BTA Bank Welcomes Judgment for Breaking Privilege in Ablyazov Fraud Case

11 August 2014 - London, UK – The English High Court has again ruled in favour of BTA Bank in its ongoing litigation against Mukhtar Ablyazov, requiring Mr Ablyazov to disclose documents relating to his assets that were previously withheld on the basis of legal professional privilege.

The Court has ordered the disclosure of materials held by Mr Ablyazov's past and present solicitors, Clyde & Co., Stephenson Harwood and Addleshaw Goddard, on the basis that Mr Ablyazov used them to further his fraudulent purposes.  In particular, the Court found that Mr Ablyazov has "been bent on a strategy of concealment and deceit" since these firms were first engaged, and that the strategy has continued right up to the present day.

Whilst noting that it was not alleged at this stage that the solicitors had themselves acted improperly, the Court found that the solicitors had nevertheless been used as instruments to conceal Mr Ablyazov's assets and his illegitimate dealings with them, which "involved perjury, forgery and contempt".

The rule preventing the disclosure of communications between a client and his lawyer is often seen as inviolate, but an exception can be made in cases where the solicitor has been used as an instrument of the client's fraud.

Mr. Justice Popplewell held that Mr Ablyazov had, as BTA Bank alleged, indeed used his solicitors in such a way and that disclosure of such materials should be given to BTA as his solicitors are "likely to hold documents casting light on Mr. Ablyazov's… beneficially owned assets which may assist the Bank in executing its judgments and enforcing the Court's order against them."  BTA Bank still has unenforced judgments for over US$4.6 billion.  Interest on the Bank's judgments alone amounts to more than US$800,000 per day.

Richard Lewis, a partner at Hogan Lovells, stated that "The Bank is delighted with this decision, which it considers will be very valuable to its efforts to identify and secure assets against which its judgments can be enforced".

Notes to editors

  • BTA Bank launched global legal proceedings against Mukhtar Ablyazov and his associates in 2009 after auditors at PwC identified a massive hole – more than $10 billion – in the Bank’s balance sheets. This led to the discovery of a large-scale fraud committed by Mukhtar Ablyazov while he was Chairman of the Bank.
  • The legal proceedings in England consist of 11 claims filed by BTA Bank in the English High Court seeking to recover more than US$6 billion in assets misappropriated by Mr Ablyazov. The Bank has secured judgments for more than US$4 billion and is in the process of seeking to enforce those judgments against assets currently held in receivership.
  • As previously reported, Mr Ablyazov was found guilty of contempt of court in February 2012 and sentenced to three concurrent 22 month prison sentences. Mr Ablyazov fled the jurisdiction before sentencing and was subsequently debarred from defending various claims brought against him by BTA Bank. His appeals against the contempt and debarral orders were dismissed by the Court of Appeal in November 2012, with Lord Justice Maurice Kay observing that "It is difficult to imagine a party to commercial litigation who has acted with more cynicism, opportunism and deviousness towards court orders than Mr. Ablyazov". On 26 February 2013, the Supreme Court of the United Kingdom refused Mr Ablyazov's application for permission to appeal the debarral judgment.

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