BTA Bank v Ablyazov - Hogan Lovells is Successful in Significant Milestone in US$6bn Fraud Case

London, 6 November 2012 – Hogan Lovells has been successful on behalf of BTA Bank in a significant milestone in one of the biggest fraud cases ever to come before the English courts. 

As a result of a Court of Appeal decision handed down today Mukhtar Ablyazov is to be debarred from defending BTA Bank's claims with a combined value of in excess of US$6 billion.

This will permit the bank to enter judgment against him.  The bank will now move to enforce against his assets in order to recoup money for the Bank and its creditors; it will also press ahead against the remaining defendants with the trial of three of the actions that is to start in the High Court this week.

Judgment was handed down today from the Court of Appeal in three appeals brought by Mr Ablyazov: (i) against a judgment of Mr Justice Teare finding him guilty of three counts of contempt of court, including lying about his wealth and dealing with his assets in breach of a freezing order (ii) against the three concurrent 22-month custodial sentences imposed against him as a result, and (iii) against the 'unless order' whereby Mr Ablyazov is to be debarred from defending the claims made against him, having failed to return to the country and hand himself over to the authorities and having refused to give proper disclosure of his assets to the bank.

Chris Hardman, lead partner on the case at Hogan Lovells, commented: "We welcome this important decision. It is a key step for an important client of the firm that has invested heavily in the English legal system in its attempts to recover the huge sums that it claims were wrongfully taken from it by Mr Ablyazov and his associates.   As the BTA Bank proceedings have made abundantly clear, the English courts continue to show that they are willing to develop the application of the law in an attempt to ensure that their orders are not flouted by determined, well-funded, but unscrupulous defendants. 

"It is inevitable that frauds will continue to be perpetrated and concealed in ever more ingenious ways; this case goes to show that the courts will keep pace with the modern means deployed by international fraudsters to hide evidence and assets.   As the Court of Appeal judgment states today, Mr Ablyazov has had fair hearings and access to the court, to an extraordinary degree, even if he complains about the results. His conduct in giving false testimony, relying on forged documents, fleeing from the committal order and remaining unwilling to face up to the litigation has created a substantial risk to justice.  Today's decision is both fair and necessary."

The judgment states: "It can be said that Mr Ablyazov has to the end been granted the opportunity for trial, if he complies with the court's orders, but has chosen to go his own way, and to forfeit the opportunities which have been given him……A litigant who has demonstrated that he is determined to pursue proceedings with the object of preventing a fair trial has forfeited his part to take part in a trial…..Mr Ablyazov has been unconscionable in his refusal to abide by the orders of the court….It cannot be just or fair, or proportionate, to permit a contemnor to avoid the consequences of his contempt by the expedient of disappearing from sight (but not from the ability to communicate with his lawyers)……It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr Ablyazov."

Background to the case

Hogan Lovells has been acting for BTA Bank (one of the largest banks in Kazakhstan) since May 2009 in a series of major fraud cases before the English Courts.  A total of ten claims have been issued in the Commercial Court and Chancery Divisions against Mukhtar Ablyazov and others for a total of approximately US$6 billion (including interest). 

The Bank's losses, in early 2009, were thought to be in excess of US$10 billion and necessitated a major cross-border restructuring in order to save the Bank.  As part of that restructuring, creditors (mainly international financial institutions) agreed to write off significant proportions of their claims against the Bank in return for a right to approximately 50% of the recoveries made by the Bank through litigation and other asset recovery efforts. 

In a previous High Court decision in February this year Mr Ablyazov was found guilty of numerous counts of contempt of court and was given 3 concurrent sentences of 22 months in prison.  However he went on the run to avoid his sentence and his whereabouts is currently unknown.  The contempt of court alleged by BTA included the disposal of assets and misleading the court on oath by denying ownership of a number of valuable properties in the UK - including a nine-bedroom mansion on The Bishop's Avenue in Hampstead worth around £15 million and a 100-acre estate near Windsor with a value of nearly £20 million - and several valuable offshore companies.

Last week Mr Ablyazov's lawyers made a last minute attempt to derail the case by asking Mr Justice Teare to stand down from the trial on the basis of apparent bias.  Mr Justice Teare has refused to stand aside and the trial will go ahead as planned.

The litigation has involved a number of developments in English law which are of significant importance in the context of cross-border fraud litigation.  In a series of Court of Appeal judgments the English Courts have provided significant guidance in a number of crucial areas such as Receivership Orders, Freezing Orders, and Norwich Pharmacal disclosure orders and access to email accounts.

Hogan Lovells has been at the centre of the significant asset recovery exercise involved in the BTA case using a team primarily based in London but has also relying heavily on support from its Moscow office.  The firm has also managed very extensive litigation in jurisdictions such as Cyprus and the BVI which has been central to the gathering of evidence and the freezing of assets. 


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