A Pyrrhic victory for Abramovich?

The judgment in the Berezovsky vs Abramovich case was a long time coming. Berezovsky lost comprehensively, but Abramovich would do well to consider carefully whether his victory was actually worth winning, says Vladimir Pastukhov

Vladimir Pastukhov
3 September 2012

I did not for a moment doubt that Boris Berezovsky would lose his London case. The turning point for me was when I heard the Russian cant word krysha [lit. roof, here a combination of political access and criminal protection] being used in the courtroom.  At that moment the plaintiff's team of lawyers suffered a conceptual defeat. 

At the beginning of the proceedings that same team had made the only possible legal assumption they could, but their opponent not only failed to retreat – he gambled everything, upping the ante even more, and won. His victory is, however, far from unconditional: as one of the characters in the Forsyte Saga remarked, winning in the High Court doesn't necessarily mean winning in life. 

Explaining the money away

This trial will certainly be used as an example to teach students. For all its legal simplicity (not to be confused with the complications arising from the multiplicity of confused facts under discussion), it has a certain piquancy. Berezovsky could essentially only invoke one objective fact (apart from own assertions, which, though not in any way corroborated, I think were probably true): the defendant had paid him astronomical sums of money for no apparent reason.  That just doesn't happen in normal business.

In my opinion the main challenge facing Abramovich's legal team was the paramount importance of explaining why these enormous sums of money had moved from one pocket to another.

Berezovsky maintained that this was payment for his share of the assets. An explanation of sorts. If Abramovich's representatives had not managed to come up with an alternative reason for the payments, they would have lost the case, because the court would have concluded that there could be no other explanation for the transfers than the one given by the plaintiff. So the fact the payments were made in itself proves that Berezovsky is in the right. There simply could not have been an alternative explanation which would not have implicated Abramovich or proved his involvement in criminal activities and Berezovsky could be sure of that, assuming as he did that his opponent wouldn't dare to declare for all to hear that he was involved in corruption and had accumulated his capital with mafia help.

But Abramovich picked up the gauntlet. Without batting an eyelid, his lawyers described their client's activities in the most unflattering light possible and introduced the famous krysha concept into British legal language.  The problem of the unexplained money transfers was thus solved and Berezovsky lost practically his only argument, along with any chance of victory in court. I lost interest in the legal aspects of the trail from the moment Abramovich confirmed that he had been paying Berezovsky for protection.  The verdict was determined at that point 

The verdict – and its cost

No judge in the world would accept responsibility for handing down a verdict entailing the seizure of assets worth several billions of dollars on the basis of statements made by one of the parties and not borne out by written or any other tangible proof. If Judge Gloster had had a better knowledge of the realities of Russian life, of course, she would have concluded that in all probability Berezovsky was right and had in actual fact considered that he owned the assets.  Because that was the kind of agreement made in the 90s.  But that would have had absolutely no effect whatsoever on her decision.  Berezovsky simply was unable to prove what he had said.  Truth in court is relative.

‘If Judge Gloster had had a better knowledge of Russian realities, she would have concluded that in all probability Berezovsky was right...  But that would have had absolutely no effect whatsoever on her decision.  Berezovsky simply was unable to prove what he had said.  Truth in court is relative.’ 

The cost of Abramovich's victory is enormous. His lawyers are to be congratulated and can doubtless start planning how best to invest their fees. The future of their client, and of others too, is not their problem. They have on the whole earned their fees – they took a risk which turned out to be justified. I would, however, not be in any hurry to congratulate their client.  Life is not just contained within the walls of the courtroom, and it can go on for a very long time.

In about 10 years this victory could come back to haunt Abramovich and compel him in retrospect to regret not paying the miserable 5 billion dollars.

It could come back to haunt other oligarchs too, possibly the whole of the Russian nation, which has become hostage to the gladiatorial contests going on in London.

The true cost of this victory will only become clear in about 2-3 weeks, when the full judgment, including Judge Gloster's rationale for her decision, is published. The trial itself has already become a kind of encyclopaedia of Russian corruption, a criminal alphabet. Its protocols are likely to be more quoted in the future than the Protocols of the Elders of Zion.

I imagine that many of these protocols will find their way into the full judgment of the decision and will establish a precedent. As a result the High Court will officially establish that all Russian capital accumulated in the wild 90s and the brazen 00s will have been obtained by criminal means, at least from the point of view of Western systems of justice.

This is the conclusion we now have to live with.  No one will be particularly exercised by it for some time, but things won't be able to continue this way for ever.

The future

One doesn't have to be a genius to make the connection between the court decision and a legal re-evaluation of the massive Russian investments in the Western economy, be it Gazprom, Metalloinvest or the very same Abramovich and Berezovsky.  Legal standards in the West will dictate that these investments must be regarded as money laundering. European countries, and of course America, are queuing up to introduce regulations to the effect that confiscated laundered money must be paid into the national budget of the relevant country.  So…this theatrical legal spectacle will ensure that in some 6 months the legal foundations will have been laid down for confiscating almost any Russian assets abroad, private or state. 

‘This theatrical legal spectacle will ensure that in some 6 months the legal foundations will have been laid down for confiscating almost any Russian assets abroad: private or state.’ 

This brilliant victory could turn into a tale with a moral about the evils of greed.  But it absolutely does not mean that tomorrow European or American prosecution lawyers will be rushing to confiscate Russian property from its owners. Not everything allowed by law is politically possible. They may not rush tomorrow, but they might the day after. A change of political regime in Russia, whatever form that might take, could entail an instant loss for Russia of foreign investments worth hundreds of billions of dollars. You don't have to look very far for examples: before the Arab Spring, Western economies were pleased to accept investments from Middle Eastern 'dictators.'  And many of those investments are still in place.

So, history repeats itself and Russia could yet again be dramatically robbed: the fruits of the hard labour of several generations will lie for ever in the safes of Western banks, occupying their place next to the assets of the Russian Imperial family.

But these conclusions are superficial.  Our curiosity is aroused by one question: could Berezovsky have realised the gamble he was taking?  For all his faults, he is after all a mathematician and, therefore, able to count. In which case, what is interesting is what the real object was of this trial for the plaintiff: money or a desire to take the defendant to the cleaners?

If the second, then I think we could well expect to see a second episode of this most unattractive circus performance.  

Photo: Ria Novosti/Vladimir Fedorenko

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