MOSCOW, September 6 (RAPSI) — The High Court of Ireland (High Court) at the organizational meeting held on July 30 announced that it intends to decide if it is the proper venue to consider the claim of the offshore companies Trafalgar Developments Limited, Bairiki Incorporated, Kamara Limited, Instantania Holdings Limited against Uralchem JSC and other persons.
“The adopted decision does not prejudge the outcome of the case on the merits. It concerns a procedural issue and only means that the court intends to consider the validity of the claims of the above companies. A decision on the merits of a dispute can only be taken after the main proceedings, which have not yet been initiated by the High Court. After the decision on the jurisdiction is rendered, Uralchem JSC will consider the issue of appealing against it," the press service of Uralchem said.
The litigation in Ireland is pending as to the suit lodged by four offshore companies that call themselves the majority shareholders of PJSC Togliattiazot, although in reality, as established by the judgement of the Komsomolskiy District Court of the city of Togliatti, the said companies received about 70% of Togliattiazot's shares in trust, the press service noted. The plaintiffs do not disclose to the court in Ireland in whose interests the claim is lodged and who is the ultimate beneficiary of the said shares. However, as it was established by the judement, these offshore companies were used by convicted Sergey Makhlai, his father Vladimir Makhlai, and Andreas Zivy as a place of storage of Togliattiazot shares with the aim to conceal information about the owners of the shares from other shareholders.
In July 2019, the Komsomolskiy District Court of the city of Togliatti issued a guilty judgement against the beneficial owners of PJSC Togliattiazot. Sergey Makhlai, Vladimir Makhlai, the owner of Swiss company Ameropa AG affiliated with them, Andreas Zivy, and two other defendants were convicted in absentia of large-scale fraud committed by a group of persons by prior conspiracy (Article 159.4 of the Criminal Code of the Russian Federation).
The court sentenced them to prison terms ranging from 8.5 to 9 years and ordered them to compensate for the damage caused to PJSC Togliattiazot in the amount of 77.3 billion rubles (about $1 billion) and 10.3 billion rubles ($140 million) in damages to JSC Uralchem, a minority shareholder which owns 10% of shares in Togliattiazot.
The claim by the trustees of ToAZ shares against Uralchem JSC and other persons was filed in November 2016, at the final stage of the investigation of a criminal fraud case. By that time investigators had a large amount of evidence about the criminal activities of the group operating at ToAZ. It is to be noted that at the end of 2016, the majority shareholding and the property complex of Togliattiazot were already seized. Moreover, all five persons involved in the case were arrested in absentia. The managers of ToAZ were faced with the prospect of a complex litigation in the Russian Federation. The filing of a lawsuit in an Irish court may have become the result of seeking legal protection in the West for the beneficiaries of ToAZ, in case they fail in a Russian court.
It was not by chance that the owners of ToAZ decided to sue in Ireland. The fact is that one of the defendants in the Irish dispute is Eurotoaz Limited, a company registered in Ireland. In 1994, Vladimir Makhlai sold a 10% stake in the plant to the Russian-Hungarian joint venture (RHJV) Eurotoaz for $20 million. At that time, this company was 40% owned by ToAZ, and 60% of RHJV Eurotoaz was owned by entrepreneur Alexander Rovt. In 1995, Vladimir Makhlai liquidated Eurotoaz, the ownership rights to his share of ToAZ stocks were transferred to Eurotoaz Limited, registered in Ireland, with the help of which ToAZ was then selling its products on the American market.
However, this story has a continuation. Mr. Rovt, according to him, only after a few years learned that his Eurotoaz ltd was no longer listed in the register of ToAZ shareholders, then he unsuccessfully challenged this development in courts. The position of the beneficiaries of ToAZ was that Eurotoaz Ltd was liquidated on its own initiative. At the same time, the register of shareholders of OJSC Togliattiazot was kept not by an independent registrar, as required by law, but by AOZT FIK ToAZ-Invest, whose director was Yevgeny Korolev, who since 1994 held various managerial positions at Togliattiazot. That is, the issuer and the registrar conducted coordinated activities to manage the enterprise and the register of its shareholders.
In 2012, the Presidium of the Supreme Commercial Court of the Russian Federation dismissed a Eurotoaz Limited petition to be included in the register of ToAZ creditors' claims, indicating in its ruling that the Irish company did not and never had rights to the shares of the enterprise.
The Irish jurisdiction of Eurotoaz Limited now came in handy for the owners of ToAZ, because the legal proceedings in this country provide for an opportunity to satisfy the claims of one party without inviting or hearing its opponents. It is to be noted that Uralchem challenged the jurisdiction of the Irish court in July 2018, since, according to the company, a decision concerning an asset located and operating in Russia should be made by a Russian, not a foreign court.
In the framework of the lawsuit filed with the High Court it is alleged that the respondents are liable for an alleged conspiracy to cause damage to the claimants by actions aimed at depriving them of their shareholding or benefits from participation in the share capital of Togliattiazot PJSC and / or causing damage to the value of their shareholding.
Uralchem denies all the demands made by the claimants and intends to prove that those are groundless in the High Court.
In order to enforce the sentence, damages were levied on the Tomet LLC controlled by Zivy, bankruptcy proceedings against this company were started in April 2021, and in August 2021 a court declared Sergey Makhlai bankrupt and foreclosed on his property.