articles in the press, hardly anything more…
No one would have paid any attention, I think. But even then, honestly, if you look at the accusations, starting from Lebedev’s arrest in July 2003 it all looked fairly ridiculous from a legal viewpoint. And all the independent observers realised it, of course.
Yes, but nonetheless it attracted the public’s attention. Today’s equivalent, to a certain extent, would be Serebrennikov’s case. It is very similar. But trust me, if the same had happened today with some other private businessman, a big company, no matter whether an oil company or some other, I think that you would have just briefly mentioned it in the news. Look at the Mamedovs’ case, it is a good example.
Yes, absolutely! It is much less written about. As far as you are concerned, there subsists the notion that you used to be on the other side, because you had good relations with Putin, because you were part of… Basically, your business began to flourish after Putin became president, your situation greatly improved. It was being said of you back then, if I am not mistaken, that you are on good terms with the siloviki of Putin’s circle, and this is why, back then… You were even largely demonised in fact, if I remember correctly. The press would say that the orthodox oligarch banker Pugachev is treading one the grounds of the old Yeltsin guard, and so forth.
Well, this is certainly mistaken. There were a number of corporate wars going on, it was something normal back then, it was a way of doing things. Nobody wanted to have someone else become closer to Putin than others, I mean the financial and industrial organisations. This is normal. But it is a different matter. The point is that I had contributed to Putin’s coming to power, because I belonged to Yeltsin’s team. So, saying that I was on the other side is utterly incorrect. Besides I still have good relations with Tatiana Diachenko and Valentin Yumashev. You have to understand that my active political career began in 1996, at the time of Yeltsin’s election. This is why saying I was on the other side is entirely inappropriate.
The other thing you mentioned: that my business began to expand after Putin came to power. This is not true, Putin had nothing to do with it at all. All I had, I had acquired by myself. I had never taken part in the privatisation process, I had bought everything for money, before Putin came to power. This applies to the largest shipbuilding yards in Petersburg, this applies to the licence I obtained in 1999 for the development of the world’s largest coking coal deposit, and to all the rest. On the contrary, Putin tried to take what belonged to me – this is precisely what happened – and give it to the people closest to him, to the Petersburg people, to his friends, his former KGB colleagues and so on.
Coming back to Khodorkovsky’s case: if I understood you correctly, you believe that in reality it was not a crossroads, that Putin had no choice, and that his decision to have Khodorkovsky arrested had been predetermined and things could not have gone any other way?
Obviously so. I remember how it came about, the details of it. What I meant to say is that psychologically Putin was not ready for anything else. It was the only way he was prepared to take. We had spoken at length about it with him and I was very much against it, categorically against it. Not because I had ever been a close friend of Khodorkovsky’s, even though we had been in close contact since the late 80s and early 90s (we were in fact neighbours, our houses and our summer houses were some fifty meters apart from each other).
This was because I understood that it was a crucial moment. That he was going to completely break the investment climate so to speak – back then this was something you could talk about. This had to be avoided a priori, because having once felt the taste of blood he would not have stopped. I realised very well that Putin would catch the trick, and then… he is in such a way that… I remember one case, quite extraordinary, when Putin wanted to replace an official: at some point he said, well, let him sit there for the time being, and if need be, we will have a criminal case brought against him and we will have him imprisoned. This is, in fact, the predominant approach today, it still is, and it could not have been otherwise.
Thank you very much for this fascinating conversation. Thank you.
The security minister has turned down a meeting with a Tory peer who has financial links to Moscow amid fears about Russian influence and lobbying in parliament, The Times can reveal.
Ben Wallace said in a letter to the Commons foreign affairs committee that he had been contacted by two Conservative peers “requesting government assistance for Russian associates” since he took up his post in 2016.
He said he did not take up the offer to meet and discuss sanctions with Lord Barker of Battle. Lord Barker, 52, is chairman of En+, the Russian energy giant majority-owned by the oligarch Oleg Deripaska, a close ally of President Putin. En+ and Mr Deripaska have been subject to sanctions since the Salisbury nerve agent attack in March.
A ministerial meeting did go ahead with the Conservative peer Lord Fairfax of Cameron. Mr Wallace said in the letter, which was leaked to this newspaper, that Lord Fairfax “wished to discuss his experiences working for Sovcomflot”, the state-owned Russian shipping company.
Lord Fairfax, 62, is director of Sovcomflot UK, a direct subsidiary of PAO Sovcomflot. Russia and “countries of former Soviet Union” are listed among his focuses on his page on the parliament website.
Lord Barker rejected any suggestion that he had attempted to lobby Mr Wallace. “I have never lobbied the UK government or requested assistance from any member of either of the Houses of Parliament,” he said yesterday.
The disclosures come amid concerns among senior members of the Commons that members of the Lords are seeking to lobby on behalf of Russian companies with links to the country’s government and doing “the Kremlin’s bidding”. A Times analysis has uncovered peers with financial interests linked to Russia, prompting calls for all Lords to divest themselves of these unless they can prove the interests are free from potential Kremlin influence.
An overhaul of the Lords code of conduct to tighten the rules around transparency and links to foreign nations has also been proposed by MPs and campaigners for transparency. Their calls come after a nerve agent attack by Russian spies in Salisbury in March.
Peers from all sides have been found to have links to Russia. Lord Skidelsky, 79, a crossbencher, is a non-executive director of Russneft, the Russian oil refining company that is 47 per cent owned by Mikhail Gutseriev, a businessman named on a US “oligarch” list this January of people close to President Putin. He declined yesterday to address the calls for peers to divest themselves of Russian interests.
In 2014 in the House, Lord Skidelsky spoke out against sanctions on Russia in response to its illegal annexation of Crimea. He said the West had “actively sought to prise those countries [which in the past formed part of the Russian state] from Russia’s orbit, using as its instruments Nato expansion and financial and logistical support for Russophobe movements in newly independent adjacent territories”.
Lord Ponsonby of Shulbrede, 59, a Labour peer, declares in the members’ register that he is a director of RNG Joint Stock Company, a Russian oil and gas company, and of its direct owner, Eastsib, a company registered in Cyprus that operates in Russia. He has not referred to Russia in parliament.
Lord Truscott, 59, an independent Labour peer, receives remunerated employment as chairman of the advisory board of Russian Gold Fund, a private equity investment fund, according to the register of interests. He has spoken about Russia in the Lords, in January declaring the idea that the Kremlin could order a conventional attack against a Nato member a “fantasy” and urging the British government to improve relations with Russia.
More than a dozen parliamentary questions have been tabled by the peer in the past year that touch on themes of interest to Russia, including defence policy, strategy in Syria, and the White Helmets, the rescue volunteers in Syria who have allegedly been targeted by Russia.
In 2013, Lord Truscott nominated Mr Putin for the Nobel peace prize. He is married to Svetlana Chernikov, who is understood to be the daughter of a Red Army colonel. Yesterday Lord Truscott told The Times that Russian Gold Fund was “not a Russian company. There is no Russian money in it. Plenty of British funds invest in Russia and other emerging markets, as do a number of major British companies.” He said he had no financial interests in Russia and no links to the Russian government.
“I believe that we should engage and work with Russia on many issues, including Syria,” he said. He declined to say whether Russian Gold Fund, which does not appear in Companies House or in other international open company registers, invested money in Russia, or why it was so named if it did not.
All the peers declared these interests in the members’ register, as the Lords’ code of conduct requires. The code and the official guide to it say : “A member . . . must not seek by parliamentary means to confer exclusive benefit on an outside body or person from which he or she receives payment or reward.
“Members are not otherwise debarred from participating in proceedings in regard to which they possess relevant interests, financial or non-financial; but such interests should be declared fully. In participating in such proceedings they should ensure that there is no conflict between their declared interests and the public interest.”
In light of Russia’s hostility, MPs are demanding that peers give up interests potentially linked to the Russian state.
Bob Seely, a Tory MP and member of the foreign affairs committee, said: “Should parliamentarians be ‘on the books’ of authoritarian states and their supposed proxies? Of course not. It must be noted that proxies can be formal or informal.
“Those peers who work for adversarial foreign powers should give up their right to sit in parliament. Will they? Of course not.”
Tom Brake, the Liberal Democrat foreign affairs spokesman, said: “Now is the time for those peers to divest themselves of interests in Russian companies unless they can prove their independence of the Russian state.
“It’s clear that the rules around transparency and lobbying in the Lords must be brought into the 21st century so that it is clear whether peers are speaking on behalf of the UK or representing interests linked to foreign powers.”
Duncan Hames, policy director at Transparency International UK, said: “Parliament needs to improve transparency about members’ financial interests to provide a greater deterrent against corrupt regimes using our representatives to influence friends in high places.”
The Times tried to reach Lord Ponsonby for comment. A House of Lords spokesman said the code was designed to ensure transparency and openness and was “kept under constant review to ensure it remains effective and appropriate, but there are no current plans to ban members from holding financial interests in Russia”.
The Russian State is continuing to persecute Mr Pugachev by manipulating the English legal system.
On October 23 2018 London’s High Court heard the latest stage of the Russian state’s case against Mr Pugachev.
The hearing took place despite the fact that at the moment there is no ruling of the Russian court against Mr Pugachev that has any legal force. This means that the Russian state – and the lawyers representing it in England through Hogan Lovells International LLP law firm — do not have any right to file any lawsuits or applications based on the decisions of the Russians courts in any other jurisdiction.
Moscow’s Arbitration Court has already issued a ruling that cancelled a previous decision finding Mr Pugachev responsible for the bankruptcy of Mezhprombank — a position that has been upheld by the Supreme Court of the Russian Federation. The Supreme Court of the Russian Federation must now issue a separate judicial order confirming the cancellation of the ruling against him, and Mr Pugachev filed an application with the Supreme Court to do so in September 2018.
The judge hearing the case on October 23 had given Mr Pugachev permission ahead of time to take part in the hearing via videolink from France, where he is now resident, and Mr Pugachev had made all the necessary technical checks in preparation. Despite all these efforts, it was not possible to make a connection with the court on October 23. For an hour, the English court said technical problems were to blame for the lack of connection. But later Judge Price’s clerk, Nichola Pierce, admitted that Judge Price at the last minute – after he had read Mr Pugachev’s statement of defense sent to the court – took the decision not to allow Mr Pugachev to participate in the hearing. During the hearing, Judge Price said that he had acquainted himself with Mr Pugachev’s position and “did not find anything useful in it for the court”. (The Guardian)
In the view of Mr Pugachev and his lawyers, these actions by the English court violate his right to a fair trial under Article 6 of the Convention on Human Rights.
The decision of the English court will be appealed.
Russian countess faces eviction as her billionaire banker ex who claims to be on a Putin death list is forced to sell £9million Chelsea mansion after judge rules it belongs to Moscow
Sergei Pugachev loses latest round of legal battle with Russian government
High Court ruled his £9million Chelsea home is property of Moscow
Ex-partner Alexandra Tolstoy and their three children must leave by January
Tycoon was once in Vladimir Putin’s inner circle and part of Russian elite
But they fell out after bank collapse and he claims president ‘wants him dead’
A Russian tycoon once known as ‘Vladimir Putin’s banker’ has been forced to hand over his £9million home after a judge ruled it belonged to the Russian state, meaning his former lover and their children face being made homeless.
Sergei Pugachev, who now claims Moscow want him dead, fought to keep his Chelsea home in the High Court battle which has been going on for four years.
The billionaire was a close ally of the Russian President and helped run his first election campaign, but their relationship has since crumbled.
He moved to London in 2011 and the property was home to his former partner Alexandra Tolstoy, 44, and their three children, who have been told to leave by January.
She previously lived in poverty in a tiny Soviet-era apartment in Moscow with her ex-husband, an Uzbek horseman.
But after meeting Mr Pugachev she experienced the best money could buy including huge properties in Cote d’Azur and the West Indies.
The Russian state has been pursuing him through the High Court claiming he illegally siphoned hundreds of millions of pounds from a government bailout of the Mezhprombank he co-founded.
Mr Pugachev, 55, denies the allegations and claims Moscow is trying to steal £11billion of his assets, including two shipyards and the world’s largest mine.
Mr Pugachev has previously been declared to be in contempt of court, with a two-year prison sentence left hanging over his head should he return to this country.
According to the Guardian, the court made an order compelling him to sell the home on Tuesday.
Mr Pugachev had been due to give evidence via video link but complained of ‘injustice’ after the connection failed.
The paper said he made a statement to the judge apologising for being in contempt of court, claiming he was on an ‘A-list’ of targets for Putin as one of his ‘worst personal enemies’.
Mr Pugachev added he had an ‘unofficial death sentence’ on his head.
He had been living in France for the past three years after being ordered to give up his passports in 2014 and having his assets frozen. He also claims ‘credible attempts’ had been made on his life in the UK.
The tycoon is in another legal battle with Russia in The Hague where he is suing the Federation for £11billion.
He claims he is being targeted because of his knowledge of state secrets.
The Guardian reported his witness statement claimed Putin wanted to buy Chelsea Football club to ‘increase his influence and raise Russia’s profile with ordinary British people’.
But the court ruled his statement ‘did not have anything useful to say’ in his defence.
His former wife Galina has also made a claim in the court over the property stating it is a ‘matrimonial asset’ but a decision has yet to be made.
Lats year the High Court ruled that the £90 million offshore trusts set up by Pugachev to provide for his children with Ms Tolstoy could be seized by the Russian state.
The 43-year-old former television presenter, a distant cousin of Russia author Leo, said it ‘destroyed’ her life, after the ruling also deprived her of a house in St Barts.
Her years with Pugachev have been described as a ‘kaleidoscope of private jets, yachts and the best hotels’.
As well as a large country house near Moscow, Alexandra had a suite in Claridge’s permanently at her disposal.
Speaking about last year’s ruling, she said: ‘I cried for two days when I heard. I lost our house in St Barts. My children are losing their home.
‘I was such a romantic. I’ve taken extraordinary risks in my life. I’ve always been reckless.
‘Until now, it’s paid off. But I was young then and had more energy. And I didn’t have the children.’
She has since described her ex-partner as a ‘tyrannical and paranoid bully’ who, she claims, effectively kept her prisoner in his spectacular homes – which he denies.
Countess Alexandra Tolstoy was just 25 when she first came to the public’s attention after joining a 5,000-mile horseback trek along the entire route of the Silk Road in 1999, just as the former USSR was opening up.
One of her local guides was the Uzbek showjumper Shamil Galimzyanov.
They fell in love in a tent on the Asian steppes and – to the amazement of her friends and family – were married at London’s Russian Orthodox Cathedral in 2003.
Despite her exotic name and family history, Alexandra is a Home Counties English rose, educated at Downe House, a school where the Duchess of Cambridge studied briefly.
But after their marriage fell apart, she started a TV career, presenting Alexandra Tolstoy’s Horse People for BBC2.
She then met Mr Pugachev in 2008 and he whisked her away to a life of yachts, chateaux in the South of France and St Barts.
