Russian court upholds $420mn ruling against former BTA Bank chairman

Russian court upholds $420mn ruling against former BTA Bank chairman
By bne IntelliNews March 15, 2017

The Moscow Commercial Court has granted a petition by Kazakhstan’s BTA Bank demanding that it uphold in Russia a ruling of London’s High Court of Justice ordering the collection of $420mn from the bank’s ex-chairman, Mukhtar Ablyazov, court records show. 

The Kazakh tycoon charged with embezzling BTA’s funds has allegedly stolen pension assets and personal savings as well as loans received from foreign financial institutions, causing damages estimated to total $7.5bn.

Eight years after BTA was nationalised in early 2009, the bank’s collapse has continued to have repercussions in the Kazakh banking sector. After years of searching for a buyer, it was eventually taken over by fellow Kazakh lender Kazkommertsbank (KKB), which in turn is now expected to merge with Halyk Bank

Meanwhile, BTA has been pursuing Ablyazov and his associates through the international courts. In November 2012, BTA asked the UK’s High Court of Justice to grant its claim against Ablyazov, former BTA board chairman Roman Solodchenko, companies TuranAlem Capital, AMK-Invest, Drey Associates Limited, Interfunding Facilities Limited and Zrl Beteiligungs AG. 

Ablyazov initially fled to the UK after the Kazakh government took over BTA in 2009 and the bank came under the control of its sovereign wealth fund Samruk-Kazyna. The government accused Ablyazov of siphoning off $5bn from the bank. Ablyazov was granted political asylum in the UK, but escaped to France after a UK court issued an order to arrest him for contempt of court.

In 2013, Ablyazov was arrested in France after 18 months in hiding. He was released from jail on December 9 after France's highest administrative court cancelled an order for his extradition to Russia, based on Ablyazov’s claims that the whole case against him is politically motivated. Extradition to Russia would have meant his immediate surrendering to Kazakhstan, Ablyazov had claimed.

Five years after BTA’s takeover by Samruk-Kazyna, KKB and its owner, Kenes Rakishev, each acquired 46.5% in BTA from Samruk-Kazyna in 2014. As part of that deal, KKB acquired BTA bad debts left over from the financial crisis; BTA’s non-performing loans accounted for more than 80% of its loan portfolio at the time of the acquisition.

BTA’s shares were later removed from KKB’s consolidated statements via Rakishev and other KKB’s shareholders’ direct purchases of BTA’s ordinary shares in 2016. However, KKB is now planning a merger with Halyk Bank, which could be partly due to mounting troubles stemming from BTA’s bad loans.