Abramovich beats "dishonest" Berezovsky in court

Reuters News
Posted: Aug 31, 2012 11:11 AM
Abramovich beats "dishonest" Berezovsky in court

By Guy Faulconbridge and Alessandra Prentice

LONDON (Reuters) - 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 prized 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 favored 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 aluminum 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 chateaux.

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 aluminum company.

At Putin's Novo-Ogaryovo residence outside Moscow, his spokesman suggested Berezovsky had slandered Russia during the hearings.

"It is always a pleasure when slander is called by its true name," Putin spokesman Dmitry Peskov told reporters when asked about the case.

Russian 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 television.

Berezovsky said he was considering whether to appeal.

(Additional reporting by Steve Gutterman in Moscow, Gleb Bryanski in Novo-Ogaryovo; Writing by Guy Faulconbridge and Kate Holton; Editing by Steve Addison, Will Waterman and Giles Elgood)