Clare Nuttall in Almaty -
A UK court has turned down an appeal from former BTA Bank chief, Mukhtar Ablyazov, upholding a previous ruling by the British High Court that a receivership order be placed on the Kazakh oligarch's assets.
Ablyazov is accused of embezzling around $10bn from the bank, which was nationalised in February 2009. The Kazakh government is pursuing Ablyazov through the British courts. Four fraud charges totalling $1.8bn have been brought against him in the UK so far, and further claims worth up to $4bn are expected.
Ablyazov fled Kazakhstan in March 2009 to avoid arrest. He maintains his innocence, saying the fraud accusations were politically motivated. He is currently seeking asylum in the UK.
After its September 16 hearing, the Court of Appeal upheld a decision by High Court judge Mr Justice Teare, following hearings in May and June, that the receivership order be put in place. The judgment from the Court of Appeal said that it did not find Mr Justice Teare's concerns over Ablyazov's honesty "in the least surprising."
"Those who take up residence in this country must understand that judges of the Commercial Court do not make Freezing Orders lightly; they only do so where there is a good arguable case against the defendant and, where the allegations are (as in this case) allegations of fraudulent conduct, where there is a good arguable case of fraud," reads the Court of Appeal judgement.
This follows Mr Justice Teare's judgement, which stated: "I am not persuaded that Mr Ablyazov has indeed 'bared his soul' as to his assets. The most that I can say is that there is a reasoned suspicion that he has not disclosed all his assets."
Ablyazov had failed to disclose his ownership of the Eurasia Tower in Moscow, which he acquired in 2004. "An asset the size of Canary Wharf can scarcely have slipped Mr Ablyazov's mind," the Court of Appeal judgment wryly notes.
Mr Justice Teare's ruling that Ablyazov's passport should continue to be retained by the court until the receivers' first report is due has also been upheld. The court has held Ablyazov's passport since November 2009.
Receivership orders are used infrequently. It is particularly unusual for receivers to be appointed before a trial begins. This is also the largest case of its kind, since Ablyazov is believed to have assets worth $5bn. "Receivership orders and freezing injunctions are the nuclear weapons in the court's armoury to try to ensure that judgments bite," comments Professor Mark Watson-Gandy, a barrister at law firm Thirteen Old Square Chambers. "Receiving orders are fairly rare because this is an expensive process and difficult to unwind. The Ablyazov ruling shows when this step can be taken. This is a good day for lawyers, and a bad day for the super rich."
Kazakh government officials say that BTA was on the brink of collapse in early 2009 when the state was forced to step in to nationalise and re-finance the bank. A debt restructuring deal has since been agreed with creditors.
A former government minister, Ablyazov has had a turbulent relationship with the regime of President Nursultan Nazarbayev. He was a co-founder of the Democratic Choice of Kazakhstan, a political movement comprising many high-level officials, and probably the most credible opposition force since Kazakhstan gained its independence.
In July 2002, Ablyazov was sentenced to six years in prison for abuse of ministerial power, but let out after just one year. Two years later, he became chairman of BTA's board of directors. Under Ablyazov's leadership, the bank expanded rapidly, becoming one of the largest banks in the CIS by asset size. However, the growth was fuelled by international borrowing, which abruptly dried up after the onset of the credit crunch in July 2007.
In addition to the legal procedures in the UK, in Russia the investigative committee of the Interior Ministry has issued a warrant for Ablyazov's arrest. He has been charged on four counts of financial crime, one of them amounting to $5bn.
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