On June 18, 2020, the Hague Tribunal made a ruling based on the hearings held last November in Paris.
The tribunal acknowledged that Mr Pugachev’s status as a legal citizen of France, allows him to rely on the protection of investor rights provided by the Bilateral Investment Treaty between France and Russia, but, nevertheless, this award did not completely suit Mr. Pugachev and on November 2, 2020, his lawyers filed an appeal with the TRIBUNAL SUPERIOR DE JUSTICIA DE MADRID.
Given that two arbitrators from the Tribunal panel refused to rule on the part concerning the claim, Mr. Pugachev’s lawyers believe that the award of June 18, 2020 is incomplete and should be amended.
Since, under the procedural terms of the Tribunal, the city of Madrid was designated as the place of arbitration, the appeal was filed with the Spanish court – TRIBUNAL SUPERIOR DE JUSTICIA DE MADRID.
Today it became known about the decision of the last session of the Hague Tribunal on the claim of Sergei Pugachev against the Russian Federation, which examined the powers of the Tribunal to consider the claim.
The lawsuit against Russia on the basis of the Agreement between the Government of the USSR and the Government of the French Republic on mutual encouragement and mutual protection of capital investments dated July 4, 1989 (hereinafter referred to as the Agreement) in connection with the expropriation by the Russian Federation of Mr Pugachev’s assets was filed by Mr. Pugachev in 2015.
Jurisdiction hearings were held in Paris in November 2019, and the decision became known only today.
Two out of three arbitrators considered that the Tribunal did not have jurisdiction to consider the claim.
The Tribunal in its decision recognized many of the arguments of Mr. Pugachev, but unfortunately, deviated from the well established principle in judicial practice according to which the Agreement protects the investor at the time of expropriation, and not at the time of the investment.
One of the arbitrators does not agree with the opinions of the other two and wrote his dissenting opinion, in which he pointed out that the interpretation of citizenship issues by the other two arbitrators is incompatible both with the text of the Agreement itself and with established case law.
This decision does not mean termination of the proceedings of Mr. Pugachev v. Russia.
The decision of the Tribunal will be appealed within the established procedural timelines.
Mr. Pugachev’s lawyers are confident that this decision will be set aside.
It was late in the evening in May 2015, and Sergei Pugachev was flicking through an old family photo album he’d found from 13 years ago or more. In one picture from a birthday party at his Moscow dacha, his son Viktor keeps his eyes downcast as one of Vladimir Putin’s daughter’s smiles and whispers in his ear. In another, Viktor and his other son, Alexander, are posing on a staircase in the Kremlin presidential library with Putin’s two daughters.
We were sitting in the kitchen of Pugachev’s latest residence, a three-storey townhouse in well-heeled Chelsea, southwest London. The late-evening light glanced in through the cathedral-sized windows and birds chirped in the trees outside. The high-powered life Pugachev had once enjoyed in Moscow — the secret deal-making, the “understandings” between friends in the Kremlin corridors of power — seemed a world away. But Moscow’s influence was still lurking like a shadow outside his door.
The day before, Pugachev had been forced to seek the protection of the UK counter-terrorism police. His bodyguards had found suspicious-looking boxes with protruding wires taped underneath his Rolls-Royce (later found to be tracking devices), as well as on the car used to transport his three youngest children to school.
Sergei Pugachev with his partner, Alexandra Tolstoy
Now, on the wall of the Pugachevs’ sitting room, behind the rocking horse and across from the family portraits, the SO15 counter-terrorism command had installed a grey box containing an alarm that could be activated in the event of attack.
Fifteen years before, Pugachev, a Russian Orthodox believer with a dark beard and broad grin, had been a Kremlin insider who’d manoeuvred endlessly behind the scenes to help bring Vladimir Putin to power. Once known as the Kremlin’s banker, he’d been close to the family of Russia’s first president, Boris Yeltsin. For years he’d seemed untouchable. But now the Kremlin machine he’d once been part of had turned against him. First, the Kremlin had moved in on his business empire, taking it for itself. Pugachev had fled Russia, ending up in Britain, but he still hadn’t felt safe.
And so one day in June 2015, a few weeks after we’d met in his Chelsea home, Pugachev was suddenly no longer in the UK. His phones had all been switched off, ditched by the wayside as he ran. He’d ignored the court orders forbidding him to leave the country. He hadn’t even told his partner and mother of his three children, the London socialite Alexandra Tolstoy, who was left waiting late into the night for him to appear at her father’s 80th birthday party. He’d fled to the relative safety of his villa high in the hills above the bay of Nice, a fortress surrounded by a high iron fence with a team of bodyguards and security cameras at every turn.
Before things had got tough in London, Pugachev had never given an interview on the record in his life. Few knew who he was. Most people believed it was the recently deceased oligarch Boris Berezovsky who had helped bring Putin to power — when in fact Pugachev had treated Putin as his protégé and been instrumental in making him president in 2000.
Putin and Pugachev in Moscow
Now he was speaking out. He and other inner-circle sources I interviewed laid bare how Putin came to power 20 years ago and the rise of the tight-knit clan of KGB men surrounding him. First they enriched themselves and then they began to pose a threat to the West. And there is no sign of it stopping: earlier this month Putin set in train constitutional changes that will enable him to stay in power until 2036 — an autocrat in all but name.
“These people, they are mutants,” said Pugachev. “They are a mixture of Homo sovieticus with the wild capitalists of the past 20 years. They have stolen so much to fill their pockets. All their families live somewhere in London.”
What emerged as a result of Putin’s rise and the KGB takeover not only of the country’s political and legal systems but also the economy was a regime in which the billions of dollars at Putin’s cronies’ disposal were to be actively used to undermine and corrupt the institutions and democracies of the West.
The inner circle
The former president Boris Yeltsin at Putin’s inauguration, 2000
As Vladimir Putin strode alone through the vaulted halls of the Grand Kremlin Palace, he seemed dwarfed by the majesty of the presidential inauguration. Solemn, with a slight smile, downcast gaze and light, lopsided gait, he was dressed in a dark suit that differed little from the garb of an everyday office worker. He’d been trained to be bland and unremarkable, to blend in anywhere. But on this day trumpeters dressed in an imperial uniform of white and gold heralded his entrance, while the state officials who thronged the gilded palace rooms applauded his every step down the red carpet into the glittering Andreyevsky Hall.
It was May 7, 2000, and the kandidat rezident (the spy candidate, cast as a patriot who would restore the Russian state) had arrived in the Kremlin. Putin, a former KGB officer who only eight months before had been just another faceless bureaucrat, was about to take on the mantle of Russian president.
Unnoticed in the mass of officials were the KGB men Putin had brought with him from St Petersburg, where he had been deputy mayor. Among them were KGB-linked businessmen such as Yury Kovalchuk, the former physicist who’d become the largest shareholder in Bank Rossiya, a St Petersburg bank created by the Communist Party in the twilight of the Soviet Union. There too was Gennady Timchenko, an alleged one-time KGB operative who’d worked closely with Putin and held a near monopoly on the city’s oil exports. (Timchenko, however, has denied working for the KGB.) And there was Nikolai Patrushev, the gnarled head of the FSB, successor to the KGB. A year older than Putin, he’d served with him in the St Petersburg KGB’s counter-intelligence division in the late 1970s.
From left: Vladimir Yakunin, Gennady Timchenko and Igor Sechin
Perhaps the closest to the new president, though, was Igor Sechin. Eight years younger than Putin, he had followed him like a shadow ever since Putin’s appointment as deputy mayor in St Petersburg. He had served as his secretary, standing like a sentry behind a podium in the anteroom leading to Putin’s office. He controlled access to Putin and all the papers Putin saw.
Eventually, said Pugachev, this inner circle made Putin. “They changed him into someone else.” Putin had begun his presidency appearing to pursue liberal economic reforms and a closer relationship with the West. But the initial steps turned out to be short-lived and illusory. “He got disappointed in the US and then he just wanted to get rich,” said Pugachev. The influence of the St Petersburg security men, steeped in the zero-sum thinking of the Cold War, soon began to outweigh all else. The economy was a weapon to be harnessed to further their own power.
All the while Pugachev moved in the shadows watching over his protégé. Pugachev said that in Putin’s first year in office he spent £30m on meeting the Putin family’s every need, down to buying the cutlery they used in their home. He bought apartments for prosecutors to make sure they were under the president’s — and his — control.
Pugachev claimed that he was trying to bring an end to the era when the oligarchs of the Yeltsin years believed they controlled the Kremlin by giving “donations” to Kremlin officials — not realising, perhaps, that essentially he was doing exactly the same.
But the KGB men had long been looking at the situation intently. Vladimir Yakunin, a bluff former KGB officer who’d been close to Putin since the early 1990s, had prepared a study on the ownership of the Russian economy. It found that in 1998-99 almost 50% of the nation’s gross domestic product was produced by companies owned by just eight families. “All the profits were going into private pockets. No taxes were paid,” says Yakunin now, nearly 20 years later. “It was looting, pure and simple. Without greater state involvement, it was clear to me it was a path to nowhere.”
For Putin’s security men, the Yeltsin-era oligarchs’ sending of cash to the West provided a useful argument for shoring up their own power. They could claim that the dominance of the oligarchs was a threat to national security, though it was mostly a threat to their own positions. They saw themselves as the anointed guardians of Russia’s restoration as an imperial power, and believed the resurgence of the state and their own fates were inextricably — and conveniently — linked.
So those close to Putin, his old allies and former KGB associates, began to seize Russia’s prize assets for themselves. One of those who went on to be most successful was Timchenko, who had worked with Putin in St Petersburg — and, some associates suggested, may have had links to him even earlier than that when Putin served in the KGB in Dresden, East Germany.
For a time the rise of Gunvor, an oil-trading company part-owned by Timchenko, was one of the industry’s great mysteries. At first few noticed when Rosneft, a Russian state oil company run by Putin’s ally Sechin, began redirecting the bulk of its exports through Gunvor. Then the state-controlled gas and oil company Gazprom also began awarding large contracts to Gunvor. Cowed by the Kremlin’s growing might, other oil majors, anxious to curry favour, followed suit. Within four years, Gunvor was trading 30% of all seaborne oil exports from Russia.
By 2008 it had become the world’s third-biggest oil trader, with revenues of £35bn. But who owned it? Where did the profits go?
On paper Gunvor was owned by Timchenko and his Swedish business partner, Torbjorn Tornqvist, but also by a third shareholder whose name, the oil trader initially said, could not be revealed. Of all Putin’s close KGB cohorts who were now rising in business, Timchenko had kept the lowest profile. He operated in a world shrouded in secrecy, shuttling between Moscow and Switzerland, where he lived in a mansion surrounded by manicured gardens and a high, guarded fence overlooking Lake Geneva. The business he handled was so sensitive that he never used email. If he spoke by mobile phone, he did so in the full awareness that he was being listened to. He’d never given an interview until 2008, when Gunvor’s meteoric rise forced him into the light. At that point only one photograph of him had ever been seen.
In the early days Timchenko was kept almost invisible, even to those closest to Putin. Pugachev had seen him only once. “Putin had always hidden him from me,” he said. One wintry evening he’d arrived at Putin’s residence outside Moscow to find Timchenko in the kitchen. Putin had ordered Timchenko to wait outside in the snow while they discussed business. It was as if he was trying to demonstrate to Pugachev that Timchenko wasn’t important to him. But to Pugachev it revealed the sensitivity of the relationship between the two men.
The reason for the apparent secrecy became clear to Pugachev when a banker flew in to see him from Switzerland towards the end of 2003. The banker asked him about Timchenko, and said he’d been told that he was a holder of funds for the president: “He told me, ‘There’s a guy named Timchenko and he’s brought us a huge amount of money.’ He told me all this money is Putin’s,” Pugachev said.
Timchenko has always strongly denied that Gunvor’s success had anything to do with the president, insisting it was down to his own business savvy. Putin also swatted away such allegations, once telling reporters they were nonsense “picked out of someone’s nose and smeared on bits of paper”.
For Pugachev, however, the sensitivity and secrecy surrounding Timchenko could mean only one thing: at the beginning of Putin’s presidency, he was the first business ally to hold funds for him.
For two of Timchenko’s former KGB associates and two close Putin allies, the root of Gunvor’s success could lie only in financial connections with the Russian president. “Putin’s money, of course it’s there,” one of them told me. “How else do you think Timchenko became such a billionaire?”
“When Gunvor was created it was 100% Putin’s company,” said a Russian tycoon close to Putin. “Timchenko is just the holder of a purse that has $10bn in its account. He might differ over how much of it is his and how much of it is Putin’s, but really it is all the same.”
Later, the US Treasury Department said flatly that “Putin has investments in Gunvor and may have access to Gunvor funds.” Timchenko, again denying any connection between Gunvor and Putin, called American sanctions against the company no more than an attempt to put pressure on the Russian regime. He had never held or managed assets for Putin, he said.
As with others of the inner circle, Timchenko’s rise was about a lot more than the president’s personal finances. It was about creating a slush fund for Putin’s KGB clan, aimed at preserving and projecting their power. “Of course, in Timchenko’s activities there are some interests of Putin,” said a former senior KGB officer, an associate of the Geneva money men. “But this is not necessarily in the form of some personal money. This can be black cash for funding party activities or a charity fund that can influence the electoral situation. It can be strategic resources.” Putin’s people were replicating the KGB-run systems of the past, in which oil exports had been a key source of black cash to fund the influence campaigns of the Communist Party and clandestine operations abroad.
While the fortunes of Putin’s KGB cohort were rising, men like Pugachev were on the way out. He had become an anachronism, a symbol of a different era, of the Yeltsin years and the transition to Putin. The KGB men had, in Pugachev’s words, “taken over like a tsunami”.
Some time in Putin’s second term Pugachev let go of his office in the Kremlin. He didn’t seem to need it any more and it felt too conspicuous. He’d remained close to some degree with Putin, helping organise a vacation for him and Prince Albert of Monaco in the summer of 2007 in the Siberian wilderness region of Tuva. There the two men fished in the Yenisei River and Putin, famously, posed topless, dressed only in green khaki trousers and wielding a fishing rod.
Angling for power: Putin in the Yenisei River, 2007
Yet Pugachev had been unable to kowtow to Putin like the yes-men around him. Always irreverent, he’d often told him what he thought. There’d always been a friction between them, as if Putin resented knowing he was in debt to Pugachev for helping bring him to power.
In the summer of 2008 he received a call from Putin asking him to stump up £270m in loans to help out Putin’s childhood friend Arkady Rotenberg. “He told me, ‘It’s only a loan. It will be paid back to you in six months,’” said Pugachev. Rotenberg had grown up with Putin scrapping on the streets of Leningrad, and then training together at the same judo gym. Although Rotenberg’s business interests had grown after Putin took the presidency, he wasn’t widely known. But that spring Rotenberg acquired a series of construction companies from Gazprom and gathered them under a holding company, Stroigazmontazh. Soon afterwards, Gazprom awarded Stroigazmontazh a multibillion-pound pipeline contract. The deal would make him a billionaire.
Martial law: Putin, centre, with Arkady Rotenberg, left, and another judo compatriot, c1985
The only problem was that by the summer Rotenberg still hadn’t been able to come up with the cash to pay Gazprom for the construction companies. It was then that Putin called Pugachev, who said he’d readily assisted. Putin’s direct interest in the matter made it clear to Pugachev who was really behind Rotenberg’s construction business. “Putin wanted to bring Rotenberg in because he really could control him,” said Pugachev. “He was absolutely his.”
Rotenberg has denied his rising fortune had anything to do with his friendship with Putin. But he fast joined the ranks of Timchenko, Sechin and Kovalchuk as one of the close Putin allies taking over ever greater swathes of the economy. This was the final favour Pugachev did for Putin before he was suddenly thrown out in the cold. When the 2008-09 financial crisis ripped through Russia’s banking system only months after he lent Rotenberg the money, Pugachev found himself in trouble.
The financial institution Mezhprombank, which Pugachev had co-founded (but claimed no longer to be a direct owner of), was left deeply in the red. At first Russia’s central bank had stepped in swiftly, as it had across the entire crisis-hit Russian banking system, providing £1.1bn in bailout loans to keep Mezhprombank afloat. But by summer 2010, when Mezhprombank had still not paid down the central bank’s support, the debt became a mechanism by which Putin sought to seize control of two shipyards owned by Pugachev: Northern Shipyard and Baltiysky Zavod. Putin wanted to create a state shipbuilding corporation.
Then, in October 2010, the central bank suddenly revoked Mezhprombank’s licence after it missed an interest payment. It filed suit to seize the shipyard stakes, and a Moscow court agreed behind closed doors to their sale for a fraction of their value to the state-controlled United Shipbuilding Corporation.
Once again the court system had allowed Putin’s allies to acquire strategic assets on the cheap.
Pugachev was soon facing the loss of the rest of his assets. The state began a criminal investigation alleging that he had caused Mezhprombank’s bankruptcy when he transferred £450m from an account he held at the bank into a Swiss account at the height of the crisis in 2008. The man who’d manoeuvred to bring Putin to the Kremlin had become expendable. Pugachev no longer fitted the regime’s objectives; he was no longer judged to be sufficiently loyal.
Russians in London
In September 2014, we were sitting in Pugachev’s office in Knightsbridge, central London, a playground for Russia’s rich. Pugachev said he wished he’d never rented an office there. “It’s disgusting,” he said. The concentration of Russian cash in the square mile around him was a bitter reminder of how deep Russia’s reach into the London elite had become.
The power of the Russian cash that had poured into Europe over the past decade was also becoming visible in the rifts between European Union countries over how far economic sanctions, imposed against Russia after its invasion of Crimea, should go. In the UK, a Foreign Office official was photographed with a briefing paper arguing that Britain must not “close London’s financial centre to Russians”.
For Pugachev, the danger was clear. The system of black cash to corrupt and buy off officials had extended to all the Russian billionaires who acted as fronts at the Kremlin’s command. “They all get calls to send money for this and for that. They all say, ‘We’ll give it. What else do you need?’ This is the system. It all depends on the first person, because he has unlimited power.”
For Pugachev, his manoeuvring to help propel Putin to power 20 years ago is now a constant source of remorse and regret. “I’ve learnt an important lesson,” he said when we talked at his home in France. “And that is: power is sacred. We all thought the people weren’t ready [for full democracy], and we would install Putin . . . Of course, we thought it was cool. We thought we’d saved the country from the communists.”
In the rush to help install Putin, though, Pugachev had ignored warnings that appointing someone from the KGB was “to enter a vicious circle”.
Those who believed they were working to introduce a free market and democracy had underestimated the enduring power of the security men.
“This is the tragedy of Russia,” said Pugachev.
Adapted from Putin’s People: How the KGB Took Back Russia and Then Took on the West by Catherine Belton (William Collins £25)
UK pubcaster BBC2 has picked up two factual shows detailing the lives of the super rich, titled Inside Monaco and The Countess & The Russian Billionaire.
Three-parter Inside Monaco will cover the season of grand events Monaco is famous for: the Grand Prix weekend, Red Cross Ball and the international yacht show. It sheds light on the amount of work that goes on behind the scenes to make this jet-set destination relevant to today’s rich and famous.
London-based indie Spun Gold TV and UK prodco Whisper will jointly develop the project for BBC2. Bridget Boseley, Jonathan Smith, Sunil Patel and Richard Gort will exec produce the project, with Michael Waldman directing.
Stand-alone doc The Countess & The Russian Billionaire steps inside the secret world of Russian oligarch Sergei Pugachev and his British partner, Countess Alexandra Tolstoy.
Filmed in the UK, France and Russia, it tells the story of their romance, unimaginable wealth and privileged lifestyle. Sergei, once known as Putin’s banker, amassed a US$15bn fortune, owning one of Russia’s largest private banks, shipyards, a coal mine and designer brands until he fell out of favour with the president.
With his empire now at risk from the Russian government and threats made to his life, Sergei fled to his chateau in France in a bid to fight back.
The Countess & the Russian Billionaire is produced by UK prodco Summer Films, with Lucy Hilman and Sam Whittaker both exec producing and directing.
INVESTIGATION – The Russian billionaire used to be the owner of shipyards, coal mines and of Hédiard. Fallen from grace, tracked by the Russian justice, and also by the British, he contends that he was expropriated. We have met the “Tsar”’s former advisor, who is now seeking remedy before a tribunal in Paris.
For a long time he used to be known as “Putin’s banker”. Today, the banker has turned against his “client”, and demands nothing less than 12 billion dollars from the latter. This stupendous amount is being claimed from the Russian Federation and, thus, from Vladimir Putin, because according to the Claimant, “Putin is the State”. The man who dares to defy the almighty Russian president is Sergey Pugachev, a fallen oligarch and a longtime citizen of France. It is in his capacity as a French citizen that he shall fight the next round of this power struggle on Tuesday 12 November in Paris — the struggle that aims to recover his expropriated assets’ value.
In the busy crowd of Russian oligarchs there are those who are still at the sovereign’s court, those fallen from grace and those who disappeared under more or less mysterious circumstances. Sergei Viktorovich Pugachev used to be the owner of the delicatessen brand Hédiard and, through his son Alexander, of the daily newspaper France Soir. He is now preparing to take part in a hearing of the International Arbitration Court of The Hague, commencing this Tuesday. Four days of judicial confrontation, taking place in Paris rather than in the Netherlands. “This was done to ensure the safety of a French citizen”, says Sergei Pugachev.
The former banker has arrived by plane from Nice, where he lives, and has offered to meet Le Figaro’s journalists in a cosy salon of a luxury hotel in Paris. The man is tall and slender, casually dressed in a leather jacket, a dark jumper and jeans. His beard and moustache are trimmed shorter than in the 2000s, when his face invariably reminded one of Nicholas II. He comes accompanied by his body guard, who is sporting a conspicuous earpiece and sits down a few meters away. “I have been receiving death threats for years”, Pugachev explains.
In 2015, when he was still living in London with Alexandra Tolstoy, the mother of his three younger children, strange boxes were discovered under his car. He believes them to be explosive devices; they might have been beacons. The case was referred to Scotland Yard, then brought before a French court. The investigation is still ongoing. “My lawyers here, Pugachev says in a bantering manner, have figured out they were being followed. As to me, I’m already used to it, you know.” Unrelenting intimidation? Genuine desire to have Pugachev killed? When you are up against the Kremlin, no hypothesis can be excluded.
But how did the former owner of Hédiard get himself in this most uncomfortable situation? We ask him, and he tells us, his speech somewhat harried. Sergei Viktorovich, 56 years old, has several lives behind him. He understands French, is fluent in English, but he prefers to use the language of Pushkin when pleading his case. “I was close to Patriarch Alexis (head of the Russian Orthodox Church from 1990 to his passing in 2008), he knew my father”, Pugachev begins. “It is through him that I came to be Boris Yeltsin’s adviser”. Pugachev had not yet turned thirty, when he founded “the first private bank” in post-Soviet Russia: the International Industrial Bank a.k.a. Mezhprombank. The financier denies having been the Patriarchate’s banker, leave alone having laundered the Church’s money. This, according to him, is a “fake story”, that is being spread around.
Having become part of the “Family”, that is President Yeltsin’s inner circle, Sergey Pugachev moved to a dacha, one of those lavish villas built in the suburbs of Moscow for the Soviet establishment. There, in the Gorki residential area, the young banker and councillor to the reigning sovereign had a neighbour: one Vladimir Putin, the new head of FSB. The two men got acquainted. For whoever would be inclined to doubt his close relationship with “Volodia”, Pugachev has posted on his personal website photographs of a birthday party and a snooker game at Brezhnev’s former country house. The picture shows Pugachev’s two elder sons, born from his marriage with Galina, still in their teens, keeping company to Masha and Katia, Putin’s daughters. The latter are a taboo subject in Russia.
He may be ten years younger than Putin, but Sergey Pugachev claims to have brought the king to power. He insists that he was the one to mention the FSB chief to the Yeltsin clan, as a potential prime minister and successor to the declining president. Against the widespread clichés, Pugachev depicts Putin as a weakly character, “incapable of saying no” — one who would always side with the most powerful clan at a given moment. A description at odds with his own assertion that “today all the high-ranking officials, governors, former KGB men — they have all been appointed by Putin; I was one who owed nothing to him”.
The businessman is brimming with memories; so much so that it is sometimes hard to keep track of the precise chronology of his various personal interactions with Putin. One such crucial exchange, “dragging on until 3 am”, took place in 2009 in the President’s residence of Novo-Ogarevo. “He failed to realise that the situation in the country had changed. He kept telling me that the people needed a Tsar.” On that day the oligarch tells the Tsar that he wants to leave the country and settle in France, where he owns, among other assets, Hédiard, purchased in 2007. According to him, his Russian financial and industrial empire, employing 300 000 people, amounted to 15 billion dollars back then. “I understand that Putin did not want my assets to end up in the hands of the wrong people.” According to Pugachev, quite a number of documents analysed by his innumerable lawyers — who are Russian, British, American and French — clearly show that back then the State was still prepared to buy his assets from him. “The choice morsels were my shipyards in Petersburg, with their order book of 60 billion dollars” — the very shipyards that were to build the Mistral-class combat ships bought from France, before François Hollande repudiated the contract in response to Russia’s annexation of the Crimea. From then on, Pugachev says, Putin’s entourage, “the pack”, were set on grabbing his assets.
Problems started to pile up. Mezhprombank went bankrupt. The Russian justice allegedly established Pugachev’s subsidiary liability for nearly a billion dollars. The oligarch swears that he “had nothing to do with the bank at least for the past nine years”, and points to “a case that has been fabricated from beginning to end”. But this bank, which he had founded, and whose licence was withdrawn in 2010, was actually financing all of his other companies. He made the point in a letter addressed to Putin in 2014. In a television speech Putin threatened Pugachev, and enjoined him to “return what he has taken”. “This TV show came as a real shock to me. It marked the beginning of aggressive expropriation”, the President’s former adviser tells us. The takeover of the shipyards was followed by the freezing of assets of the world’s biggest coking coal mine, which Pugachev was developing in Siberia. Pugachev was also ousted from the prestigious real estate development project on Red Square, which was going to involve Jean-Michel Wilmotte. Hediard’s bankruptcy, too, was allegedly caused by the Kremlin’s cutting his cashflows.
Moscow succeeded in obtaining a worldwide freezing order on Pugachev’s assets from the British justice. Pugachev, who failed to comply with the orders of the London courts and left the United Kingdom, has been condemned in absentia to two years of emprisonnent for contempt of court.
The French justice, on the other hand, in a decision of the Tribunal de Grande Instance of Nice rendered in February 2019, ruled against a seizure of Pugachev’s assets in France by the Deposit Insurance Agency, acting as Mezhprombank’s liquidator. The businessman was thus able to retain ownership of the château de Gairaut — a stunning property build in 1904 on a hill above Nice, offering an unrivalled view over the Angels’ Bay and now guarded by intimidating Malinois dogs.
In 2015 Pugachev filed a claim before the International Arbitration Court at The Hague. His former partner, Countess Alexandra Tolstoy — related to the famous Russian writer — is known to have asked him to withdraw his claim in exchange for the right to see his children. “My children’s mother has been corrupted by the Russians… I have not seen my youngest six-year old daughter for three years”, the ex-oligarch breathes out, his razor-sharp green-grey eyes suddenly getting misty. As to Alexandra Tolstoy, she has complained to the British press that she has been denied any financial support by her ex-partner.
How, then, does he now manage to finance his lifestyle on the French Riviera, pay his lawyers, afford personal safety measures? Pugachev tends to stay discreet about his “business”. He is also a young grand-father: he has six grand-children, born in France to his two older sons. He launches into an enthusiastic speech about OPK Biotech, a Boston start-up working on artificial blood, in which he has had stock for years.
In Paris, the three arbitrators (a Columbian, designated by the Claimant, a Spaniard designated by the Russian side, and a Frenchman) have called high-ranking witnesses to appear, among whom Aleksei Kudrin, former minister of Finance of the Russian Federation and current Chairman of the Court of Audit, and former Prime minister Viktor Zubkov. Their actual appearance at the hearing would be a surprise. There are seven lawyers approved for each side by the Tribunal’s order, but Jean-Georges Betto, representing Sergey Pugachev, and David Goldberg from the London firm White&Case, representing the Russian Federation, have both refused to comment.
Can the oligarch win? An historical arbitration precedent was set in 2015, when the International Arbitration Court of The Hague issued an award in favour of the majority shareholders of the Yukos group, founded by Mikhail Khodorkovsky, condemning Russia to pay the gigantic amount of 50 billion US dollars. The award was subsequently set aside, and this 15-year-old case is still ongoing. Sergey Pugachev believes his own case to be sounder from the legal standpoint, because it relies on a bilateral agreement on investment protection, signed by the USSR and France on 4 July 1989.
This week’s hearing will mark an additional step in a seemingly endless judicial saga. If Pugachev wins the arbitration and Russia refuses to pay, this will mean “that the 160 bilateral agreement on investment protection signed by Russia are worth nothing”, the banker warns. This would signal disaster for such French companies as Total, Renault or Auchan, that have invested billions in Russia. According to Pugachev, Emmanuel Macron should use this legal case as a trump card to exert pressure on Russia. The former protégé of the Orthodox Patriarch has faith in his case and in the international justice. Even faced with his former neighbour and friend Volodia, he declares that “it is impossible to lose”.
FSB colonel Cherkalin has testified against Miroshnikov, former deputy head of the DIA. The latter is charged with setting up a scheme for racketing banks.
According to one of the versions pursued by the Investigation Committee of the Russian Federation, part of the billions found at the colonel’s home were in fact the “share” belonging to DIA’s top manager Miroshnikov, who has left Russia.
Testimony of an officer
Kirill Cherkalin, the former head of the Second Section of the “K” Department of the FSB Economic Security Service, has told the investigators of the role played by the First Deputy Head of DIA, Valery Miroshnikov, in setting up schemes for criminal “protection” of banks (known in Russian as kryshevanie — translator’s note). This information has been shared with “Open Media” by a contact familiar with the above individuals, both of whom are currently under criminal investigation; it has also been confirmed by a source close to the investigation. Miroshnikov currently has the status of witness in this case, but Cherkalin insists that the Deputy Head of DIA was the one setting up all the criminal schemes. Furthermore, according to Cherkalin’s statement, a large part of the record amount of 12 billion rubles, found during home searches, did in reality belong to the state agency’s top manager and was merely “deposited” at the officer’s parents’ place. “A man who is being blamed for all has cropped up in this case”, stresses an acquaintance of the colonel’s.
The statement of Oleg Shigaev, former owner of Baltiysky Bank, also mentions Miroshnikov’s receiving large bribes. Shigaev’s statement is currently being checked by the Investigation Committee. Shigaev also alleges that Miroshnikov used to force the management of the targeted financial institution to agree to a restructuring procedure, threatening that failure to comply would result in the withdrawal of the bank’s licence and “unavoidable problems with law enforcement bodies”. Out of the funds allocated to the restructuring, one billion was to be paid to Miroshnikov and his “supervisors from the FSB, for organising and facilitating the deal”.
Miroshnikov was involved from the start in the setting up of the Russian deposit insurance system, having first worked for the Central Bank, then for the Agency for the Restructuring of Credit Institutions, which was subsequently replaced by the DIA. Miroshnikov has thus worked at DIA from the very beginning, being first appointed Deputy Head, then First Deputy Head in 2005, when he was put in charge of all the issues connected with the liquidation and reorganisation of credit institutions. The authors of the joint investigation conducted by the media “Proekt” and “The Bell” quote bankers, who wished to remain anonymous, saying that Cherkalin and Miroshnikov tried to obtain money from them for preventing the withdrawal of their banking licence and suspending criminal pursuits launched against those bankers for diversion of funds.
Three persons are currently facing charges in this case: Kirill Cherkalin, and two of his colleagues, namely Dmitry Frolov, his predecessor as head of the “banking” section, and one Andrei Vasiliev. They were arrested on 25 April 2019. Cherkalin is charged with having provided “overall protection” to commercial entities, against payments amounting to 850 000 US dollars. All three are also under suspicion of fraud. A “Kommersant” article mentions that Cherkalin allegedly received money for “protecting” Aleksandr Mazanov, co-owner of Transportnyi Bank, and was also part of a criminal group, that embezzled profits from the selling of luxury residential properties in Moscow.
Cherkalin is actively cooperating with the law enforcement bodies. “Rosbalt” writes that the colonel has repented and asked to sign a preliminary agreement. “Businessmen and bankers, who at some point had to face the Cherkalin-Frolov tandem and their accomplices, are currently coming to the FSB to declare amounts that were transferred to the latter in exchange for protection and other such services. However these statements can seldom be taken into account, for lack of substantial evidence. Now that Cherkalin has made his statement, some of these cases might perhaps be investigated further”, says a source within the Agency. Finally, Cherkalin has agreed to hand over to the State some 6 billion rubles, which, according to his lawyer, were derived from “sources not provided for by the law”. Cherkalin’s lawyer Vladimir Mikhailov refused to comment on the ongoing investigation.
An Israeli partner
The investigators grew interested in Miroshnikov’s correspondence with Cherkalin, but have so far been unable to interrogate him: being summoned by the authorities, Miroshnikov failed to appear. On 10 July the DIA announced that Miroshnikov had resigned from his post. According to a person acquainted with the Agency’s Deputy Head, interviewed by “Open Media”, Miroshnikov has not been seen at the workplace for at least two months before his resignation. He appears to have left the country immediately after Cherkalin and his two colleagues were arrested. The FSB colonel somehow seems to only use the past tense to speak about the former Deputy Head of the DIA: “Cherkalin testifies against Miroshnikov, speaking as if the latter was already dead”, stresses one of the colonel’s acquaintances.
According to one of the sources mentioned in the joint investigation by “Proekt” and “The Bell”, after Cherkalin was arrested, Miroshnikov first went on vacation to Australia with his family, then moved to Germany. The investigators believe that he might currently be in Israel, says a source close to the Investigation Committee. According to that source, Miroshnikov might have joined his former business partner and colleague Aleksandr Dunaev. Dunaev had been previously mentioned by Mezhprombank’s former owner Sergei Pugachev. The senator accused Miroshnikov of attempting to extort 350 million dollars from him, threatening him with physical reprisal and criminal pursuits. Incidentally, these threats were allegedly conveyed to Pugachev in June 2011 by Aleksandr Dunaev.
Dunaev is also mentioned as a “consultant working with the DIA” in the testimony of Oksana Reinhardt, executive director for emerging markets at the Japanese financial firm Nomura. Reinhardt gave an affidavit in 2012 in relation with the Pugachev case and in view of potential international arbitration proceedings (which were effectively launched when Pugachev filed a claim with the Permanent Arbitration Court at The Hague). “Open Media” has a copy of the materials mentioned above, and their authenticity has been confirmed by a source familiar with the investigation.
Given that Nomura was a creditor of Mezhprombank’s, Reinhardt attempted to find out from Miroshnikov how her firm might recover its funds. According to her, during their first meeting with Miroshnikov, the Deputy Head claimed to “have experience in putting pressure on oligarchs who have left Russia”. During their second meeting Dunaev was also present, and stated that issues related to the debts of Pugachev’s entities would be solved by selling his Severnaya shipyard. Creditors would then be able to claim funds, but not Pugachev, Dunaev added. This is what effectively happened: the shipyard was auctioned during the summer of 2012 and sold for a price nearly eight times lower than what Pugachev had expected to obtain.
In 2012 Dunaev fell under criminal investigation in a case of embezzlement for over half a billion rubles, but he was able to flee the country. In 2014 he was arrested in Israel, but no extradition occurred, because an Interpol red warrant was been issued against him in 2017. Dunaev is still wanted by the Ministry of Interior, according to the Ministry’s database.
Audit Chamber head Aleksei Kudrin ( Deputy Prime Minister of Russia from May 2000 to March 2004 and from September 2007 to September 2011 ) , chairman of Gazprom’s board of directors Viktor Zubkov ( Prime Minister of Russia, Vice Prime Minister from May 2008 to May 2012 ) and investment banker Oksana Reinhardt have been invited to testify in a case filed by former billionaire Sergei Pugachev, once a member of President Vladimir Putin’s inner circle, against the Russian Federation in Paris. The legal battle began when ex-senator Pugachev, who left Russian in 2011, demanded $12 billion from Russia for allegedly expropriating his assets. The lengthy proceedings have finally reached the decisive phase.
The hearing will take place between 12 and 17 November. Kudrin, Zubkov and Reinhardt have been asked to testify in person; and they may be cross-examined by the judge, as well as both the prosecution and the defense, according to two sources who spoke with The Bell. Pugachev and those invited to testify either declined to comment or didn’t respond to The Bell’s requests for comment.
Kudrin and Zubkov have been asked to testify in relation to plans from the early 2000s to build an elite hotel on Red Square. Companies close to Pugachev signed $300 worth of contracts with a firm created specially for the project and, in return, Pugachev was supposed to get a stake in the finished complex. Instead, in 2007, construction was frozen, and ownership of the site transferred to the Federal Security Service. Pugachev successfully sued the Ministry of Finance for $26.2 million in 2011, but this did not cover all of his losses.
It seems likely that Reinhardt has been invited to talk about Mezhprombank, which was founded by Pugachev but lost its license in 2010 (when Pugachev no longer owned the bank). Reinhardt, who was an executive at Japanese bank Nomura at the time, has once before provided written legal testimony — in 2012 — relating to Pugachev and Mezhprombank’s loss of its banking license, and she might have a lot of interesting things to say, one source told The Bell.
Kudrin, Zubkov and Reinhardt received invitations rather than a formal summons, so they will not face any sanction should they chose not to comply. But if they are no-shows this could also influence the court’s decision, according to a lawyer at a European law firm who spoke with The Bell.
Lawsuits have flown between Russia and Pugachev for almost a decade, and have led to legal battles in several different countries. In the Hague, Pugachev is accusing Russia of expropriating four groups of assets that used to belong to him: shipbuilding companies, Yenisei Industrial Company, the Red Square development project, and land near Moscow. A criminal case has been filed in Russia against Pugachev in which he is accused of embezzlement. Finally, Russia’s Deposit Insurance Agency is using a London court to helpy it locate and seize Pugachev’s global assets. One former top executive from the Deposit Insurance Agency, who has a long-standing disagreement with Pugachev, was the subject of The Bell’s recent investigation into the FSB and money-laundering.
Why the world should care. The story of Pugachev is one of the most significant corporate conflicts in recent Russian history. While lawsuits heard abroad like this often shed fascinating light on how business is really done in Russia, unfortunately this will not be the case with Pugachev as the Russian Federation’s defense team has succeeded in ensuring proceedings take place behind closed doors. Any information that does emerge, however, will be worth watching.
The Bell and investigative website The Project looked into an FSB backed financial empire, and why it all fell apart.
As the head of the banking oversight department at Russia’s domestic intelligence agency, Colonel Kyrill Cherkalin wielded immense power: With a click of his fingers, he could cause bankruptcy or give a zombie bank a new lease of life. But then it all went wrong: earlier this year he was arrested on fraud charges and 12 billion rubles ($180 million) in cash and jewelry was found in his apartment and other places linked with him and his colleagues. The Bell and investigative website The Project looked into how Cherkalin became a key figure in the money laundering business, how he ran his financial empire, and why it all fell apart.
For a meeting at Moscow’s Vogue cafe with banker Alexander Zheleznyak in summer 2014, Cherkalin arrived in a chauffeured Range Rover wearing an expensive Rolex watch. At that moment, Zheleznyak was co-owner of Life, a large financial holding. Cherkalin immediately got down to business, suggesting that a retired officer from the Federal Security Services (FSB) be made vice-president at Probiznesbank (one of Life’s main assets) with an annual salary of $120,000, a private office, personal driver and assistant.
But this was a mere detail. Zheleznyak had already received the main demand: cede a large stake in Life to a company that will share its income with senior officials from the FSB and the Prosecutor General’s Office.
These details come from a statement from Zheleznyak, acquired by The Bell and The Project, which he gave under oath this year in the United States. His testimony is set to be used in legal proceedings that Life’s former owners have launched in the U.S. and Europe.
For the co-owners of Life, childhood friends Zheleznyak and Sergei Leontiev, dealings with Cherkalin ended very badly. After the meeting, the partners agreed to take part in the protection racket involving Probiznesbank, but they did not hand over shares in all their businesses. Later, their banking license were revoked by the regulator, criminal cases were started against them, and both fled Russia. The Central Bank believes that Life was engaged in illegal financial activity, while Zheleznyak insists they went bankrupt because of pressure from the authorities.
The tale of Life is just one in which Cherkalin, 38, and his FSB colleagues played starring roles. Cherkalin’s department at the FSB oversees the financial sector (banks, pension funds and insurance companies) and is one of the most powerful branches of the notorious Department K, which is responsible for economic security.
The two men arrested at the same time as Cherkalin were his former boss, Dmitry Frolov, and the more junior Andrei Vasiliev. While Cherkalin was still in his post when he was detained, Frolov and Vasiliev were dismissed several years earlier, after newspaper Novaya Gazeta published details of real estate allegedly owned by them on the shore of Lake Maggiore in Switzerland and Italy.
“Brilliant, very smart, well-versed in the field” is how Cherkalin was described by one major Russian banker. “But these are business guys, that’s what their [whole] generation is like.”
These sorts of commercially-minded FSB officers rose to power in the early 2000s at the same time as Russia’s money laundering business was booming, according to a source close to the FSB familiar with Cherkalin and his colleagues. “You know the principle: If you realize it’s useless to fight something, you have to lead it,” he explained.
Department K at the FSB had two main ways of interacting with banks: either they demanded a percentage of all withdrawals into cash (up to 0.2% of the transaction), or they took bribes and payoffs for specific violations, said a source close to the FSB.
To ensure the percentage was paid, whole protection rackets were established. This usually took the form of a retired FSB officer being given a position at the bank’s security team from where he could monitor cash flows. The ex-officer was also responsible for collecting information about the market. This scheme exactly matches what Zheleznyak said in his testimony about the ex-FSB officer that Cherkalin suggested employing at Probiznesbank.
The FSB did not respond to a request for comment.
At the end of May 2019, Cherkalin was visited in prison by prison monitors, who were surprised to see him wearing an expensive Givenchy tracksuit. Cherkalin’s cell was decorated with so many icons that some newspapers compared it to an Orthodox chapel.
Milking the money launderers
The system over which Cherkalin ruled was built up over several years, and was familiar to many bankers, particularly those involved in the money laundering business.
Mikhail Zavertyaev, a former со-owner and deputy chairman of Intelfinance bank, which collapsed in 2008, is one of those bankers. His relationship with Department K began in 2007 when he met Yevgeny Dvoskin, a mysterious figure described as a key player in the money laundering market with close ties to both the FSB and criminal gangs.
In an interview, Zavertyaev recalled how, in December 2007, he caught his chief accountant trying to arrange a credit line to a front company supposedly linked to Dvoskin. The following day, Dvoskin and his bodyguard, who spoke like a mafia enforcer, arrived at his offices in an ambulance. “Dvoskin came up to me, hit me in the ear, and I struck him with my elbow,” Zavertyaev said of the encounter. “He dropped to the floor and my first thought was that he had fallen on top of my suitcase with documents and that he would grab the suitcase and flee. I bent down to move the suitcase, he hit me with a pistol and I lost consciousness.”
Dvoskin has always maintained that Zavertyaev is a liar and, in court, argued that he couldn’t have assaulted Zavertyaev as he had been giving evidence in another criminal case at the moment the attack was supposed to have occurred.
Zavertyaev said the encounter did not end with his hospitalization after the fight. His wife’s car was torched shortly after and, over the next two months, about 11.7 billion rubles was extracted from Intelfinance. Still trying to get the money back, half a year later, Zavertyaev said he met Frolov, Cherkalin and Sergei Smirnov, deputy head of the FSB, at the Palazzo Ducale, a plush restaurant in downtown Moscow.
According to Zavertyaev, his dining partners were courteous, insisting he try the salad. From the conversation, he said he realized they were well acquainted with Dvoskin and were trying to understand what evidence he had of Dvoskin’s visit. They also wanted to convince him to stop trying to retrieve Intelfinance’s lost money. Eventually, he was offered financial compensation, which he said he refused. All Zavertyaev’s subsequent efforts to use the courts to get the money back have come to nothing.
Dvoskin was under the protection of the FSB, according to two sources close to Russian security agencies. When asked about his connections to the FSB, Dvoskin hung up the phone.
Cooperation between the FSB and banks carrying out money laundering was apparently extensive. The FSB “took the money launderers under its wing and made them its informers,” one source close to the security agency told The Bell and The Project. One of these informers he named as Aleksei Kulikov, the former co-owner of a small bank, Kreditimpeksbank, who is currently serving a 9-year prison sentence for fraud.
A source close to the FSB recalled that, at first glance, Kreditimpeksbank’s offices in the mid 2000s never looked like much: a half-empty banking hall, about 20 shabby rooms for staff and a gloomy looking security guard. But, according to the source, the bank was a big player on the money laundering market and the company’s security team was headed by a former Department K officer who received up to 3% commission on all financial transactions. Kreditimpeksbank had several run-ins with the Central Bank, but, each time, the FSB was able to help resolve the problem. According to the source, Kreditimpeksbank had several large clients with access to state funds and used fake contracts to move large amounts to construction firms in Turkey and Malta.
When Kreditimpeksbank was shut down by the regulator, it was estimated it had a 229-million-ruble black hole in its balance sheet and was conducting 13.5 billion rubles ($200 million) worth of suspicious deals every year. About 2 million rubles in cash was found in Kulikov’s apartment during a police search.
Cherkalin’s influence was not restricted to banks in the money laundering game. He was also in contact with both the heads of the major Russian banks and the senior officials running the state’s financial regulatory bodies.
Valery Miroshnikov, the former head of Russia’s Deposit Insurance Agency (DIA), which guarantees deposits in the case of bankruptcy, is currently a witness in the case against Cherkalin. Immediately after Cherkalin’s arrest, Miroshnikov left Russia (according to friends he first went to Australia, and then to Germany for healthcare reasons) — and has never returned. Two and a half months later, the DIA announced his resignation without giving a reason.
There are few details about the link between Cherkalin and Miroshnikov, but one source called them “good friends” and news outlet RBC has reported that investigators are looking into messages the two men exchanged. Miroshnikov is also alleged to have been involved in extortion. The former owner of Mezhprombank, Sergei Pugachev, was allegedly approached in 2011 by two men, one of whom worked for Miroshnikov, with a simple message: hand over $350 million or risk your own life and that of your family.
Pugachev’s lawyers have been telling this story in court since 2014 when the DIA began a legal drive to track down his assets and hold him liable for Mezhprombank’s debts. The Bell and The Project were unable to contact Miroshnikov, but he has previously denied authorizing the intimidation of Pugachev.
The DIA’s task is to manage the assets of banks that have collapsed or been shut down by the regulator, paying out deposits and seeking to recover assets. Over the 15 years of its existence, it has received more than 1 trillion rubles ($30 billion) from the Central Bank.
Many have pointed out the big gap between the severity of the allegations levelled at Cherkalin, and the charges on which they were formally arrested. Officially, Cherkalin and his colleagues are accused of stealing assets worth 499 million rubles ($7.7 million) from Moscow developer Sergei Glyadelkin, and Cherkalin is accused of taking a bribe worth 50 million rubles ($770,000).
Glyadelkin, who appears successfully to have stood up to the FSB, is not widely known, but has had a long career in Moscow. Until 2005, he was employed by a state company that distributed plots in downtown Moscow to developers and builders. But he also worked with Igor Chaika, the son of Prosecutor-General Yuri Chaika, and in Fall 2013, they set-up Techno R-Region, a waste management company. The Prosecutor General’s Office did not answer questions from The Bell about its relationship with Glyadelkin.
One former senior security officer said that the 12 billion rubles found during the detention of Cherkalin and his colleagues indicated “someone inside the intelligence services knew such a payment was in the offing.” The raid was deliberately planned to catch them with the cash, he said. “To keep such a sum of money for a long time is pointless; it looks like they were stockpiling it before selling it or sending it abroad.”
When asked why Cherkalin was arrested now, a businessman with good connections in the security services replied simply: “infighting” A major Russian banker, who knew both Cherkalin and Frolov, agrees. FSB director Alexander Bortnikov is 68 and the prospect of his retirement is fueling bitter battles among possible successors, according to another source. With the FSB the most powerful institution in modern Russia, victory means nothing short of gaining total control over the country.
The ex-wife of an exiled oligarch is at the center of his court battle with the Russian state, with each side accusing her of working for the other.
Galina Arkhipova is the former spouse of Sergei Pugachev, once an ally of Russian President Vladimir Putin. Pugachev is accused of siphoning more than $1 billion from a bailout of International Industrial Bank, which he co-founded. The ex-senator denies the allegations, which he calls part of a politically motivated campaign to confiscate his wealth.
The Deposit Insurance Agency, a Russian agency in charge of liquidating the bank, was in a London court this month to try to force Arkhipova to turn over paperwork in the case. The DIA accuses the divorcees of working together to protect Pugachev’s assets, an allegation he said was “an exceptional lie” in an email sent to Bloomberg.
In its filing to the London High Court, the DIA accuses Pugachev of asking her to make claims to frustrate confiscation orders. Pugachev, who now lives in France, makes his own allegation: that Arkhipova is acting in “collusion” with the DIA to “distract” his attention from his own lawsuit in Russia over its seizure of his assets. A legal representative for Pugachev repeated the allegation in email to Bloomberg.
Neither Pugachev nor his wife, Galina Arkhipova, were in the London court or had attorneys there.
The DIA and its attorneys at Hogan Lovells declined to comment on the case. Representatives for Arkhipova didn’t respond to emails requesting comment.
The London case — set for trial in early 2020 — revolves around a mansion in London’s upscale Chelsea neighborhood that he bought for 7.9 million pounds ($10 million) in 2011.
Five years ago, a London court froze his assets, beginning a global battle by the Russian state to claim what it says it’s owed. Arkhipova filed for divorce that same year, and started claiming her interests in some of their possessions.
The DIA is questioning whether the house was purchased while the couple was still married, and last week, its attorneys got an order forcing Arkhipova to hand over documents that could prove the timing of the end of the marriage.
The agency points to a July 2014 statement in a Moscow divorce court where Arkhipova said that she hadn’t had lived with Pugachev since 2002.
The DIA says Arkhipova is making only “desultory” attempts to disclose documents, which she says were lost when laptops were seized by Russian authorities in 2016.