Strand, London, WC2A 2LL
B e f o r e :
| (1) MUKHTAR ABLYAZOV
(2) ROMAN SOLODENCHKO
(3) ZHAKSYLYK ZHARIMBETOV
(4) DREY ASSOCIATES LTD
|- and -
|JSC BTA BANK
Thomas Elias (instructed by Peters & Peters) for the Third Defendant/Applicant
Hearing dates : 8 December 2011
Crown Copyright ©
Lord Justice Stanley Burnton :
"2. The Claimant ("the Bank") is a bank in Kazakhstan, 75.1% of whose share capital has, since 2 February 2009, been owned by the State of Kazakhstan through a sovereign wealth fund, Samruk-Kazyna. On that date the State effectively took control of the Bank when, according to the evidence of the Bank, there was significant concern as to the ability of the Bank to continue as a going concern. The Bank's accounts for the year ending 31 December 2008 recorded a negative equity of about US$6.1 billion. Its debts, which are said to amount to US$12 billion, are being restructured pursuant to the law of Kazakhstan.
3. The Defendant ("Mr. Ablyazov") is the former chairman of the Bank and is accused by the Bank of "widespread misappropriation of the Bank's funds." It is said that he has treated the Bank "as if it were his own private source of funds". Four claims have now been issued in this jurisdiction against Mr. Ablyazov. The total sum claimed is in excess of US$1.8 billion. Further claims are anticipated which I was told will bring the total sum claimed to US$4 billion.
4. Mr. Ablyazov denies these claims. He states that the claims are an attempt by the President of Kazakhstan, Nursultan Nazarbayev, to take control of his assets in support of a politically motivated claim against Mr. Ablyazov, who is a leading figure in Kazakhstan's democratic opposition. His evidence paints a chilling picture of life in Kazakhstan where power resides with the President and the members of his family and close associates, where the rule of law is not respected and where dissent is ruthlessly eliminated. In 2003 Mr. Ablyazov was arrested and imprisoned and his assets seized after what he and others have said was a politically motivated trial. Whilst imprisoned on what he says were "trumped-up" charges he says that he was subjected to mistreatment, torture and an unsuccessful plot to assassinate him and that his assets were "distributed to the President's coterie". He says that political assassination is used in Kazakhstan as a means of silencing opposition and that there was a further attempt to assassinate him in 2004 in Moscow…."
"18. The Bank's case is a case of fraud and embezzlement on an almost unprecedented scale. Essentially what is alleged is that Mr Ablyazov, on occasion with the assistance of the other Respondents, helped himself to huge amounts of the Bank's cash resources by causing the Bank to make substantial transfers of funds to (or for the benefit of) a considerable number of overseas companies which he secretly owned.
19. Soon after the Respondents left the Bank, the Bank was obliged to undergo an insolvency process because its deficit of assets versus liabilities was in the region of US$16 billion. This was the largest insolvency procedure which the Kazakh Republic has experienced.
20. The insolvency restructuring has now been completed. As part of it, the Bank's creditors have had to write off US$ billions of debt. Those creditors include a number of well-known Western financial institutions, not least the Royal Bank of Scotland (which was itself subject to a similar nationalisation process in the UK at about the same time).
21. The restructuring has been approved in courts across the world, including the Chancery Division of the High Court in London. Under the agreements entered into as part of the restructuring, the Bank is obliged to pursue all possible avenues to recover its losses from those who are believed to have been responsible for those losses. The creditors are entitled to receive 50% of any recoveries.
22. The Bank is obliged to retain professional assistance to help it pursue those responsible for the losses. The Bank's asset recovery process is required to be monitored by a Recovery Sub-Committee, which is a sub-committee of the main Board of the Bank and must include at least one director appointed independently by the Bank's creditors (and in fact includes two such creditor directors). The Bank has an obligation to report regularly to an independent recovery assets auditor and an obligation to justify certain key decisions to that auditor.
23. The 7 actions which the Bank has commenced against one or more of the Respondents in the High Court in England (6 in the Commercial Court and one in the Chancery Division) are part of this recovery exercise. They are pursued on the authority of the new management and pursuant to the Bank's obligations undertaken towards its creditors upon the restructuring. Major beneficiaries of any success in the actions will be the former creditors of the Bank. The suggestion that the actions are part of a pet project of the President to crush the Respondents could hardly be further from reality. The governance protections granted to the Bank's creditors under the restructuring (including the asset recovery programme) are enshrined in the Bank's charter which was amended for this purpose as part of the restructuring ….; the Bank's super-majority shareholder, Samruk-Kazyna, has undertaken to ensure that the governance and other rights of the creditors are maintained."
(1) The Bank has very substantial claims against the defendants for fraud, embezzlement and breach of duty that raise triable issues.
(2) The creditors of the Bank include Western banks that have no relevant connection with the government of Kazakhstan.
(3) There is an arguable case that the Bank is bringing these proceedings in order to obtain a judgment against the defendants, to denude them of their assets and thereby to weaken, if not to eliminate, their ability to oppose the President of Kazakhstan in Kazakhstan.
The defendants' contentions
"(1) Motive and intention as such are irrelevant (save only where 'malice' is a relevant plea): the fact that a party who asserts a legal right is activated by feelings of personal animosity, vindictiveness or general antagonism towards his opponent is nothing to the point. As was said by Glass JA in Champtaloup v Thomas (1976) 2 NSWLR 264, 271 (see Rajski v Baynton (1990) 22 NSWLR 125 at p.134):
'To impose the further requirement that the donee [of a legal right] must be actuated by a legitimate purpose, thus forcing a judicial trek through the quagmire of mixed motives would be, in my opinion, a dangerous and needless innovation.'
(2) Accordingly the institution of proceedings with an ulterior motive is not of itself enough to constitute an abuse: an action is only that if the Court's processes are being misused to achieve something not properly available to the plaintiff in the course of properly conducted proceedings."