FT: Extradition attempt is political ploy, says Sergei Pugachev

Neil Buckley, Eastern Europe Editor of the Financial Times interviewed Sergei Pugachev. He writes:

Sergei Pugachev, the exiled Russian tycoon once nicknamed the “Kremlin’s banker” has said a Russian attempt to extradite him from Britain is politically motivated and he fears being sent back to his homeland.

The industrialist says the bankruptcy was caused by the Russian state expropriating billions of dollars of assets from him, including shipyards, and construction and energy projects, after he fell out with the Kremlin, where he was once a trusted insider.

Mr Pugachev told the FT he sent a letter to Vladimir Putin last December informing the Russian president he intended to launch an international arbitration case under a bilateral investment treaty between Russia and France, of which he is a citizen.
The letter set a six-month deadline for the dispute over his business empire to be resolved through negotiations, which expired last week.

Buckley quoted Pugachev: “This is all a consequence of my fight against Russia . . . and against particular people who committed crimes during the expropriation. Everything that is happening in England and the legal prosecution in Russia has taken on an entirely punitive nature.”

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Pugachev for the FT: The Russian Government had abused the London court proceedings

Catherine Belton of the Financial Times reported:

“Moscow’s arbitration court ruled on Thursday that Sergei Pugachev should pay Rbs75.6bn ($1.5bn) for his role in the bankruptcy of Mezhprombank, the Russian bank he co-founded.”

“The ruling could open the way for the London lawyers of the DIA, Russia’s state deposit insurance agency, which is acting as the bank’s liquidator, to seek to enforce the claim by seizing the international assets of Mr Pugachev.”

“The former oligarch says the $1.5bn asset gap at the bank was instead caused by a politically motivated state takeover of his empire, led by the sale at a knockdown price of his multibillion-dollar shipyard business, shares in which had been pledged as collateral for $1.15bn in loans from the central bank.”

“One of Russia’s richest men until he fell out of favour with the Russian president and a forced state takeover was launched of his multibillion-dollar business empire, Mr Pugachev called Thursday’s decision “unprecedented and illegal”.

“He said he would appeal against the ruling, which found three of Mezhprombank’s former senior executives jointly responsible, with Mr Pugachev, for the bankruptcy.”

“Mr Pugachev said it seemed clear that the DIA had abused the London court proceedings as “an instrument for obtaining information” for the Russian court case.”

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Sergei Pugachev welcomes the decision of the London Court of Appeal

February 27, 2015 – The Appeal court of London has rendered its decision in respect of three appeals, related to the court proceedings between the Deposit Insurance Agency (DIA) and Sergei Pugachev.

The former senator welcomes the decision of the court to uphold the unlimited cross undertaking, which would allow him to recover from the DIA any damages that he sustains, including any losses incurred by him during the time when the asset freezing order is in place. Losses incurred during this period have already exceeded the limited cross undertaking of 75 million US dollars initially provided by the DIA to Sergei Pugachev. Appeals have been filed in respect of the court’s other decisions.

Pugachev for Bloomberg: The Russian authorities are misusing Interpol

The article published by the Bloomberg stated that “Sergei Pugachyov, a former banker and confidante of Vladimir Putin, said he was placed on Interpol’s most-wanted list because of a campaign against him led by the highest echelons of Russian politics.”

“The involvement of Interpol by the Russian authorities is an attempt to give credibility to the actions of high-level Russian officials involved in the expropriation, including direct orders of President Putin and a number of Russian cabinet ministers,” Pugachyov said in a statement.

Pugachyov, who denies any wrongdoing, was subject to an earlier red notice by Interpol which was canceled after he challenged it in court. He said he plans to explore “all avenues of canceling this second notice.”

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PRESS RELEASE: Sergei Pugachev denies allegations of intentional bankruptcy and misappropriation

MOSCOW, 7 February 2014 – The Moscow City Court on Monday upheld the refusal of the Basmanny District Court to arrest businessman Sergei Pugachev in absentia.

It was alleged that Pugachev, a former Russian senator and founder of International Industrial Bank (IIB), was  involved in misappropriation of funds and the intentional bankruptcy of IIB.

In a statement released today, Pugachev denies involvement in any wrongdoings. Pugachev’s lawyers argue that the legal proceedings have been replete with irregularities, and the wrongful application of law enforcement agencies to solve commercial disputes, echoing the experience of high profile Russian businessmen such as Mikhail Khodorkovsky. Under Russian law, the charges brought against Mr. Pugachev are associated with business activities, and recourse for arrest in absentia is not available. Despite these provisions, the Basmanny District Court granted an arrest warrant late last year. Defence counsel successfully argued that there were serious problems with the decision, and the ruling was quashed on appeal.

A further attempt to have the Basmanny Court grant an arrest warrant was denied in January 2014. The Moscow City Court’s decision today to uphold the refusal of the lower court highlights once again the highly irregular manner in which the justice system has been used in this matter. The charges against the former politician were met with surprise by many, given the widely held belief that Mr Pugachev, who served in the Russian Senate from December 2001 to January 2011, was close to both former President Boris Yeltsin and to current President Vladimir Putin.

Speaking for the first time about the matter, Sergei Pugachev commented: “In the last few years, law enforcement agencies have become the main tool for solving commercial disputes in Russia. Ever since I left the country, every one of my main domestic assets has been facing raiding attempts or expropriation. I have also been on the receiving end of threats and attempts at extortion. The unsubstantiated criminal allegations against me are consistent with that.The International Industrial Bank was founded by me more than 20 years ago but after I disposed of my shares over ten years ago, I no longer had any involvement, let alone control over its activities. If its bankruptcy was indeed intentional, it would have to have been instigated by the Russian Central Bank, which closely supervised its activities, and the Central Bank’s Chairman.” 

The case re-ignites the public debate about the Russian justice system and its impact on doing business in the country, at a time when Russia is in desperate need of inward investment. The pardoning of Mikhail Khordorkovsky late last year and the release of his business associate Platon Lebedev in January had been interpreted as signs Russia’s authorities were taking steps to appease international opinion. The authorities’ continued pursuit of Mr Pugachev, along with his statement made today that his domestic assets have been subject to raids and attempts at expropriation, goes against this trend. In an interview on 15 January 2014 with Radio Ekho Moskvy, counsel for the defence Aleksandr Gofstein said that Sergei Pugachev will plead not guilty and the prosecution does not have sufficient evidence, “the fact is that there was no crime, and that’s why there is no documentary evidence of criminal activity.”

Press Office of Sergei Pugachev

PDF version of the Press Release 14.02.07