JSC BTA Bank v Mukhtar Ablyazov (16 February 2012)
The applicant bank had satisfied the court to the criminal standard of proof that the respondent was guilty of contempts of court by failing to disclose his assets in breach of a worldwide freezing order.
The applicant Kazakh bank (B) applied to commit the first defendant (X) for contempt of court and for other associated relief.
B had effectively been nationalised by the State of Kazakhstan. X was the former chairman of B and was accused of widespread misappropriation of its funds. X had left Kazakhstan and taken up residence in England. B had brought proceedings against him claiming in excess of US$1.8 billion. X denied the claims which he said were politically motivated. B had obtained a worldwide freezing and disclosure order against X and the appointment of a receiver over his assets in support of that order. B advanced numerous allegations that X had failed to comply with the freezing order or had otherwise acted in contempt of court. For case management reasons the court determined that there should be a trial of only three allegations that X (i) had failed, in breach of the freezing order, to disclose his beneficial ownership of the shares in a company, Bubris, incorporated in the British Virgin Islands; (ii) when cross-examined under oath as to his assets, had failed to disclose his beneficial ownership of four residential properties in London and of the shares in three foreign companies, which had received substantial payments from a company which X admitted he owned; (iii) in breach of the freezing order, had dealt with the rights to the repayment of certain loans made by a Cypriot company, Stantis.
(1) X did not hold his assets in his own name. Rather, a trusted associate appeared to hold shares in a holding company on his behalf and by that means controlled the shareholdings in a chain of other companies at the bottom of which was an operating business. The use of a nominee and of companies registered in offshore jurisdictions made it difficult to trace his assets. Assets held in that way were assets of X within the wide definition of assets in the freezing order. They were assets which X had the power indirectly to dispose of as if they were his own. Although not the registered owner of any shares in a company he was the ultimate beneficial owner of them and could dispose of the assets held by the company as if they were his own by reason of being able to instruct his nominee (see paras 16-17 of judgment). (2) The court was satisfied to the criminal standard that X was at all material times the true beneficiary of the shares in Bubris. The shares were held on his behalf by a succession of nominees. X's denial of ownership was untrue. It was improbable that Bubris was worth less than £10,000. It followed that X was obliged to disclose his interest in Bubris by the terms of the freezing order and that in breach of that order he had failed to do so. That was a contempt of court. His conduct was deliberate. It was not necessary to show that the defendant to a contempt application appreciated that what he was doing was a breach of the court order and intended to breach the court order,Masri v Consolidated Contractors International Co SAL  EWHC 1024 (Comm) applied (paras 122-124). (3) The court was sure that three of the London properties were beneficially owned by X. The evidence was circumstantial but the only reasonable inference was that he was the beneficial owner. He had provided the purchase price. There had been no complaint from a third party when the shares in the companies holding the properties had been included in the receivership order. X's evidence that all the properties he owned had been listed in his schedule of assets was therefore untrue. He did not have any belief in the truth of what he said. His evidence must have been given with the intention of interfering with or impeding the course of justice. It was therefore given in contempt of court (paras 145-147, 158, 173). The court was also sure that X was the beneficial owner of the three foreign companies. When X denied having any interest in them he gave false evidence and acted in contempt of court (paras 204-206). (4) The court was sure that Stantis was not an operating company but a mere conduit for channelling X's funds. It held its assets in accordance with X's instructions. The repayment rights were thus assets of X within the freezing order. They were dealt with when they were assigned to a third party. X attempted to justify the assignment by the use of documents which had been fabricated for the purpose. The assignment was a dealing with X's assets in breach of the freezing order and a contempt of court (paras 219-221, 229, 235).