MOSCOW, March 19 – RAPSI, Ingrid Burke. Finding that Cypriot shell company Usarel Investments Ltd. had knowingly helped disgraced Kazakh banker Mukhtar Ablyazov defraud BTA Bank during his former tenure as its chairman, London’s High Court of Justice held Tuesday that Usarel is liable under Kazakh law to deliver most of its ownership shares in Russia’s Vitino Port to BTA Bank, according to a copy of the judgment obtained by RAPSI.

The order stemmed from a much broader series of claims filed by the bank against Ablyazov and various of his former colleagues alleging that it had been defrauded of approximately $6 billion.  

BTA Bank insists that Ablyazov carried out the fraud by way of directing bank funds to various offshore accounts owned by him.

In total, the bank lodged 11 claims against the former chairman. At issue in Tuesday’s judgment were three of those claims, amounting to approximately $3 billion.

One such claim was the Chrysopa action, wherein BTA Bank asserted that Ablyazov paid $120 million of the bank’s funds to an offshore account.  
In August 2008, BTA Bank paid $120 million to Dutch shell company Chrysopa Holding BV as part of a loan deal. The money was then passed to Usarel, who used it to purchase the Vitino Port on northern Russia’s White Sea.

BTA Bank claimed that the loan deal was a sham. According to the judgment, the bank believes that Ablyazov owned Chrysopa and had never intended for the company to reimburse the bank. Rather, the bank alleged that the deal was carried out as such in order to securely transfer the funds to Usarel so that it could purchase the Vitino Port.

The port was purchased using the $120 million loan and an additional $6 million.

Ildar Khazhaev joined Ablyazov and Usarel as a co-defendant in this claim. Only in his mid-20s at the time, Khazhaev’s career had quickly advanced to the point where he was running BTA Bank’s CIS Financing Department, which was responsible for loan deals outside of Kazakhstan.
According to the court, Khazhaev knew that both Usarel and Chrysopa were affiliated with Ablyazov. Referencing a July 2008 email he had received, the court explained, “The significance of the email is that it stated that Chrysopa and Usarel were Ablyazov companies, being part of the Eurasia group, and for that reason no further legal due diligence was required.”

In August 2008, Khazhaev signed a loan deal on behalf of BTA Bank. That day, the funds were transferred to Chrysopa, which then transferred them to Usarel.

Among the bank’s claims against Usarel was one alleging unjust enrichment.

The court’s determination of Usarel’s liability under the claim hung on “whether Mr. Ablyazov’s knowledge and intentions can be attributed to Usarel when entering into and receiving the proceeds of the sub-loan.”

After grappling with the proper approach to attribution under Kazakh law, the court determined that Usarel is liable to compensate BTA Bank “by its unlawful actions and its own fault.”

As Usarel is incapable of returning the $120 million, Kazakh law requires that all “dokhody” – a word translated by the court’s Kazakh legal expert as incomes – derived from the loan should be returned to the bank.