Hogan Lovells Wins Court Battle to Force Pugachev to Disclose Trust Assets
27 February 2015
LONDON, 27 February 2015 – Hogan Lovells has won a groundbreaking judgment in the Court of Appeal today, which requires Sergei Pugachev to disclose further information about a number of discretionary trusts he has been fighting to withhold since their existence was revealed in Court last year.
Mr Pugachev has been ordered to disclose information in relation to the discretionary trusts established in New Zealand, in which he disclosed an interest as a discretionary beneficiary as part of his asset disclosure pursuant to a worldwide freezing order granted in July 2014. The required information includes details of the assets held within the trusts as well as copies of the trust deeds. Up until this point, he has refused to provide any further information as regards either the terms of the trusts or the assets held within the trusts. This is despite the fact that Mr Pugachev is known to live in houses in London owned by the trusts and appears to be dependent on income from the trusts in order to meet every aspect of his day-to-day expenditure.
Hogan Lovells is acting on behalf of the Deposit Insurance Agency (DIA), the liquidator of Mr Pugachev’s former bank Mezhprombank, which collapsed in 2010 with a deficit of over US$2 billion. Mezhprombank was formerly one of the largest privately owned commercial banks in Russia.
In the leading judgment, Lord Justice Lewison said that the DIA had "raised issues which call for fuller explanation". Rejecting Mr Pugachev's arguments that he should not be required to give further disclosure in relation to the trusts, the Court of Appeal expressed concern that "sophisticated and wily operators should not be able to make themselves immune to the courts' orders". The judgment is an important precedent which is likely to have widespread application in other freezing injunction cases.
The DIA originally commenced proceedings against Mr Pugachev in Russia in December 2013 after he was accused of helping himself to over US$2 billion from Mezhprombank, while allegedly controlling and beneficially owning it.
Civil proceedings were subsequently initiated against Mr Pugachev in England in July 2014. At the same time, an injunction freezing Mr Pugachev's worldwide assets up to the value of £1.17 billion, and requiring him to disclose all his assets worth £10,000 or more, was granted by the High Court of Justice on 11 July 2014 in support of the proceedings in Russia.
Separate criminal proceedings are pending against Mr Pugachev in relation to the Bank’s insolvency in Russia and Mr Pugachev is currently the subject of an Interpol "red notice".
The Hogan Lovells team includes partners Michael Roberts (London) and Alexei Dudko (Moscow) and Of Counsel Rebecca Wales (London)