If A Company Is Behaving As A Monopoly, Can An Individual Become A Whistle Blower And Obtain Money?
The Power of Money: How Autocrats Utilise London to Strike Foes Worldwide
English courtrooms have get a battleground — and a source of powerful weapons — in fierce disputes between the tycoons and the politicians of the mail service-Soviet earth.
LONDON — Olena Tyshchenko, a lawyer based in Great britain, was facing years in a crowded Russian prison cell, when a chance at freedom came via an unexpected source.
An English lawyer named Chris Hardman, a partner at Hogan Lovells, 1 of the biggest police force firms in the world, flew into Moscow while his firm helped draft a tantalizing offer: Ms. Tyshchenko could be freed if she provided information that could be used to assist his customer in a sprawling web of litigation in London.
The twist is that Ms. Tyshchenko was one of the lawyers on the other side. To win her freedom, she would have to plow on her customer. It was a ruthless exchange. Simply the Moscow prison house had been ruthless, as well, and she reluctantly agreed. In a later interview, she said what seemed "most abnormal" was that lawyers opposing her in a trial in London could play a role in her fate in Russian federation.
"They are extremely aggressive," she added.
A Moscow prison. A London courtroom. One is office of a Russian legal arrangement widely considered corrupt and subordinate to the Kremlin. The other is a symbol of an English language legal organization respected around the globe. Even so after Mr. Hardman returned to London, an English judge would accept into the case the bear witness obtained from the Moscow prison.
The episode is a vivid illustration of how the brutal politics of authoritarian countries like Russia and Kazakhstan accept spilled into England's legal system, with lawyers and private investigators in London raking in huge fees and engaging in questionable tactics in the service of autocratic foreign governments.
An investigation by The New York Times and the Agency of Investigative Journalism — involving a review of hundreds of pages of instance documents, leaked records and more than lxxx interviews with insiders, experts and witnesses — reveals how London'due south courts are existence used by autocrats to wage legal warfare against people who have fled their countries after falling out of favor over politics or coin.
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Four out of the by six years, litigants from Russia and Kazakhstan have been involved in more civil cases in England than accept any other foreigners. Authoritarian governments, or related state entities, are frequently pitted confronting wealthy tycoons who have fallen from favor and fled. Neither side elicits much pity — just both pay generous legal fees.
Filing litigation in London tin bring legitimacy for claims by autocratic governments, whose own legal systems are so tainted that their decisions acquit little weight outside their borders. England also offers advantages: Judges have wide latitude to examine prove, even if it is produced by corrupt security services or compromised foreign legal systems. London's own private intelligence firms are unregulated, largely unrestrained and sometimes willing to utilise borderline methods for deep-pocketed clients.
In one example, our investigation found that private detectives working on a case with Mr. Hardman's firm, Hogan Lovells, traveled to French republic to try to pay a potential witness to testify against an enemy of President Vladimir V. Putin of Russia.
But peradventure the biggest advantage is how lawyers similar Mr. Hardman enabled their clients to pursue their foes by winning what ane judge called a legal "nuclear weapon" — courtroom orders freezing a defendant'south assets worldwide. These orders are like to the ones the U.S. regime uses against terrorists or arms dealers, except they emerge from civil proceedings.
Much of this is initially underground, with orders in many cases issued before the target is aware or has been plant liable in a trial. Fifty-fifty lawyers specializing in the freezing orders are uncertain how many are issued. Simply the fact that London lawyers, judges and private investigators are now securely immersed in the cruel political battles of the post-Soviet earth is eliciting concern.
"We're existence asked in the U.K. to adjudicate on political dynamics that English language courts don't fully understand," said Tom Mayne, a researcher at Exeter Academy, who focuses on how English courts handle corruption cases related to the former Soviet Union. "Information technology seems like an abuse of English language law courts, because we're basically reinforcing the status quo of the regimes in these kleptocratic countries."
Lawmakers in Britain are increasingly expressing alarm over Russian influence, warning in a parliamentary study last year that a growing industry of London professionals, including lawyers and private investigators, has emerged "to service the needs" of the Russian elite.
"As the Russian federation Report laid blank, an manufacture of enablers has grown up in our capital letter city to protect and sustain the interests of corrupt elites," said Lisa Nandy, who leads on foreign affairs for the opposition Labour Party. "The court system has now go the latest battleground as they seek to use the institutions of an open society to defend ill-gotten gains."
Mr. Hardman and his protégés at Hogan Lovells have been industry leaders in representing powerful clients from the former Soviet Union, routinely working with Diligence, a London private intelligence firm with a reputation for aggressive surveillance. The firms are teamed up on behalf of Russian federation's Deposit Insurance Agency in pursuit of Sergei Pugachev, a former confidant of Mr. Putin at present defendant by the country of stealing more than $1 billion from a Russian bank, which he denies.
Another instance is a bitter and sensational legal battle that originated in the brutal, autocratic politics of Kazakhstan and involves a country-endemic banking concern, a avoiding tycoon and allegations of stolen billions. The much-publicized dispute began 12 years ago in London, involves numerous lawyers on both sides and is focused on Mukhtar Ablyazov, a onetime insider in Kazakhstan'southward kleptocratic elites who said he was singled out for prosecution after he cruel out of favor for political reasons.
Ms. Tyshchenko was a lawyer for a company related to Mr. Ablyazov. She had gone to Moscow in Baronial 2013 but was grabbed from her luxury hotel nigh the Kremlin, tossed in prison and accused of helping Mr. Ablyazov hide avails. Russian government blest the deal with Mr. Hardman's client that set her free. She denied whatsoever wrongdoing, but the affidavit that she later provided to Mr. Hardman became show in a instance that saw an English judge issue a freezing lodge against Mr. Ablyazov'southward son-in-constabulary.
In a statement, Hogan Lovells denied all allegations of interim inappropriately, adding that Mr. Ablyazov and Mr. Pugachev had "committed some of the largest frauds that the world has ever seen," and that "given its well justified reputation for fair and open justice, it should be no surprise that such claims are tested in London where the result can be trusted around the earth."
An Unusual Menu
To understand the lengths to which Diligence, the private intelligence firm, has gone to produce evidence in these cases, consider the instance of Natalia Y. Dozortseva, a Russian lawyer.
Sitting in a hotel in Nice, France, in 2017, Ms. Dozortseva was joined at the bar by Trefor T. Williams, the caput of Diligence in London. Speaking over the tinkling of a pianoforte, Mr. Williams mixed flattery with offers of money if she would plow on her client, Mr. Pugachev, the onetime Putin confidant who was residing in French republic to avert a prison sentence for breaching a 2014 freezing order issued in London.
Mr. Williams described a menu of options: gold, silver or bronze. Each band, he said, represented a level of cooperation, and compensation.
Telling him everything she knew about her client would earn bronze. Silverish would require a sworn statement. Gold would entail her testifying in court against her customer.
"I e'er want to become gold," Mr. Williams said. He said Ms. Dozortseva's knowledge could help finish what he described as a legal "stalemate" and promised her "financial independence" and, through his contacts in Moscow, the possibility of traveling freely to and from Russia.
"For that," Mr. Williams said, "we desire something, we want some sort of cooperation."
In the competitive earth of individual intelligence, Diligence has congenital a reputation for deceptive tactics and intrusive surveillance that gets results, while frequently working on cases, such as this i, for Hogan Lovells.
Unlike many European countries — and U.S. states — Great britain has no statutory regulation of private investigators, fifty-fifty after the 2011 tabloid telephone-hacking affair, arguably the near infamous private investigation scandal in modern history. Investigators are bound by privacy and other laws and legal procedures in local jurisdictions, only even those are sometimes looser in civil cases brought by private parties.
The Times and the Bureau of Investigative Journalism learned nigh Diligence's approach to Ms. Dozortseva afterwards listening to a secret recording of her conversation with Mr. Williams. In the end, she never betrayed Mr. Pugachev, but instead told him in advance of the meeting, and recorded it.
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Lawyers for Diligence admitted that Mr. Williams had attended an "exploratory" coming together with Ms. Dozortseva just noted that "it is non illegal to offer payments to witnesses" and said no understanding on payment was reached.
The offer to Ms. Dozortseva would run afoul of England's strict rules governing public prosecutions, but zip would explicitly ban it in private-party civil proceedings. In French republic, offer to pay witnesses is illegal merely if the intent is to induce fake testimony. Some legal experts believe, however, that a substantial payment could be evidence of such intent, a betoken Diligence strongly rejected.
Lawyers have been able to benefit from these gaps in the police force to obtain evidence and tactical advantages while distancing themselves from the techniques of firms similar Diligence. Information technology would, for instance, be against industry regulations for a lawyer to pay whatever witness except for "specific and reasonable" expenses, such as travel or adaptation.
Hogan Lovells refused to answer questions about its relationship with Diligence or its knowledge of the firm's tactics, including the offering to Ms. Dozortseva. The police force house noted that its utilise of "enquiry agents" had non been criticized by the English courts and said it would always "expect such firms to ensure that they operate within the police force."
Established in 2000, Diligence took its corporate DNA from Nick Day, its founding chief executive, who, according to former colleagues, reveled in the thrill of undercover operations. A big quantum came in 2005, while the firm was assisting a Russian conglomerate in a multimillion-dollar commercial dispute in the British Virgin Islands.
Mr. Day was accused of bamboozling an accountant with KPMG into handing over some confidential documents. He impersonated a British intelligence officeholder while an American working for the visitor pretended to be from the C.I.A., claiming to be "Liz from Langley."
When KPMG was tipped off about the deception, Diligence paid $one.seven 1000000 to the accounting firm to settle a fraud claim, Bloomberg reported.
Mr. Hardman worked on the case alongside Diligence at the time and has since continued to put work the house's mode. Hogan Lovells paid Diligence nearly $ii.3 1000000 for piece of work carried out in 2012 solitary, documents show, around half of the London headquarters' total income for the year.
In a argument, Mr. Day said that both he and Diligence's Swiss spinoff, which he now runs, denied "all allegations of wrongdoing." Mr. Solar day — who did non deny impersonating an intelligence officeholder to obtain documents — stated that the company had stringent protocols to "ensure that its techniques are lawful, necessary and proportionate." Information technology uses "creative and cut border investigative techniques" to obtain information that is "admissible in court and meets all applicable rules of bear witness," he added.
For the Pugachev case, Diligence'due south approach to Ms. Dozortseva was arranged past Mr. Pugachev's butler and commuter, a keen apprentice pianist and an admirer of Russia and its culture.
In render for spying on Mr. Pugachev and copying some documents, the butler, Jim Perrichon, said in an interview that Diligence had promised him a monthly servant. Mr. Perrichon said he delivered on the bargain by setting upward the hotel meeting with Ms. Dozortseva. "I realized that if we could recruit Natalia nosotros could shell Pugachev," Mr. Perrichon recalled.
But Mr. Perrichon, while still a believer in Russia, said he now no longer trusted Diligence, which he said failed to fully pay him. In a March 2020 email, the firm also offered him a one-off "36k" settlement and promised to increase its payments if he prepared a report on what he knew almost Mr. Pugachev and stated his willingness to testify in courtroom. He rejected the deal.
Diligence admitted to paying Mr. Perrichon for information on Mr. Pugachev but said it did not recruit him as an informant. The company said it was Mr. Williams who sought to cease the relationship, subsequently Mr. Perrichon did non deliver the promised intelligence. It denied attributable him money.
A Legal Weapon
Like a military drone, a global freezing social club can strike its target without alert.
Mr. Pugachev, for example, learned that his assets had been frozen only when a Diligence amanuensis and a Hogan Lovells lawyer tried to hand him the order on a London street. Later Mr. Pugachev refused to accept the papers, the lawyer dropped them at his business firm.
England introduced the freezing orders in 1981, and past 1998 a judge had ruled that they had global accomplish. The timing was propitious. Money and businessmen from Russia and other post-Soviet states had poured into London, supposedly a safe oasis.
Mr. Ablyazov fled Kazakhstan in 2009 after the Central Asian state accused him of embezzling billions from BTA Bank, of which he was chairman. Mr. Ablyazov denies wrongdoing, and maintains that the government only pursued him considering he posed a political threat.
An English judge has declared Mr. Ablyazov untrustworthy, but France'southward highest authoritative court in 2016 overturned a authorities decision to extradite him on the grounds that the case against him had a "political motive."
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Mr. Hardman's legal team won the freezing lodge confronting Mr. Ablyazov in 2009 and has since filed scores of court applications, winning judgments that have gradually widened the society'south telescopic and expanded the list of defendants to associates and members of his family.
The civil rulings ultimately turned into a 22-month prison judgement in 2012 for contempt of courtroom for Mr. Ablyazov, subsequently he was found to have breached an order to disclose assets. He fled to France, which eventually granted him refugee status.
Since then, English freezing orders, backed past international respect for England's courts and London's centrality as a financial hub, take become unparalleled in power and reach, experts say. The orders tin can be practical to an individual target with even a loose link to Uk, and courts have ruled they can also utilise to continued companies, trusts and associates anywhere in the globe.
"A worldwide freezing order is an incredibly draconian measure," said Lloydette Bai-Marrow, a former senior prosecutor for United kingdom of great britain and northern ireland'south Serious Fraud Part who now runs a white-collar investigations consultancy. "At that place is a tendency toward them existence used potentially in a very harmful way and weaponized against individuals, and that should be a cause for concern for all of us.
"We can't allow ourselves to exist used equally a pawn in a bigger game."
Hogan Lovells said English law places a "very heavy burden" on whatever party applying for a freezing lodge to practice then fairly. The police force firm added that the accused had the correct to apply immediately on being served to take an order lifted if the injunction has been obtained using "improper or false" evidence, and noted that the litigant must put forward whatsoever arguments to the guess that the defendant might brand if they were present.
Many English lawyers and judges maintain that freezing orders are essential to restrict fraudsters, and defend the openness of their courts to lawsuits and evidence originating in countries with compromised legal systems. Assessing all the evidence, they contend, regardless of where it came from or how it got there, improve serves justice.
"Admissibility of evidence makes U.K. courts more attractive for this kind of litigation than countries like the U.South.," said Pavel Tokarev, a former Diligence investigator who left in 2019 to start his own agency. "The rules of accepting prove, information technology's very flexible in the U.Yard."
The jailhouse evidence from Ms. Tyshchenko is a example in indicate.
To acquire it, Mr. Hardman worked with Andrei A. Pavlov, a Russian lawyer hired by BTA Bank. The United States and Britain would later place sanctions on Mr. Pavlov for his declared function in a criminal conspiracy that led to the 2009 expiry in a Moscow prison house of the whistle-blower Sergei Magnitsky. Mr. Pavlov, in an interview in Moscow, said he had been unfairly smeared and had done nothing incorrect. He said he was proud to accept worked with Mr. Hardman because of his London partner's reputation as an outstanding lawyer.
Faced with complaints that Hogan Lovells had not fully informed the court that Ms. Tyshchenko provided her evidence under duress, an English judge ruled they had followed disclosure rules by stating that she was incarcerated when she first provided the information. But the gauge was not asked to rule on whether the circumstances of her incarceration — the fact that she was in a Russian prison house — should besides exist considered, likewise as the interest of Mr. Pavlov and questions nigh whether Ms. Tyshchenko had been mistreated.
Moreover, while Ms. Tyshchenko remained in prison house, another Hogan Lovells chaser convinced an English judge to grant an order that required her husband in Britain to hand over records and other data. Amidst the supporting evidence the constabulary firm submitted were "press reports" from compromat.ru, a Russian website notorious as a clearing business firm for unverified and sometimes fabricated information.
Hogan Lovells said that London'due south High Court had already rejected complaints of the firm "behaving improperly" in Ms. Tyshchenko'southward case, and stated that it "complies fully" with the rules of evidence. The information from compromat.ru was "one small part of a much larger collection of evidence that the courtroom accustomed justified the granting of the order" in the case confronting Ms. Tyshchenko, the firm said.
Ms. Tyshchenko was less sanguine. "At that place are no proficient guys in this affair," she said.
A Case That Never Ends
If some of London's police firms have reaped rich rewards by defending oligarchs and former Soviet countries, they have sometimes been less successful at recovering funds for those clients. As of November 2020, BTA Banking company had recovered just $45 million of the more than $6 billion information technology claims Mr. Ablyazov stole, its chairman said in a contempo affidavit.
An internal report prepared by the bank in 2014 said that 89 pct of the $470 million it had spent worldwide on lawyers and other "consultants" was disbursed in London.
Legal battles rooted in onetime Soviet states are often "pretty lucrative simply considering the rates of U.K. lawyers or investigative firms," said Mr. Tokarev, the former Diligence investigator. "The U.One thousand. is a businesslike country and government, and they don't accept any interest in chasing whatever coin out of the country."
Prototype
Indeed. The BTA case, for one, shows no sign of slowing down.
In November, for example, a London gauge reviewed a request by the state-owned bank to freeze the avails of a Kazakh billionaire, Bulat Utemuratov, whom a British lawyer working for BTA Depository financial institution alleged in court was Mr. Ablyazov'south "money-launderer in chief." The approximate, presented with evidence partly generated past Kazakhstan'southward security apparatus, issued the freezing club.
The post-obit month, however, some other London guess abruptly lifted the order afterward the bank reached a confidential settlement and dropped its case confronting Mr. Utemuratov, who denied the allegations. The law house that introduced the prove to an English court, Greenberg Traurig, declined to annotate.
It was some other reminder that the political fights of Kazakhstan, and other autocratic states, ofttimes end up in London.
Source: https://www.nytimes.com/2021/06/18/world/europe/uk-courts-russia-kazakhstan.html
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