LONDON - Chelsea Football Club owner Roman Abramovich emerged victorious on Friday from a $6 billion legal battle with his former mentor Boris Berezovsky that has laid bare the intrigue behind the post-Soviet carve-up of Russia's vast natural resources.
Berezovsky, who became a Moscow powerbroker under the late
President Boris Yeltsin only to fall foul of Vladimir Putin, had
accused Abramovich of using the threat of Kremlin retribution to
intimidate him into selling prize assets at a knockdown price.
But Judge Elizabeth Gloster told a packed London courtroom
that she had found Berezovsky to be an “unimpressive and
inherently unreliable witness” who gave sometimes dishonest
evidence and would say “almost anything to support his case”.
Gloster dismissed all of Berezovsky’s $6 billion in claims
in one of the biggest private litigation cases ever, saying
Abramovich – the world’s 68th richest man with a $12.1 billion
fortune – was a “truthful and on the whole reliable witness”.
“I am absolutely amazed about what happened today,”
Berezovsky, 66, told reporters after listening expressionless
as the verdict was read out in a modern, glass courtroom crowded
with lawyers, bodyguards and journalists.
“My confidence in English justice has been undermined by the
judge’s decision,” he said, adding that the ruling was so
sympathetic to Putin that it read as if the Kremlin chief had
written it himself.
But such a stinging rebuke from one of Britain’s most
experienced commercial judges is likely to cement Berezovsky’s
reputation as a publicity-seeker and opens him up to claims for
costs that could exceed $100 million.
“There was a marked contrast between the manner in which Mr
Berezovsky gave his evidence and that in which Mr Abramovich did
so,” Gloster said in an hour-long dissection of Berezovsky’s
claim which delved into the murky world of Russian business.
Abramovich, who made headlines by buying Chelsea in 2003,
had denied Berezovsky owned the assets and said that he merely
paid Berezovsky for political cover and protection – known in
Russian gangster slang as “krysha” or “roof”.
The 38-page preliminary ruling marks the beginning of the
end for a legal odyssey stretching from the gilded corridors of
the Kremlin via the offshore enclaves favoured by Russia’s
tycoons to the rarefied atmosphere of London’s High Court.
Judge Gloster stumbled at times trying to pronounce
“krysha”, a term used by leather-jacketed gangsters on the
streets of Russian cities and now the partial basis of a ruling
in one of the most respected legal systems in the world.
“It is a very tough verdict for Mr Berezovsky: it is very
much based on an appreciation of him as a witness whether that
is justified or not and he clearly thinks it is not,” said
Philippa Charles, a litigation partner at law firm Mayer Brown,
which is not directly involved in the case.
The case has captivated some of the top lawyers in Britain,
whose globally respected, tradition-bound courts where
barristers still wear wigs have become the venue of choice for
the international rich to sue each other. Russian firms often
settle their legal differences in London because they do not
trust the courts at home.
Friday’s judgment comes less than a month before the main
proceedings in another legal battle between two Russian tycoons
– metals billionaire Oleg Deripaska and his former associate
Michael Cherney – are set to begin in a London courtroom.
Berezovsky had claimed that Abramovich used the threat of
retribution at the hands of Putin’s Kremlin to intimidate him
into selling out of Sibneft, Russia’s fourth biggest oil
company, at a knockdown price.
The judge said that though she felt the court had not got
the full picture of the relations between Berezovsky, his late
partner Badri Patarkatsishvili, and Abramovich, she had
dismissed the $5 billion Sibneft claim and another $565 million
claim relating to claimed ownership in aluminium company RUSAL.
Abramovich was not in court to hear the verdict and his team
of lawyers, led by Karyl Nairn a litigation partner at Skadden,
Arps, Slate, Meagher & Flom LLP, merely smiled as the judge read
out her lengthy statement.
“There were many serious allegations made against Mr
Abramovich by Mr Berezovsky, including attacks on Mr
Abramovich’s honesty and integrity,” Abramovich’s investment
vehicle, Millhouse, said in a statement.
“We are pleased that the Judge has firmly rejected all such
allegations and has described Mr Abramovich as a truthful and
frank witness who showed a responsible and honest approach when
giving evidence in this case.”
The titanic legal battle had provided rich pickings for the
media ever since a tussle broke out between the two tycoons and
their retinues of bodyguards in a Hermes luxury boutique in
London in 2007, when Berezovsky served Abramovich with a writ.
That gave an early glimpse of what was to come, with the
hearings revealing the extravagant lifestyles of Russia’s
super-rich: helicopter flights to luxury ski resorts in the
Alps, Caribbean cruises, English country estates and French
But besides the drama and vast legal costs of a battle
between two of Russia’s most prominent businessmen, the case has
detailed the treacherous business world of post-Soviet Russia:
Ownership rights so flimsy even powerful tycoons like
Abramovich needed krysha stretching up to the Kremlin itself,
offshore cash as king and the constant insecurity of a system
where assets could be expropriated at will.
Complete with blatant tax evasion, vague deals on
billion-dollar assets and a fly-on-the-wall view from inside the
adrenaline bubble of Russia’s A-team of oligarchs, the case
reveals the country’s heady corruption.
Even the evidence read like a John le Carre thriller:
barristers bickered over handwritten notes from an offshore
lawyer who died in a mysterious helicopter crash, a snatched
conversation on tax avoidance recorded in secret at Le Bourget
airport, and a meeting at London’s Dorchester Hotel to hash out
the creation of the world’s biggest aluminium company.
In Russia, state television reports cast the legal battle as
evidence of the dire state the country was in following the 1991
collapse of the Soviet Union, a period Putin has described as a
tragic and chaotic era when the country was on its knees.
“We’ve heard a great deal here in the last few months as the
lawyers dragged once-confidential information out of the former
friends, now opponents, about ways to make billions in a
half-destitute country,” said the report on Rossiya-1
Berezovsky said he was considering whether to appeal.