In action 2007 Folio 942 (“the Commercial court action”) the claimant, Boris Abramovich Berezovsky (“Mr. Berezovsky”), sues the defendant, Roman Arkadievich Abramovich (“Mr. Abramovich”) for sums in excess of US dollars (“$”) 5.6 billion.

Both men are Russian citizens and are, or were, successful businessmen. Mr. Berezovsky fled from Russia to France on 30 October 2000, following a public dispute with Vladimir Putin (“Mr. Putin”), who was elected President of the Russian Federation in March 2000. Mr. Berezovsky subsequently settled in England and applied for asylum in the United Kingdom on 27 October 2001. His application was accepted on 10 September 2003. He is now resident in England. At the time Mr. Berezovsky fled Russia, he had substantial commercial interests in the Russian Federation. According to his United Kingdom tax returns, he remains domiciled in Russia for tax purposes and intends to return to Russia when the political situation permits him to do so.

Mr. Abramovich frequently visits England because of his ownership of Chelsea Football Club. He also had substantial commercial interests in the Russian Federation at material times for the purposes of this litigation.

Jurisdiction in the action was founded on service, or attempted service, of the claim form personally on Mr. Abramovich, whilst in England, and his subsequent decision not to challenge the jurisdiction of the English court. In circumstances where Mr. Berezovsky was unable to return to Russia without facing arrest, and what were accepted, on Mr. Abramovich’s part, to be the difficulties facing Mr. Berezovsky in obtaining a fair trial, if he had attempted to bring civil proceedings in Russia, that was no doubt a realistic decision.

Mr. Berezovsky brings two claims against Mr. Abramovich. The first claim relates to an interest which Mr. Berezovsky alleges that he had in OAO Sibirskaya Neftyanaya Kompaniya (“Sibneft”), a Russian joint stock company, which was created by Decree Number 872 of the President of the Russian Federation, dated 24 August 1995 (“the August 1995 Decree”), as part of a programme of privatisation (“the Sibneft claim”). Sibneft subsequently became a major integrated oil company generating large profits. The second claim relates to an interest which Mr. Berezovsky alleges that he had in OAO Russkiy Alyuminiy, a company registered in Moscow on 25 December 2000 (“RusAl”), which became a substantial company in the Russian aluminium industry (“the RusAl claim”).

Although the formulation of the claim has changed over time, by the start of the trial

As set out in the Re-re-re-Amended Particulars of Claim dated 5 October 2011 and Mr. Berezovsky’s opening submissions.

NB:In this judgment I have referenced certain passages in the evidence in footnotes. These footnoted references should not in any way be regarded as exclusive, exhaustive, or even the principal, references to the evidence upon which I relied in reaching my conclusion in relation to a particular topic. Often the footnoted reference is no more than a starting point to the relevant evidential material.

prior to the August 1995 Decree, Mr. Berezovsky, one of his close business associates, Mr. Arkady (or Badri) Patarkatsishvili (“Mr. Patarkatsishvili”), a Georgian citizen, and Mr. Abramovich agreed orally to acquire a controlling interest in any oil company carrying on the business formerly carried on by OAO Omsk Oil Refinery (“Omsk Oil”), an oil refinery located in Siberia, and OAO Noyabrskneftegaz (“Noyabrskneftegaz”), an oil production company; in the event, the oil company which acquired such businesses was Sibneft

See paragraph C33 of the Re-re-re-Amended Particulars of Claim.

in the period leading up to the August 1995 Decree the three men also orally agreed to the effect that:

any ownership interest which the three men acquired in Sibneft, would be held for their benefit as follows: 50% for the benefit of Mr. Abramovich on the one hand, and 50% for the benefit of Mr. Berezovsky and Mr. Patarkatsishvili, on the other hand;

profits would be distributed in the same percentage proportions; and

any future business interests which they acquired (whether or not related to Sibneft) would also be shared between them in the same proportions

See paragraph C34 ibid.

the alleged 1995 Agreement would be governed by Russian law

See paragraph C34 ibid.

it was orally agreed between the three men in 1996 (“the alleged 1996 Agreement”) that:

Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili would arrange matters so that Mr. Abramovich, or his companies, was the legal owner of all the Sibneft shares which had been acquired pursuant to the 1995 Agreement;

Mr. Berezovsky and Mr. Patarkatsishvili would continue to have the rights and interests which they had acquired pursuant to the 1995 Agreement in the shares that would be held by Mr. Abramovich;

Mr. Abramovich would upon request, transfer to Mr. Berezovsky and/or Mr. Patarkatsishvili shares equivalent to their interest in Sibneft on the basis of the percentage split referred to above;

Mr. Berezovsky and Mr. Patarkatsishvili would continue to be entitled to dividends and to any other payments made by Sibneft to its owners on the basis of the percentage split referred to above;

thereafter any further acquisitions of Sibneft shares would be held on the same basis

See paragraph C37 ibid.

the alleged 1996 Agreement would be governed by Russian law

See paragraph C37A ibid.

in the period from 1996 until 2000 very large sums of money were paid by Sibneft, at Mr. Abramovich’s direction, to Mr. Berezovsky and Mr. Patarkatsishvili “in connection with their interests in Sibneft”

See paragraph C40 ibid.

subsequently, at meetings between Mr. Abramovich and Mr. Patarkatsishvili between August 2000 and 2001, Mr. Abramovich, through Mr. Patarkatsishvili, threatened Mr. Berezovsky that, unless he and Mr. Patarkatsishvili sold their ownership interests in Sibneft to him or his nominee, Mr. Abramovich would take steps to ensure that (i) Mr. Berezovsky’s and Mr. Patarkatsishvili’s interests in Sibneft would be expropriated by the Russian State and/or (ii) Nikolay Glushkov (“Mr. Glushkov”), a close personal friend and business associate of Mr. Berezovsky and Mr. Patarkatsishvili, would be detained in prison for an extended period

See paragraph C40-46 ibid.

as a result of such intimidatory threats by Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili were coerced into selling their ownership interests in Sibneft to Mr. Abramovich in May or June 2001 for a price of $1.3 billion, which was a very substantial undervalue, when compared with the true value of their interests in Sibneft

See paragraph C46-54D ibid.

Mr. Berezovsky’s primary case was that the proper law of the tort was English law; his secondary case was that it was French law; and his third case was that it was Russian law

See paragraph C54A-54D ibid.

accordingly, Mr. Berezovsky contends that Mr. Abramovich is obliged to compensate Mr. Berezovsky for the loss which he, Mr. Berezovsky, has suffered as a result of such coerced sale

See paragraph C55 et seq. ibid.

Again, although the formulation of the RusAl claim has changed over time, by the start of the trial, the RusAl claim was, in broad summary, pleaded as follows:

Mr. Berezovsky alleged that from about 1998 or 1999, Messrs Berezovsky, Patarkatsishvili and Abramovich began to acquire assets in the Russian aluminium sector (“the pre-merger aluminium assets”). Until his pleadings were amended at the beginning of the trial, Mr. Berezovsky’s claim to an interest in the pre-merger aluminium assets was based on the provision of the alleged 1995 Agreement set out at sub-paragraph 6(ii)(c) above to the effect that Mr. Berezovsky and Mr. Patarkatsishvili would have a combined ownership interest of 50%, and Mr. Abramovich would have an ownership interest of 50%, in any future business venture entered into by any of them.

Subsequently, shortly before trial

The information had previously appeared in a response dated 26 April 2011 to a request for further information. See also paragraph 260 of Mr. Berezovsky’s 4th witness statement.

Re-re-re-Amended Particulars of Claim, paragraph 59A and C59B.

In about late 1999 and early 2000, at Mr. Abramovich’s suggestion, Messrs Berezovsky, Patarkatsishvili and Abramovich entered into merger negotiations with Oleg Deripaska (“Mr. Deripaska”) for the pooling of their aluminium assets. Messrs Berezovsky’s, Patarkatsishvili’s and Abramovich’s contribution to the merger consisted of their interests in the pre-merger aluminium assets

Re-re-re-Amended Particulars of Claim, paragraph C61.

Messrs Berezovsky, Patarkatsishvili and Abramovich agreed among themselves that any arrangements for the proposed merger would be subject to English law

Re-re-re-Amended Particulars of Claim, paragraph C61A.

Final agreement between them and Mr. Deripaska was reached at a meeting at the Dorchester Hotel in London on 13 March 2000, (“the Dorchester Hotel meeting”) attended by all four men. At this meeting, they agreed orally to pool their assets in a new company and that 50% of the new company would be owned by Mr. Deripaska and his partners (including a Mr. Michael Cherney

Also referred to as Mikhail Chernoy.

It was also agreed at that meeting that none of the four would sell his shares in the new company without the agreement of the others.

It was orally agreed between Messrs Berezovsky, Patarkatsishvili, and Abramovich at the Dorchester Hotel meeting that, in line with their agreement in relation to the Sibneft shares:

their 50% shareholding in the new company should be split and held on terms that Mr. Abramovich would beneficially own 25% of the new company, while Mr. Berezovsky and Mr. Patarkatsishvili would beneficially own 25% between them; and

the Berezovsky/Patarkatsishvili shares would be controlled and legally owned by Mr. Abramovich, or companies that he owned or controlled, and held by him for Mr. Berezovsky and Mr. Patarkatsishvili.

During the Dorchester Hotel meeting, Mr. Patarkatsishvili agreed with Messrs Deripaska and Abramovich, in the presence of Mr. Berezovsky, that all the merger arrangements (including those relating solely to Messrs Berezovsky, Patarkatsishvili and Abramovich) would be governed by English law

Re-re-re-Amended Particulars of Claim, paragraph C62A.

The arrangements between Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili among themselves in respect of RusAl were governed by English law by express choice; alternatively as a matter of implied choice, or as the system of law having the closest connection to the RusAl arrangements

Re-re-re-Amended Particulars of Claim, paragraph C64A.

RusAl was established as this new company and was registered for this purpose in Moscow on 25 December 2000.

In about September 2003, Mr. Abramovich sold a 25% shareholding in RusAl to Mr. Deripaska, without consulting Mr. Berezovsky or Mr. Patarkatsishvili, or obtaining their consent.

This was a breach of contract and/or trust and/or fiduciary duty on the part of Mr. Abramovich, in that he either:

sold his own shares, wrongly favouring his own interests over those of Mr. Berezovsky and Mr. Patarkatsishvili, since the sale gave Mr. Deripaska a controlling shareholding and rendered the remaining 25% minority interest less valuable; or

sold the Berezovsky/Patarkatsishvili shares without the consent of the beneficiaries and without accounting to them for the proceeds; or

sold a mixture of the two groups of shares.

Mr. Berezovsky accordingly claims that Mr. Abramovich is liable to compensate him for the loss which he has suffered as a result of Mr. Abramovich’s breach of contract and fiduciary duty. Mr. Berezovsky claims that his loss is at least $564 million.

Mr. Abramovich disputed the Sibneft claim. His case was that, while the precise percentage shareholding fluctuated over time, at all material times, the majority of Sibneft’s shares were (indirectly) owned by him through trusts and companies which he controlled; that neither Mr. Berezovsky, nor any entity controlled by him, had ever been the registered or beneficial owner of any significant number of Sibneft shares. He asserted that there never had been any agreement to confer any interest in the company, or in its share capital, or in the profits derived from such interest, on Mr. Berezovsky and Mr. Patarkatsishvili; that, on the contrary, the deal between them was that, in return for substantial cash payments to Mr. Berezovsky, Mr. Abramovich and Sibneft would enjoy Mr. Berezovsky’s political patronage and influence, which was indispensible to the construction of any major business in the conditions of the 1990s, the Russian term for such support being “krysha” (literally translated “roof”). Mr. Abramovich contended that the amount of the various payments made to Mr. Berezovsky for such support was determined by a combination of unilateral demands by Mr. Berezovsky, and ad hoc horse-trading between him or Mr. Patarkatsishvili and Mr. Abramovich, but did not represent dividend or other payments linked to an ownership interest in Sibneft. Mr. Abramovich denied that any threats were ever made by him directly or indirectly to Mr. Berezovsky to persuade the latter to part with any alleged ownership interest in Sibneft or otherwise. He alleged that the payment of $1.3 billion made by him in 2001 to Mr. Berezovsky and Mr. Patarkatsishvili had nothing to do with any alleged sale of the latter’s alleged ownership interests in Sibneft, but, on the contrary, was a final pay-off to discharge Mr. Abramovich’s krysha obligations to the two men in relation to Sibneft. He asserted that, in any event, Mr. Berezovsky had suffered no loss: if he had indeed had some sort of ownership interest in Sibneft, he had never parted with it; if, on the other hand (contrary to Mr. Abramovich’s contentions), the sum of $1.3 billion in fact represented the price paid by Mr. Abramovich to acquire Mr. Berezovsky’s ownership interest in Sibneft, such sum was a great deal more than the value of Mr. Berezovsky’s alleged ownership interest at the time. As a matter of law, he contended that, in any event, the alleged agreements concluded in 1995 and/or 1996 in relation to Sibneft were not valid as a matter of Russian law. Moreover, even if (contrary to Mr. Abramovich’s contentions) threats had been made to persuade Mr. Berezovsky to sell his alleged ownership interest in Sibneft, any intimidation claim, together with any other claim that might be put forward, was time-barred as a matter of Russian law, which was the relevant law governing the alleged tort of intimidation.

In broad summary, Mr. Abramovich denied Mr. Berezovsky’s claim to an interest in the pre-merger aluminium assets based on the allegation that there was an oral binding agreement in 1995 that each of Mr. Abramovich, Mr. Berezovsky or Mr. Patarkatsishvili should be entitled to participate in the same proportions in any future business venture undertaken by either of the others. He further denied that he had ever agreed in 1999, or at any other time, to participate with Mr. Berezovsky and Mr. Patarkatsishvili in the acquisition of the pre-merger aluminium assets on the same terms as the alleged 1995 Agreement. He denied that there had been any agreement made at the Dorchester Hotel meeting (or elsewhere) that Mr. Berezovsky and Mr. Patarkatsishvili would have a share of the aluminium business created by the merger of the pre-merger aluminium assets with Mr. Deripaska’s aluminium assets; or that there had been any agreement that he, Mr. Abramovich, would hold that interest for Mr. Berezovsky and Mr. Patarkatsishvili under an English law trust. He further denied that it had been agreed at the Dorchester Hotel meeting between Mr. Berezovsky, Mr. Patarkatsishvili, Mr. Abramovich and Mr. Deripaska that none of them should be entitled to sell his interest in the merged business without the consent of the others; or that his sale of a 25% share in RusAl in September 2003 to Mr. Deripaska’s holding companies was a breach of such agreement. Further he contended that the governing law of any such arrangement would have been Russian law, under which no concept of trust or equitable proprietary interest was recognised and that, in any event, any arguable claim under Russian law would have been time barred under the relevant Russian law of limitation. He alleged that, in any event, any trust claim would have been bad even under English law, because of the uncertainty of its alleged terms. Finally, he claimed that the RusAl claim had in any event been the subject of a contractual release, which was binding on Mr. Berezovsky. Accordingly, Mr. Abramovich asserted that he had no liability to Mr. Berezovsky in respect of the RusAl claim.

The Sibneft and RusAl claims are distinct claims. However it was common ground they were inter-connected because, in two significant respects, the RusAl claim depended on Mr. Berezovsky proving that he had an interest in Sibneft. That was because:

Mr. Berezovsky’s claim to an interest in the merged aluminium business, RusAl, depended on his establishing that, at the time of the merger agreement with Mr. Deripaska, he already had an interest in the pre-merger aluminium assets acquired by Mr. Abramovich’s companies under certain agreements dated 10 February 2000. Mr. Berezovsky’s claim to an interest in the pre-merger aluminium assets, in turn, depended on:

the allegation that there was indeed an oral binding agreement in 1995 that each of Mr. Abramovich, Mr. Berezovsky or Mr. Patarkatsishvili should be entitled to participate in the same proportions in any future business venture undertaken by either of the others; and/or

the allegation (made by a further re-amendment at the beginning of the trial) that the alleged 1995 Agreement was applied specifically to the aluminium venture by the terms of the alleged 1999 Agreement.

It was common ground that Mr. Berezovsky made no cash contribution to the cost of acquiring the pre-merger aluminium assets. Mr. Abramovich contended that Mr. Berezovsky’s claim to an interest in any of the pre-merger aluminium assets could not be established unless (as the latter contended) it was part of the alleged 1999 Agreement that his contribution should be set off against his share of Sibneft profits. This, in turn, depended on Mr. Berezovsky satisfying the court that he was entitled to a share of Sibneft profits.

The two claims were also related in a much more general way. That was because it was necessary to look at the business relationship between Mr. Abramovich, on the one hand, and Mr. Berezovsky and Mr. Patarkatsishvili on the other, as one continuum. Thus the evidence relating to the manner in which the three men subsequently conducted themselves in relation to the RusAl merger, although later in time than the alleged 1995 and 1996 Agreements, was itself relevant to an assessment of whether the original relationship between Mr. Abramovich and Mr. Berezovsky was the contractual relationship alleged by Mr. Berezovsky or the krysha relationship alleged by Mr. Abramovich. For this reason, in coming to my conclusions in relation to the Sibneft issues, I have taken into account the subsequent evidence in relation to the RusAl issues, and vice versa.

Before setting out the chronology relating to the Commercial court action, it is relevant to refer to certain other events which occurred before the issue of proceedings. In addition to the sale to Mr. Deripaska of a 25% shareholding interest in RusAl in September 2003, in July 2004 Mr. Abramovich sold the remaining 25% stake in RusAl to Mr. Deripaska. In September 2005, Mr. Abramovich sold the stake in Sibneft which he then held (through companies controlled by him), said to represent about 72% of the share capital in Sibneft, to OAO Gazprom (“Gazprom”), a Russian public joint stock company, via another company called Gazprom Finance BV.

In July 2006, Mr. Glushkov fled Russia for London.

On 14 May 2007, Mr. Berezovsky’s then solicitors, Carter Ruck, sent a letter before action to Mr. Abramovich, enclosing draft particulars of claim. On 1 June 2007, the Claim Form was issued. On 8 January 2008, re-drafted particulars of claim were served by Mr. Berezovsky.

On 12 February 2008 Mr. Patarkatsishvili died in England.

On 18 and 28 April 2008, there was a two day hearing before HHJ Mackie QC, sitting as a Deputy High court Judge, at which Mr. Berezovsky sought permission to make certain amendments, and at which Mr. Abramovich sought Further Information of Mr. Berezovsky’s case.

Further Information was served by Mr. Berezovsky in correspondence on 25 April 2008, 2 May 2008, and 16 May 2008, and served in consolidated form on 12 June 2008. On 26 June 2008 Mr. Abramovich served his defence. On 2 October 2008 Mr. Berezovsky served his reply.

On 14 November 2008, Mr. Abramovich issued an application notice pursuant to CPR Part 24 for summary judgment in respect of all of Mr. Berezovsky’s claims; and, pursuant to CPR Part 3.4, to strike out all of his claims. In the alternative, Mr. Abramovich sought summary judgment in respect of, or to strike out, parts of the claim. (I shall refer to these applications collectively as “the summary judgment application”.) The summary judgment application came on for hearing before Sir Anthony Colman, sitting as a Deputy Judge, in July and November 2009. Sir Anthony Colman handed down judgment on 31 March 2010; [2010] EWHC 647 (Comm). He dismissed both the application for summary judgment and that to strike out. He gave permission to Mr. Berezovsky to amend his pleadings.

The Court of Appeal heard Mr. Abramovich’s appeal in January 2011, handing down its judgment on 23 February 2011 [2011] EWCA Civ. 153. It dismissed Mr. Abramovich’s appeal against Sir Anthony Colman’s decision.

The parties agreed a list of issues to be determined in the Commercial court action (“the Agreed List of Issues”). They are attached to this judgment as Appendix 1.

It was sensibly agreed between the parties that, because of the unavoidable unavailability of one of the quantum experts, during the relevant trial period set aside for their evidence, issues relating to the quantum of Mr. Berezovsky’s claim in the Commercial court action should be adjourned pending my determination of the liability issues.

In summary, the liability issues which the court has to determine in the Commercial court action can be formulated as follows

I have adapted this summary list of liability issues from Mr. Abramovich’s written closing submissions for the purposes of this judgment, rather than using the Agreed List of Issues, as the former are shorter and more comprehensible. The order differs slightly from the order adopted in the Agreed List of Issues.

Issue A1: Were agreements made, in 1995 and in 1996 between Mr. Abramovich on the one hand, and Mr. Berezovsky and Mr. Patarkatsishvili on the other, that they would have an interest in the proportions 50:50 in any shares that they might acquire in any oil company carrying on the business formerly carried on by OAO Omskiy Oil Refinery and OAO Noyabrskneftegaz, and additionally, in the terms alleged by Mr. Berezovsky in his pleadings and in his written and oral evidence?

Issue A2: If such agreements were made, were they valid as a matter of Russian law, which, it is common ground, must have governed them?

Issue A3: If so, did Mr. Abramovich threaten Mr. Berezovsky that, unless Mr. Berezovsky sold that interest to him or his nominee, Mr. Abramovich would take steps to ensure that (i) Mr. Berezovsky’s interest in Sibneft would be expropriated by the Russian State; and/or (ii) Mr. Glushkov would be detained in prison for an extended period?

Issue A4: If Mr. Berezovsky had an interest in Sibneft, did he sell it to Devonia Investments Limited under a sale and purchase agreement (“the Devonia Agreement”) dated 11/12 June 2001 between Mr. Berezovsky and Mr. Patarkatsishvili, Devonia Investments Limited (“Devonia”) and Sheikh Sultan

His Highness Sheikh Doctor Sultan bin Khalifa al Nahyan, the son of the ruler of the United Arab Emirates.

Issue A5: What law governs any liability in tort or delict arising out of the alleged intimidation?

Issue A6: Has such liability arisen under that law?

Issue A7: If so, is a claim in respect of that liability time-barred?

Issue B1: Was an agreement made between Mr. Abramovich and Mr. Berezovsky: (i) in 1995; or (ii) in late 1999, the effect of which was that Mr. Berezovsky would have an interest in any aluminium producers which might be acquired by Mr. Abramovich or his companies (in the event the Bratsk and KrAZ assets)?

Issue B2: Was it agreed at the Dorchester Hotel on 13 March 2000 that Mr. Berezovsky and Mr. Patarkatsishvili would have a share of the aluminium business created by the merger with Mr. Deripaska’s aluminium interests?

Issue B3: Was it expressly agreed at the Dorchester Hotel on 30 March, 2000 that Mr. Abramovich would hold their interest in the aluminium business created by the merger of those assets with Mr. Deripaska’s aluminium interests on trust for Mr. Berezovsky and Mr. Patarkatsishvili under an English law trust?

Issue B4: If it was agreed that Mr. Berezovsky would have an interest in the merged business, but there was no express agreement about the law governing the arrangements between him, Mr. Abramovich and Mr. Patarkatsishvili relating to that business, then what law did govern those arrangements?

Issue B5: Would the alleged express RusAl trust be good even in English law?

Issue B6: If there was no valid express trust, was there a resulting or constructive trust governed by English law?

Issue B7: Was it agreed at the Dorchester Hotel between Mr. Berezovsky, Mr. Patarkatsishvili, Mr. Abramovich and Mr. Deripaska that none of them should be entitled to sell his interest in the merged business without the consent of the others?

Issue B8: If such an agreement was made, what was its proper law?

Issue B9: Was the sale of the first 25% tranche of RusAl in September 2003 a breach of (i) trust or (ii) contract?

Issue B10: Was any liability released under the terms of the agreements for the sale of the second 25% tranche of RusAl shares on 20 July 2004?

In addition to his claim in the Commercial court proceedings against Mr. Abramovich, in late 2008 and early 2009 Mr. Berezovsky also issued three actions in the Chancery Division (“the Chancery actions”). In these actions, Mr. Berezovsky contends that he was Mr. Patarkatsishvili’s partner in relation to a number of substantial business ventures, and seeks to obtain what Mr. Berezovsky alleges is his (i.e. Mr. Berezovsky’s) share of these ventures, including an interest in RusAl.

The first of these Chancery actions was Claim No. HC08C03549 (“the main Chancery action”), which was issued on the 12 December 2008. The defendants to this action are:

the personal representatives of the estate of Mr. Patarkatsishvili (“the Interim Administrators”);

Inna Gudavadze, Liana Zhmotova, Iya Patarkatsishvili and Natela Patarkatsishvili, who are respectively the widow, two daughters and mother of Mr. Patarkatsishvili (“the Family defendants”);

other possible beneficiaries of Mr. Patarkatsishvili’s estate; and

various individuals and entities who Mr. Berezovsky says hold assets in which he asserts an interest.

At the centre of the main Chancery action is Mr. Berezovsky’s claim that he and Mr. Patarkatsishvili made an oral agreement in Russia in 1995 that all commercial investments made by either of them would be shared on a 50:50 basis. Before me, this allegation has been referred to as “the bilateral joint venture” or the “over-arching joint venture”. As an alternative to this allegation, in the main Chancery action Mr. Berezovsky asserts a number of individual agreements pursuant to which he says he acquired an interest in various assets. One such agreement is alleged to have been made at the Dorchester Hotel meeting where, as set out above, Mr. Berezovsky claims that he and Mr. Patarkatsishvili obtained a 25% interest in RusAl. Mr. Berezovsky says that he is entitled to trace into the assets acquired with the proceeds of sale of that interest, and to the extent he is unable to recover them, seeks damages in the main Chancery action against Mr. Patarkatsishvili’s estate for failing properly to secure them.

The second of the Chancery actions to be issued by Mr. Berezovsky was Claim No. HC09C00494 (“the Metalloinvest action”), which was issued on 18 February 2009. The defendants to that action are the Interim Administrators, the Family defendants, and Vasily Anisimov (“Mr. Anisimov”), a Russian businessman, together with a number of entities controlled by him (“the Anisimov defendants”). In that action Mr. Berezovsky claims an interest in a stake held by Mr. Anisimov in CJSC Holding Company Metalloinvest (“Metalloinvest”), a valuable Russian ore and mining company. It is alleged that the Metalloinvest stake was purchased using monies from the sale of the second 25% interest in RusAl in July 2004. Mr. Berezovsky claims to have acquired an interest in those monies - and, thus, in the Metalloinvest stake purchased with them - as a result of the alleged agreement concluded at the Dorchester Hotel meeting.

The third of the Chancery actions issued by Mr. Berezovsky was Claim No. HC09C00711 (“the Salford action”). The 4th to 9th and 11th defendants in that action (“the Salford defendants”) were, or were alleged to be, members or associates of a group of companies including Salford Capital Partners Inc, a private equity firm specialising in the developing markets of the former Soviet Union and Eastern Europe, alleged to have been involved in the sale of the second tranche of RusAl shares. The Interim Administrators and Ms. Gudavadze are also defendants in the Salford action. The Salford defendants contend that the proceeds of the sale of the second tranche of RusAl shares, and the alleged abortive instruction of the Salford defendants in connection therewith, form no part of the Salford action; and that the claims against the Salford defendants in the Salford action rest upon quite different foundations: namely the alleged bilateral Joint Venture between Mr. Berezovsky and Mr. Patarkatsishvili, and the arrangements which are said to have been made between Mr. Berezovsky and Mr. Patarkatsishvili on the one hand, and the Salford defendants on the other, in May 2002. The Salford defendants say that the question of Mr. Berezovsky’s ownership of RusAl and the fruits of that investment form no more than part of the narrative background to the case that is made against them.

I was informed that the Family defendants are the principal beneficiaries of Mr. Patarkatsishvili’s estate and that, with the approval of the Interim Administrators, and other beneficiaries, the Family defendants have made the running in defending Mr. Berezovsky’s claims against the estate in the Chancery actions.

The Family defendants, Mr. Anisimov and the Salford defendants are participating in this Joint Trial pursuant to an order of Mann J and myself dated 16 August 2010 (“the 16 August order”), made at a conjoined Case Management Conference held in both the Commercial court action and in the Chancery actions, which took place in July and August 2010. The 16 August order identified a number of issues, defined as “the Overlap Issues”, which arise in both the Commercial court action and the Chancery actions. Mann J and I directed that the Overlap Issues should be tried and determined as preliminary issues in the Chancery actions at the same time as the trial of the Commercial court action. We further ordered that each of the parties to the Chancery actions should be bound only by the findings made at the Joint Trial on, and might participate fully in, the Overlap Issues, but should not be bound by findings at the Joint Trial on any other issues. The Overlap Issues, as defined in the Order of 16 August 2010, were slightly amended by orders made respectively on 7 July and 23 January 2012. As finally defined, they were as follows:

As can be seen, the Overlap Issues correspond with certain of the RusAl liability issues in the Commercial court action. Paragraph 5 of the 16 August order also referred to certain other issues, which arise in the Commercial court action only, upon which the Chancery defendants could participate and be bound. The Overlap Issues are thus of relevance to two of the three Chancery actions, and of tangential relevance to the third.

The Family defendants and Mr. Anisimov have a very significant interest in the outcome of this trial and the determination of the Overlap Issues. In the Metalloinvest action, whilst recognizing Mr. Patarkatsishvili’s interest in the RusAl proceeds, Mr. Anisimov denies that Mr. Berezovsky had any interest in RusAl or its proceeds or in the Metalloinvest stake held by Mr. Anisimov. Were Mr. Berezovsky to establish an interest in half of the RusAl proceeds by means of the alleged agreement made at the Dorchester Hotel, that would, according to the Family defendants, halve Mr. Patarkatsishvili’s interest in the RusAl proceeds, and therefore that of his estate (of which the Family defendants are principal beneficiaries). In the main Chancery action, in reliance on his claimed interest in the RusAl proceeds, said to arise, inter alia, as a result of the alleged agreement at the Dorchester Hotel, Mr. Berezovsky asserts a claim to a number of valuable assets – in addition to Metalloinvest - which are prima facie held for Mr. Patarkatsishvili’s estate. In addition, Mr. Berezovsky says that the estate is liable to him in damages to the extent that he is unable to secure and recover any such assets. Again, the determination of whether or not Mr. Berezovsky had such an interest in RusAl (and therefore in its proceeds) is of importance to the estate in that action and, thus, to the Family defendants.

Accordingly, as well as sitting as a judge of the Commercial court to determine the Commercial court action, I also, pursuant to a direction of the Chancellor, Sir Andrew Morritt dated 21 June 2011, sat as a judge of the Chancery Division for the purpose of determining the Overlap Issues as preliminary issues in the Chancery actions.

At trial, Mr. Berezovsky was represented by Mr. Laurence Rabinowitz QC, Mr. Richard Gillis QC, Mr. Roger Masefield, Mr. Simon Colton, Mr. Henry Forbes-Smith, Mr. Sebastian Isaac, Mr. Alexander Milner and Ms. Nehali Shah. Mr. Abramovich was represented by Mr. Jonathan Sumption QC, Miss Helen Davies QC, Mr. Daniel Jowell QC, Mr. Andrew Henshaw, Mr. Richard Eschwege, Mr. Edward Harrison and Mr. Craig Morrision. In the Chancery actions, the Anisimov defendants were represented by Mr. Ali Malek QC, Ms. Sonia Tolaney QC and Ms. Anne Jeavons. Mr. David Mumford Esq appeared for the Salford defendants to the Chancery actions, and Mr. Jonathan Adkin and Mr. Watson Pringle appeared for the Family defendants to the Chancery actions.

For a case which at its centre required the proof of oral contracts and intimidation, the universe of documentation and case materials was huge. There were 20 different sets of bundles, designated from A to T, with each set in itself often comprising further subsets of bundles, and numerous numbered individual files. For example: there were 9 subsets of what were euphemistically referred to as “Selected Disclosure” bundles, of which the principal subset of chronological documents itself ran to what in hard copy was 99 lever arch files; there were 13 files of witness statements, 36 files of expert evidence addressing Russian history and Russian law, and 57 files of expert valuation reports which, in the event, the court did not need to address. Most importantly, for the trial alone, there were approximately 4000 pages of written submissions submitted by counsel.

The court and the parties had the inestimable advantage of having all the documentation and case materials, including daily transcripts, legal arguments and authorities presented in a highly organised web-based electronic format. This meant that it was extremely quick and easy to access all the necessary materials both in and out of court, including notes which I myself had made during the hearing. There was extensive hyper-linking, which rendered access even easier. In effect, I was able to work in a virtually paperless environment although counsel and witnesses often preferred to use hard copy materials for the purpose of cross-examination.

I return to this topic at the end of this judgment, but there was no doubt that electronic presentation of documentation was not only essential, given the amount of material involved, but also that it also greatly contributed to the efficient conclusion of the trial within the time allotted. Whether the facility of electronic compilation and presentation unnecessarily increases the number of documents presented to the court at trial, and whether this in itself can give rise to a potential increase in costs, is a matter for debate on another occasion.

I should perhaps also mention that, because, for various reasons, the trial had to start on 3 October 2011, it was not possible for any formal time to be allocated in the court schedule for judicial pre-reading in advance of the trial itself. Necessarily, therefore, a certain amount of pre-reading had to be done in my own time, and a considerable amount of time was required both during, and after the conclusion of the trial, to complete the reading process.

Both Mr. Berezovsky and Mr. Abramovich described the claim as one arising out of a “uniquely Russian story”. Indeed, Mr. Berezovsky sought to rely, in support of his case, on a lengthy and detailed report by Professor Stephen Fortescue about contemporary Russian history, together with a large number of press articles and similar materials upon which the report was based. The claim could also be characterised as a uniquely personal story, centred as it was on a relationship between two men, of different ages, both in their time extremely successful and powerful, and whose fortunes changed as the dynamic of their relationship changed. The dispute between the two men has to be evaluated against the sometimes turbulent political and economic backcloth of Russia in the late 1990s and early 2000s, and in the context of the deterioration of their relationship. Nonetheless, the dispute is in essence a commercial one, which, like any other tried in this court, has to be decided on the factual evidence, both oral and documentary, relating to the specific transactions in issue. And, although this court necessarily views that evidence “Under Western Eyes

See per Joseph Conrad, Under Western Eyes (1911), Part Fourth, Chapter V: “And this story, too, I received without comment in my character of a mute witness of things Russian, unrolling their Eastern logic under my Western eyes”.

See ibid: Part First, Chapter II: “If to the Western reader [these thoughts] appear shocking, inappropriate, or even improper, it must be remembered that as to the first this may be the effect of my crude statement. For the rest, I will remark that this is not a story of the West of Europe.”

The reason why the Russian historical context was relevant was that it was the background against which the inherent probabilities of Mr. Berezovsky’s and Mr. Abramovich’s respective cases fell to be evaluated. What is inherently probable in a secure and relatively ordered society, governed by the rule of law, is not necessarily inherently probable in the extraordinary conditions that prevailed in Russia in the 1990s.

Interesting as it was, however, I obtained limited assistance from the evidence about Russian contemporary history in determining the inherent probabilities of Mr. Berezovsky’s claims or Mr. Abramovich’s defence. Much of the so-called historic material relied upon was no more than hearsay reportage, some of it of an obviously unreliable or self-serving character. Nor was it necessary, save in certain limited areas, for me to make any factual findings about what might be characterised as political events. Accordingly, I have mainly restricted any references below to those events whose nature and occurrence was effectively, or to a large extent, agreed between the parties and their respective experts. Where the experts’ reports were of particular assistance was in relation to the concept of krysha which I explain below.

The following is a largely non-contentious summary of the relevant factual background to Mr. Berezovsky’s claims taken from the opening submissions on both sides and the expert evidence. In so far as such summary departs from agreed facts, it reflects my findings of fact based on the evidence at trial.

The late 1980s and 1990s were a period of extraordinary upheaval in Russian history. During this period a political system, an economic model and a legal framework for trade and industry were scrapped and replaced. After the final collapse of Communism in 1992, Russia became Europe’s “Wild East”. A country, which had never in its entire history been either liberal or democratic in its governmental institutions, experienced, in less than a decade, a transition to capitalism which had taken other European countries more than a century to achieve. The result of this was an immense social upheaval, the partial collapse of old structures of authority, the enfeeblement and the impoverishment of the state, and the disappearance of the rule of law.

Between 1987 and 1991, under the policies of glasnost (“openness”) and perestroika (“restructuring”), the government of the USSR under Mikhail Gorbachev began to dismantle the Soviet centrally planned economy. Between 1987 and 1991, new legislation in the USSR relaxed certain conditions relating to: the engagement and holding of non-personal private property; the entitlement of individuals to engage in private economic activity; the establishment of enterprises for profit; and the entry into market transactions by individuals.

By 1991, a large number of Soviet enterprises had effectively been unilaterally privatised by their Soviet era managers, who ceased to report to the central planning authorities and operated their factories and plants for their own profit. These managers subsequently became known as “Red directors”. At the same time, a small group of proto-capitalists from outside the Soviet management structures were starting to develop businesses which would make them very rich.

On 12 June 1991, Boris Yeltsin was elected as President of the Russian Soviet Federative Socialist Republic. The coup attempt by Soviet hardliners in August 1991 accelerated the delegitimisation of the Communist Party and the Soviet government, and, in December 1991, the Soviet Union was dissolved. The Union Republics of the former USSR, including Russia, became independent and President Yeltsin (until then only the President of a subsidiary Republic within the USSR) became President of a newly independent Russia, a position he held until 31 December 1999.

It was common ground between the historical experts that, during the transition from a socialist to a market economy, the Russian business and legal environments were turbulent. For example, Professor Fortescue described the transition as follows:

Professor Robert Service, Mr. Abramovich’s historical expert, described the situation as follows:

Professor Bruce Winfield Bean, the Family defendants’ historical expert, expressed the point in similar terms:

These types of problems were confirmed by Sibneft itself in an offering circular issued by Salomon Brothers in 1997, which said:

It was in this context that, during the late 1980s and early 1990s, a small group of individuals were able to take the opportunities and manage the risks of the transition economy in a way which allowed them to achieve huge wealth and influence in a very short time. They were commonly, if (arguably) inaccurately, referred to as “oligarchs”

There was some discussions between the historical experts as to whether the use of such term was appropriate, and what it conveyed, but that is not a matter which I need address.

The concept of krysha (literally Russian for “roof”) played an important role in this case. The meaning of the concept was effectively common ground as between the respective historical experts and the parties. In a society which is not governed by the rule of law, people devise alternative structures to govern their relations, based not on law but on power. Krysha is an alternative system of obligation; the classic product of a society where businessmen cannot count on the protection of the law, either because the law is itself defective or because the administrative and judicial agencies charged with its enforcement cannot be relied upon to do so. Where there is no effective law, or no effective legal process of enforcement, relationships are governed instead by power. It was common ground among the experts that the situation in Russia in the 1990s and early 2000s was that, although there were laws, the legal processes were defective.

The concept of krysha was described by Mr. Berezovsky’s historical expert, Professor Fortescue, in paragraphs 188 to 190 of his first report. He emphasised that the concept was not limited to physical protection. He explained as follows:

In November 2003, an article in The Economist observed that:

The evidence at trial demonstrated that the essential features of krysha were as follows:

It was not possible in Russia in the 1990s to build up a substantial business without both political and physical krysha

Abramovich 3rd witness statement, paragraphs 33 and 50. Abramovich Day 24, page 23: “It was impossible to keep hold of the company without krysha. So we required both political and physical krysha protection”.

Service 1, paragraph 39.

Krysha was a form of clientage, which came at a price: see Professor Fortescue’s account of krysha in the mid-1990s quoted above. Professor Bean stated that (in his experience) “… krysha was never provided without a cost”.

Political krysha (the kind with which the article in The Economist was concerned) involved the patron’s use of his connections in government or administration:

to procure favourable treatment of the client’s interests in the formulation of legislation or policy, or the provision of discretionary favours;

to protect the client against arbitrary action by State authorities; and to provide the client with a visible connection to a powerful man which can be expected to deter others from attacking his interests

Abramovich 3rd witness statement, paragraphs 33, 37 and 43; Abramovich Day 17, page 64; Day 24; Day 24, pages 38-39. See also Fortescue 1, paragraph 189.

Physical krysha involved protection against violence or other interference, commonly through the services of criminal gangs

Abramovich Day 17, page 69. This is the type of krysha being described by Professor Fortescue at paragraph 188 of his first report. In his oral evidence, he confirmed his view that in the mid-90s businessmen were prepared “… to turn to criminal protection or resolution in the event of disputes over their business arrangements”: Fortescue Day 37, page 112. Mr. Abramovich confirmed that it was his desire to secure himself against the use of such steps by others that led to his need for physical krysha: Abramovich Day 17, page 69.

Krysha was a long-term relationship, based on a code of personal obligation. It was not terminable at will. The client owed the survival, and possibly the creation, of his business to the patron, who may well regard himself as “owning” the client or as having an interest in the client’s business fortunes

Abramovich 3rd witness statement, paragraphs 35 and 127.

Krysha was not a legally enforceable relationship

Abramovich 3rd witness statement, paragraphs 36 and 278; Abramovich 4th witness statement, paragraph 35; Shvidler 3rd witness statement, paragraph 130; Shvidler 5th witness statement, paragraph 22.

It was Mr. Abramovich’s case that the relationship between Mr. Berezovsky and himself was founded principally on political krysha or protection: not merely at the outset in 1995, but also thereafter. He claimed that the relationship with Mr. Berezovsky included the provision of an element of physical, as well as political, protection; but that it was not Mr. Berezovsky who provided physical protection, but rather his associate, Mr. Patarkatsishvili. Mr. Abramovich’s evidence was that he was concerned to maintain his connection with a known and influential political protector right through to the time when Mr. Berezovsky fell out with Mr. Putin in 2000, and that, even then, he did not regard the relationship as unilaterally terminable. It was also his evidence that the physical protection provided by Mr. Patarkatsishvili was also valuable and, in relation to the RusAl acquisition, essential.

It was also Mr. Abramovich’s case that the lobbying activities of Mr. Berezovsky, as a protector providing political krysha for Mr. Abramovich, were inherently corrupt; and that, likewise, the deal between the two men, whereby Mr. Abramovich agreed to pay Mr. Berezovsky for his krysha services, was also corrupt. Mr. Sumption accepted that Mr. Abramovich was privy to that corruption but submitted that the reality was that that was how business was done in Russia in those times. Mr. Berezovsky certainly accepted the business reality of the need for influence; he said repeatedly in his witness statements that, without his political influence over President Yeltsin, Mr. Abramovich would have got nowhere in the world of Russian business and would certainly not have acquired control of Sibneft. That was accepted by Mr. Abramovich, and indeed was part of his case.

I address below my findings in relation to the evidence and arguments relating to Mr. Abramovich’s krysha allegations.

Mr. Berezovsky was a significant and highly controversial figure in Russian business and politics during the 1990s. Born in 1946, he was for many years an academic mathematician, having obtained a degree in applied mathematics. He remains a correspondent member of the Russian Academy of Sciences, with over 100 scientific publications to his name. As Head of the Department of System Design at the Institute of Control Sciences (a research centre associated with the motor industry), he had begun to work in 1973 with the largest car manufacturer in Russia, the State-owned AvtoVAZ.

In 1989, Mr. Berezovsky was involved in the creation of ZAO LogoVAZ (“LogoVAZ”), Russia’s largest independently owned car dealership. This was initially set up as a Russian joint venture between AvtoVAZ, LogoVAZ’s main supplier, Logosystems, an Italian company, and the Institute of Control Sciences. Later, it was restructured into a Russian closed joint stock company. Mr. Berezovsky never had more than a small direct shareholding in LogoVAZ; it amounted to 6.78% in 1996. But he exercised effective management control over LogoVAZ until about 1995, and made his initial wealth out of the business in this period. He was the General Director at LogoVAZ (equivalent to Chief Executive Officer).

Amongst the individuals who participated in the establishment and operation of LogoVAZ together with Mr. Berezovsky, and who play a part in this case, were Mr. Glushkov, who, as I have already mentioned, was one of Mr. Berezovsky’s closest friends and business associates, and Vladimir Kadannikov (“Mr. Kadannikov”), a former General Director of AvtoVAZ and Deputy Prime Minister of Russia from 1996. Mr. Glushkov had a doctorate in theoretical and mathematical physics and had also studied economics at the All Russian Academy of Foreign Trade. By the time Mr. Berezovsky had met him in 1989, Mr. Glushkov had spent approximately ten years working for the Ministry of Foreign Trade, had acted as a consultant to the Chamber of Commerce and had experience of establishing joint ventures in Russia. He became head of LogoVAZ’s commercial department, and shortly thereafter became Deputy General Director for Commerce.

At first, LogoVAZ functioned as a centre for the implementation of scientific research into advanced software and sold software to different research institutes in the USSR. However, later, the company moved into the automobile business: first as an importer of second-hand cars to Russia, and then, once private dealerships were made legal, as a reseller of AvtoVAZ-manufactured vehicles to private buyers.

Between 1989 and 1991, Mr. Berezovsky and Mr. Glushkov met with André & Cie, a Swiss commodities trader which was a major buyer and exporter of commodities produced in the Soviet Union. The result of those discussions was that, in 1991, it was agreed that André & Cie should take a stake in LogoVAZ, and would replace Logosystems as shareholder. As a result, LogoVAZ was restructured into a closed joint stock company (rather than a Russian joint venture). A special purpose vehicle, a newly formed Swiss company, Anros SA, was created to enable André & Cie to co-invest in LogoVAZ. The shares in Anros SA were held as to 10% by André & Cie and as to 90% by Mr. Berezovsky, Mr. Glushkov, Mr. Patarkatsishvili, Mr. Kadannikov and others. The name Anros reflected a combination of the name “André & Cie” with “Rossiya” (or “Russia”) to represent the two sides of the arrangement.

In 1992, with the assistance of André & Cie, Mr. Berezovsky initiated the establishment of the Forus group of companies, in order to provide Western project finance and import financing arrangements to support the operations of AvtoVAZ. The top group holding company was Forus Holdings SA, a Luxembourg company (“Forus”). Mr. Berezovsky, together with Mr. Patarkatsishvili, Mr. Glushkov, Mr. Kadannikov, André & Cie and other of Mr. Berezovsky’s associates were apparently shareholders in Forus at this early stage.

As a result of changes in the law in Russia in the late 1980s, private enterprises were allowed to develop and own their own banking operations. In the 1990s, banking became one of the most popular businesses as the new free market began to spread. Many large companies and businessmen established their own corporate banks, as there was little confidence within the business community in the State-controlled banking sector.

Consolidated Bank, (sometimes referred to Obyedinenniy Bank) was a bank set up by LogoVAZ on Mr. Berezovsky’s initiative in 1992, in order to support LogoVAZ’s business interests and in the hope that it would develop into a successful business of its own. As such it was, in effect, the in-house bank of LogoVAZ. It was common ground that Mr. Berezovsky was in a position, by virtue of his management control of LogoVAZ, to exercise effective management control over Consolidated Bank. However, Mr. Berezovsky’s actual ownership interest in Consolidated Bank was small. The Quarterly Reports on Securities for Consolidated Bank disclosed that, as at the last quarter of 1996, Consolidated Bank was owned by five companies:

Of these companies, it appeared that in 1995 Mr. Berezovsky himself held only a 6.78% direct interest in LogoVAZ, a 25% interest in Atol and at most a 33.33% interest in Forus. In combination, these would have given him at most a 13.7 % indirect interest in Consolidated Bank.

In 1994 or 1995, Mr. Berezovsky offered Ruslan Fomichev (“Mr. Fomichev”) a senior role at Consolidated Bank. He later became chairman of the Executive Board of Consolidated Bank and Mr. Berezovsky’s chief aide, and “in-house” financial adviser. However, although at an earlier stage of the proceedings Mr. Berezovsky indicated that Mr. Fomichev would be called as a witness on his behalf, subsequently, before trial, the two men fell out and, in the event, Mr. Fomichev was not called as a witness. I deal with certain matters relating to Mr. Fomichev below.

In 1993, Mr. Berezovsky established an entity called All Russian Automobile Alliance (“AVVA”) in order to engage in the construction of a new automobile assembly plant at Togliatti. The founding members of AVVA included AvtoVAZ, LogoVAZ, Forus and Consolidated Bank. Mr. Berezovsky was General Director. The scheme was that AVVA would raise funds by selling shares both privately and to members of the public. However, for various reasons the scheme failed. It was alleged on Mr. Abramovich’s behalf that AVVA was involved in pyramid selling, an allegation which Mr. Berezovsky denied. It is not an issue which I need to decide.

In early 1994, AVVA and André & Cie participated in the establishment of a joint venture company called Andava SA (“Andava”). Andava was set up to raise capital in the West for AVVA and as a treasury centre for AVVA. However, it does not appear that Western capital was in fact raised for such purpose. From 1996, Andava provided central treasury services for Aeroflot, the Russian State airline, but, according to Mr. Berezovsky, that was not something which was apparently envisaged when Andava was founded. Although Mr. Berezovsky and Mr. Glushkov had no ownership interest in Aeroflot

When cross-examined on this point, Mr. Berezovsky confirmed Mr. Glushkov’s written evidence that he, Mr. Berezovsky, did not have a shareholding in Aeroflot (although it transpired during Mr. Glushkov’s oral evidence that Consolidated Bank did at one point have a stake, which had been sold prior to 1999).

According to Mr. Berezovsky, from about 1992 his main interest had been politics and his business activities had served mainly as a vehicle for funding his political career. During 1993 and 1994, LogoVAZ was subject to repeated, violent attacks. Then, on 7 June 1994, Mr. Berezovsky himself was the victim of an assassination attempt. As he was leaving the LogoVAZ club, a remote-controlled bomb exploded, killing his driver instantly and severely injuring his bodyguard. Mr. Berezovsky was badly burned and went to Switzerland for medical treatment.

Whilst recuperating in Switzerland, Mr. Berezovsky decided that:

In his evidence he stated that he believed passionately in the importance of preventing Russia from relapsing into communism and that at that time he had concluded that the best way to promote a democratic political agenda would be through owning key mass media outlets.

In the course of Mr. Berezovsky’s business dealings, he developed various business and social relationships which he utilised, both commercially and politically, in the years to come. These relationships included inter alia, relationships with:

Mr. Kadannikov, who, as described above, was AvtoVAZ’s General Director, and later First Deputy Prime Minister; Mr. Berezovsky described him as “one of Russia’s major industrialists”;

Alexander Voloshin (“Mr. Voloshin”), later Chief of the Presidential Administration under both President Yeltsin and President Putin; Mr. Berezovsky had worked with Mr. Voloshin at AVVA;

Viktor Gorodilov (“Mr. Viktor Gorodilov”), whom Mr. Berezovsky met in 1993; Mr. Viktor Gorodilov was President of Noyabrskneftegaz, the oil production company, which was subsequently incorporated into Sibneft by Presidential Decree; Mr. Viktor Gorodilov became Sibneft’s first President and Chairman of the Board of Directors;

Mr. Putin, whom Mr. Berezovsky met for the first time in October 1991, at a meeting at which Mr. Berezovsky introduced an Oklahoman oilman to the mayor of St Petersburg, for whom Mr. Putin was then working; Mr. Putin helped Mr. Berezovsky to develop LogoVAZ’s business in St Petersburg, and the two men became friendly, even sometimes holidaying together;

various businessmen who, like him, would later be known as “oligarchs”; these included:

Pyotr Aven (“Mr. Aven”), Minister of External Economic Relations between June and December 1992, co-founder of Alfa Group consortium with Mikhail Fridman (“Mr. Fridman”);

Mr. Fridman;

Mikhail Khodorkovsky (“Mr. Khodorkovsky”), who controlled Bank Menatep and was a controlling shareholder of Yukos Oil Company;

Alexander Smolensky (“Mr. Smolensky”), President of SBS-Agro Bank.

From 1994 onwards, Mr. Berezovsky acquired considerable influence over the inner circle of advisers surrounding President Yeltsin. In particular, he enjoyed privileged access to:

Tatyana Dyachenko (“Ms. Dyachenko”), President Yeltsin’s daughter;

Valentin Yumashev (“Mr. Yumashev”), President Yeltsin’s former Chief of Staff and (from 2001) married to Ms. Dyachenko; he introduced Mr. Berezovsky to President Yeltsin in late 1993 and proposed that Mr. Putin be made head of the FSB in 1998;

General Alexander Korzhakov, Head of President Yeltsin’s Security Service, 1993-1996; and

other top-level politicians and members of the government.

Mr. Berezovsky also had strong connections with Viktor Chernomyrdin (Prime Minister of Russia from 1992-1998), who was a neighbour of Deputy Prime Minister Soskovets, and with General Alexander Lebed, a political rival of President Yeltsin. General Lebed later became Governor of the Krasnoyarsk region, a region which acquired some importance during the so-called “aluminium wars” of the late 1990s.

Mr. Berezovsky was therefore extremely well connected in political circles at the time he met Mr. Abramovich.

The centre of Mr. Berezovsky’s network of influence was the LogoVAZ club in Moscow. It plays a part in this story. This was the place where Mr. Berezovsky spent almost all of his working time when he was not travelling. It was also the place he used as the main venue for meetings with business partners and associates, politicians and friends. Mr. Berezovsky did however travel very frequently, and it was commonplace for his business meetings to take place outside Russia. Mr. Berezovsky described the function of the club as follows

See paragraph 34 of his 4th witness statement.

In the course of 1994, Mr. Berezovsky used his political influence and contacts to persuade President Yeltsin to authorise the partial privatisation of the Russian State Television and Radio Broadcasting Company, Ostankino, which was then the only television network in Russia with a nearly universal reach across the national territory. Mr. Berezovsky argued that the channel could be used to support the interests of democratically inclined Russians whose interests were represented by President Yeltsin’s re-election campaign. President Yeltsin ultimately agreed to the proposal on the basis that the State would retain majority ownership of the channel.

It was proposed that Ostankino’s assets should be transferred to a new company, OAO Obshestvennoye Rossiyskoe Televvidenie (“ORT”), with a view to its being partially privatised. ORT had been created by Presidential Decree on 29 November 1994. The plan was for the State to sell 49% of the shares in ORT to a syndicate of private investors organised by Mr. Berezovsky, whilst retaining a controlling 51%. The 49% shareholders would be expected to fund ORT’s media operations, and in return would obtain effective editorial control. Thus although, technically, the private investors were buying a minority stake in a State-owned company, in fact, the votes of minority shareholders of ORT were necessary for central aspects of its decision-making. For example, under ORT’s Charter, a quorum of 2/3 was necessary for the General Meeting of Shareholders, and a simple majority vote at a General Meeting of Shareholders was insufficient for the appointment of the Board of Directors. At the original privatisation of ORT, Mr. Berezovsky and Mr. Patarkatsishvili acquired 8% through LogoVAZ. In addition, Mr. Berezovsky persuaded a number of ‘oligarchs’ with whom he had a relationship, to take stakes in ORT, on the basis that they would allow Mr. Berezovsky to manage their shareholdings on their behalf. In September and October 1995, Mr. Berezovsky was given a power of attorney over their shareholdings (which effectively gave him control of their ORT shares).

ORT began operations on 1 April 1995. Subsequently, from 1996 onwards, Mr. Berezovsky and Mr. Patarkatsishvili bought out the shareholdings of the other private shareholders, who did not wish to incur the costs of running the station, so that, by the end of the 1990s, they had 49% of the shares, held through two companies (LogoVAZ and ORT-KB) and management control of the station through its board. Mr. Berezovsky persuaded Mr. Patarkatsishvili to take over as ORT’s First Deputy General Director, a role which he held until 2000.

By the time of the Russian presidential elections in the summer of 1996, there was real concern in certain quarters of the Russian electorate that the Communists might be re-elected. Mr. Berezovsky’s evidence was that, at the World Economic Forum in Davos in February 1996, he became concerned that the Communist candidate, Gennady Zyuganov (“Mr. Zyuganov”), Leader of the Communist Party of the Russian Federation, might win the next Russian presidential election due to be held on 3 July 1996.

Mr. Berezovsky anticipated that, with the benefit of editorial control, he would be able to use ORT to assist President Yeltsin to win the 1996 presidential election. He organised a high profile media campaign supporting President Yeltsin’s re-election, in which ORT played a major part.

On 3 July 1996 Mr. Yeltsin was re-elected President with 54% of the vote, with Mr. Zyuganov achieving 40%.

On 9 August 1999, Vladimir Putin (“Mr. Putin”, or “President Putin”) was appointed acting Prime Minister by President Yeltsin. On 1 January 2000, Mr. Putin became acting President of Russia. On 26 March 2000, he was elected President and, on 7 May 2000, was inaugurated as such.

Thus the evidence established that Mr. Berezovsky in his prime was the archetypal “well-connected powerbroker”. According to Professor Fortescue, in the early and mid-1990s Mr. Berezovsky was “one of the most politically influential ‘oligarchs’ in Russia”, an assessment with which Mr. Berezovsky readily agreed in cross-examination. Professor Fortescue identified three main factors which accounted for his influence: (i) his relationship with the so-called family advisers of President Yeltsin; (ii) his close relations with other “oligarchs”; and (iii) his media interests.

This was broadly confirmed by Mr. Berezovsky, with the characteristic proviso that the main factor accounting for his influence was “my intellectual capacity”. Mr. Berezovsky’s ability to lobby for the creation and privatisation of ORT, and its transfer into his control, and thereafter to run it, apparently without interference, clearly demonstrated the level of influence which he was able to exert at the time. The evidence also established that he exercised close control over its editorial policy and that, between 1995 and 2000, editorial control of ORT was the main source of Mr. Berezovsky’s political influence.

Mr. Patarkatsishvili was a Georgian citizen who began his career in the Georgian operations of the State-owned car manufacturer AvtoVAZ. By 1980/81 he had become head of the division responsible for the distribution of spare parts in the Caucasus. He later told Mr. Berezovsky’s solicitors that he had provided the start up capital for LogoVAZ in 1989, or at least for Mr. Berezovsky’s share of it. At some stage he moved to Moscow at Mr. Berezovsky’s invitation to join its management. Mr. Berezovsky’s account of the origins of their relationship was rather different. He said that Mr. Patarkatsishvili joined LogoVAZ as an employee in 1992, at a time when he had no significant private assets. By 1994, he had risen under Mr. Berezovsky’s patronage to become its First Deputy General Director for Commerce, and had begun to acquire a modest shareholding (4%) in LogoVAZ as well as interests in other enterprises in which Mr. Berezovsky was involved. It is not necessary for me to decide any issues about the origins of the two men’s business relationship in these proceedings, and I do not do so. It was common ground that Mr. Patarkatsishvili’s strong feature was that he was an outstanding financial manager. According to Eugene Shvidler (“Mr. Shvidler”), one of Mr. Abramovich’s close business associates, who was President of Sibneft from July 1998 to October 2005, and Chairman of the Board of RusAl from 2000 – 2003, Mr. Patarkatsishvili also had a reputation, apparently acquired in Georgia, as a “tough guy” with connections to even “tougher individuals”. When, in early 1995, Mr. Berezovsky acquired an interest in ORT, Mr. Patarkatsishvili was very quickly installed as its First Deputy General Director. In about March 1995, while his discussions with Mr. Berezovsky were continuing, Mr. Abramovich first met Mr. Patarkatsishvili at the LogoVAZ club.

Mr. Berezovsky alleges that in 1995 he reached agreement with Mr. Patarkatsishvili that, unless otherwise agreed, they would participate in any future and existing businesses on a 50:50 basis. As I have already mentioned, that is disputed, in particular by the defendants in the Chancery proceedings. As a result of an earlier decision of mine dated 6 May 2011, in which I refused Mr. Berezovsky leave to amend to raise the point in his claim against Mr. Abramovich, it is common ground that it is not an issue which can or should be resolved at this trial. Mr. Abramovich’s position is that he appreciated that Mr. Berezovsky and Mr. Patarkatsishvili were close business associates but never knew the exact nature or terms of their relationship. Mr. Berezovsky claims to have told Mr. Abramovich in 1995 that he had a 50:50 partnership with Mr. Patarkatsishvili, who managed their joint business. Mr. Abramovich does not accept that he was told this. Again, these are not issues which arise for determination at this trial, and are not issues which can subsequently be raised as against Mr. Abramovich.

The following is a summary of additional relevant events in relation to Mr. Berezovsky and Mr. Patarkatsishvili which are, to a lesser or greater extent, connected with the issues in the case. They are largely, but not exclusively, taken from the agreed chronology:

There were a number of significant features of the case which the court had to bear in mind when approaching the evidence.

First, at the core of the dispute between the parties were four highly contentious alleged oral agreements, relating to substantial assets which, if established, had serious financial and commercial consequences for the alleged parties to those agreements. Every, or almost every, aspect of the alleged agreements was in dispute. Significantly, there were no contemporaneous notes, memoranda or other documents recording the making of these alleged agreements or referring to their terms. Such documents as were relied upon by Mr. Berezovsky as circumstantial evidence supporting his case, were usually (but not invariably) considerably later in origin than the alleged agreements; they were not documents that were communicated to Mr. Abramovich or his representatives; and were documents which were open to various interpretations as to whether they were supportive of Mr. Berezovsky’s case.

Second, the oral evidence relating to such claims was extremely stale. The court was being asked, in effect, to make findings based on limited direct evidence relating to events which occurred many years ago; these included the alleged agreements between Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili in 1995 and 1996 relating to Sibneft; between the three men in 1999 relating to the aluminium interests; the alleged Dorchester Hotel Agreement said to have been concluded between Mr. Abramovich, Mr. Berezovsky, Mr. Patarkatsishvili and Mr. Deripaska on 13 March, 2000, relating to RusAl; and alleged threats said to have been made by Mr. Abramovich relating to the sale of Mr. Berezovsky’s and Mr. Patarkatsishvili’s interests in ORT in 2000, and in relation to their alleged interests in Sibneft in 2001. In a case which is dependent upon establishing oral agreements, evidence relating to events which occurred a long time ago necessarily gives rise to particular problems. Apart from the fact that, not surprisingly, it is often difficult for witnesses to remember what happened many years ago, and they can rarely be expected to remember the specific words which they used, witnesses can easily persuade themselves that their recollection of what happened is the correct one. That problem was compounded in this case by the fact there had been substantial summary judgment proceedings, followed by the appeal to the Court of Appeal, during the course of which round after round of evidence was produced by various witnesses on each side. Given the substantial resources of the parties, and the serious allegations of dishonesty, the case was heavily lawyered on both sides. That meant that no evidential stone was left unturned, unaddressed or unpolished. Those features, not surprisingly, resulted in shifts or changes in the parties’ evidence or cases, as the lawyers microscopically examined each aspect of the evidence and acquired a greater in-depth understanding of the facts. It also led to some scepticism on the court’s part as to whether the lengthy witness statements reflected more the industrious work product of the lawyers, than the actual evidence of the witnesses. However, it would not have been practical, given the length and complexity of the factual issues involved, for the court to have required evidence in chief to have been given orally. It was for that reason that cross-examination, in particular of Mr. Berezovsky and Mr. Abramovich, assumed such a critical importance.

Third, the lapse of time and staleness of the claims also gave rise to the inevitable problem that the court did not have before it all the evidence which it might otherwise have done, had the dispute been resolved nearer the time that the alleged oral agreements had been made, rather than 16 years after they were alleged to have been concluded. A number of witnesses, who would, or might, have been able to have given key evidence, were dead; these included Mr. Patarkatsishvili himself, an English solicitor, Stephen Curtis (“Mr. Curtis”) and two other English solicitors, Nick Keeling (“Mr. Keeling”) and Mr. Stephen Moss (“Mr. Moss”). A number of witnesses were not prepared to give evidence. Documents which might have been available at the time had been destroyed in the normal course of business, or were not able to be found.

Fourth, the burden of proof was on Mr. Berezovsky to establish his claims. As the only witness, on his side, who could give direct oral evidence of the making of the alleged agreements or the alleged threats, the evidential burden on him was substantial. Whilst Mr. Rabinowitz submitted in his oral closing submissions that:

Fifth, as I have already mentioned, the context in which the business arrangements between Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili were concluded was the Russian business and political environment in the period 1995-2001. Whilst the respective parties’ historical experts were able to give certain background evidence in relation to the period, ultimately it was for the court to decide whether, or the extent to which, that context explained or informed the probabilities of the arrangements being as respectively contended for by either side. The Russian context gave rise to another problem; apart from the fact that many witnesses gave their evidence in Russian, the business arrangements between Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili would have been discussed, made and conducted in Russian; the nuances of the words used between them in such discussions would not necessarily be conveyed in translation to the non-Russian speaker; particular care therefore had to be taken when considering, for example, information given by Mr. Patarkatsishvili to non-Russian speakers such as Mr. Curtis, and Mr. Berezovsky’s English solicitors.

Sixth, this case fell to be decided almost exclusively on the facts; in the event, very few issues of law were involved. Because of the nature of the factual issues, the case was one where, in the ultimate analysis, the court had to decide whether to believe Mr. Berezovsky or Mr. Abramovich. It was not the type of case where the court was able to accept one party’s evidence in relation to one set of issues and the other party’s evidence in relation to another set of issues.

Because both the Sibneft and the RusAl claims depended so very heavily on the oral evidence of Mr. Berezovsky, the court needed to have a high degree of confidence in the quality of his evidence. That meant confidence not only in his ability to recollect things accurately, but also in his objectivity and truthfulness as a witness. Before addressing his credibility in more detail, I record that Mr. Berezovsky spoke excellent English. Although his evidence did not always appear on the transcript as syntactically correct, it was easy to understand. Sometimes he had difficulty in expressing himself and I give full allowance for the fact that, under pressure, he may sometimes have given an answer which did not accurately reflect what he wanted to say. But he gave his evidence in an assured and confident manner and had little, if any difficulty, in understanding the questions put to him in cross-examination by Mr. Sumption. Indeed he gave the impression, if not of precisely enjoying the experience, at least of relishing the opportunity to present his story to the court and a large audience, and to fence with Mr. Sumption. However, I have little doubt that he found the experience a stressful one. At all times he had a Russian interpreter at his side, who was able to provide immediate assistance on the relatively few occasions he required it. He appeared to have diligently read the transcripts. He was cross-examined for seven days in all, six days by Mr. Sumption and, on the seventh day, by Mr. Malek and Mr. Adkin. He was unfailingly courteous to the court and to counsel who cross-examined him.

A court’s assessment of the credibility of a witness is not meant to be some sort of pseudo-psychological analysis of his character. But, as submitted by Mr. Sumption, Mr. Berezovsky’s personality was one of the dominant themes of the trial, which provided a key to his credibility as a witness, as well as an explanation for his evidence in relation to some of the critical events. For that reason, it is appropriate to refer to certain aspects of his personality which were displayed in his evidence, and in his demeanour. In his time, Mr. Berezovsky had clearly been a person of real political significance in Russia, who had played his part in its transition from a Communist state to a free market and capital-based economy. He was, and is, as he would be the first to profess, an intelligent man, who was able to engender considerable loyalty and support from the many people around him who believed in his abilities and powers of influence. He had been a skilful manipulator of the Russian media, and was astute in deploying it, and his numerous contacts, in order to achieve his political and personal goals. He certainly regarded himself as a champion of the free press in Russia. But, by the time of the trial he had been in exile for some 11 years, and was no longer a colossus bestriding centre stage of the Russian political scene, as he had once been. The evidence demonstrated that he personally resented Mr. Abramovich, whom he regarded as a former protégé whom he had created from nothing, but who had survived under a Russian regime, which Mr. Berezovsky hates, for what he regards as its unacceptable political values and for driving him into exile. The evidence also established that Mr. Berezovsky resented the business stature and wealth which Mr. Abramovich had acquired, as a result of being publicly perceived as the owner of Sibneft and, with Mr. Deripaska, as the creator of RusAl.

The manner in which he gave, and the content of, his evidence also showed him to be a man with a high sense of his own worth, who was keen to portray himself as the central and indispensable figure in political and commercial events. The following are examples from the transcripts:

in cross-examination by Mr. Sumption:

Again in cross-examination by Mr. Sumption:

And in cross-examination by Mr. Adkin:

Another example was his attempt to portray himself, in a reference written by a former British ambassador in support of Mr. Berezovsky’s application for asylum, as having played the principal role in bringing home two British hostages (as well as other hostages) from Chechnya. The reality, as the evidence demonstrated, was that it was Mr. Patarkatsishvili who retrieved the hostages from Chechnya and Mr. Abramovich who paid the ransom for their release.

On my analysis of the entirety of the evidence, I found Mr. Berezovsky an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes. At times, the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events. On occasions he tried to avoid answering questions by making long and irrelevant speeches, or by professing to have forgotten facts which he had been happy to record in his pleadings or witness statements. He embroidered and supplemented statements in his witness statements, or directly contradicted them. He departed from his own previous oral evidence, sometimes within minutes of having given it. When the evidence presented problems, Mr. Berezovsky simply changed his case so as to dovetail it in with the new facts, as best he could. He repeatedly sought to distance himself from statements in pleadings and in witness statements which he had signed or approved, blaming the “interpretation” of his lawyers, as if this somehow diminished his personal responsibility for accounts of the facts, which must have been derived from him and which he had verified as his own.

Whilst I can readily understand that, in a case of this sort, which involved a considerable amount of evidence at the interlocutory stage given by lawyers on instructions

A practice that I regard as undesirable.

In public interviews with the media prior to June 2001, Mr. Berezovsky had consistently and clearly denied, whenever directly asked, that he was a shareholder in Sibneft. He had never suggested in such interviews (which were frequently based on the journalist’s assumption that he indeed had such a shareholding, whether held directly or indirectly through other companies) that he had a beneficial interest in, or some sort of contractual entitlement to, Sibneft shares pursuant to arrangements with Mr. Abramovich. In cross-examination he saw nothing wrong (on the basis that he was correct in his claim that he had a beneficial interest in Sibneft shares) in misleading journalists in this respect.

In this judgment I have identified numerous instances where I have not been able to accept Mr. Berezovsky’s evidence. Although there are many other instances demonstrating Mr. Berezovsky’s lack of credibility as a witness, for present purposes it is sufficient to cite the following additional examples:

In 1997, Mr. Berezovsky sued Forbes magazine for libel in the English High Court. In response to the justification defence put forward by Forbes, Mr. Berezovsky denied in pleadings and statements many of the facts alleged by Forbes. However, in the present proceedings, Mr. Berezovsky relies upon many of those same facts, which he now says are true, as the basis for his claims in respect of Sibneft. There were significantly inconsistencies between the evidence which he gave in this litigation, and the statements which he made in the Forbes litigation. In that case, it suited his purposes to lie about the true nature of his relationship with the Yeltsin government; for example he denied allegations concerning his use of his relationship with Ms. Dyachenko and Mr. Yumashev to influence President Yeltsin; he also denied that he had personally lobbied President Yeltsin or that he had been involved in the “fixing” of the Sibneft loans for shares auction (a topic addressed below). In the present case, however, it suited his purposes to emphasise that relationship and to claim that he had played a significant role in the auction. There was no explanation for the divergences in his evidence other than that, in one case, it suited Mr. Berezovsky to present the facts in one way, and, in the second case, it suited him to present them wholly differently. The attempt which he made in cross-examination to try to explain away the discrepancies was not impressive. I reject the submission that these divergencies were only in relation to minor matters.

Another example was Mr. Berezovsky’s evidence about an alleged meeting with Mr. Abramovich in Cap d’Antibes in December 2000 (again, a topic which I address in some detail below). As Mr. Berezovsky admitted in his evidence about this: “I changed my recollection many times

Berezovsky Day 7, page 74.

Berezovsky 6th witness statement, paragraphs 31 and 33.

Another example of Mr. Berezovsky’s propensity to change his case, where it was shown not to fit with the known facts, was the change following his Russian law expert’s opinion that the alleged 1995 Agreement was insufficiently certain to extend to the partnership said to have been created under its terms in respect of the pre-merger aluminium assets acquired in 2000. In order to meet this difficulty, Mr. Berezovsky introduced a new agreement, said to have been made in 1999, specifically applying to the aluminium assets. Then, when told by his expert that, under Russian law, his claim in relation to RusAl was bound to fail, suddenly, in the face of the summary judgment application, Mr. Berezovsky belatedly recalled a “distinct recollection” that there was an express agreement that “British law” would apply. It is quite normal that a party’s case may develop and change in the course of lengthy and complex litigation. But the persistent changes in Mr. Berezovsky’s recollections, over the course of the proceedings, in response to a perceived need of what he had to prove, was, to say the least, out of the ordinary.

A further example of Mr. Berezovsky’s lack of credibility as a witness was his initial denial in cross-examination that any of his witnesses stood to gain financially, if he were to be successful in the Commercial court action. In cross-examination on Thursday, 13 October, 2011, he said as follows

Day 9, page 147.

But this turned out to be untrue. Two witnesses, Natalia Nosova (“Dr. Nosova”) and her husband, Mr. Lindley, a solicitor, stood to gain very substantially if Mr. Berezovsky were to win these proceedings. Mr. Berezovsky’s excuse in re-examination, on Monday 17 October, for not giving a truthful answer was wholly unconvincing

Day 10, pages 166-167.

This aspect of his evidence requires greater elaboration. I regard Mr. Berezovsky’s attempts to conceal the fact that two of his witnesses, Dr. Nosova and her husband, Mr. Lindley, a solicitor, each stood to gain 1% of Mr. Berezovsky’s winnings, (up to $140 million in total) if he won the action, as typical of his attitude towards the integrity of the trial process. Dr. Nosova was one of the key witnesses for Mr. Berezovsky in this litigation. In correspondence and in her disclosure statement, Dr. Nosova sought to emphasise her independence from Mr. Berezovsky for the purposes of disclosure, describing herself as a “businesswoman” who had “use of” an office at Mr. Berezovsky’s office premises. Mr. Lindley was described by Dr. Nosova as having a “managerial” role in this litigation although he sought to downplay it by describing it merely as that of a financial controller. He attended at least two meetings with Mr. Berezovsky and Mr. Patarkatsishvili in relation to the litigation in June 2007, where he took lengthy attendance notes and was called to give evidence about them. Mr. Lindley’s evidence, to the effect that he had not mentally made the connection between the payment and his evidence, was an astounding answer. In addition, Mr. Berezovsky had agreed to pay 1% of the proceeds of any successful recovery against Mr. Abramovich to a Mr. Cotlick, a long-standing assistant of Mr. Berezovsky’s and a qualified Israeli lawyer, who not only assisted Mr. Berezovsky in the conduct of this litigation but who also played a major role, in conjunction with Addleshaw Goddard, in relation to disclosure of Mr. Berezovsky’s documents, but who was not going to feature as a witness.

These contingency fee agreements were apparently entered into to compensate Mr. Lindley, Dr. Nosova and Mr. Cotlick for managing the litigation on Mr. Berezovsky’s behalf. According to Mr. Lindley, he drafted Mr. Cotlick’s agreement and Mr. Cotlick (using Mr. Lindley’s draft as a template) prepared Mr. Lindley’s agreement and that of his wife, Dr. Nosova. The contingency fee arrangements were documented by means of express written agreements about which there can have been no doubt as to their existence or consequences. There was no justification whatsoever for the fact that these arrangements were not disclosed to Mr. Abramovich’s lawyers, until they were introduced into evidence by Mr. Rabinowitz in re-examination. Neither Mr. Lindley nor Dr. Nosova referred to their contingency fee arrangements in their witness statements. It was also notable that Mr. Lindley had not informed his firm, Streathers, in which he was a partner, and which had been previously instructed by Mr. Berezovsky in this litigation, of his contingency fee arrangements until their disclosure in the course of Mr. Berezovsky’s re-examination, notwithstanding that Streathers were receiving professional fees for his work in connection with the case. Nor were Addleshaw Goddard informed of their existence by any of Dr. Nosova, Mr. Lindley, Mr. Cotlick or Mr. Berezovsky himself. They were first informed on Friday, 14 October, 2011, after Mr. Berezovsky had given his evidence in cross-examination.

But, importantly, Mr. Berezovsky’s cross-examination was not the first occasion on which the existence of these arrangements had been concealed from Mr. Abramovich and his solicitors, Skadden or, indeed the court. In particular, on 23 March 2011, Mr. Hastings of Addleshaw Goddard served his fifth witness statement. The background to the statement was the revelation that Mr. Berezovsky had entered into a contingency fee agreement whereby he agreed to pay 5% of any recovery from the claim to the intermediary who had provided the Le Bourget recording. In that context, Skadden had applied for details of that arrangement and for details of any other payments made to any witnesses in the dispute. It was known by that point in time that Dr. Nosova would be a witness. Mr. Lindley was sent a copy of the fifth witness statement of Mr. Hastings and he accepted in cross-examination that he had read it. Mr. Cotlick was referred to expressly in that witness statement. As Mr. Lindley acknowledged, Mr. Cotlick was also aware of Mr. Hastings’ witness statement. On 29 March 2011 there was a court hearing at which reference was made to Mr. Hastings’ witness statement. Both Mr. Cotlick and Mr. Lindley were present in court on that occasion and, indeed, sat next to each other.

Mr. Hastings’ fifth witness statement said:

The first paragraph of Mr. Hastings’ fifth witness statement confirmed that Addleshaw Goddard had instructions to make the witness statement on Mr. Berezovsky’s behalf. By a letter dated 13 July 2011, in response to a query from Skadden, Addleshaw Goddard confirmed that paragraphs 37(e) and (f) as set out above “remain correct”. Addleshaw Goddard subsequently confirmed that they had instructions from their client to send that letter. As was properly accepted in correspondence by Addleshaw Goddard, in light of the contingency fee arrangements, those paragraphs of Mr. Hastings’ witness statement and the confirmation given in the letter dated 13 July 2011 were (unbeknownst to Addleshaw Goddard at the time) incorrect.

In such circumstances, I find it difficult to accept that Mr. Berezovsky, Mr. Cotlick, the individual with key responsibility for Mr. Berezovsky’s disclosure, and Mr. Lindley, one of the managers of the litigation on Mr. Berezovsky’s behalf, did not appreciate that the court, Skadden and Addleshaw Goddard were being misled. But even approaching this incident on the most generous of bases, so far as Mr. Berezovsky is concerned, and assuming that he did not appreciate that there had been a deception, it still raises real concerns about his attitude to the trial process and his credibility.

I should perhaps also say, in this context, that whilst there was, of course, always the possibility that Mr. Abramovich might have made similar, but informal, arrangements promising, but not contracting, to compensate his witnesses for giving testimony supporting his case, there was no evidence suggesting or indicating the existence of such arrangements.

Accordingly, I concluded that, in the absence of corroboration, Mr. Berezovsky’s evidence frequently could not be relied upon, where it differed from that of Mr. Abramovich or other witnesses. I regret to say that the bottom line of my analysis of Mr. Berezovsky’s credibility is that he would have said almost anything to support his case.

The witnesses called by Mr. Berezovsky had no direct evidence to give about critical issues such as the alleged 1995, 1996 and 1999 Agreements or the alleged threats in relation to ORT or Sibneft. Nor, with the exception of Mr. David Reuben (whose evidence was not in fact supportive of Mr. Berezovsky’s case), and of Mr. Michael Cherney (who declined to appear as a witness, and with whose evidence I deal subsequently), were they able to give any direct evidence in relation to the alleged acquisition by Mr. Berezovsky and Mr. Patarkatsishvili of interests in the aluminium assets or RusAl or in relation to the Dorchester Hotel meeting. These witnesses had not been involved in the relevant events. The most which their evidence amounted to was, effectively, that the evidence which Mr. Berezovsky was giving at trial was consistent with what he had previously told them. All Mr. Berezovsky’s witnesses who gave such evidence of previous, allegedly consistent, statements fell into the category of his loyal supporters, who were either fellow exiles with him, or who were, or had at some time been, financially reliant upon him to a considerable extent. Their evidence was almost exclusively derived from what the witnesses had been told by Mr. Berezovsky. They were all plainly motivated by a loyal desire to support evidence that had previously been given by Mr. Berezovsky. Indeed, Mr. Glushkov, who sat through Mr. Berezovsky’s evidence, changed his own evidence in relation to whether his arrest had been a foregone conclusion, from the account which he had previously given not only in his witness statement, but also in his own asylum proceedings, apparently in order to support Mr. Berezovsky’s revised case on this topic. I could attach very little weight to the evidence of this type given by witnesses such as Mr. Glushkov, Mr. Goldfarb and Mr. Dubov. Their recollection was, not surprisingly, vague as to details, dates and specifics, and, apart from being totally dependent on what Mr. Berezovsky had told them, also required an ability to differentiate between the various occasions on which the particular witness had discussed the issues with Mr. Berezovsky.

I had difficulty in accepting Dr. Nosova as a truthful witness. Although she claimed to know a lot about the background to the case, she was not directly involved in the critical discussions or events relating to Sibneft and RusAl. Given her undisclosed contingency fee agreement, and that of her husband, she had a substantial financial interest in the outcome of the proceedings, which clearly coloured her approach to her evidence. She sat in court throughout Mr. Berezovsky’s cross-examination and the impression I formed was that she was motivated by a desire to craft her evidence to promote his case. Apart from her loyalty to Mr. Berezovsky, she departed from her evidence, both written and oral, when it suited her, and at times gave the impression of making up her evidence as she went along. I address specific aspects of her evidence in greater detail below. Consequently, I therefore approached her evidence with considerable caution.

Mr. Abramovich gave his evidence in Russian which was simultaneously translated. He also had the benefit of having a translator standing beside him throughout his cross-examination to provide linguistic assistance. It was obvious that his ability to speak, understand or read English was limited and I had no reservations about the genuine nature of his wish to give his evidence in Russian. Although it is always more difficult to cross-examine through an interpreter, in this case, because of the technical skills and abilities of the simultaneous translators, that difficulty was significantly reduced. I did not form the impression that Mr. Abramovich in any way used the translation process as a means of evading giving a direct answer or of delaying his answers to any questions put to him. Despite the fact that he gave his evidence in Russian, I was able to form a clear view of his demeanour and credibility from the answers which he gave and the manner in which he gave them. Mr. Abramovich was cross-examined over a period of nine days. He was also unfailingly courteous to the court and counsel who were cross-examining him.

In his oral closing submissions, Mr. Rabinowitz submitted that Mr. Abramovich:

Mr. Berezovsky’s written closing submissions contained similar arguments. Thus at paragraph 88 the submission was made:

But cross-examination is a very revealing process, particularly when it takes place over a number of days and requires the witness to face detailed and intensive questioning in respect of a large number of topics and documents. However well-prepared a witness may be, or however controlled he may appear to be, when giving his answers, it is very rare that the court is not able to reach a conclusion as to whether he is telling the truth or not. Contrary to Mr. Berezovsky’s views, Mr. Abramovich did not present himself in cross-examination as a “humble man” or as someone who was attempting to appear likeable, or to be liked. Whilst his demeanour was reserved and restrained, he made no attempt to pretend that he was anything other than a highly successful and very wealthy businessman, who had made a very substantial fortune in the challenging Russian business environment of the 1990s and early 2000s, largely as a result of his and his colleagues’ entrepreneurial, management and financial skills. I also had little doubt that, if the need arose, he would have been prepared to act ruthlessly in a business context to achieve his commercial goals.

But there was a marked contrast between the manner in which Mr. Berezovsky gave his evidence and that in which Mr. Abramovich did so. Mr. Abramovich indeed gave careful and thoughtful answers, which were focused on the specific issues about which he was being questioned. At all times, he was concerned to ensure that he understood the precise question, and the precise premise underlying the question which he was being asked. He was meticulous in making sure that, despite the difficulties of the translation process, he understood the sense of the questions which were being put to him. To a certain extent that difference, no doubt, reflected the different personalities of the two men, for which I gave every allowance possible to Mr. Berezovsky. But it also reflected Mr. Abramovich’s responsible approach to giving answers which he could honestly support. Where he had relevant knowledge, he was able to give full and detailed answers; he took care to distinguish between his own knowledge, reconstructed assumptions and speculation. He was not afraid to give answers which a less scrupulous witness would have considered unhelpful to his case. For example, he never sought to underplay the significant and essential role which Mr. Berezovsky had played in the acquisition of Sibneft, and, likewise, the essential contribution which Mr. Patarkatsishvili had made in connection with the acquisition of the aluminium assets. There were few differences between Mr. Abramovich’s oral evidence and the evidence given in his witness statements. Such differences as there were, were largely attributable to the legitimate addition of corroborative detail in response to questions in cross-examination, and to difficulties inherent in the translation process. Whilst, not surprisingly, there were occasions where his evidence was inconsistent, or his recollection was faulty, or had changed over time, none of these occurrences was so startling as to give me concerns about his basic truthfulness and reliability as a witness.

I do not accept Mr. Rabinowitz’s characterisation of Mr. Abramovich’s demeanour in the witness box as “smooth” or “a highly controlled performance” or any pejorative gloss implicit in the suggestion that he had been “… meticulously prepared for the evidence he would give”. Mr. Abramovich clearly found the cross-examination process a stressful one, not least because he was not in control of the questions which he was being asked, or of the court process, and because he clearly needed to concentrate hard to understand and answer the questions.

I reject the serious allegations made by Mr. Rabinowitz that Mr. Abramovich was a thoroughly “dishonest and cynical witness” who deliberately called witnesses whom he knew would give “as they were intended to do, thoroughly untrue evidence designed only to mislead the court.” Neither the evidence, nor my analysis of it, supported that allegation. Likewise I reject the allegation that he manipulated the trial process or engaged in improper collusion with his witnesses, or was part of a “smears and innuendo” campaign.

On the contrary, I found Mr. Abramovich to be frank in making concessions where they were due, for example in relation to the backdating of documents, the concealment of his 44% beneficial interest in Sibneft, or in relation to the mis-description of his educational qualifications in a Sibneft circular (the last of which I suspect largely arose as a result of translation difficulties and which were, in any event, of minimal importance). Contrary to the assertion that he, together with Mr. Shvidler and Mr. Tenenbaum, were involved in a smear campaign, Mr. Abramovich was extremely reticent about referring to personal or reputational matters concerning Mr. Berezovsky and did not attempt to embarrass him. What was referred to as the “dressing gown” evidence

A reference to what Mr. Berezovsky was wearing at the Dorchester Hotel meeting.

In conclusion, I found Mr. Abramovich to be a truthful, and, on the whole, reliable witness.

Mr. Abramovich called as witnesses almost every member of his staff who had been concerned with the matters at issue in the litigation, as well as a number of witnesses independent of Mr. Abramovich, such as Mr. Deripaska and Mr. Hauser. Their evidence was broadly consistent with that of Mr. Abramovich. Their evidence was attacked on behalf of Mr. Berezovsky on the basis that, so far as the employees were concerned, their loyalty overrode their honesty, and so far as they and Mr. Deripaska were concerned, that they had colluded in relation to various aspects of their evidence. It is not necessary for me to analyse the detailed evidence relating to the issue of alleged collusion set out in Mr. Berezovsky’s closing submissions, Mr. Abramovich’s Errata schedule and Mr. Berezovsky’s Second Schedule. The allegation was not supported by the evidence. The evidence showed that, although Mr. Abramovich’s various witnesses had, to a certain extent, discussed the events in which they had been mutually involved, prior to making their witness statements, each, when making their witness statements and giving their oral evidence had given their own personal evidence and recollection. Indeed Dr. Nosova described a very similar process within the inner circle of Mr. Berezovsky’s advisers, as well as their attempts to reconstruct dates and events from documents. Such practices are the normal, everyday reality of litigation, and unobjectionable, provided that the particular witness applies his own mind to what he can remember from his own knowledge, and distinguishes between what he personally can recall and what he has learned from someone else. It is rare to find that the integrity of individual recollection is preserved 100% intact; but, absent something more, such practices do not amount to “collusion”. I did not find it “astonishing”, as Mr. Rabinowitz suggested, that Mr. Abramovich’s witnesses did not refer to these type of discussions in their witness statements. Mr. Berezovsky’s witnesses did not do so either.

Various individual attacks were also made on the credibility of others of Mr. Abramovich’s witnesses, in particular, Mr. Shvidler, Mr. Tenenbaum, Ms. Panchenko, Mr. Gorodilov, Ms. Goncharova, and Ms. Khudyk, on the basis of their loyalty to Mr. Abramovich and other matters. I have carefully taken into account these factors, in my assessment of their credibility and evidence, as well as, in the case of Mr. Shvidler, Mr. Tenenbaum, Ms. Panchenko, and Mr. Gorodilov, their friendship with Mr. Abramovich. I did not find that their loyalty to Mr. Abramovich adversely affected the reliability of their evidence. Mr. Shvidler, Mr. Tenenbaum and Ms. Panchenko were particularly helpful witnesses, who gave their evidence in a straightforward and articulate fashion.

I address Mr. Deripaska’s evidence below. There was no reason to suppose that he crafted his evidence to suit his purposes in the ongoing claim brought against him by Mr. Michael Cherney

Cherney v Deripaska 2006 Folio 1218.

Mr. Berezovsky’s written closing submissions also contained the allegation that there had been a deliberate policy on Mr. Abramovich’s part of destroying documents in order to impede investigations into Mr. Abramovich’s dealings, and that this adversely affected the credibility of his case and his witnesses. I address this topic elsewhere but merely comment here that full and satisfactory explanations were given for the absence of certain documents, in particular by Ms. Goncharova. I did not find it at all surprising, given the passage of time and the staleness of Mr. Berezovsky’s claim, that certain documents were not available. There was certainly no evidence supporting an allegation of a “deliberate policy of document destruction” on the part of Mr. Abramovich.

Mr. Rabinowitz invited the court to draw adverse inferences from the fact that Mr. Abramovich did not call Mr. Fomichev, Mr. Smolensky and Mr. Bosov. I was satisfied that Mr. Abramovich had provided persuasive reasons why none of these three men were called as witnesses by him. I deal with the position of Mr. Fomichev in the RusAl section of this judgment. So far as Mr. Smolensky was concerned, I accept that the reason why he was not called was because, in the light of the cross-examination of Mr. Berezovsky and Mr. Abramovich, it became apparent that his evidence was marginal at best. Mr. Bosov was an independent third party witness out of the jurisdiction, whose witness statement was served under a hearsay notice solely to address a disclosure matter relating to an alleged video recording in the possession of Mr. Abramovich. This was a matter that did not, in the event, arise for the court’s determination. Mr. Bosov was nonetheless requested by Mr. Abramovich to give oral evidence, but was not in the event willing to attend to do so. In the circumstances, I draw no adverse inference against Mr. Abramovich in relation to the fact that he did not call any of these three witnesses.

I found Mr. Anisimov to be a reliable and credible witness, who gave evidence about matters directly within his own knowledge and declined to speculate even when invited to do so. I do not consider that his financial interest, as a defendant in the Metalloinvest action provided any reason per se why I should not accept his evidence. I address his evidence in greater detail below in the RusAl section of this judgment.

Likewise, I address the credibility of Mr. Anisimov’s witnesses below.

On my analysis of the entirety of the evidence, I found Mr. Berezovsky an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes. At times the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events. Accordingly, I could not accept Mr. Berezovsky as a reliable and truthful witness.

I found Mr. Abramovich to be a truthful, and on the whole, reliable, witness.

Issue A1 correlates with Issue 1 in the Agreed List of Issues

Issue A1 is the most critical issue in the case. Unless Mr. Berezovsky can prove that the agreement entered into between Mr. Abramovich, Mr. Patarkatsishvili and himself in 1995, conferred upon him and Mr. Patarkatsishvili an ownership interest in Sibneft, the remainder of his claims are difficult to establish. That is because, as I have already explained, Mr. Berezovsky’s claim to have had an interest in RusAl is ultimately dependent on his assertion that he and Mr. Patarkatsishvili had previously owned half of the aluminium assets which were contributed to the merger with Mr. Deripaska. That suggestion in turn depends upon Mr. Berezovsky’s contention that there was an agreement to give him the same interest in the pre-merger aluminium assets as he claims to have had in Sibneft, and that the aluminium assets were acquired with Sibneft assets or with that of his, Mr. Berezovsky’s, claimed share in Sibneft profits.

However, as I have already explained, because it is necessary to look at the relationship between Mr. Abramovich and Mr. Berezovsky over the entire period to which the action relates, I have had regard to various evidence relating to aspects of the RusAl claim in coming to my conclusion in relation to the Sibneft claims, and vice versa. That is because, for example, evidence of the subsequent conduct of the parties in the period 2000-2004, that might tend to show that Mr. Abramovich was operating as a partner to Mr. Berezovsky and Mr. Patarkatsishvili in relation to RusAl, might have had a bearing on whether the parties had indeed made an agreement in the terms alleged by Mr. Berezovsky to share their business interests on a 50:50 basis.

It was common ground that there was an agreement or understanding between Mr. Abramovich and Mr. Berezovsky in early 1995 in relation to the creation of Sibneft. There was also a limited measure of common ground about the terms of agreement or understanding. Thus:

It was common ground that Mr. Abramovich and Mr. Berezovsky agreed to co-operate to acquire management control over the company which acquired the businesses of Omsk Oil and Noyabrskneftegaz (in the event, Sibneft).

It was common ground that Mr. Berezovsky had an essential role in this process, and the reason why his participation was indispensable, was the exercise of his political influence to ensure:

that those businesses were transferred to a separate joint stock company (ultimately Sibneft); and subsequently

that Sibneft was partially privatised and included in the loans-for-shares programme.

It was also common ground that it was agreed that management control over Sibneft, once acquired, would be exercised by Mr. Abramovich and his team, and not by Mr. Berezovsky or Mr. Patarkatsishvili.

But it was not common ground that there was any legally binding agreement between the parties; that the “precise terms of the relationship were finalised” shortly before August 1995; nor were the parties agreed as to the extent of Mr. Berezovsky’s role in assisting with the securing of finance for the acquisition of Sibneft shares.

The critical dispute between the parties in relation to the issue, was whether Mr. Berezovsky was going to be rewarded for his role in the creation and privatisation of Sibneft by receiving, jointly with Mr. Patarkatsishvili, a contractual entitlement to an ownership interest in Sibneft and a proportionate entitlement to its profits and/or the profits of Mr. Abramovich’s trading companies generated as a result of the latter’s acquisition of control of Sibneft (as Mr. Berezovsky contended); or whether he and Mr. Patarkatsishvili were going to be rewarded by payments on demand for their krysha or patronage services (as Mr. Abramovich contended). As Mr. Sumption bluntly put the matter, was Mr. Berezovsky trading his undoubted political influence at the Kremlin and elsewhere, and his contacts with senior bankers and businessmen, in return for straight cash, or was his reward to be an entitlement to a share in the ownership of Sibneft, and the profits generated as a result of Mr. Abramovich’s acquisition of control?

My conclusion on this issue is that there was no such agreement of the nature and in the terms alleged by Mr. Berezovsky in paragraphs C33-C34 of the Re-re-re-Amended Particulars of Claim and paragraphs 97-105 of Mr. Berezovsky’s fourth witness statement, nor as subsequently developed in his case at trial. Nor was any agreement reached in 1996 between Mr. Berezovsky, Mr. Patarkatsishvili and Mr. Abramovich in the terms alleged in paragraph C37 of the Re-re-re-Amended Particulars of Claim.

Thus I find that:

there was no agreement that Mr. Berezovsky (or Mr. Berezovsky and Mr. Patarkatsishvili) would be rewarded for his (or their) role in the creation and privatisation of Sibneft by receiving an interest in Sibneft shares, or an entitlement to require the transfer of Sibneft shares;

there was no agreement that he or they would be rewarded by an entitlement to receive payment of 50% (or some other proportionate entitlement) of Sibneft profits and/or those generated by Mr. Abramovich’s trading companies as a result of his acquisition of control of, or involvement with, Sibneft, to be held jointly with Mr. Patarkatsishvili.

On the contrary, the evidence established that the arrangement between the parties was that Mr. Abramovich would provide payments towards Mr. Berezovsky’s (and subsequently Mr. Patarkatsishvili’s) expenses, not only in connection with ORT, but also generally, in exchange for Mr. Berezovsky’s assistance, protection or krysha, and subsequently that of Mr. Patarkatsishvili. The actual amounts to be paid were agreed each year as between Mr. Abramovich and Mr. Patarkatsishvili as a result of a process of negotiation.

Whilst it may have been the case that:

the figure which Mr. Berezovsky and Mr. Patarkatsishvili demanded, the figure which they expected Mr. Abramovich to pay under their protection type relationship, and the figure which Mr. Abramovich agreed to pay, was informed by, or related to, how much Mr. Abramovich’s trading companies and/or Sibneft were actually earning; and

the expectation of Mr. Berezovsky and Mr. Patarkatsishvili was that the more Mr. Abramovich’s trading companies and/or Sibneft were earning, the greater would be the payments that Mr. Abramovich would have to make to retain protection and discharge his krysha obligations;

The arrangement was one which, by its very nature, might have caused Mr. Berezovsky and Mr. Patarkatsishvili to have regarded themselves, in the vernacular, as having, or being entitled to “a piece of the Sibneft action”. That, in a very loose sense, was the nature of the deal with Mr. Abramovich, and the nature of many payments under so-called patronage or “protection” arrangements. But that does not translate into the complicated contractual agreement for which Mr. Berezovsky contended.

Having rejected Mr. Berezovsky’s case, I do not need to decide what the precise terms of the arrangement between the three men were. Whilst I conclude that it was – at least - in general terms of the nature asserted by Mr. Abramovich in paragraphs D.32 of the Re-re-Amended Defence, paragraphs 55-58 of his third witness statement and his oral evidence, I suspect, given what I can only describe as the obscure nature of the relationship, first: that the “requirements” made of Mr. Abramovich, or, put another way, his krysha type obligations, changed over time; and second, that there were other aspects of the business arrangements between the three men which have not been referred to in evidence in this trial. I am not convinced that the court has been presented with the full picture of the business arrangements between the three men. But that is irrelevant. What I have to decide is whether Mr. Berezovsky has proved, on the balance of probabilities, his case in relation to the alleged 1995 and 1996 Agreements. He has not done so.

I found Mr. Berezovsky’s evidence (and that of his witnesses) in relation to this issue to be vague, internally inconsistent, exaggerated and, at times, incredible. Whilst there were defects in certain aspects of Mr. Abramovich’s evidence (and that of his witnesses), I found it, on the whole, to be more reliable and easier to square with the inherent probabilities of the business relationship between the two men and the circumstantial evidence.

My conclusions are based not only on the direct evidence given by each man as to the arrangements between them, but also on the circumstantial evidence.

The following paragraphs of this section summarise the respective pleaded cases, the salient direct evidence in relation to this issue, the indirect circumstantial evidence relating to the issue and my relevant findings of fact and conclusions. Necessarily not all evidential issues are addressed.

In the final version of his pleaded case Mr. Berezovsky alleged as follows in relation to the alleged 1995 Agreement

See Re-re-re-Amended Particulars of Claim dated 5 October 2011: I have not included the previous wordings.

In the final version of his pleaded case Mr. Berezovsky alleged as follows in relation to the alleged 1996 Agreement

See Re-re-re-Amended Particulars of Claim: I have deleted the previous wordings.

There was no written document recording the terms of either the alleged 1995 Agreement or the alleged 1996 Agreement. I address below the documentary materials which Mr. Berezovsky alleged supported their existence in the terms alleged by him.

Mr. Berezovsky’s evidence about the making of the alleged 1995 Agreement was set out in his 4th witness statement (his principal witness statement for trial, dated 31 May 2011). In his 2nd witness statement dated 17 July 2009 (his principal witness statement served in the course of the summary judgment proceedings, where he had also described the making of the alleged 1995 Agreement in similar detail) Mr. Berezovsky had said that:

The evidence which Mr. Berezovsky gave describing the making of the alleged 1995 Agreement can be summarised as follows. From early 1995, “… it was accepted …” that he, Mr. Patarkatsishvili and Mr. Abramovich:

Mr. Berezovsky then said that at some stage between then and August 1995, a more detailed distribution of functions was agreed. In paragraph 96 of his 4th witness statement he said:

According to Mr. Berezovsky, the “exact shares” of the three parties were agreed only shortly before the Sibneft decree in July or August 1995: “50:50 between [Mr. Patarkatsishvili] and me on the one side and Mr. Abramovich on the other”. In his 4th witness statement he said:

As I describe in greater detail below, it was common ground that at some stage it was agreed that companies respectively controlled by Mr. Abramovich on the one hand and Mr. Berezovsky/Mr. Patarkatsishvili on the other would respectively have a 50% share in the vehicle company which was to be used to acquire management control of Sibneft through an auction process, referred to as the “loans-for-shares” scheme. This process involved a loan to the State (effectively by the pledgee), a pledge by the State of 51% of the share capital of Sibneft as security for the loan, and the possibility of default by the State, when the shares would be sold by the pledgee and available for purchase by the highest bidder.

However, it was far from clear from Mr. Berezovsky’s evidence what his case actually was as to the interest which he was going to have in the 49% of the share capital of Sibneft which was designated for ultimate privatisation, or the 51%, that might be sold in the event of a default, by the State, on the loan. He suggested first that “it was not agreed that I will be a registered shareholder of the company”

Berezovsky Day 4, page 157.

Berezovsky Day 4, page 158.

Berezovsky Day 4, page 159.

When challenged that there was no agreement in 1995 that Mr. Abramovich would hold any Sibneft shares for Mr. Berezovsky and Mr. Patarkatsishvili, Mr. Berezovsky said:

At the same time, according to Mr. Berezovsky, it was agreed that the parties would have corresponding 50:50 shares of “the profits”. Contrary to Mr. Rabinowitz’s submission

See, for example, Berezovsky First Schedule pages 3-4 and Mr. Rabinowitz’s oral closing submissions.

Paragraph C34B of the Re-re-re-Amended Particulars of Claim (also quoted above) appeared to go further and alleged that, pursuant to the Russian law rights which arose by virtue of the alleged 1995 Agreement, but not as a result of any express oral agreement

In his fourth witness statement, Mr. Berezovsky said that he was entitled to a share of profits “in respect of our share of Sibneft”

Berezovsky 4th witness statement, paragraph 169.

Berezovsky Day 4, pages 153 and 154; Day 5, pages 108 and 117; Day 6, pages 16, 29 and 122.

By the time of closing submissions this was formulated as an allegation that the express oral agreement between the parties was that he and Mr. Patarkatsishvili were entitled to a 50% profit share, not only in Sibneft’s profits, but also in profits generated indirectly through Mr. Abramovich’s trading companies

Defined below.

For reasons which I elaborate below, I conclude that it was highly unlikely that Mr. Abramovich would have agreed, in contractually binding terms, to have paid a defined percentage of such a vague proportion of his trading companies’ profits to Mr. Berezovsky.

Another difficulty in Mr. Berezovsky’s oral evidence related to the terms of the express oral agreement, as pleaded in paragraph C34(3) of the Re-re-re-Amended Particulars of Claim, in relation to 50:50 participation in “… any future business interests they acquired, whether or not related to Sibneft”.

However, unlike the pleaded allegation contained in paragraph C34(3), neither Mr. Berezovsky’s witness statements nor his oral evidence suggested that this amounted to an automatic right of participation in other business ventures. In cross-examination, Mr. Berezovsky initially confirmed that the pleaded account was correct

Day 6, page 117-118.

Berezovsky 4th witness statement, paragraph 104; Berezovsky Day 6, page 118: “As far as Abramovich is concerned, it’s absolutely correct that it was a right of first refusal”. See also Berezovsky Day 6, pages 120-121.

I conclude that it was wholly implausible that either Mr. Berezovsky or Mr. Abramovich would have agreed to such a term in the circumstances prevailing in 1995. In 1995, according to his own evidence, Mr. Berezovsky was an established business man with considerable influence in the Kremlin. He had known Mr. Abramovich for only a few months, had not yet participated with him in any business venture, and in any event regarded Mr. Abramovich as a small-time oil trader with no business track record. His case was that he allowed Mr. Abramovich a 50% stake in Sibneft in order to incentivise him as its manager. But on the basis of this term as to future business, he was giving Mr. Abramovich the right to take a stake in any of Mr. Berezovsky’s and Mr. Patarkatsishvili’s future ventures, even if Mr. Abramovich was not managing such a venture. Likewise, I find it equally incredible, that Mr. Abramovich would have contractually bound himself to allow Mr. Berezovsky to take a participation in any future business venture that he might choose to engage in.

Mr. Berezovsky also alleged for the first time in his fourth witness statement:

But this allegation was never pleaded. Mr. Berezovsky appeared to suggest that the reason why this term of the alleged agreement had not been pleaded (despite the many amendments to his statement of case) was because he had not been asked any questions about it by his lawyers

Day 6, pages 27-28.

Day 6, page 28.

Day 6, page 28.

Again, in the circumstances of 1995, I find it incredible that either Mr. Berezovsky or Mr. Abramovich would have agreed to such a term. I cannot see why either of them would have wished to have locked themselves in to an eternal partnership as shareholders in Sibneft, only dissolvable by common consent. No commercial rationale was suggested for such a term. The only inference which I draw is that the allegation of such a term was consistent with Mr. Berezovsky’s case in relation to RusAl.

In his written evidence, Mr. Berezovsky said that no attention had been given in 1995 to the manner in which shares of Sibneft would be held. He said:

Mr. Berezovsky alleged that it was therefore agreed in the course of a series of conversations between March and June 1996 that he and Mr. Patarkatsishvili would be “distanced” from Sibneft because of the prospect of a Communist victory in the 1996 elections

Berezovsky Day 6, page 7

Mr. Berezovsky’s case as presented at trial was that it was agreed that Mr. Abramovich would hold his and Mr. Patarkatsishvili’s interest for them, and that he would “… continue to pay us the share of profits we would otherwise have received in respect of our share of Sibneft”.

He said

Berezovsky 4th witness statement, paragraphs 169-170.

In his Defence, Mr. Abramovich denied Mr. Berezovsky’s case in relation to the alleged 1995 Agreement in the following terms:

Mr. Abramovich denied that any such agreement as alleged by Mr. Berezovsky had been made in 1996, or that Mr. Berezovsky or Mr. Patarkatsishvili had or would have any interest in or rights in relation to Sibneft.

In his third witness statement he described his arrangements with Mr. Berezovsky as follows:

Mr. Abramovich’s evidence about the understanding reached in 1995 can thus be summarised as follows:

Their understanding was substantially reached by early 1995, probably in February when the first payment to Mr. Berezovsky was made, but in any event by March

Abramovich 3rd witness statement, paragraphs 53, 57-8. In his oral evidence, Mr. Abramovich suggested that “… the agreement was reached I believe in February 1995”: Abramovich Day 16, page 116; Day 17, page 26. Ms. Goncharova’s evidence was that the first payments were made in cash in about February: Day 27, page 52.

Mr. Abramovich appreciated from the outset of their discussions that:

However, according to Mr. Abramovich, Mr. Berezovsky was not interested in acquiring Sibneft shares, and their discussions were not concerned with share ownership entitlement. In his evidence he pointed out that he and Mr. Berezovsky arrived at their understanding at a time when the oil assets were under State ownership and the loans-for-shares scheme had not yet been proposed, let alone adopted. The possibility that the two Siberian businesses might be wholly or partly privatised was not mentioned at that stage. Mr. Berezovsky’s interest was in obtaining immediate funds or “cash flow” from Mr. Abramovich to finance ORT. Mr. Abramovich observed that this interest in cash flows as opposed to share ownership was typical of Mr. Berezovsky’s modus operandi and, indeed, of the way business was commonly done in Russia at that time. For his part, Mr. Abramovich said that he always envisaged that he might eventually acquire a controlling stake in the company. But his main interest at this stage was in the creation of Sibneft and in getting a substantial degree of management control over it within the state sector.

In his oral evidence, Mr. Abramovich accepted that as the project developed, and it became clear that there would be a loans-for-shares auction for management control of 51% of Sibneft’s share capital, and privatisation of the remaining 49%, he discussed with Mr. Berezovsky the acquisition of management control; he said that by October 1995 it was agreed that Mr. Berezovsky would help him in relation to the loans-for-shares auction

Abramovich Day 24, page 19-20.

The confusion arose largely because of translation difficulties.

Abramovich Day 17, pages 21-26.

Mr. Abramovich’s evidence was that Mr. Berezovsky agreed to provide his protection, or krysha in return for payments; Mr. Abramovich’s immediate need was for political krysha, but he was happy to have physical krysha also

Abramovich Day 17, page 63; Day 17, page 65.

Abramovich Day 17, pages 70-71.

Mr. Abramovich’s evidence was to the effect that, in the most basic terms, in return for his protection, Mr. Berezovsky was to get money

Abramovich Day 17, page 12.

Abramovich Day 17, pages 25-26.

Abramovich 3rd witness statement, paragraph 55.

Abramovich 3rd witness statement, paragraph 56 ; Abramovich Day 17, page 12.

Abramovich Day 17, page 51.

Mr. Abramovich’s evidence was that his understanding was with Mr. Berezovsky only, although he appreciated that Mr. Patarkatsishvili was a close associate of Mr. Berezovsky. Mr. Abramovich’s evidence was that:

Mr. Abramovich denied that there was any agreement that Mr. Berezovsky or Mr. Patarkatsishvili would become shareholders in Sibneft or be entitled to receive any particular proportion of its profits or profits generated indirectly through Mr. Abramovich’s trading companies as a result of his control of, or involvement with, Sibneft; nor, he said, was there any partnership (in the legal sense) or agreement to share future business opportunities between them

Abramovich 3rd witness statement, paragraphs 44-45; Abramovich 4th witness statement, paragraphs 32-36. In his oral evidence Mr. Abramovich said that the 1995 arrangement was “limited only to Sibneft and to the money that we had discussed”: Abramovich Day 16, page 118.

His account was supported by Mr. Shvidler, with whom Mr. Abramovich discussed his conversations with Mr. Berezovsky at the time.

Both Mr. Abramovich and Mr. Shvidler disputed that any such discussions took place or that any such agreement was made

Abramovich 3rd witness statement, paragraphs 111-117; Shvidler 3rd witness statement, paragraph 88.

Mr. Rabinowitz submitted that there were a number of critical aspects of the circumstantial evidence which strongly supported Mr. Berezovsky’s account of the nature and terms of the alleged 1995 and 1996 Agreements, and which demonstrated that Mr. Abramovich’s case was untrue. In headline terms, these were as follows:

the transcript of a meeting which took place at Le Bourget airport between Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili on 6 December 2000 (“the Le Bourget transcript”);

handwritten notes alleged by Mr. Berezovsky to have been prepared by Stephen Curtis, a London solicitor, who died on 3 March 2004, recording what is said to have taken place at a meeting at Mr. Patarkatsishvili’s beach house at Batumi, Georgia, on 25 August 2003 attended by, among others, Mr. Patarkatsishvili, Mr. Curtis, Mr. Fomichev and Mr. Tenenbaum (“the Curtis notes”);

the nature of the relationship between Mr. Abramovich and Mr. Berezovsky; in particular, Mr. Abramovich’s case could not be squared with the dramatic end of the two men’s friendship in 2000 and 2001;

the fact that the work done by Mr. Berezovsky and Mr. Patarkatsishvili in 1995 went well beyond the provision of mere political lobbying or protection (krysha) as alleged by Mr. Abramovich;

the beliefs of Mr. Berezovsky and Mr. Patarkatsishvili and the beliefs of a large number of other people who believed, based on their contemporaneous involvement with the parties, that Mr. Berezovsky and Mr. Patarkatsishvili did indeed have an interest in Sibneft;

the nature and amount of the payments made by Mr. Abramovich to Mr. Berezovsky and Mr. Patarkatsishvili; these, submitted Mr. Rabinowitz, were:

calculated by reference to, and correlated with, Sibneft’s profits and profits generated through Mr. Abramovich’s trading companies as a result of his control of, or involvement with Sibneft; and

given the amount of the $1.3 billion payment made to Mr. Berezovsky and Mr. Patarkatsishvili in July 2002, and the $585 million paid to Mr. Patarkatsishvili in 2004;

the nature and inconsistency of Mr. Abramovich’s krysha allegation.

Mr. Sumption, on the other hand, submitted that Mr. Abramovich’s account of the alleged 1995 Agreement was more likely to be correct for the following principal reasons:

the timing was more consistent with Mr. Abramovich’s version than any other;

so too was the absence of any written record;

an interest in Sibneft, with a corresponding future profit share, would not have served Mr. Berezovsky’s purposes in 1995; only cash payments for his krysha would have done that;

no agreement was ever made about the manner in which Mr. Berezovsky’s supposed interest in Sibneft would be held for him; the alleged 1996 Agreement, relied upon by Mr. Berezovsky for this purpose, was a fabrication;

the inherent vagueness and uncertainty of the agreement that Mr. Berezovsky alleges was made in 1995;

the peripheral terms alleged to have been agreed, namely that each party would be entitled to participate in any future business venture of the others, and that none could sell out without the consent of the others, were inherently incredible in the circumstances of 1995;

the parties did not behave between 1995 and 2000 as if they had made an agreement of the kind which Mr. Berezovsky alleges; in particular, Mr. Berezovsky’s case that he was to have an interest in Sibneft and/or in Sibneft’s profits and those generated indirectly through Mr. Abramovich’s trading companies as a result of his control or involvement with Sibneft, was not consistent with:

the way in which Sibneft shares were acquired in 1996 and 1997, and held thereafter; or

the amount or timing of the payments made to him, nor with the manner in which they were arranged;

until June 2001, Mr. Berezovsky’s public statements were not consistent with his having had an interest in Sibneft; his private statements to friends and staff were equivocal.

To a certain extent, and not surprisingly, many of these points were the other side of the coin to those made by Mr. Rabinowitz.

I analyse the circumstantial evidence alleged to support the respective cases of Mr. Berezovsky and Mr. Abramovich in relation to the Sibneft issues under the following, loosely chronological headings:

the initial relationship between Mr. Abramovich and Mr. Berezovsky;

the conduct of the parties between 1995 and 2000: a) the creation of Sibneft; the acquisition of control of Sibneft; the privatisation and acquisition of Sibneft shares in 1996 and 1997; and the manner in which they were held; the contributions made by Mr. Berezovsky and Mr. Patarkatsishvili;

the timing of the alleged 1995 Agreement;

the absence of any written record;

Mr. Berezovsky’s purposes in 1995;

the alleged 1996 Agreement;

The conduct of the parties between 1995 and 2000: b) whether any payments were made to Mr. Berezovsky and/or Mr. Patarkatsishvili prior to 1996;

The conduct of the parties between 1995 and 2000: c) the nature of the payments made to Mr. Berezovsky and/or Mr. Patarkatsishvili between 1995 and 2000 and whether they were referable to 50% of:

Sibneft’s profits; or

Sibneft’s profits and profits generated indirectly through Mr. Abramovich’s trading companies as a result of his acquisition of control of, or involvement with, Sibneft:

the Le Bourget transcript;

Mr. Berezovsky’s asserted belief as to his entitlement to an interest in Sibneft; his public and private statements about his connection with Sibneft; materials showing the belief of Mr. Patarkatsishvili and others in relation to Mr. Berezovsky’s and Mr. Patarkatsishvili’s entitlement to an interest in Sibneft;

the payments of:

$1.3 billion in July 2002

I address this below, in relation to the Devonia Agreement.

$585 million to Mr. Patarkatsishvili in 2004

I address this topic below, in relation to the Dorchester Hotel meeting.

the nature and inconsistency of Mr. Abramovich’s krysha allegation.

As already mentioned, before coming to my conclusion in relation to this issue, I also took into consideration the evidence relating to the RusAl issues.

Mr. Rabinowitz submitted that the relationship between Mr. Berezovsky and Mr. Abramovich strongly supported Mr. Berezovsky’s case. He submitted that the evidence relating to their close relationship was very much more consistent with there having been a partnership between them, than it was the sort of relationship of protector and protectee suggested by Mr. Abramovich.

Mr. Berezovsky and Mr. Abramovich first met in December 1994 on a yachting holiday in the Caribbean, hosted by the Russian businessman and politician, Mr. Aven.

At this stage, Mr. Berezovsky, by then some 48 years old, already had a reputation as a man of great wealth with significant political connections and influence in Moscow, as I have already described above. The evidence showed that he was the classic power broker; he described himself as one of the most influential oligarchs in Russia. His influence derived, as Professor Fortescue stated, and as he himself confirmed in his evidence, primarily from his connections within the Kremlin but also from his ability to operate in conjunction with other oligarchs, and from the control which he was, in 1995, in the process of acquiring over the national television network in Russia, ORT, formerly owned by the State corporation, Ostankino.

I find as a fact that his main priority at this time was to find a method of funding ORT, so as to enable him to pursue his objective of assisting Mr. Yeltsin in the forthcoming election. The broadcasting business was known to be heavily loss-making. Mr. Berezovsky faced a funding shortfall despite drawing on LogoVAZ and other fellow investors. The lack of advertising revenue limited the prospect of financial recovery at least in the medium term. Mr. Berezovsky was therefore looking for another source of funding.

In his evidence, he said that, even before his first meeting with Mr. Abramovich, he had decided that one solution would be to acquire a big, cash-generating oil company. Dr. Nosova suggested in her written evidence that in November 1993 Mr. Berezovsky had visited various cities primarily for the purpose of promoting investments in AVVA. However, she claimed that Mr. Berezovsky also used this trip to explore investment opportunities in the oil sector, and, whilst he and the colleagues travelling with him were in Noyabrsk, Mr. Berezovsky organised a visit to the oil fields there, in order to meet Mr. Viktor Gorodilov, the President of Noyabrskneftegaz, for the purpose of having exploratory discussions about investing in Noyabrskneftegaz’s business. Mr. Voloshin, however, said that the purpose of the trip to the city of Noyabrsk, as with the visits to the other cities, was to attract co-investors in AVVA, and they involved а series of promotional presentations to potential investors (private and corporate). Mr. Voloshin gave evidence in his witness statement to the effect that Mr. Berezovsky did not express any interest in oil investments during the period of this trip, or that if he did, he did not discuss such proposals with him. Nor did Mr. Voloshin have any recollection of hearing about а meeting with Mr. Viktor Gorodilov during this trip. Neither witness was cross-examined on the point however.

In late 1994, Mr. Abramovich was 28 years old. He had begun his career as a mechanic, but like many others (including Mr. Berezovsky) had gone into business in the late 1980s when private business was authorised in Russia for the first time in many years. He had studied part-time at the Moscow Road Engineering Institute for a period of four years from 1987 to 1991. Subsequently, after a one–year’s “distance-learning” course, he had obtained a diploma in law in 2001.

His business career had begun in 1987, when he was employed as a mechanic in a construction office. At the time of Mr. Gorbachev’s announcement of the start of “perestroika”, allowing for the establishment of small businesses known as “cooperatives”, he was one of the country’s early entrepreneurs, serving from 1989 through 1991 as chairman of a cooperative which specialised in the manufacture of plastic toys for children. In 1991, he had begun to participate in the trading and transportation of oil, petroleum products, mineral fertilisers and cement. In the period from 1991 to 1996, he founded his first petroleum trading companies: Russian MPI A.V.K and AOZT Petroltrans (“Petroltrans”) from 1991 to 1993, and then, in 1994, a Swiss company, Runicom SA (“Runicom SA”). He had two other petroleum products trading businesses as well as fuel oil and cement trading companies, the most important of which was BMP in Germany. Petroltrans, BMP and Runicom SA together became one of the largest petroleum trading networks in Russia, sourcing their products, from among other sources, from the government-owned Omsk Oil, in Western Siberia, as well as from refineries in Ukhta, Samara and Moscow. Petroltrans managed logistics, sales and distribution of petroleum products on the domestic market. According to Mr. Abramovich, and Mr. Shvidler, whose accounts I have no reason to disbelieve: from 1993 BMP was a leading exporter of fuel oil, petrol and diesel to markets in Romania and Moldova; the network of companies began by trading nearly 400,000 tonnes of petroleum product exports in 1993 and rapidly expanded to handle an annual volume of 3 - 3.5 million tonnes in the following year; in 1994, it also expanded its product line to include petrochemicals and aromatic hydrocarbons, which it exported to markets in Western Europe; the network was the top supplier of fuel to power stations and factories in Romania and Moldova; it was thus a natural progression to move into trading electricity, cement and aluminium produced in that region. At trial these trading companies were referred to as Mr. Abramovich’s “Trading Companies”, regardless of whether they were domiciled in Russia or abroad. I shall likewise so refer to them hereafter.

At the time when he met Mr. Berezovsky, Mr. Abramovich was already a moderately successful businessman, but, as was common ground, he was little known by the extremely wealthy Russian businessmen in whose circle Mr. Berezovsky moved, and was without political influence. In his principal witness statement at trial, Mr. Berezovsky described Mr. Abramovich as “a small scale oil trader who had not achieved anything in business in late 1994”. Mr. Berezovsky was equally scathing in his oral evidence about Mr. Abramovich’s success at that time. He described Mr. Abramovich as not being “smart”

Berezovsky Day 4, page 16.

Berezovsky Day 4, page 17.

Berezovsky Day 5, page 21.

One of the principal trading counterparties of Mr. Abramovich’s oil trading group was Omsk Oil, which operated a large modern refinery at Omsk in Western Siberia. The refinery was supplied with crude oil by Noyabrskneftegaz, one of the largest producers in Russia. In the course of his trading operations, Mr. Abramovich had developed good relationships with both companies. Both were at the time in public ownership, and, in Mr. Abramovich’s opinion, were not well managed. Mr. Abramovich’s evidence was that, as a result of a meeting that he had attended in October 1994, he had conceived the idea of creating a new vertically integrated oil company combining both the production and the refining businesses. He believed that he could make more money if he could obtain management control of the combined entity and run it in conjunction with his existing oil trading network. To achieve the integration of Omsk refinery and Noyabrskneftegaz as a free-standing enterprise, and acquire management control over them, so as to create a new vertically integrated oil company, Mr. Abramovich needed access to someone who was in a position to influence the key decision-makers in government and to assist in securing the necessary legislation.

It was suggested to Mr. Abramovich in cross-examination that the idea, or “vision” of integrating the two companies had originated with Mr. Victor Gorodilov, the general director of Noyabrskneftegaz, and not with him. Mr. Abramovich did not accept this. Precisely what proposal Mr. Victor Gorodilov may have conceived, or had in mind, or discussed with Mr. Abramovich, is irrelevant. What was clear from the evidence, as indeed Mr. Berezovsky accepted in both his written and oral evidence, was that it was Mr. Abramovich who brought the proposal of establishing a new vertically integrated oil company, through the merger of the two companies and their effective privatisation, to Mr. Berezovsky. In his witness statement Mr. Vladimir Voronoff, an associate and close friend of Mr. Berezovsky and Mr. Patarkatsishvili, claimed that Mr. Berezovsky regarded the creation of Sibneft as his “brainchild”. Whilst Mr. Berezovsky may well have presented the creation of Sibneft as his own idea to others such as Mr. Voronoff, I am satisfied that, as between Mr. Berezovsky and Mr. Abramovich, the idea of creating Sibneft was brought to the table by Mr. Abramovich. Such a concept required knowledge of how the various oil enterprises operated and interacted. This Mr. Abramovich had acquired as a result of his dealings with those enterprises as an oil trader. It was clear that Mr. Berezovsky did not have such knowledge.

Mr. Abramovich and Mr. Berezovsky discussed the idea of combining the businesses of Omsk Oil and Noyabrskneftegaz on the cruise, and their discussions continued once they returned to Moscow. As I have already said, Mr. Berezovsky accepted that it was Mr. Abramovich who presented to him the idea of forming a viable vertically-integrated oil company by the creation of a company such as Sibneft.

Mr. Berezovsky, by his own account, saw the plan as “offering the opportunity for great wealth”, which “would allow me to fund ORT and other media acquisitions”. In his oral evidence, he acknowledged that the main reason why he became interested in the Sibneft project was that it would provide a source of funding for ORT

Berezovsky Day 4, page 34; Day 5, page 9.

It was common ground that Mr. Berezovsky and Mr. Abramovich met each other frequently during this period, and indeed in the immediately following years, and formed a close relationship. As Mr. Abramovich admitted in his Defence, they became friends. In his third witness statement, he described their relationship as follows:

In his written closing submissions, Mr. Rabinowitz suggested that Mr. Abramovich had sought to deny that friendship, and had been “… obliged to retreat from that position” when faced with “… voluminous evidence of the friendship”. I disagree. Mr. Abramovich’s point was a more subtle one: with the benefit of hindsight he did not regard himself as a close friend. Whilst he did regard himself as a friend of Mr. Berezovsky between 1996 and the end of 1999 and early 2000, he was not a friend in 1995

Abramovich Day 17, pages 84-85.

Mr. Abramovich went to say that his close friends were men such as Mr. Shvidler, Mr. Andrei Gorodilov and Mr. Tenenbaum, with whom he worked and relaxed; but that he would not describe Mr. Berezovsky as falling into that category.

The evidence also showed that the two men’s families went on holiday together about eight times in the four years between 1995 and 1998 (although with other families as well); that one year, Mr. Abramovich rented one of Mr. Berezovsky’s properties at Cap d’Antibes; that in 1996-1997, Mr. Berezovsky and Mr. Abramovich were meeting each other on almost a daily basis; that Mr. Abramovich’s then wife and Ms. Gorbunova were friends; and that Mr. Abramovich was invited to Mr. Berezovsky’s birthday parties from 1996 up until and including 2000.

I do not consider that the evidence relating to the undoubted friendship between the two men and their families supports Mr. Berezovsky’s case, even if, as Mr. Rabinowitz submitted, Mr. Abramovich attempted to underplay the closeness of that friendship. In 1995, at the start of their relationship, Mr. Abramovich was a moderately successful, 28 year old businessman, with resources, but not enormous resources, who clearly needed the political influence of a powerful and influential older politician such as Mr. Berezovsky. The evidence clearly showed that Mr. Berezovsky never regarded Mr. Abramovich as an intellectual or social equal, notwithstanding that their relationship developed into one of friendship. That was apparent, not only from the evidence relating to incidents such as the Dorchester Hotel meeting, but also from the disparaging terms in which Mr. Berezovsky spoke about Mr. Abramovich’s brain and business achievements. It was clear, moreover, that the younger man, initially at least, looked up to and respected the elder man.

I conclude, therefore, that the nature of the two men’s friendship did not support Mr. Berezovsky’s case. The uneven balance of their personal relationship, which reflected Mr. Berezovsky’s greater age and superior status, was, in my judgment, more consistent with Mr. Abramovich’s case that their relationship was one of krysha.

This next section of this judgment summarises the evidence relating to the creation of Sibneft, the loans-for-shares programme, and Sibneft’s subsequent privatisation. In order to assess the probabilities as to whether there were indeed contractually binding agreements between Mr. Abramovich and Mr. Berezovsky, in the terms alleged by the latter in relation to Sibneft, it is necessary to have a detailed understanding not only of those events, but also of the part each of the two men played in them and their respective contributions to what happened. The evidence as to the events themselves (i.e. objectively what happened) was largely not in dispute. What was in dispute were the roles respectively played by Mr. Berezovsky and Mr. Abramovich in relation to the creation of Sibneft, what was referred to as the loans-for shares programme, and Sibneft’s subsequent privatisation. In so far as facts were in dispute, the following account reflects my findings in relation to those issues which I consider material.

Mr. Berezovsky and Mr. Abramovich each contended that the evidence relating to their respective contributions to the process strongly supported their respective cases.

Mr. Berezovsky’s “lobbying” of the Russian government was described in paragraphs 110 to 133 of his fourth witness statement. The essence of it was that he arrived at an understanding with President Yeltsin and his officials that, if the government agreed to take the necessary steps to put the businesses of Noyabrskneftegaz and Omsk Oil under the control of his associates, he (Mr. Berezovsky) would be able to extract enough money from Sibneft to fund the cost of ORT’s operations and to put ORT’s considerable influence behind Mr. Yeltsin’s campaign for re-election in the presidential elections due in June 1996. In his written evidence, Mr. Berezovsky put the point in this way

Berezovsky 4th witness statement witness statement, paragraphs 111, 115, and cf paragraphs 117-119, 153.

As Mr. Abramovich accepted, without the exercise by Mr. Berezovsky of his political influence, Mr. Abramovich would not have obtained control of Sibneft. Had Mr. Berezovsky not provided his assistance:

Noyabrskneftegaz and Omsk Oil would have been consolidated into the Russian State oil company, Rosneft, for which they had been earmarked; and

the Russian State would not have included Sibneft in the loans-for-shares programme, as to which see below.

In addition to Mr. Berezovsky’s lobbying for political support, it was essential to obtain the support of the top management of Noyabrskneftegaz and Omsk Oil. The critical figures here were the “Red” directors, Mr. Viktor Gorodilov, the then General Director of Noyabrskneftegaz, and Ivan Litskevich (“Mr. Litskevich”), the then General Director of Omsk Oil, and subsequently Konstantin Potapov (“Mr. Potapov”) who replaced Mr. Litskevich. Mr. Abramovich knew Mr. Viktor Gorodilov and Mr. Litskevich from his previous dealings with Noyabrskneftegaz and Omsk Oil, and indeed Mr. Berezovsky had been impressed on first meeting Mr. Abramovich that Mr. Abramovich had been able to forge a business relationship with Mr. Viktor Gorodilov. Mr. Berezovsky also knew them.

The evidence showed that Mr. Berezovsky played an important role in securing the support of the Red directors to the acquisition of Noyabrskneftegaz and Omsk Oil by Sibneft and their effective merger. But it also showed that Mr. Abramovich played an important part, as he was responsible for negotiating the terms and conditions with the Red directors. Mr. Litskevich did not initially support the merger proposal, and was vacillating, so Mr. Abramovich asked Mr. Berezovsky to sign a letter to him recommending him to do so. The letter contained a manuscript note from Mr. Berezovsky: “Roman Abramovich (whom you know) will come to you today and explain everything. You can trust him”. Mr. Abramovich agreed that this note was necessary because otherwise Mr. Litskevich would not have taken him seriously as someone who could bring about the merger of two major State assets by means of a presidential decree.

On 10 February 1995, Mr. Viktor Gorodilov wrote to President Yeltsin, explaining the benefits of creating an independent oil company. There was a dispute between Mr. Berezovsky and Mr. Abramovich, about which of them arranged for Mr. Viktor Gorodilov to write this letter. Mr. Abramovich suggested he did so; Mr. Berezovsky on the other hand suggested that he and Mr. Abramovich did so. It is not necessary for me to resolve this dispute. What was clear, as Mr. Abramovich accepted during cross-examination, was that Mr. Berezovsky, as a much more important and influential person than Mr. Abramovich at that time, was instrumental in obtaining Mr. Viktor Gorodilov’s support.

Mr. Abramovich was cross-examined about various agreements signed by Mr. Berezovsky on behalf of a proposed entity, Neftyanaya Finansovaya Korporatsiya, purportedly as its chief executive officer, with, respectively, Mr. Viktor Gorodilov and Mr. Potapov. Neftyanaya Finansovaya Korporatsiya may have been destined as the vehicle to be used for the purposes of exercising management control of Sibneft; however it was never in fact incorporated. The agreements (or proposed agreements) were:

an agreement dated 9 September 1995 between Mr. Viktor Gorodilov and Mr. Berezovsky relating to the proposed creation of Neftyanaya Finansovaya Korporatsiya, stating that that company would have a right to take decisions on all important matters in relation to Sibneft activity;

an almost identical agreement between Mr. Berezovsky and a Mr. Konstantin Potapov, then Acting President of Omsk Oil Refinery, dated 11 October 1995;

an agreement “on mutual obligations” dated 9 September 1995 purportedly between Neftyanaya Finansovaya Korporatsiya and Sibneft, signed by Mr. Berezovsky and Mr. Viktor Gorodilov, pursuant to which, apparently, it was agreed that Neftyanaya Finansovaya Korporatsiya would ensure that Mr. Viktor Gorodilov received a “monthly base salary” of $100,000; that upon expiry of his first year of employment, he received an equity stake in Sibneft of $3 million; that upon expiry of the next two years he received an additional equity stake of $5 million; and that he would receive a residence in Moscow to meet “all his requirements”;

an agreement on similar terms (although the financial rewards were of lesser amount), but purportedly between Neftyanaya Finansovaya Korporatsiya and Omsk Oil, dated 12 October 1995, signed by Mr. Berezovsky and Mr. Potapov.

Mr. Abramovich explained that Mr. Viktor Gorodilov was well-respected not only in the industry, but also among company personnel, and that it was essential to secure his support to the Sibneft proposal. Given his role at Omsk Oil, Mr. Potapov was similarly important. Mr. Abramovich said that he had negotiated all the terms and conditions of the above agreements with the two men, but, in order to make these agreements more meaningful had asked Mr. Berezovsky to sign them on behalf of Neftyanaya Finansovaya Korporatsiya, since his status, influence and political position at the time added credibility to the obligations in the agreements. He also gave evidence to the effect that, in the end, Neftyanaya Finansovaya Korporatsiya was never formed, although the vehicle eventually set up for the bid in the loans-for-shares auction did have a very similar name. The relevance of these agreements was that they show the importance which Mr. Abramovich attached to the involvement of Mr. Berezovsky. They also demonstrate the role which Mr. Abramovich played in their negotiation.

Subsequently Presidential Decree No. 872 dated 24 August 1995 “On the Establishment of the OAO Siberian Oil Company” (already defined above as “the August 1995 Decree”), formally authorised the formation of Sibneft. The August 1995 Decree also provided that the Russian government was “… to provide during the formation of OAO Sibneft that 51% of its shares be kept in the federal property for three years.”

At its inception, Sibneft was one of Russia’s largest companies. Its component units had produced about 22 million tons of crude oil in 1994 (8% of Russian production), with estimated reserves of 835.7 million tons, and a refining capacity of about 26 million tons a year.

It was common ground that Mr. Berezovsky’s political influence and connections was invaluable in relation to this stage. However, contrary to the evidence which he gave, I do not accept that his connections with Mr. Victor Gorodilov were determinative. Whilst, as I have held above, his participation was extremely important, Mr. Abramovich himself also had very strong business relations with Mr. Victor Gorodilov as a result of the dealings between the Trading Companies and Noyabrskneftegaz.

The Russian government’s loans-for-shares programme appears to have originated in March 1995. Mr. Vladimir Potanin (“Mr. Potanin”), a Russian businessman who owned substantial interests in OneximBank (sometimes known as UneximBank), and was later first Deputy Prime Minister

From 1996-1997.

Mr. Abramovich’s evidence was that, although his initial goal had simply been to create Sibneft, in September 1995 he and Mr. Berezovsky met the Committee for the Management of State Property to discuss Sibneft’s inclusion on the list of companies to be included in the “loans-for shares” programme.

Mr. Berezovsky had separate meetings on the same subject with Alfred Kokh (“Mr. Kokh”), the Deputy Head and acting Chairman of the committee, and with Mr. Viktor Gorodilov.

Decree No. 972 of the Government of the Russian Federation dated 29 September 1995 provided for the Committee for the Management of State Property to contribute to the authorised share capital of Sibneft the State’s shares in Noyabrskneftegaz, Omsk Oil, OAO Noyabrskneftegazgeofizika (“Noyabrskneftegazgeofizica”) (an oil exploration company associated with Noyabrskneftegaz), and OAO Omsknefteprodukt (“Omsknefteprodukt”) (a marketing company associated with Omsk Oil). At the same time the decree approved a summary privatisation plan for Sibneft, which envisaged that 51% of Sibneft’s shares would be issued to the State for a period of three years (as had been expressly required by the August 1995 Decree), and that the remaining 49% would be sold by tender or auction to private investors. Pursuant to this decree, Sibneft was officially registered on 6 October 1995 in the City of Omsk. Mr. Viktor Gorodilov was appointed as its first President. On 11 October 1995, the Committee for the Management of State Property issued directive No 1462-r, confirming the transfer of shares in each of Noyabrskneftegaz, Omsk Oil, Noyabrskneftegazgeofizica and Omsknefteprodukt to Sibneft and approving the summary privatisation plan of Sibneft.

Again, Mr. Abramovich accepted that Mr. Berezovsky’s political influence and connections were invaluable in relation to this stage of the process. It was clear however that Mr. Abramovich and his team also played a significant part in the process.

A further Presidential Decree and a Government Decree, both dated 27 November 1995, approved arrangements for selling, by auction, the right to enter into a “loans-for-shares” agreement in respect of the 51% of Sibneft shares to be retained in State ownership. Under these arrangements, participants in the auction were to make competitive bids stating the amounts which they were willing to lend to the State. The bidder offering the largest loan would enter into a loan agreement and security documentation in prescribed form, taking a pledge by way of security over the 51% of the equity reserved to the State, and acquiring the right to manage that holding for three years. The successful bidder would obtain no property in the Sibneft shares by virtue of these arrangements. In the event of a default, the successful bidder would be required to auction the shares and apply the proceeds in repayment of the loan.

This was not an auction of Sibneft shares in themselves. What was being sold was the right to lend money to the State on the security of a pledge of the 51% shareholding in Sibneft which the State proposed to retain. Under the terms of the pledge, the lender would have the right to manage the company for a period of three years. Under the terms of the pledge, the lender became nominal holder of the shares only whilst ownership remained with the Russian government

See the pledge agreement, paragraph 2.1 and 2.2. See also article 2 of the linked commission agreement.

There was an issue about whether it was inevitable that the Russian government would default on these loans, with the result that the State’s 51% holding would in due course be sold, but the area of dispute was narrow. At the time of the decree authorising the loans, there was no provision in the Russian federal budget for their repayment, but that might or might not have changed later. Mr. Berezovsky said that it was practically inevitable that the loan would go into default because the Russian government was bankrupt. Mr. Shvidler’s evidence was that default was probable but by no means certain. One of the many uncertainties affecting the position was the forthcoming 1996 Presidential election. If the Communist candidate were to be elected, there would be no question of the shares then being allowed to fall into private hands. The precise degree of likelihood that the loan to the State would go into default is not an issue that it is necessary for me to decide; all I need say is that it was highly likely, but not inevitable.

The loans-for-shares auction was held on 28 December 1995. The rules governing the conduct of the auction required at least two bidders. The successful bidder was Neftyanaya Finansovaya Kompaniya (“NFK”), with the support of AKB Stolichny Savings Bank (“SBS”). The under-bidder was a consortium organised by Bank Menatep. As was common ground, NFK never acquired any shares in Sibneft; all it ever had was management control

Berezovsky Day 5, page 83: “NFK just manage 51 shares of Sibneft”.

NFK had been created just before the loans-for-shares auction. The Audit Chamber report records that NFK was registered on 7 December 1995. NFK’s foundation agreement was dated 6 December 1995. NFK was 50% owned by OOO Vektor-A (which, as was common ground, was indirectly owned by Mr. Abramovich) and 50% by Consolidated Bank (which, as was common ground, and as I have already mentioned, was under the effective management control of Mr. Berezovsky). Again, as I have already mentioned, Mr. Berezovsky had, at most, a 13.7 % indirect interest in Consolidated Bank, and thereby, at most, a 6.85 % indirect interest in NFK.

It was Mr. Abramovich’s idea to arrange for NFK to be partly owned by Consolidated Bank. His reason was that Consolidated Bank was widely regarded as being associated with Mr. Berezovsky, and the association with Mr. Berezovsky was seen as politically valuable. In practice, Mr. Abramovich controlled NFK through its officers, all of whom acted on his instructions; and, in practice, it was Mr. Abramovich and his associates who managed Sibneft, not NFK.

NFK had no genuine competition in the loans-for-shares auction. Effectively, between them, Mr. Berezovsky, Mr. Patarkatsishvili and Mr. Abramovich, had persuaded other potential bidders, by various means, either not to bid at all, or to put in bids of lesser amount than NFK.

The only other bidder at the auction itself was a syndicate organised by Bank Menatep, controlled by Mr. Khodorkovsky. He had agreed with Mr. Berezovsky, in advance, to bid slightly more than the reserve and slightly less than NFK. According to Mr. Berezovsky, this resulted from earlier agreements with Mr. Khodorkovsky and his Menatep colleagues, and with other oligarchs

These included the partners in Norilsk Nickel (Mr. Potanin and Mr. Prokhorov), Mr. Fridman and Mr. Aven; and Mr. Alekperov (of Lukoil)

A fourth bidder, OAO Samarskaya Metallurgicheskaya Kompaniya (“Sameko”), an aluminium company, was persuaded by Mr. Patarkatsishvili to withdraw by a promise of payment of debts which it owed to AB Inkombank (“Inkombank”), a Russian bank owned by Vladimir Vinogradov. Inkombank was the main creditor of Sameko at the time and had been pushing Sameko to take part in the Sibneft auction as Inkombank’s bidding vehicle. Mr. Abramovich had learnt of its proposed bid, and had discussed it with Mr. Patarkatsishvili, who had said that he would seek to persuade the General Director of Sameko, Maxim Ovodenko (“Mr. Ovodenko”), to withdraw Sameko’s bid. Mr. Patarkatsishvili, together with Mr. Victor Gorodilov, travelled to Samara a day or two before the auction to negotiate with Mr. Ovodenko. The day before the auction itself, Mr. Abramovich, Mr. Kulakov, Mr. Fomichev and Mr. Andrei Gorodilov (Mr. Victor Gorodilov’s son), also travelled to Samara to meet the Sameko personnel. Although by the time they arrived, the negotiations in principle had been completed by Mr. Patarkatsishvili and by Mr. Victor Gorodilov, there was a final meeting at which Mr. Abramovich and his team attended in order to complete and sign the documentation which guaranteed compensation to Sameko for all its losses resulting from its withdrawal from the auction as well as to help with the restructuring of Sameko’s debts with Inkombank should this become necessary.

Because Mr. Abramovich was going to be in Samara, he and Mr. Berezovsky agreed that Mr. Berezovsky would present the bid at the auction on behalf of NFK. This also had the advantage of lending Mr. Berezovsky’s undoubted political reputation and stature to the bid. Although Mr. Berezovsky claimed in his written evidence that the amount of the bid was left to his discretion, that statement was not correct. The day before the auction, he and Mr. Abramovich had discussed the current bid situation and Mr. Abramovich had set a range for the bid of up US $101 million. They had also discussed а second option for the bid, in case the bid from the key competitor, Sameko, was not withdrawn. They agreed that, in that event, Mr. Berezovsky would be authorised to put forward what Mr. Abramovich referred to as a “totally out-of-this-world” alternative bid figure of $217 million. Mr. Abramovich knew that the second figure was unrealistic because:

NFK did not have funds of that amount available;

because, he, Mr. Abramovich, would not be able to raise them; and

because SBS would not have been prepared to provide а loan for that amount.

At the time of the auction Mr. Abramovich, and Mr. Fomichev were on their way back from Samara with Mr. Patarkatsishvili. Mr. Berezovsky went to the auction with two bids: the lower bid, for $ 100.3 million, which was intended to be submitted; the other, for $ 217 million, was kept in his pocket in case Mr. Patarkatsishvili failed to persuade Sameko to withdraw. But it was not necessary to use it. Mr. Patarkatsishvili, together with a representative of Sameko, arrived from the airport at the auction just five minutes before it began. The representative of Sameko brought with him written confirmation from Sameko that it had withdrawn from the process.

The bid price, i.e. the amount to be lent to the Russian Ministry of Finance, was $ 100.3 million, which was regarded as a very large amount of money to raise in Russia at the time

Shvidler 3rd witness statement, paragraph 45.

However, although formally the lender, SBS had little, if any, exposure to the financial risk that the State would not repay. As the evidence of Messrs Abramovich, Shvidler, Andrei Gorodilov and Grigoriev showed, SBS was fully secured by:

cash collateral counter-deposits of:

$ 17.3 million held in Runicom SA’s account at SBS (funded by Mr. Abramovich’s Trading Companies); Mr. Abramovich and Mr. Andrei Gorodilov explained that the Trading Companies raised finance on the strength of future long-term contracts with Noyabrskneftegaz and Omsk Oil Refinery, and that it was these funds which were deposited with SBS; and

cash deposits of $ 80 million held in the accounts of Noyabrskneftegaz and Omsk Oil at SBS; these were raised from trade finance arrangements secured by future production at Noyabrskneftegaz and Omsk Oil themselves;

guarantees and pledges from Runicom for the full amount;

the pledge of the State’s interest in 51% of Sibneft’s shares from NFK as the pledge-holder.

A back-to-back guarantee was also provided by Bank Menatep to SBS. Due to the amount involved, it was necessary to obtain this type of back-to-back guarantee from a second bank, since the Russian Central Bank rules in force at the time limited a bank’s commitments to a proportion of its capital. However, like SBS, Bank Menatep had little or no financial exposure in providing its guarantee, since the $ 100.3 million had been deposited in SBS prior to the auction as already described above.

The loans-for-shares auction for Sibneft has been a controversial topic in Russia ever since it took place. In December 1997, the Audit Chamber of the Russian Federation issued a highly critical report on the way it was authorised and conducted

As to the accuracy of which see above.

During the course of the trial I received unsolicited communications from various Russian persons complaining inter alia in relation to the acquisition of Sibneft. Everything which I received was made available to the parties. Such materials were not deployed in evidence and I do not propose to refer to them further.

After the auction, Mr. Andrei Blokh became the first vice president of Sibneft, and Mr. Abramovich’s associate, Mr. Shvidler, became the vice president for finance. Mr. Abramovich himself became the Head of the Moscow branch. Mr. Shvidler and Mr. Gorodilov gave evidence that, for the purposes of the loans-for-shares auction, and appointment to the board of Sibneft, on behalf of NFK, Mr. Berezovsky was called the “chairman” of NFK, but that this was a meaningless title because NFK had no board, NFK being a ZAO company which was run by a general director, and the NFK charter specified neither that position nor a body such as a board of directors. Mr. Shvidler said that “he needed to be called something”. Nor did Mr. Berezovsky subsequently perform any functions or duties related to that, or any other, position in NFK, such as, for example, chairing meetings. Indeed in his written evidence not only did Mr. Berezovsky not assert that he was chairman of NFK, but also disavowed any “hands-on involvement in deciding on the corporate structures used for the purpose of the vehicles that bid in the December 1995 auction

See Berezovsky 4th witness statement witness statement, paragraph 147-149.

Mr. Abramovich did not dispute the significance of Mr. Berezovsky’s political contribution to the creation of Sibneft, and the achievement of management control over it. Mr. Abramovich accepted that it was indispensable. He also accepted that the help which Mr. Patarkatsishvili gave in persuading Sameko to withdraw its bid was invaluable, and that, without such help, Sameko would not have provided a letter of confirmation to that effect. It was also common ground that Mr. Berezovsky had been instrumental in persuading Mr. Khodorkovsky and Bank Menatep to put in a lower bid than NFK.

There was, however, an issue between the parties about Mr. Berezovsky’s contribution to the commercial preparations for the auction, and the nature of the contribution which he made to the raising of bank finance to support the bid.

My findings in relation to this issue may be summarised as follows:

I conclude that Mr. Berezovsky has exaggerated the role which he claimed that he played in relation to the obtaining of finance from SBS and the contribution which he claimed

See, for example, paragraph 324 of Mr. Berezovsky’s written closing submissions.

Mr. Berezovsky’s relationship with Mr. Smolensky, the Chairman of the SBS Board, was clearly an important and valuable factor in persuading SBS to support NFK’s bid

Shvidler 3rd witness statement, paragraph 65.

Abramovich 3rd witness statement, paragraph 6.

Berezovsky 4th witness statement witness statement, paragraph 140.

Once the introduction had been made, however, it was Mr. Abramovich who conducted the negotiations to raise the finance for NFK’s bid. Whilst Mr. Smolensky may have met informally with Mr. Berezovsky to discuss the loans-for-shares auction with him, the negotiations with SBS of the terms for the financing of the loan were conducted by Mr. Abramovich and his team, including in particular Mr. Andrei Gorodilov, with, on the SBS side, Mr. Smolensky, Mr. Aleksey Rasskazov, Mr. Grigoriev and other employees of SBS. The commercial reason why SBS was willing to lend its name to the bid, apart from the fact that it was fully cash collateralised, was the agreement that, if the bid were successful, SBS would obtain all Sibneft’s and Runicom’s banking business. Sibneft’s cash flow by late 1995 was in the region of $ 1 billion per year, and thus to become the principal banker to Sibneft was a significant coup for SBS. That commercial driver had nothing to do with Mr. Berezovsky’s association with Mr. Smolensky. Mr. Grigoriev’s evidence also made it clear that the fact that SBS agreed to provide financing for NFK’s bid had nothing to do with SBS’ financing of ORT. According to Mr. Grigoriev, SBS did not regard the ORT project funding as commercially profitable and had provided a soft loan of $ 55.4 million finance to ORT quite regardless of the loans-for-shares auction relating to Sibneft.

Contrary to Mr. Berezovsky’s claim

See paragraph 316 of Mr. Berezovsky’s written closing submissions.

Berezovsky Day 5, pages 89-90.

Nor was there any evidence to support Mr. Berezovsky’s suggestion

See paragraph 257(1) of Mr. Berezovsky’s written closing submissions.

See paragraph 315(4) of Mr. Berezovsky’s written closing submissions.

Mr. Berezovsky’s evidence was that he expended considerable effort in attempting to obtain funding for the project. I have no doubt that the critical issue of raising finance would have been discussed as between Mr. Abramovich and Mr. Berezovsky, possibly also with Mr. Shvidler present, on occasions prior to the auction. As the latter described, at that time they were all reviewing their connections to see if they knew people who might be able to assist. However, although Mr. Berezovsky did contact his acquaintance, the financier, George Soros, in the hope that Mr. Soros would assist, and may well also have canvassed other potential investors in Europe and the Far East, these approaches came to nothing. The proposal was regarded as far too risky for investors outside Russia.

I reject Mr. Berezovsky’s evidence and that of Dr. Nosova that members of his team, including Dr. Nosova and Mr. Waldman, worked closely on the bid.

Berezovsky 4th witness statement, paragraph 147

Dr. Dubov, one of Mr. Berezovsky’s witnesses, gave unchallenged evidence that, towards the end of 1995, he attended SBS with the LogoVAZ seal, having been told by Mr. Patarkatsishvili that he was in financial negotiations with SBS and might require a guarantee from LogoVAZ and Dr. Dubov’s signature. Dr. Dubov was shown a draft of the guarantee which it was proposed that LogoVAZ would give. He did not recall to whom the loan was to be given. He was kept hanging around SBS offices for some time but, in the event, no guarantee from LogoVAZ was required. It was for an amount close to $100 million, which, according to Dr. Dubov, was approximately half of what LogoVAZ was worth at the time, which was a matter which concerned him. Mr. Grigoriev did not recall any discussion of a guarantee; he commented that such a guarantee might have been prepared, but that, if it was, then it was not in connection with the Sibneft transaction but rather in connection with a loan to ORT which was also being documented at that time. However ORT’s line of credit which was being negotiated was only in the sum of approximately $20million, whereas a figure of $100 million was close to the amount which SBS had undertaken to lend in respect of the Sibneft transaction. Mr. Abramovich himself did not recall any discussion about a proposed guarantee from LogoVAZ and pointed out that, in his view, the required amount would have been significantly greater than half of the financial capacity of LogoVAZ at that time. Whilst I accept that there may have been some discussion as between Mr. Patarkatsishvili and an SBS representative about the possibility of LogoVAZ providing a guarantee, it clearly came to nothing.

Accordingly I reject the conclusion contended for by Mr. Berezovsky that he “played a central role in all of the major aspects of the funding for “the loan for shares” auction”

See Mr. Berezovsky’s oral and written closing submissions.

The 49% of Sibneft’s share capital which was not under NFK’s management control pursuant to the pledge under the loans-for-shares scheme, was sold off by the Russian State in three separate auctions conducted in 1995 and 1996.

The first of the three cash auctions by which the State disposed of the 49% of Sibneft earmarked for immediate privatisation closed on 4 January 1996. The auction began on 1 November 1995 and bids were accepted until 4 January 1996 (originally the deadline had been 1 December 1995 but this was extended on 27 November 1995). 15% of the company was available for sale. Out of the 15%, 12.22% was acquired by Runicom SA at a cost of about $ 30 million

Shvidler 3rd witness statement, paragraph 74; Gorodilov 1st witness statement, paragraph 23.

Mr. Abramovich’s evidence was that the decision to participate in this cash auction was his, and his alone; that, although he and Mr. Berezovsky discussed the auctions from time to time, there was never any discussion of anyone else, such as Mr. Berezovsky and Mr. Patarkatsishvili, owning the shares acquired; and that it was Mr. Abramovich and his team who prepared the bid and arranged the funding for it.

Mr. Berezovsky said that he was aware that the auctions were taking place but was not involved in the arrangements for participating, and did not recall being consulted on the bidding process or structures used. He accepted that he made no attempt to find out before the auctions whether or not Mr. Abramovich proposed to bid, and if so at what price, or even (so far as his evidence shows) to discover afterwards what the outcome had been. Nor did he claim to have made any direct contribution to the cost of acquiring the shares.

The financing for Runicom SA’s acquisition of the 12.22% stake was as follows: $ 24.5 million (of the total purchase price of $ 26 million) was lent by SBS Bank to Runicom pursuant to two loans secured by some sort of suretyship

Mr. Gorodilov’s evidence was that $ 24.5 million was loaned from SBS Bank to Runicom SA. the two loans were secured by “sureties” [sic] from Omsk Oil .

In his oral evidence, Mr. Berezovsky said that the money used to buy the Sibneft shares in this first cash auction of shares, derived from profits generated by Sibneft’s or Runicom’s trading activities (which, was unclear) as a result (effectively) of transfer pricing. As such, he claimed, as a result of the alleged 1995 Agreement, any such funds retained in Sibneft or Runicom belonged to him and Mr. Abramovich equally. He also suggested that SBS would not have made this loan to Runicom, had it not been for his influence with Mr. Smolensky. I do not accept this description of how this first acquisition of shares was financed. The evidence showed that, as I have described, it was funded principally by a loan from SBS and from Runicom SA’s own funds. Nor do I accept that Mr. Berezovsky (or indeed Mr. Patarkatsishvili) played any part - other than the original introduction to Mr. Smolensky - in obtaining finance from SBS. The negotiations to obtain the finance were conducted by Mr. Abramovich’s team.

The second cash auction was held on 20 September 1996. 19% of Sibneft was sold by auction to ZAO Firma Sins (“Firma Sins”) for about $ 60 million (comprising $ 15 million payable under the share sale agreement and $ 45 million in obligations to fund Sibneft’s investment programme). Firma Sins was a company owned as to 49.99% by ZAO Branko and as to 49.99% by ZAO PK-Trast. It was common ground that ZAO Branko was (indirectly) owned by Mr. Abramovich. So far as PK-Trast was concerned, it had been registered on 25 May 1996, prior to the auction, with Mr. Berezovsky and Mr. Abramovich as joint co-founders and each nominally owning half of its shares. Mr. Abramovich’s evidence (which I accept) was: that he asked Mr. Berezovsky to become a co-founder of the new company, given the latter’s powerful political position in order to make it easier to resolve various issues with different governmental agencies and because the association with Mr. Berezovsky gave credibility to the bid; and that Mr. Berezovsky agreed to do so. At some time before February 1997, Mr. Berezovsky ceased to be a shareholder in PK-Trast and the company was liquidated in 2001. Mr. Berezovsky’s evidence was that he had no knowledge of any of this

Berezovsky Day 5, pages 124-125.

Berezovsky 4th witness statement witness statement, paragraph 156; Berezovsky Day 5, page 100; Day 5, page 101; Day 5 pages 107-108.

The bid was funded by a loan from SBS, arranged by Mr. Abramovich and Mr. Andrei Gorodilov. The latter discussed the details with Mr. Alexei Grigoriev, at that time the Chairman of the SBS Management Board. The loan was initially secured by guarantees provided by Noyabrskneftegaz, Omsk Oil and Runicom, and then by the pledge of the Sibneft shares previously acquired by Runicom. Again Mr. Berezovsky suggested that the reason why he had not been asked by Mr. Abramovich to contribute to the funding of the bid, or had not needed to discuss the bid with him, was that the funds used to finance the bid had been generated from profits earned by Sibneft, “… which belonged to me, to Badri [Mr. Patarkatsishvili] and to [Mr. Abramovich]”. Mr. Grigoriev give evidence to the effect that neither Mr. Berezovsky nor Mr. Patarkatsishvili was involved in any way in such loans

Grigoriev 1st witness statement, paragraph 25.

The third and last cash auction was held on 25 October 1996. The remaining 15% of the 49% of the share capital of Sibneft, which had been earmarked for privatisation, was sold to ZAO Refine Oil (“Refine Oil”) for approximately $ 48 million. The purchase price consisted of $ 12.5 million paid by Refine Oil under the share sale agreement, and $ 35.5 million in obligations undertaken to fund Sibneft’s investment programme; these included direct investments into Sibneft’s subsidiaries; annual lease payments for Sibneft’s Moscow Representative Office; and payment of tax arrears owed by Sibneft’s subsidiaries, payable to the federal budget. It was common ground that Refine Oil was (indirectly) owned by Mr. Abramovich. The bid was funded by a further loan from SBS, secured by guarantees by Sibneft group companies and the pledge of Sibneft shares by companies controlled by Mr. Abramovich. Again Mr. Berezovsky accepted that he was not involved in the auction and contributed nothing to the funding of the acquisition of the 15% holding. Mr. Andrei Gorodilov gave evidence that no assistance had been received from Mr. Berezovsky or Mr. Patarkatsishvili in relation to the acquisition or its funding. Again Mr. Berezovsky suggested that the reason why he had not been asked by Mr. Abramovich to contribute to the funding of the bid, or had been involved in it, was that the funds used to finance the bid had been generated from profits earned by Sibneft which he and Mr. Patarkatsishvili jointly owned with Mr. Abramovich.

In due course, as anticipated, the Russian State defaulted on its loan. NFK exercised its right as pledgee to sell the 51% shareholding in Sibneft under its management. The stake was sold at auction on 12 May 1997. The auction was conducted by NFK and Mr. Patarkatsishvili served as chairman of the auction committee. According to Mr. Shvidler, Mr. Patarkatsishvili would certainly have seen it as his role to discourage other bidders. Mr. Abramovich’s team, and, in particular, Mr. Gorodilov, arranged the incorporation of another vehicle for the purpose of bidding in this auction, namely OOO Finansovaya Neftyanaya Korporatsiya (“FNK”), a different corporate entity from NFK. Its owners were initially ZAO Alkion Securities and ZAO Obedinennaya Depozitarnaya Kompaniya, two depositary companies owned by SBS. However, it was common ground that, for practical purposes, FNK was indirectly owned and controlled by Mr. Abramovich through these companies.

FNK won the auction by offering $ 110 million for the State’s 51% stake in Sibneft. In addition, in accordance with the terms of the auction, FNK had the obligation to fulfil a number of requirements including:

providing Sibneft with the free use of an office building in Moscow for a term of 7 years;

paying existing tax arrears of Sibneft, or its subsidiaries, owed to the Federal Budget in the sum of approximately $ 10 million;

providing financing for construction and reconstruction of equipment in the sum of US $49 million;

arranging the transfer of 13% of the ordinary share capital of OAO Noyabrskneftegazgeofizika to Sibneft.

According to Mr. Andrei Gorodilov, FNK’s purchase was financed by SBS, which:

lent the two depositary companies, Alkion Securities and Obedinennaya Depozitarnaya Kompaniya, about $ 104.5 million to capitalise FNK;

provided FNK with a loan of about $ 47 million.

He also gave evidence to the effect that “… the actual source of the funds …” with which FNK was capitalised were monies which Runicom SA, Noyabrskneftegaz and Omsk Oil had in the accounts which had been opened by those companies with SBS at the end of 1995, pursuant to the cash collateral arrangements already described in relation to the loans-for-shares auction. It was common ground that the monies which had been deposited as security for SBS’ loan at the time of the loans-for-shares auction were the same monies eventually used to capitalise FNK.

Once again, the arrangements for the auction and the financing were all organised and negotiated by Mr. Abramovich’s team. There was no evidence to suggest that Mr. Berezovsky or Mr. Patarkatsishvili had any discussions with Mr. Abramovich or Mr. Shvidler, or indeed any other members of Mr. Abramovich’s team, about financing, about the fulfilment of FNK’s obligations following its successful bid, or otherwise about the acquisition, other than the role played by Mr. Patarkatsishvili in relation to the auction process itself. Indeed, Mr. Berezovsky’s evidence was that it had all been left to Mr. Abramovich. Mr. Berezovsky acknowledged that he had not been involved in the process and had not been consulted. This was consistent with Mr. Abramovich’s evidence that he did not believe that he had discussed the cash auction with Mr. Berezovsky.

In his witness statement Mr. Berezovsky did not claim to have had any interest in either ZAO Alkion Securities or ZAO Obedinennaya Depozitarnaya Kompaniya, nor did he claim to have contributed to the cost of FNK’s acquisition of the 51%. Indeed, immediately after the auction, on 13 May 1997, he was reported as having denied to Reuters that he had any links to FNK as the buyer of a majority stake in Sibneft and quoted as saying “I have no ties to FNK”.

But in cross-examination, Mr. Berezovsky at one point appeared to suggest that there was an “… agreement … to transfer what was NFK to FNK”, or at least to transfer NFK’s management control to FNK. His evidence on this point was difficult to understand; he appeared to be asserting that it was agreed that FNK would be 100% owned by Mr. Abramovich, in order to protect himself and Mr. Patarkatsishvili “better”, and in order (at Mr. Abramovich’s insistence and with his concurrence) to distance himself (i.e. Mr. Berezovsky) from the business. He also said for the first time that he did have an “interest” in FNK; thus, when it was put to him: “You don’t claim to have had any interest in it [FNK], do you?” he replied:

What he did assert, however, was that effectively the money used to buy the 51% majority stake “… came from profit which generate Sibneft and the company linked to here like Runicom”

Berezovsky, Day 5, page 116.

At paragraph 353 of Mr. Berezovsky’s closing the following submission was made:

The evidence did not support the submission that “the parties intended” that Mr. Abramovich should acquire control of a large majority of the shares. As I have already said, it was common ground that the monies which had been deposited as security for SBS’ loan at the time of the loans-for-shares auction were the same monies eventually used to capitalise FNK. But the point does not assist Mr. Berezovsky. He had no financial exposure whatever: Runicom did, however, and it was common ground that the company was wholly-owned by Mr. Abramovich and that Mr. Berezvosky had no interest in it.

Second, I do not accept the statement that:

Initially only 2.8% of Sibneft was owned by the public. However that proportion increased when Sibneft increased its capital in 1997. By 1998, public investors comprised 3.2% of the company. Thereafter, the proportion of shares held by the public varied up to 14.8%. The “free” shares were traded on the Moscow Stock Exchange.

After the original loans-for-shares auction, Mr. Abramovich and his management team transformed Sibneft from a loss-making Soviet-style bundle of assets into a competitive, profitable, modern corporation. A summary of the various steps that were taken was provided by Mr. Shvidler in his evidence. Neither Mr. Berezovsky nor Mr. Patarkatsishvili played any part in this process. Nor did they claim to have done so.

I have already largely set out above my findings as to the part played, and the contribution made, by Mr. Berezovsky in the loans-for-shares auction whereby NFK acquired management control of Sibneft, and the four subsequent auctions of Sibneft shares at which Mr. Abramovich’s companies acquired shares in the company. There was a marked difference between Mr. Berezovsky’s active involvement and participation in the former, and his apparent indifference to the latter acquisitions, which is difficult to comprehend if indeed the deal between him and Mr. Abramovich was that Mr. Berezovsky (together with Mr. Patarkatsishvili) were to acquire Sibneft shares in partnership with Mr. Abramovich. Mr. Berezovsky’s evidence was that he played no part in the subsequent auctions and did not need to do so, because Mr. Abramovich was organising everything. But that hardly explained Mr. Berezovsky’s lack of interest in the result of the auctions if he personally was indeed acquiring an interest in any Sibneft shares acquired as a result of the auction process.

What was particularly surprising (if Mr. Berezovsky’s account were the correct one) was that the parties had agreed that a joint-venture vehicle, namely NFK, should be used for the purposes of the loans-for-shares auction, (i.e. for the purpose of obtaining management control) but that, in relation to the first privatisation auction which took place just one week later, in January 1996, Mr. Abramovich’s company, Runicom, was the purchaser of 12% of the 15% of Sibneft shares sold. According to Mr. Berezovsky’s case, at this stage – i.e. late 1995 early 1996 - there were no arrangements in place (under the terms of the alleged 1995 Agreement) for his stake to be held for him indirectly via Mr. Abramovich or one of his companies; it was only in May or June 1996 that such an agreement (the alleged 1996 Agreement) was made.

In such circumstances, if it had been agreed that Mr. Berezovsky and Mr. Patarkatsishvili were indeed meant to obtain a partnership interest in 50% of any Sibneft shares acquired by Mr. Abramovich, it was surprising that the joint-venture vehicle, NFK, or some other 50:50 vehicle, was not used for such acquisition. At the least, one might have expected Mr. Berezovsky and Mr. Patarkatsishvili to have raised some point with Mr. Abramovich as to what price was going to be paid for any Sibneft shares which the three partners were to acquire, how “their” Sibneft shares were going to be paid for, and how they were going to be held on their behalf, and to have expressed some interest in the outcome of the auction.

Mr. Berezovsky’s explanation that he left the conduct and the financing of the share auctions, on their behalf, to Mr. Abramovich to arrange as the person charged with the management of Sibneft under the alleged 1995 Agreement was not convincing. At one stage Mr. Berezovsky insisted that Mr. Abramovich had to make a bid and that he, Mr. Abramovich, could decide on the bid price, but that the latter could come to Mr. Berezovsky if he was in difficulties. Yet there did not appear to have been any obligation on Mr. Berezovsky and Mr. Patarkatsishvili to pay for any Sibneft shares acquired by Mr. Abramovich; none was pleaded or referred to in Mr. Berezovsky’s witness statements.

At another stage Mr. Berezovsky suggested that it was up to Mr. Abramovich, in the exercise of his powers of management, to meet Mr. Berezovsky’s proportion of the cost of acquiring Sibneft shares by setting it off against his share of Sibneft profits

Berezovsky Day 4, pages 172-173; Day 5, page 2; Day 5, page 96; Day 5, page 103; Day 5, pages 108-109; Day 5, page 116; Berezovsky Day 4, page 169-176.

But not only did the evidence show that, at the relevant times, there were no Sibneft profits available which could be applied to paying for Mr. Berezovsky’s share of the purchase price, but also, as was common ground, what was actually agreed in 1995 was that Mr. Abramovich and his team would run Sibneft after management control had been acquired. As was submitted on Mr. Abramovich’s behalf, it is not normally part of the function of a company’s manager to purchase shares in that company on behalf of potential investors or to pay for them out of distributions, even on the footing that there are distributions available for that purpose.

In addition to the above points, in support of his contention that the evidence relating to the acquisition of the Sibneft shares in 1996 and 1997, and the manner in which they were held thereafter, supported his case in relation to the alleged 1995 Agreement, Mr. Berezovsky sought to rely upon:

his undoubted and invaluable contribution to the success of the loans-for-shares auction, which he alleged went well beyond the mere provision of krysha;

the fact that security for a number of the loans made by SBS to Runicom had been secured by means of cash counter-deposits from Sibneft group companies (such as Omsk Oil) and that in effect he was equally entitled to the utilisation of such sums, as Mr. Abramovich, since the availability of such funds was the direct result of the three partners’ efforts in 1995;

that Mr. Abramovich and his companies had in cash terms only provided a total of just $18.8 million in return for obtaining approximately 90% of Sibneft;

the fact that Mr. Berezovsky did have an ownership stake as co-founder in PK-Trast, the 49.9% shareholder in FirmaSins, the vehicle used to purchase 19% of Sibneft shares in the second cash auction held in September 1996.

I found none of these points persuasive. Dealing with them in turn:

His considerable efforts which contributed to the success of NFK’s acquisition of management control of Sibneft as a result of the loans-for-shares auction was in my judgment far more characteristic of a relationship between protector and client, than one between investor and manager. I have set out my conclusions above as to the role played by Mr. Berezovsky in this respect. The use which was made of his contacts with SBS and Bank Menatep, and the political influence which he exercised behind the scenes, again was wholly consistent with a krysha-type relationship. His non-participation in the arrangements for the bids made at the subsequent share auctions at which the Sibneft shares were acquired, and his indifference to what was going on in relation to such acquisitions, is likewise wholly explicable in a situation where Mr. Berezovsky was providing political patronage for cash. It is not explicable if Mr. Berezovsky was himself acquiring a partnership interest in such assets. His constant refrain that his priorities at the relevant time were ORT and the forthcoming presidential election was not convincing; such priorities were not a reason why he (or, at least, his in-house advisers, on his behalf) would not have been interested, at least, in the number of Sibneft shares that had been acquired, the cost of such acquisition and the manner in which they were held upon his and Mr. Patarkatsishvili’s behalf.

In my judgment the fact that security for a number of the loans made by SBS to Runicom had been secured by means of cash counter-deposits from Sibneft group companies (such as Omsk Oil) was not circumstantial evidence that supported Mr. Berezovsky’s case as to the terms of the alleged 1995 Agreement. I have already expressed my view above that the availability of such funds was not “the direct result of the three partners’ efforts in 1995”. Mr. Berezovsky’s initial exercise of political influence had created the opportunity for Mr. Abramovich; but it was Mr. Abramovich who exploited that opportunity, by thereafter buying Sibneft shares and utilising Sibneft’s subsidiaries’ own cash deposits to secure the financing, or, possibly

It was not clear from the evidence whether the Sibneft subsidiaries merely provided cash collateral by way of security for the various SBS loans raised to fund the purchases of Sibneft shares, or whether their funds were actually used to discharge the loans. I assume - in Mr. Berezovsky’s favour – the latter.

Nor did the fact that Mr. Abramovich and his companies had in cash terms provided a total of only $18.8 million (or possibly more) support Mr. Berezovsky’s version of events. Mr. Berezovsky and Mr. Patarkatsishvili paid nothing towards the acquisition of Sibneft shares, nor, unlike Mr. Abramovich, were any of their companies exposed to commercial risk.

I have dealt with the evidence relating to PK-Trast, the 49.9% shareholder in FirmaSins. Whilst the fact that Mr. Abramovich considered it desirable to nominate Mr. Berezovsky as a founder shareholder of PK-Trast did, to a limited extent, support Mr. Berezovsky’s case, it was hardly a significant feature. Indeed the point did not feature in his written closing.

Accordingly, I conclude that the evidence relating to the acquisition of the Sibneft shares in 1996 and 1997, and the manner in which the shares were subsequently held, coupled with the absence of any evidence (or a pleaded allegation) that Mr. Abramovich was obliged under the terms of the alleged 1995 Agreement to buy shares for Mr. Berezovsky and Mr. Patarkatsishvili in the subsequent auctions of Sibneft shares, supports Mr. Abramovich’s case that he was acquiring such shares on his own behalf and at his own expense and does not support Mr. Berezovsky’s case of an alleged partnership agreement under which he and Mr. Patarkatsishvili would be entitled to 50% of all shares acquired in Sibneft.

The essence of the dispute about timing between the parties was as follows. Mr. Berezovsky’s case was that the three men were partners and that they agreed the partnership in July or August 1995, after working together for many months; and that is was in July or August 1995 “… when they agreed that they would split their interests in Sibneft 50:50”

See Day 41, page 81.

Mr. Rabinowitz submitted that it would have been extremely unlikely for Mr. Abramovich, in February/March 1995, at a time when he barely knew Mr. Berezovsky, and when the value of Mr. Berezovsky’s future contribution was wholly unknown, to have agreed that, in return for Mr. Berezovsky’s assistance, Mr. Abramovich would pay Mr. Berezovsky unlimited sums depending entirely on Mr. Berezovsky’s demands. He also submitted, that it would have been “bizarre” for Mr. Abramovich to have agreed in February/March 1995 to make a payment, in that first year, to Mr. Berezovsky of $30 million, given that such sum represented 75 percent of Mr. Abramovich’s oil trading profits of $40 million for the previous year.

Mr. Sumption submitted that, on the contrary, Mr. Abramovich’s account of the understanding reached in 1995 was supported by the fact that the timing was more consistent with his version than any other. In support of this contention he submitted:

Mr. Abramovich’s version was consistent with

Mr. Berezovsky’s evidence that from early 1995 it “was accepted” that they would be partners

Berezovsky 4th witness statement, paragraph 95; Berezovsky Day 4, page 147.

the fact that both of them were actively engaged on the project from January 1995, and Mr. Berezovsky was lobbying the government by February at the latest

Berezovsky Day 4, pages 142-143. As Mr. Berezovsky said, “I think I start immediately”: Berezovsky Day 4, page 143.

the evidence of Mr. Abramovich and his employee, Ms. Goncharova, (denied by Mr. Berezovsky) that the first payment was made to Mr. Berezovsky in about February 1995, with further payments in the following months.

A comprehensive agreement of the kind alleged by Mr. Berezovsky, regulating the parties’ rights as owners of Sibneft, is unlikely to have been reached by August 1995, let alone by February or March 1995. The situation was too fluid for that, since:

Sibneft was not created until the Presidential decree of 24 August 1995. The decree provided for the State to retain at least 51% of the company for at least three years. But the privatisation of the other 49% was not approved until 29 September 1995.

The loans-for-shares scheme was not proposed until the end of March 1995, when Mr. Vladimir Potanin, then head of Oneksimbank and later first deputy Prime Minister, made an offer on behalf of a consortium of banks to lend money to the Russian government secured on State holdings in leading Russian companies. The proposal was not formally adopted until 31 August 1995, with the issue of Presidential Decree No. 889 “On Pledging Federally Owned Shares”. Sibneft was not initially included in it. It was added to the scheme on 27 November 1995, as I have already mentioned.

Mr. Abramovich’s evidence was that his understanding was with Mr. Berezovsky only, although he appreciated that Mr. Patarkatsishvili was a close associate of Mr. Berezovsky. Mr. Berezovsky’s evidence was that the parties to the agreement were not just Mr. Abramovich and Mr. Berezovsky, but also Mr. Patarkatsishvili, who, Mr. Berezovsky asserted, was present when the initial agreement was made

See, for example, Day 4 pages 148-153.

For example, the allegation that the alleged ownership interest was held “50% for the benefit of Mr. Berezovsky and Mr. Patarkatsishvili”.

See in particular, Mr. Berezovsky’s response to a RFI from the Family Defendants in the Main Action, paragraph 1.2. Given that, on Mr. Berezovsky’s own case, his alleged joint venture with Mr. Patarkatsishvili was not made until August 1995, it is difficult to see on what basis Mr. Berezovsky could allege, as he did in oral evidence, that he had told Mr. Abramovich about the alleged joint venture with Mr. Patarkatsishvili “from the very beginning” when he returned from the Caribbean cruise: Berezovsky Day 6, page 130.

I conclude that, to a certain extent, the arguments on timing support Mr. Abramovich’s case.

There is force in Mr. Abramovich’s submission that Mr. Berezovsky’s active engagement on the project from early 1995, and in particular, his lobbying of the government from, at the latest, February, would have been unlikely to have taken place without some prior agreement as to his remuneration. Likewise, there is force in Mr. Abramovich’s submission that the first payment made to Mr. Berezovsky in about February 1995, and the further payments in the following months of 1995, (which, as set out below, I conclude were indeed made), were, similarly, unlikely to have been made in the absence of some prior agreement. At that stage, no profits were being generated that could be said to be attributable, directly or otherwise, to any interest in Sibneft, however widely the term “profits” might be defined.

On the other hand, the fact that Mr. Berezovsky’s alleged partnership with Mr. Patarkatsishvili was claimed to have dated only from August 1995 is consistent with Mr. Berezovsky’s case that the alleged 1995 Agreement was concluded in August 1995.

But I am not persuaded by Mr. Rabinowitz’s submissions as to the unlikelihood of Mr. Abramovich agreeing in February/March 2005 to pay Mr. Berezovsky $30 million in the first year, notwithstanding that, at that stage, Mr. Berezovsky had not demonstrated that he could achieve anything concrete, and that he was not personally well known to Mr. Abramovich. Mr. Abramovich’s evidence was convincing on this point; there could be no realistic expectation of Mr. Berezovsky exerting his influence at the Kremlin without a prior commitment on Mr. Abramovich’s part to remunerate him for that activity; Mr. Abramovich regarded Mr. Berezovsky’s personal and political reputation and standing at that time as considerable; given the potential future revenues which Mr. Abramovich rightly believed he could generate by consolidating control over Omsk Oil Refinery and Noyabrskneftegaz, through the incorporation of Sibneft, and directing their sales through his Trading Companies, he would not have needed the track record of a prior business relationship to justify an agreement to pay large sums for Mr. Berezovsky’s future assistance.

However, on both men’s respective evidence: their discussions continued from January throughout 1995; they were both actively engaged from that date in the project; and the situation itself remained fluid and dynamic, given the development in the underlying legislative background.

Thus, none of the timing points relied upon by Mr. Sumption per se would have precluded the making of a further agreement, in August 1995, or indeed thereafter, in relation to any entitlement to Sibneft shares that might subsequently be acquired as a result of the loans-for-shares programme, or in the subsequent privatisation auctions, or in relation to an entitlement to participation in profits, as the underlying situation developed. I accept, of course, that this is not what was pleaded by Mr. Berezovsky. He did not suggest, for example, that the payments made from February 1995 and thereafter in that year were payments on account of anticipated profits from the alleged joint venture. He simply denied that he had received them at all: at least in connection with his Sibneft arrangements with Mr. Abramovich.

In conclusion, whilst the timing arguments lend some support to Mr. Abramovich’s defence, if I were otherwise satisfied as to the truth of Mr. Berezovsky’s case, such points would not persuade me to find against him.

It was submitted on behalf of Mr. Abramovich that, if an agreement had indeed been made in August 1995 in the terms alleged by Mr. Berezovsky, it would have been recorded in writing, whereas the absence of any written record of their arrangements strongly supported Mr. Abramovich’s case that the nature of the arrangements between the two men had been based on a krysha type of relationship.

Mr. Berezovsky, on the other hand, alleged in his fourth witness statement that, in 1995, Mr. Abramovich had insisted that there should not be a written agreement, in case the Communists won the 1996 presidential election and took action against businesses with which Mr. Berezovsky was associated. Because it was such a critical part of Mr. Berezovsky’s case, I set out his written evidence on the point

Berezovsky 4th witness statement, paragraph 106 et seq.

Mr. Abramovich denied the allegation that it was at his suggestion that nothing was recorded in writing. In his written evidence

Abramovich 4th witness statement, paragraph 35.

This evidence was not expressly challenged in cross-examination, although, since time did not permit either party to challenge each and every factual assertion in cross-examination, I assume that it was impliedly challenged.

I find the absence of any written agreement or similar document recording the alleged 1995 Agreement, and the alleged 1996 Agreement, as highly surprising if agreements had indeed been concluded in the terms alleged by Mr. Berezovsky. I regard the absence of any written record, in the circumstances, as a significant factor supporting Mr. Abramovich’s case and undermining that of Mr. Berezovsky.

My reasons for reaching the conclusion that it was inherently improbable that, if such an agreement had indeed been made, there would have been no written record of it, may be summarised as follows.

Whilst commercial oral agreements may have been less uncommon in Russia in the 1990s than they would have been, for example, in New York or London, the evidence did not suggest that they were the norm. Mr. Berezovsky himself at that time had made plenty of written agreements relating, for example, to Anros, LogoVAZ and ORT, even though some of these agreements were made with people, such as Mr. Glushkov, who were close and trusted associates of long-standing. As Dr. Nosova explained in her evidence, and as was confirmed by Mr. Berezovsky, the practice of denying unrecorded interests in joint ventures, referred to as “kinut” in Russian, was a well known hazard in Russia at the time.

Objectively, and even leaving aside the characters of the participants, I find it highly unlikely that, in Russia in 1995, there would be no formal written agreement, or even informal written record, of a joint venture or partnership agreement, whose subject matter was (according to Mr. Berezovsky):

the acquisition in agreed proportions of an interest in, or entitlement to, shares in a substantial Russian oil company; and

the acquisition of an interest, or entitlement to participate, not only in the profits of that oil company, but also in profits of another partner’s existing trading companies, insofar as the profits of such companies were derived from acquisition of control of, or involvement with, the oil company; and whose terms included:

a right of first refusal in relation to any future business interests any of the three partners acquired, whether or not related to Sibneft, to be shared in the same proportions; and

a restriction on the sale of the shares held by the respective partners in the oil company without the consent of the other two partners.

In paragraphs 524 - 528 of Mr. Berezovsky’s written closing submissions, it was submitted that all such matters were addressed in the oral discussions between the parties. I do not accept that submission as a matter of fact, but in any event, what is highly surprising in this context is that, if they were indeed discussed orally, such complex matters were not reduced to writing. Moreover even on the assumption that, as Mr. Berezovsky contended, and Mr. Abramovich denied, it was correct as a matter of Russian law that, once the court was satisfied that a partnership or joint venture activity existed between the three men, it would be able to “fill in” any missing details in the terms of the agreement under its relevant default rules

See, for example, paragraph 523 of Mr. Berezovsky’s written closing submissions.

As I have already explained, it was not part of Mr. Berezovsky’s pleaded case that he was entitled to a share of anything other than the profits of Sibneft. As developed in his oral evidence, his case by the end of the trial was that it had been agreed that the parties would share in the relevant proportions:

As Mr. Berezovsky explained, “… everything what generate Sibneft and everything what generate connected to Sibneft, from the Sibneft activity, belong to us together”. It did not matter whether the profit was made by Sibneft itself or by Mr. Abramovich’s Trading Companies: if it derived from the control of Sibneft or the parties’ joint activity, then it was to be shared

See paragraph 524 (4) ibid.

But, contrary to Mr. Rabinowitz’s submission

See paragraph 527 ibid.

that it was “agreed” that Mr. Abramovich was “… responsible for deciding how the share acquisitions should be organised”

See paragraph 524(5) of Mr. Berezovsky’s written closing submissions.

that it was agreed that “Mr. Abramovich would manage Sibneft”, and:

that no partner could sell their interest in the partnership without the consent of the others; and

that there was a right of first refusal on future investment projects.

Moreover, I find it inconceivable that, if there had been such an agreement as alleged by Mr. Berezovsky, Mr. Abramovich, advised as he was by Mr. Shvidler, would not have insisted on a properly drawn up commercial agreement recording the terms of the three men’s “partnership”. The consequences of such an agreement for his future business activities would have been so swingeing, given, for example, the alleged obligation to provide a 50% participation to Mr. Berezovsky/Mr. Patarkatsishvili in every new venture, and the constraints upon dealing with the Sibneft shares, that it is inherently unlikely that he would have agreed to such a proposal without a written record clearly setting out the conditions (for example as to timing of the exercise of the rights, and the provision of capital) attaching to such rights of first refusal and the other constraints on his ability to deal with his assets.

As a witness, Mr. Abramovich presented as a man with a keen requirement for detail, certainty and precision of expression. In my judgment, he was the last man one would have supposed to have been content to have such an agreement left in the limbo of oral recollection. I find it difficult to believe that he would have had a different approach in 1995.

From the perspective of Mr. Berezovsky, the absence of a written agreement was particularly striking in the circumstances prevailing in 1995. At that stage, Mr. Berezovsky had only just met Mr. Abramovich, a man of whom he had never previously heard and whom he says he regarded as someone with no significant track record in business. Indeed, as I have already mentioned, in the early part of his evidence in cross-examination Mr. Berezovsky spoke of Mr. Abramovich’s abilities with some degree of contempt. The two men had never done a deal together before. I did not find Mr. Berezovsky’s evidence that by August 1995 he trusted Mr. Abramovich so implicitly, there was no need to have any written agreement, as remotely plausible. On Mr. Berezovsky’s hypothesis, Mr. Abramovich was being trusted not only to run a multimillion dollar oil business in which Mr. Berezovsky and Mr. Patarkatsishvili owned a 50% share, but also to hold the two men’s ownership interests on their behalf, in a manner that was never made clear to them. Mr. Berezovsky’s lack of concern with the detail of his financial affairs and the fact that at that date he was concentrating on the re-election of Mr. Yeltsin, provided no satisfactory explanation for the absence of a written agreement.

On the other hand, if the true nature of the arrangement was a political arrangement, that is to say, a trade in influence and protection, in return for payment of large sums of money, as opposed to an oil industry partnership, it is readily understandable that both men, and particularly a person in Mr. Berezovsky’s position, would not have wanted there to have been anything recorded in writing. As was submitted in Mr. Abramovich’s written closing submissions

See paragraph 29.

I reject Mr. Berezovsky’s evidence to the effect that it was Mr. Abramovich who had insisted that the agreement should not be recorded in writing. In cross-examination he initially appeared confused as to whether any such stipulation had been made, and then appeared to suggest Mr. Abramovich’s insistence had come in 1996 at the time of the alleged 1996 Agreement. But even if one attributes his muddled evidence on this topic to an understandable difficulty in recollection, given the passage of time, and even making full allowances for that fact, I still had real difficulty in accepting his evidence.

First, the allegation was not included among the reasons given for the absence of a written agreement in Mr. Berezovsky’s second witness statement, prepared for use in the summary judgment proceedings, although he claimed in that statement to have a “clear recollection” of what was said. The suggestion that a written record was dispensed with at the request of Mr. Abramovich was first made in the Re-Amended Reply, served in July 2010

Re-re-re-Amended Reply, paragraph R34.1(11).

Berezovsky, Day 5, page 47.

The evidence showed that Mr. Berezovsky’s main priority in 1995 was to ensure that, as a matter of urgency, ORT was adequately funded so that it could give effective support to President Yeltsin’s campaign. The driver behind Mr. Berezovsky’s agreement in 1995 to assist Mr. Abramovich to acquire control of Sibneft, as explained to Mr. Abramovich (and indeed as acknowledged by Mr. Berezovsky), was to generate a source of funds for ORT

At a later stage, however, I conclude that his concern became the funding of his own personal expenditure, rather than that of ORT.

When this passage was put to him in cross-examination, Mr. Berezovsky gave the following evidence

Day 4, pages 42-43.

Mr. Sumption submitted that ownership of Sibneft shares, with a consequent participation in Sibneft profits, would not have helped Mr. Berezovsky in 1995 to fund ORT, and would not therefore have achieved what Mr. Berezovsky’s own evidence shows to have been his main purpose in joining up with Mr. Abramovich; whereas, on the contrary, a krysha type arrangement with Mr. Abramovich would, and in fact did, enable Mr. Berezovsky to make an immediate and significant contribution to ORT’s funding shortfall.

In support of this submission Mr. Sumption put forward the following arguments:

Since the elections were due in June 1996, Mr. Berezovsky needed to find a source of funding for ORT as a matter of some urgency

Berezovsky Day 5, page 10; Day 5, page 11.

The acquisition of ownership of, or an interest in, Sibneft shares, would not have achieved the purpose of providing immediate funding for ORT. Mr. Berezovsky needed money to fund ORT much more quickly than he could ever have obtained such funding out of Sibneft dividends. In the first place, it would have taken time for the necessary legislation to be passed creating Sibneft, and for management control to be acquired. In the event, Mr. Abramovich did not acquire control of Sibneft until the beginning of 1996, just six months before the elections. Secondly, the component businesses of Sibneft were old-style Soviet State enterprises, which had never been exposed to market disciplines and were then making substantial losses. They would have to be fused into a single business, and then turned round. Mr. Berezovsky’s assertion that it would have been perfectly straightforward to have integrated the component businesses of the two Siberian companies into one, with the old-style Soviet management and their billion dollars of accumulated debt, and that large sums of money from the combined businesses could have been extracted as soon as Mr. Abramovich acquired management control, was absurd, and was given from the standpoint of complete ignorance of the industry. Mr. Berezovsky admitted that at the time when he needed funding for ORT, “Sibneft was not profitable”. He confirmed that even in 1996 Sibneft also made no profits. In the event profits were not made until 1997. Even then they were on a modest scale and had to be retained for investment in order to grow the business. Significant profits were not made by Sibneft until 1999, and no dividend was paid until 2000. Since the reward for Mr. Berezovsky’s efforts was required straight away in order to fund ORT, he could not possibly have stipulated for a form of reward that, even on his own evidence, might take months to arrive and, in fact, took years to arrive. By comparison, by exacting payments from Mr. Abramovich in early 1995, and thereafter, in return for the krysha he and Mr. Patarkatsishvili provided, Mr. Berezovsky was in a position to, and did, make an immediate and significant contribution to ORT’s funding shortfall. This funding was worth far more than a share of the modest profits which Sibneft was likely to make in the early years after Mr. Abramovich acquired control of it. It was hardly conceivable that Mr. Berezovsky was not aware of this.

Notwithstanding that, by his own admission, he knew nothing about the internal business affairs of Sibneft or its terms of trade with those to whom it sold oil, Mr. Berezovsky suggested that “everybody knew” that the actual profits of oil companies were much higher than their declared profits, because of what he says was the universal practice of exporting profits out of the companies by charging artificial transfer prices to connected entities

Berezovsky Day 5, page 117; Day 5, page 119. Mr. Berezovsky boldly asserted that “… in very short time all oil companies become super-profitable” Day 5, page 13, and that one did not need to be Seneca to understand how it worked: Berezovsky Day 5, page 17.

He said that he did not appreciate the significance or widespread character of what he calls “transfer pricing” until the trial of Mr. Khodorkovsky in 2003

Berezovsky Day 5, page 121; Day 6, page 32.

Berezovsky Day 6, pages 34-35.

Until he was cross-examined, he had not suggested that he was entitled to the profits of any company other than Sibneft.

It was no part of Mr. Berezovsky’s pleaded case that Mr. Abramovich was bound under the terms of the alleged 1995 Agreement to pay him any money in excess of the ordinary profit distributions of Sibneft which were payable rateably to its shareholders generally. It follows that, if Mr. Berezovsky made the agreement that he claims in his Re-Re-Re-Amended Particulars of Claim he made, then Mr. Abramovich could have paid him nothing for a considerable time, in the event until November 2000. The only plausible explanation of the fact that Mr. Abramovich paid him more than he was bound to pay is that he was not paying under a legal obligation, but for krysha.

It was difficult to accept that Mr. Berezovsky was unaware of these issues at the time. The fact that he initially demanded $30 million a year, and called for the first payments in early 1995, reinforced the point. Mr. Berezovsky accepted in his oral evidence that, whilst he could not recall having discussed the figure of $30 million, he could not exclude the possibility that he had.

On the other hand, Mr. Rabinowitz, on behalf of Mr. Berezovsky, submitted as follows in relation to Mr. Berezovsky’s purposes in 1995:

There was no reason for Mr. Berezovsky:

Mr. Berezovsky’s contentions about the agreement between himself and Mr. Abramovich were entirely characteristic of the way that the loans-for-shares scheme was known to have operated in other cases, where the individual with the political influence to secure the privatisation and acquisition of the particular company concerned, invariably took an interest in the company; examples were Mr. Khodorkovsky in respect of Yukos and Mr. Potanin in respect of Norilsk Nickel and Sidanco. Whereas Mr. Abramovich’s case, on the other hand, postulated that:

Mr. Sumption’s argument that a partnership agreement of the kind alleged by Mr. Berezovsky would not in fact have served Mr. Berezovsky’s purposes, namely to generate cash, because Sibneft itself did not make profits for some years was no more than a “rehash” of the ill-founded pleading point that the partnership alleged by Mr. Berezovsky should be treated as one that limited Mr. Berezovsky to an entitlement to share in the profits of Sibneft rather than in those “profits generated by the partners thanks to their control of Sibneft, which is what the agreement was really about

See Mr. Rabinowitz’s oral closing submissions at Day 41, page 94.

Mr. Berezovsky knew full well that Mr. Abramovich had the potential to make money out of Sibneft between 1996 and 2000, wholly separately from (and in excess of) the declared profits of Sibneft. Mr. Abramovich’s own evidence was:

This supported Mr. Berezovsky’s contention that his purpose was to obtain a partnership interest, not merely in Sibneft dividends, but in the profits generated by Mr. Abramovich’s Trading Companies, as a result of Mr. Abramovich’s control of, or involvement with, Sibneft.

My conclusions in relation to this issue are as follows:

What occurred in relation to other major State-owned industrial businesses included in the loans-for-shares scheme, or which were otherwise privatised at about the same time

For example, as described in Professor Fortescue’s evidence.

There was nothing in the evidence to suggest that, in 1995, Mr. Berezovsky had any commercial interest in acquiring an ownership interest in what had been poorly performing State-owned companies, with large accumulated debts. He certainly had no interest in participating in any way in the management of Sibneft or in transforming its acquired businesses into profit-making ventures. On the contrary, on my analysis of the evidence, his interest and purpose in entering into the arrangements with Mr. Abramovich was to secure a future cash flow stream. That explains why he was interested in the amount that Mr. Abramovich’s Trading Companies could generate and not in what might ultimately be the profits generated by Sibneft itself.

These findings support Mr. Abramovich’s case, and undermine that of Mr. Berezovsky.

This topic is not strictly a topic of circumstantial evidence, since whether there was an agreement reached in 1996 in the terms alleged by Mr. Berezovsky in paragraph C37 of the Re-re-re-Amended Particulars of Claim is one of the defined issues in the Agreed List of Issues. However, it is convenient, chronologically and logically, to deal with it at this stage.

Mr. Berezovsky’s case was that between March and June 1996, Mr. Abramovich made clear to him that he felt very strongly that Mr. Berezovsky should distance himself from Sibneft, because Mr. Berezovsky was so involved in politics and that he and Mr. Patarkatsishvili should be secret partners, without their names appearing on any documents relating to ownership of Sibneft. Mr. Berezovsky says that he agreed to this on the terms set out in paragraph C37, namely

Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili would arrange matters so that Mr. Abramovich, or his companies, was the legal owner of all the Sibneft shares which had been acquired prior to the 1995 Agreement;

Mr. Berezovsky and Mr. Patarkatsishvili would continue to have the rights and interests which they had acquired pursuant to the 1995 Agreement in the shares that would be held by Mr. Abramovich;

Mr. Abramovich would, upon request, transfer to Mr. Berezovsky and/or Mr. Patarkatsishvili shares equivalent to their interest in Sibneft on the basis of the percentage split referred to above;

Mr. Berezovsky and Mr. Patarkatsishvili would continue to be entitled to dividends and any other payments made by Sibneft to its owners on the basis of the percentage split referred to above;

thereafter any further acquisitions of Sibneft shares would be held on the same basis.

Mr. Rabinowitz submitted that Mr. Berezovsky’s case was supported not only by Mr. Berezovsky’s own evidence, but also by the following evidentiary materials:

the evidence of Mr. Patarkatsishvili, in particular as recorded in the proof of evidence recorded by Mr. McKim;

the Le Bourget recording;

the evidence of Mr. Khodorkovsky, who gave an interview consistent with the approach set out under the alleged 1996 Agreement (recognising Mr. Berezovsky’s interest in Sibneft but declining to acknowledge that he owned a stake in it);

the numerous public statements denying Mr. Berezovsky interests in Sibneft.

Mr. Rabinowitz further submitted that the rationale of the alleged 1996 Agreement strongly supported Mr. Berezovsky’s case because, early in 1996, Mr. Berezovsky’s public association with Sibneft presented a real threat to the business. He submitted that an analysis of the evidence showed that Mr. Abramovich was acutely aware of the potential risks of being seen to associate too closely with a person as politically active, and thus politically exposed, as Mr. Berezovsky.

In support of his arguments that there was a strong rationale for the making of the alleged 1996 Agreement, Mr. Rabinowitz referred to the following matters:

the fact that 1996 was a Presidential election year, a year in which Mr. Berezovsky was particularly closely involved in politics;

the agreement of the historical experts to the propositions that:

Russian businesses were subject to substantial levels of political risk, both before and after the 1996 Presidential elections, and that the risks included attacks by local and national government agencies on businesses controlled by political rivals;

prominence, while it could bring benefits, could also subject individual businessmen to increased risks;

the fact that, in the volatile political situation of 1996, Mr. Abramovich could not be sure whether (even if President Yeltsin were re-elected) Mr. Berezovsky would end up as a friend or foe of the Kremlin. For example, President Yeltsin’s Midnight Diaries showed just how realistic these fears were: they tell of the conflict, between the first and second round of elections, between President Yeltsin’s two groups of supporters (the FSB supporters led by Mr. Korzhakov, and the “analytical group” of Mr. Berezovsky); Ms. Dyachenko protected Mr. Berezovsky, and President Yeltsin demanded Mr. Korzhakov’s resignation. But, if this middle of the night stand-off had ended differently, Mr. Berezovsky could have become a political liability for Sibneft, even if President Yeltsin had nonetheless secured re-election.

On the other hand, Mr. Abramovich’s case was that no distinct agreement had been made in 1996, and that Mr. Berezovsky’s case in relation to the alleged 1996 Agreement had been devised when Mr. Berezovsky had persuaded himself that shares in Sibneft had originally been acquired and held by NFK (the successful bidder in the loans-for-shares auction, half of which was owned by Consolidated Bank).

In support of that contention, Mr. Sumption submitted that, on that basis, it was necessary for Mr. Berezovsky to explain how the Sibneft shares later came to be held by Mr. Abramovich’s companies in a manner consistent with Mr. Berezovsky continuing to be interested in them. The alleged 1996 Agreement was devised to serve as this explanation. In what were referred to as the “re-drafted Particulars of Claim”, as served on 8 January 2008

The original version of the Particulars of Claim was dated 6 September 2007, but it was not accepted for service by the Defendant, and it was agreed by the parties that the redrafted Particulars would be served on 8 January 2008.

Accordingly, Mr. Sumption submitted, the assertion in the first sentence of paragraph 36 was inaccurate, because:

The Sibneft shares which were acquired through the cash auctions of the 49% of the company’s share capital, and in the default auction relating to the 51%, had always been controlled by Mr. Abramovich’s companies, and had never been legally owned by NFK.

This remained Mr. Berezovsky’s case until shortly before the strike-out application, in July 2009, by which time it had become clear:

that any alleged trust-type agreement would be governed by Russian law; and

that Russian law did not recognise the concept of a trust or a beneficial interest.

In fact, as Mr. Berezovsky accepted, no shares in Sibneft were ever held by companies controlled by him or Mr. Patarkatsishvili. With this discovery, the alleged 1996 Agreement lost its entire commercial rationale, and became redundant. There was no need for Mr. Berezovsky and Mr. Patarkatsishvili to be “distanced” from Sibneft by having their shares held by Mr. Abramovich’s companies, because all the shares that by 1996 had been sold (apart from a small number sold to other purchasers in the first private auction) had been held by Mr. Abramovich’s companies from the outset.

In response to the summary judgment application, Dr. Rachkov, Mr. Berezovsky’s Russian law expert, came to his aid by suggesting that the representative capacity in which Mr. Abramovich was said to have held the shares under the alleged 1995 Agreement could be derived, notwithstanding the absence of any concept of trust in Russian law, from the terms of the alleged 1995 Agreement, by classifying the latter as a “joint activity” agreement, or a sui generis agreement in Russian law. Mr. Berezovsky then amended his account of the alleged 1996 Agreement, to remove any suggestion of original ownership or control on his part, and then transfer of, any shares. The difficulty for him was that, on the case currently pleaded, the alleged 1996 Agreement made no difference to the parties’ relationship, as Mr. Berezovsky’s written opening expressly acknowledged

Mr. Berezovsky’s written opening, paragraph 1059: the alleged 1996 Agreement “… made no difference to the substance of Mr. Berezovsky’s rights”.

Even on the footing that the alleged 1996 Agreement changed something, the alleged rationale for the change made no sense, given the political circumstances prevailing in Russia in early 1996, and the fact that, even after the alleged 1996 Agreement, Mr. Berezovsky was not distanced from Sibneft. On the contrary, Mr. Abramovich sought publicly to associate Mr. Berezovsky with the company.

I have little or no hesitation in rejecting Mr. Berezovsky’s case on the alleged 1996 Agreement. My reasons can be summarised as follows:

The evidence which Mr. Berezovsky gave in cross-examination in relation to the change of his pleaded case in relation to the alleged 1996 Agreement and the “transfer” of Sibneft shares legally “controlled and legally owned” by companies legally owned or controlled by Mr. Berezovsky and Mr. Patarkatsishvili was highly unsatisfactory. For example, the suggestion that it was his lawyers “… who change[d] the position”, but that he “… never change[d] the facts”

Berezovsky Day 6, page 19.

Having heard the evidence, and reviewed the history of the various amendments to Mr. Berezovsky’s case, it appears to me highly likely that the original pleading in relation to the alleged 1996 Agreement was indeed based on the mistaken assumption as to NFK’s ownership of shares in Sibneft, and the subsequent amendments opportunistically crafted to reflect Dr. Rachkov’s Russian law advice.

It is difficult to see what rationale (political or otherwise) there might have been in early 1996 for the making of the alleged 1996 Agreement. If there was going to have been some such agreement along these lines, it is surprising that the point was not raised, or such an agreement reached in the context of the first cash auction, which opened on 1 November 1995 in relation to the privatisation of the first 15% tranche of Sibneft shares. In that auction, Runicom acquired a 12.2% shareholding. But, as I have already described, Mr. Berezovsky took no interest in that auction, nor in how “his” shares were going to be held.

I accept Mr. Abramovich’s evidence, as summarised in paragraph 111 of his 3rd witness statement that in early 1996, and for some time thereafter, he personally had no concerns about Mr. Berezovsky’s being publicly associated with Sibneft. The fact that subsequently, in late 2000 and early 2001, Mr. Abramovich had come to view Mr. Berezovsky as a political risk, because of the latter’s publicly made criticisms of Mr. Putin’s governance, is no reason why he should have adopted such a stance earlier.

In fact, by the time that the alleged 1996 Agreement is supposed to have been made, it was common knowledge that Mr. Berezovsky was publicly associated with Sibneft, as he accepted in his evidence. Although he had no shareholding, he had taken a very public part in the loans-for-shares auction, on behalf of NFK; he had given press interviews on the results of the loans-for-shares scheme.

I was not persuaded by the other “wider” political points made by Mr. Rabinowitz, based on the expert evidence about political risk in Russia at the time. Whilst, no doubt, prominence or high profile of the type enjoyed by Mr. Berezovsky or other oligarchs might have exposed them to increased risk of attack from government, that was not, of itself, any reason in the circumstances for the making of the alleged 1996 Agreement.

Nor was I impressed by the argument that there was a need to distance Mr. Berezovsky because of the risk that the Communists might win the next election. If that eventuality happened, it would have made little difference whether or not Mr. Berezovsky was publicly associated with Sibneft.

The fact that, after the alleged 1996 Agreement, Mr. Berezovsky was not, in fact, distanced from Sibneft was also wholly inconsistent with his case. As I have already described, Mr. Abramovich made arrangements to have Mr. Berezovsky publicly associated with PK-Trast in advance of the second cash auction in September 1996; in the same month, Mr. Berezovsky was appointed to the board of Sibneft (resigning in December 1996, upon his appointment to the Security Council); in June 1997, Mr. Patarkatsishvili became a director of Sibneft, remaining on the board until 1999. I was not impressed with the suggestion in Mr. Berezovsky’s evidence, that Mr. Berezovsky’s appointment to the Sibneft board was designed to divert attention from his alleged shareholding. The appointment appeared to have the opposite effect, so far as contemporary press reports were concerned. Subsequently, in August 1997, Mr. Berezovsky’s close association with the management of Sibneft was expressly referred to in the Saloman Brothers Eurobond circular for Sibneft, as described in greater detail below. In January 1998, Mr. Berezovsky appeared at the very public ceremony at the LogoVAZ Club, where the merger “heads of terms” between Sibneft and Yukos were signed, a fact which was also widely reported in the press.

Whilst what is stated in paragraph 25 of Mr. McKim’s proof of Mr. Patarkatsishvili’s evidence dated 7 December 2007 offers prima facie support for Mr. Berezovsky’s case in relation to the alleged 1996 Agreement, I attach little weight to such evidence, for the reasons set out below.

Likewise, I do not consider I am assisted by the Le Bourget transcript, or the various public statements denying Mr. Berezovsky’s interests in Sibneft, or by the interview given by Mr. Khordorkovsky.

The critical issue here is whether an oral agreement in the terms alleged by Mr. Berezovsky was made in early 1996. Ultimately, that depends on my assessment of the evidence given by Mr. Berezovsky and Mr. Abramovich about the matter, and their general credibility, albeit evaluated in context. I have no hesitation in preferring the evidence of Mr. Abramovich on this point. Even if, as Mr. Rabinowitz sought to argue

See the commentary to paragraph 37 of Mr. Abramovich’s written closing submissions, to be found on page 9 of Mr. Berezovsky’s First Schedule.

It follows that I decide Agreed Issue 3 in the negative. There was no such agreement as alleged by Mr. Berezovsky.

I take these two topics together as, to a certain extent the relevant evidence is common to both.

Mr. Berezovsky’s pleaded case is that it was agreed that he would “… be entitled to dividends and to any other payments made by Sibneft to its owners”

Re-re-re-Amended Particulars of Claim, paragraph C37(4). See also paragraph C34 and 34B where no broader allegation is made.

See the First Schedule to Mr. Berezovsky’s written closing submissions; commentary on paragraph 19 (4) and 46 of Mr. Abramovich’s written closing submissions.

Again, as I have already explained, Mr. Berezovsky’s oral evidence, however, was that it was expressly agreed that he (and Mr. Patarkatsishvili) would be entitled to all profits “in respect of our share of Sibneft”, whether generated directly by Sibneft or indirectly through, or as the result of any trading connection between Mr. Abramovich’s Trading Companies and, Sibneft. This was the way in which the case was formulated in Mr. Berezovsky’s written and oral closing submissions: for example at paragraph 401 of Mr. Berezovsky’s written closing, his evidence was summarised as follows:

Mr. Rabinowitz, in closing

See paragraph 401(3).

Mr. Berezovsky admitted in his oral evidence that he did not “know at all” what relation his payments bore to Sibneft’s profits, or indeed the profits of Mr. Abramovich’s Trading Companies. The evidence showed that he never did know, and took no steps to find out; he said that it was Mr. Patarkatsishvili who informed him. He suggested that there were regular meetings between Mr. Patarkatsishvili and Mr. Abramovich, but then admitted that he did not know what Mr. Patarkatsishvili did to ascertain the profits of Sibneft. He said that he was “[d]efinitely not” interested in knowing how large Sibneft’s profits were.

The dispute between the parties in relation to payments made by Mr. Abramovich principally focused on:

whether any payments were made prior to 1996;

whether the payments were referable to Sibneft’s profits or to profits generated indirectly through Mr. Abramovich’s Trading Companies as a result of his control or involvement with Sibneft; and

whether the fact that payments were made to both Mr. Berezovsky and Mr. Patarkatsishvili supported Mr. Berezovsky’s or Mr. Abramovich’s case.

Mr. Berezovsky submitted that:

that there was no credible evidence that Mr. Abramovich made any krysha payments to Mr. Berezovsky in 1995; the evidence of Mr. Abramovich’s team to the effect that payments were made under the alleged 1995 Agreement before 1996 was “clearly untrue” because it was evidence which was:

the product of collusion between witnesses;

reconstructed, following disclosure, from documents without any genuine recollection on the witnesses’ part;

in parts, demonstrably false.

that Mr. Berezovsky’s case on the alleged 1995 Agreement (i.e. that it conferred upon him an interest in Sibneft shares or a right to such an interest) found support in:

the beneficiary of Mr. Abramovich’s payments - being (according to Mr. Berezovsky) both Mr. Berezovsky and Mr. Patarkatsishvili; and

the quantum of Mr. Abramovich’s payments – being (according to Mr. Berezovsky) correlated with the profits made by Mr. Abramovich and his Trading Companies as a result of his influence and control of Sibneft.

Mr. Abramovich, on the other hand, contended that he paid Mr. Berezovsky and Mr. Patarkatsishvili sums in the region of $ 20-30,000,000 in 1995, and that neither those payments, nor payments made to him and to Mr. Patarkatsishvili between 1995 and 2000, bore any relation to Sibneft’s profits or to those profits combined with the profits of Mr. Abramovich’s Trading Companies. He submitted that the fact that payments were made to Mr. Patarkatsishvili, as well as to Mr. Berezovsky, was not consistent only with the partnership relationship alleged by Mr. Berezovsky; on the contrary, that fact was also consistent with Mr. Abramovich’s krysha allegation.

The evidence in relation to these two topics, to the extent to which it was (largely) un-controversial, can be summarised as follows:

The amounts paid to Mr. Berezovsky and Mr. Patarkatsishvili actually came from Mr. Abramovich’s Trading Companies, not from Sibneft itself.

The amounts involved could not be precisely calculated, except for the year 2000, because of the absence of records. In the case of Mr. Abramovich, that was variously because the businesses whose records would be relevant had been liquidated or were no longer under his control, or hard copies of records no longer existed as a result of explicable routine destruction or loss. I reject the allegation made on behalf of Mr. Berezovsky

See paragraph 173 of Mr. Berezovsky’s written closing submissions.

In the case of Mr. Berezovsky, the absence of documentation (although some records relating to payment were produced by him) was largely explained by the fact that he had lost many documents in his flight from Russia, and because other records have been impounded by judicial authorities in the course of various money-laundering investigations.

Mr. Berezovsky accepted that substantial payments were made to him and/or Mr. Patarkatsishvili between 1996 and 2000; he did not put forward a positive case as to the ballpark figures but was reluctant to accept that the sums put forward in Mr. Abramovich’s evidence were the sums which had been paid, although the figures for 1996-8 were presented by him as accurate to the French investigating judge in evidence given in June 2011 in the context of a judicial investigation into alleged money-laundering

The figures had originally been presented by M. Temime, Mr. Berezovsky’s French lawyer, on behalf of Mr. Berezovsky to the French judicial authorities in a letter dated 16 June 2011. When examined by the magistrate on the figures, Mr. Berezovsky did not query their accuracy. Mr. Berezovsky told the French investigating magistrate that “As well we have a lot of documents which show the profit I got from Sibneft on the basis of 50-50 ownership”. He has not produced any documents in this action to substantiate that assertion.

The evidence put forward by Mr. Abramovich and his witnesses showed the following profits or losses for Sibneft and the following payments made to Mr. Berezovsky and/or Mr. Patarkatsishvili for the relevant years:

The figures given in the table for Sibneft profits were derived from the audited annual group financial statements. In cross examination Mr. Berezovsky asserted that the audited financial statements did not reflect the true profits of Sibneft, on the grounds that the trial of Mr. Khodorkovsky in 2003 showed that Russian oil companies generally transferred profits to connected entities by way of artificial transfer pricing, apparently in order to reduce their taxable profits

Berezovsky Day 6, pages 34-35.

The figures given in the table for the years 1995-1999 were based upon estimates provided by Mr. Abramovich and Ms. Goncharova of sums which she handled on his behalf. For 1997, the table added to Ms. Goncharova’s estimates a further 96.5 million French Francs and $4.35 million, approximating $20 million in total, which was paid by Runicom SA in that year for expenses associated with Mr. Berezovsky’s property at Cap d’Antibes. These payments were not handled by Ms. Goncharova. The quantum of the French expenses paid in 1997 were confirmed by Hans-Peter Jenni (“Mr. Jenni”), a Swiss lawyer, who acted as legal and business adviser to Mr. Berezovsky from about 1991 and to Mr. Patarkatsishvili from about the same date to February 2008, and whose firm dealt with some of the administrative arrangements. For the year 2000, the figures were derived from an extant spreadsheet (the “Bolshoi Balance”), prepared under the supervision of Ms. Panchenko on the instructions of Mr. Shvidler

Mr. Berezovsky abandoned his challenge to the authenticity of this document in the course of the trial. The metadata suggest that it was created on 4 July 2000, and last modified on 4 April 2002.

Except for the payments allegedly made in 1995, these estimates were not seriously disputed by Mr. Berezovsky. His case as to what he was in fact paid was unclear. According to Mr. Rabinowitz, “Mr. Berezovsky does not in fact assert a case as to what precisely he was paid in these years”. It appeared to be that he did “no[t] dispute at all that the sums were paid”, but:

The only real issue on the figures related to whether Mr. Berezovsky had received any payments in 1995. He denied receiving anything in that year pursuant to his version of the alleged 1995 Agreement. Such denial was consistent with his case that the payments represented Sibneft profits, or related to profits derived from the acquisition or control of Sibneft, since Sibneft was not formed until October 1995 and management control of the company was not acquired until the following year. But since he claimed to have no precise recollection of dates or figures, and said that he did not concern himself with the details of payments which he received, because this was left to Mr. Patarkatsishvili, his own evidence was not of much assistance on this issue. He was unable to give any satisfactory explanation in cross-examination for payments which certain documents showed had been made to him or LogoVAZ in 1995, including a sum of $4 million paid in September 1995. His suggestion that payments were made to LogoVAZ because Mr. Abramovich’s companies had bought cars for its employees was unconvincing, and was, I find, rebutted by Mr. Abramovich in his oral evidence.

Mr. Abramovich and Ms. Goncharova gave evidence about the 1995 payments. Mr. Abramovich recalled an initial payment of $8 million in early 1995. He recalled a further payment of $10 million in the autumn, $4 million of which was paid directly to LogoVAZ. In cross-examination he also referred to a cash payment of $16,000 made to Mr. Berezovsky to enable him to pay off a debt to a Mr. Denisov and a payment made a couple of months later of a further $50,000.

Ms Goncharova recalled dealing with payments from early 1995 until late 2000

Goncharova 1, paragraphs 9-20.

Mr. Shvidler also gave evidence about a payment of $1 million paid by Runicom SA to Atrium Consolidated Limited on 6 December 1995. There was no dispute that such a payment was made, as Mr. Berezovsky disclosed a document showing that it had been. Mr. Shvidler’s evidence was that Atrium was connected to Mr. Aven, to whom Mr. Berezovsky allegedly owed a debt.

Mr. Rabinowitz submitted that the evidence of Mr. Abramovich’s team asserting that payments were made under the 1995 Agreement before 1996 was:

In particular he submitted that Mr. Abramovich had changed his case about the basis on which payments were made, because reference was made in the Defence, and the evidence served in support of the summary judgment application, only to payments in respect of ORT and that the specific payments which were:

Mr. Rabinowitz suggested that this posed a problem for Mr. Abramovich’s case, because in evidence served in support of his strike-out application, by Paul Mitchard, a partner at Skadden, there was no reference to any payments unconnected with ORT. Mr. Rabinowitz submitted that, on the contrary, the statement made clear that only ORT-related payments were alleged; that was despite all of the major witnesses to payments – Mr. Shvidler, Ms. Panchenko, Ms. Goncharova, Ms. Khudyk – having been interviewed by Mr. Mitchard. Mr. Rabinowitz sought to point the contrast between the evidence of Mr. Abramovich’s witnesses at the summary judgment stage and that given in their written witness statements, claiming that payments to Mr. Berezovsky were krysha payments to cover Mr. Berezovsky’s “personal expenses”, and not limited to ORT-related payments. He said that this was as the consequence of collusion between Mr. Abramovich’s witnesses. The various witnesses were cross-examined by him and Mr. Gillis to this effect.

I reject Mr. Rabinowitz’s attack on the veracity of the evidence of Mr. Abramovich’s witnesses in this respect. Mr. Abramovich’s case had always been that the agreement with Mr. Berezovsky arose in the context of Mr. Berezovsky needing to meet the cash flow requirements of ORT, so that Mr. Berezovsky could use his control over the TV station to maintain his political power and influence. As both Mr. Abramovich and Mr. Shvidler said in their written and oral evidence, the great majority of the funds constituting $30 million paid in the first year did in fact go to ORT, but the scope of Mr. Berezovsky’s demands expanded over time, so that there was a gradual increase in the proportion of Mr. Berezovsky’s personal expenditure that was being funded by Mr. Abramovich. It was Mr. Berezovsky’s own evidence that, by 1997, his entire personal expenditure was in fact being funded by Mr. Abramovich. Mr. Abramovich was not involved in ORT and had no particular reason to be concerned about whether or not the money was strictly being applied for ORT purposes. Mr. Berezovsky has never alleged that it was a term of the alleged 1995 Agreement that the money paid to him had to be applied for ORT purposes. Mr. Abramovich’s concern was with the amounts, not with what the purpose to which Mr. Berezovsky applied the funds.

In his written evidence

Shvidler 3rd witness statement paragraph 129.

Mr. Rabinowitz’s arguments, in my judgment, placed undue semantic emphasis on what was said by Mr. Mitchard (who was not involved in the actual events) at the pre-disclosure, summary judgment stage. Mr. Abramovich and his witnesses gave credible oral explanations as to how their evidence came to be summarised by Mr. Mitchard at that early stage. As I have said earlier in this judgment, this was a case where the evidence given by witnesses in oral cross-examination and re-examination was on the whole more reliable – in the sense of more nearly approximating the truth – than what was said in closely crafted witness statements on earlier interlocutory occasions.

I also reject the suggestion, put to Mr. Abramovich and Ms. Goncharova in cross-examination, that the 1995 payments were a recent invention or emerged as a result of collusion. These payments were not required to be specifically pleaded, and were mentioned on the first occasion on which evidence on the merits was served on Mr. Abramovich’s behalf. Mr. Mitchard’s third witness statement (served for the summary judgment application) states on the basis of information provided by Mr. Abramovich that the payments began “… in the first half of 1995 before Sibneft had even been established”, and that Ms. Goncharova had confirmed that “… she was responsible for payments to ORT from about the beginning of 1995”. Nor do I accept Mr. Rabinowitz’s criticisms of the evidence of Mr. Abramovich, Ms. Goncharova and Mr. Shvidler in this context

See paragraph 426-430 of Mr. Berezovsky’s written closing submissions.

As an example of this type of criticism, Mr. Rabinowitz, in his written closing submissions

See paragraph 426-429 of Mr. Berezovsky’s written closing submissions.

Thus Mr. Abramovich not only gave an explanation of the narrative on the debit note, but also gave one which was wholly consistent with the payment being of a krysha nature. Indeed, vague, broad-brush wording, such as “Settlement Agreement”, is just the type of wording one might expect a payer to use to describe a payment destined to secure political influence, in circumstances where, on the one hand, as Mr. Abramovich described, the payer needed to convince the bank that the payment was legitimate so that it would effect payment, and, on the other, might wish to conceal from the bank the true nature of the payment. Whilst such description is one that might justifiably be open to criticism in a Western accounting context, as providing a false explanation, its use was understandable in the circumstances. Mr. Berezovsky speculated in his evidence that this payment might have been for motor cars purchased by Runicom SA from LogoVAZ, but that suggestion was rebutted by Mr. Abramovich’s evidence, which on this point I accept.

In his written closing submissions

See, for example, paragraph 108(4)(2)

that Mr. Surov was first employed by an entity called Novokuznetskaya Street House CJSC as from December 1996;

that Mr. Surov had previously been employed by a company called JSC Engineering

This was apparent from the “application” by Mr. Surov to transfer jobs.

that Mr. Surov had been employed in the same job as an administrator from September 1988

See the entry on Box 11 of the “personal card”.

This evidence was not put to Ms. Goncharova and no application was made by Mr. Rabinowitz to have her recalled or to adduce further evidence relating to the date when Mr. Surov first started working as Mr. Berezovsky’s assistant. Nor do I accept the other criticisms made by Mr. Rabinowitz as to, for example, the late emergence of this evidence, the alleged inconsistencies in her evidence, and the absence of any cross-examination of Mr. Berezovsky’s witnesses in relation to Mr. Surov

See for example commentary on paragraph 108(4)(2) in Mr. Berezovsky’s Second Schedule.

Accordingly, I conclude on the evidence that sums in the region of $20-30 million were indeed paid by Mr. Abramovich to Mr. Berezovsky, or to his order, in the year 1995. Whilst these payments could have been characterised as being consistent with Mr. Berezovsky’s case, on the grounds, for example, that they were effectively payments on account of an entitlement to 50% of future or anticipated profits to be earned by Mr. Abramovich’s Trading Companies as a result of the acquisition of control of Sibneft, that was not the way in which Mr. Berezovsky chose to address the issue. As I have said, he simply denied that payments had been made in 1995. In those circumstances, I conclude that the evidence in relation to the 1995 payments does indeed undermine Mr. Berezovsky’s case in relation to the alleged 1995 Agreement.

Mr. Rabinowitz submitted

See paragraph 445 of Mr. Berezovsky’s written closing submissions.

See paragraph 446 of Mr. Berezovsky’s written closing submissions.

Mr. Abramovich’s own case was that in 1995 he expected to make about $60 million from his influence gained over the companies to be placed into Sibneft, by increasing his profits from $40 million to $100 million, and expected to pay about $30 million to Mr. Berezovsky; although it was controversial whether any such payments were actually made, the expectation that he would pay 50% of his generated profits to Mr. Berezovsky was plainly consistent with the 1995 Agreement.

The evidence of the Le Bourget transcript and the Bolshoi Balance demonstrated that in 2000 Mr. Abramovich paid Mr. Patarkatsishvili and Mr. Berezovsky approximately 50% of the sum which he had told them had been generated from his oil trading using Sibneft.

It was clear, therefore, that, whatever was Mr. Berezovsky’s pleaded case, the focus of his argument at trial was based on an alleged correlation between what he and Mr. Patarkatsishvili were paid on the one hand, and not only the profits of Sibneft (when they finally came to be earned as from 1997), but also the profits of Mr. Abramovich’s Trading Companies derived from their trading with, or the latter’s “involvement with, Sibneft”

See, for example, the heading to paragraph 439 of Mr. Berezovsky’s closing.

Contrary to Mr. Rabinowitz’s submission, I conclude that the evidence did not demonstrate that the payments made to Mr. Berezovsky and Mr. Patarkatsishvili were “actually calculated as 50% of the profits generated from Mr. Abramovich’s influence and control of Sibneft”. Nor did such evidence establish that there was in fact any correlation as between such payments and the profits made by Mr. Abramovich as a result of his control of Sibneft. Accordingly I do not accept that Mr. Berezovsky’s case in relation to the alleged 1995 Agreement finds support from the evidence relating to the payments. My reasons for this conclusion are set out below.

First, none of the payments which were made in the period 1995-1999 were referable to Sibneft profits, as shown in its annual audited group financial statements. Indeed this was accepted on behalf of Mr. Berezovsky. Mr. Rabinowitz referred to this point as “a red herring”. However it was one that was in issue between the parties, at least at some stage during the trial, and was a point prayed in aid by Mr. Abramovich. The fact that the payments were not referable to Sibneft’s profits was shown by the following:

As I have found, the payments to Mr. Berezovsky, or his order, began in February 1995. In that year, $20-30 million was paid before any management interest or shareholding interest in Sibneft had been acquired.

In 1996, Sibneft made a loss, but an estimated $50 million was nevertheless paid to Mr. Berezovsky and Mr. Patarkatsishvili in that year. Mr. Abramovich’s stake in Sibneft did not exceed 47% in 1996.

For 1997 and 1998, the payments to Mr. Berezovsky and Mr. Patarkatsishvili exceeded the entire profits of Sibneft for the year.

1999 and 2000 were the first years in which Sibneft’s total profits exceeded the payments to Mr. Berezovsky and Mr. Patarkatsishvili. In 2000, the payments were considerably more than 50% of Sibneft’s profits, even on the footing (asserted by Mr. Berezovsky but disputed by Mr. Abramovich) that $30 million of the payments represented the latter’s profit share in respect of RusAl.

The absence of correlation between Sibneft’s profits and payments to Mr. Berezovsky and Mr. Patarkatsishvili would have been even greater if Mr. Berezovsky were right in saying that his share of the cost of acquiring Sibneft shares in the auctions of 1996 and 1997 fell to be set off against his share of profits.

No profits of Sibneft were distributed until the dividend of $50 million declared in November 2000, but nonetheless payments were being made throughout the year to Mr. Berezovsky and Mr. Patarkatsishvili.

Second, I reject Mr. Berezovsky’s allegation that the audited financial statements did not reflect the true profits of Sibneft on the grounds that it had improperly transferred profits to connected entities by way of artificial transfer pricing, whether in order to reduce its taxable profits or to transfer profit to certain shareholders, and that Sibneft’s profits should therefore be treated as including the profits of Mr. Abramovich’s Trading Companies. Mr. Berezovsky’s referred to this process as “tricked”

Berezovsky Day 6, pages 34-35.

Mr. Rabinowitz sought to stress both during the course of the trial, and in his written closing submissions, that Mr. Berezovsky was not making any allegations about transfer pricing and sought to disavow any such allegation. But Mr. Berezovsky’s own evidence in response to questions put by Mr. Sumption in cross-examination clearly suggested that he was indeed alleging that the profits on sales of the oil were improperly not being taken in Sibneft, which he accepted was not profitable, but rather being captured abroad or in one of Mr. Abramovich’s Trading Companies. The following passages give a characteristic sample of Mr. Berezovsky’s evidence on this point:

It was for Mr. Berezovsky to adduce evidence to support this allegation of improper transfer pricing. He did not do so. His own conclusions based on disclosures in court proceedings about the affairs of Yukos, another oil company, and Mr. Khodorkovsky, were of no evidential weight.

He produced no evidence to show that Sibneft’s financial statements, audited by Arthur Andersen, in accordance with US GAAP, subject to any overriding requirements of Russian law, understated Sibneft’s profits by excluding profits earned as a result of transfer pricing transactions, whether with connected parties or third parties. Indeed Mr. Berezovsky did not appear to challenge them

Berezovsky Day 6, page 35

Mr. Shvidler explained that Runicom Ltd was incorporated in July 1996 and subsequently took over business from Runicom SA. Shvidler 3rd witness statement, paragraph 13.

The course of trading between Sibneft and Runicom SA/Runicom Ltd, which were appointed as Sibneft’s exclusive export agents from 1995, was also described in a Sibneft Eurobond offering circular of 1997

Mr. Berezovsky accepted that he was not in a position to disagree with this analysis: Berezovsky Day 6, pages 64-65.

Abramovich 7th witness statement, paragraph 9; Abramovich Day 18, page 38.

Gorodilov 1, paragraphs 36-46.

Their evidence on these matters was not challenged in cross-examination. The only evidence that was referred to on Mr. Berezovsky’s behalf

The later investment analyst research notes, dating from 2001, referred to at paragraph 442 of Mr. Berezovsky’s written closing submissions were not relied upon for this purpose and were not evidence, or at least not satisfactory evidence, of improper diversion.

Notwithstanding my conclusions in relation to the transfer pricing allegation, and notwithstanding the inadequacies of Mr. Berezovsky’s pleaded case, I approached the matter (in Mr. Berezovsky’s favour) on the basis that, if there had been a profit share agreement with Mr. Abramovich, it would have been wholly logical, from a commercial perspective, for Mr. Berezovsky to have insisted on having a profit entitlement to share not only in Sibneft profits, but also in a wider pool of profits generated by Mr. Abramovich’s Trading Companies. That was because:

first, as Mr. Abramovich himself said, one of his stated aims in acquiring control of Sibneft was to increase the profits which his own Trading Companies might generate through trading with the businesses of Noyabrskneftegaz and Omsk Oil; and

secondly, even absent any improper diversion of funds from Sibneft, or legitimate transfer pricing, the evidence showed that there was a substantial amount of re-organisation of the business of the previously State-run subsidiaries that would be required before Sibneft itself would be generating profits.

I turn, therefore, to consider whether evidence relating to the quantum of the payments made to Mr. Berezovsky and Mr. Patarkatsishvili supports Mr. Berezovsky’s final version of the alleged 1995 Agreement

That is, that it was an express oral term of the alleged 1995 Agreement that he (and Mr. Patarkatsishvili) would be entitled to all profits “in respect of our share of Sibneft”, whether generated directly by Sibneft or indirectly through, or as the result of any trading connection between Mr. Abramovich’s trading companies and Sibneft.

See, for example, paragraphs 439-443

But my third reason for rejecting Mr. Berezovsky’s argument under this head is that Mr. Berezovsky was unable to demonstrate, on the evidence, that numerically what he and/or Mr. Patarkatsishvili were paid bore any, or any real, correlation to 50% of the profits of Mr. Abramovich’s Trading Companies derived from their trading with Sibneft or as a result of Mr. Abramovich’s control of, or involvement with, Sibneft.

The allegation that there was such a correlation appeared to be based on three arguments put forward by Mr. Rabinowitz:

First, that because Mr. Sumption had said in opening, as confirmed by Mr. Abramovich in evidence, that:

second, that because Mr. Abramovich’s own case was that, in 1995, he expected to make about $60 million from his influence gained over the companies to be placed into Sibneft, by increasing his profits from $40 million to $100 million, and expected to pay about $30 million to Mr. Berezovsky (i.e. 50% of $60 million), that demonstrated the relevant correlation; and although it was controversial whether any such payments were actually made in 1995, the expectation that Mr. Abramovich would pay 50% of his generated profits to Mr. Berezovsky was plainly consistent with the 1995 Agreement. Indeed Mr. Berezovsky’s written closing submissions asserted

See paragraph 358(1).

Third, that the figures shown in the Bolshoi Balance for the payments made to Mr. Berezovsky and Mr. Patarkatsishvili in 2000 showed the relevant correlation.

I am not persuaded by either of the first two arguments. As to the first, the fact that Mr. Berezovsky demanded more, as Mr. Abramovich and Mr. Abramovich’s Trading Companies became richer, and became in a position to pay more, was not indicative of an agreed entitlement to participate in 50% of such profits; nor was it any more consistent with Mr. Berezovsky’s case than with Mr. Abramovich’s case. As to the second argument, apart from the fact that Mr. Berezovsky did not accept that any payments were made to him at all in 1995, Mr. Abramovich’s evidence was not “that it was agreed that Mr. Berezovsky’s reward for performing his side of the bargain would be 50% of this profit”. Mr. Abramovich explained that it was Mr. Berezovsky who indicated that he would require approximately $30 million per year for ORT and his personal expenses, and that he subsequently inquired how much Mr. Abramovich could make a year in order to satisfy himself that Mr. Abramovich could afford to pay his fee. It was in that latter context that Mr. Abramovich indicated that he currently generated around $40 million per year and expected to be able to increase it to around $100 million per year. As Mr. Abramovich explained in his witness statement

Likewise in his oral evidence Mr. Abramovich made it clear that Mr. Berezovsky was not interested in how Mr. Abramovich’s Trading Companies would perform; he was only interested in whether Mr. Abramovich could pay $30 million:

I accept this evidence. It was entirely consistent with Mr. Berezovsky’s lack of interest in detailed financial matters.

As to Mr. Rabinowitz’s third argument, I deal with the evidence relating to the figures shown in the Bolshoi Balance for the year 2000 below.

My fourth reason for rejecting Mr. Berezovsky’s allegation of correlation (which, indeed, applies more widely in relation to his case as to the alleged profit sharing terms of the alleged 1995 Agreement), is that his evidence was vague and uncertain as to which profits he claimed that he and Mr. Patarkatsishvili had a 50% entitlement. Even leaving to one side the absence of any pleading of this alleged express term, his case as to the relevant profit source was wholly unclear. Was it to be a share only in the increased profits of Mr. Abramovich’s Trading Companies, generated as a result of Mr. Abramovich acquiring influence and control of Sibneft (as paragraph 445 of Mr. Berezovsky’s closing, and its reference to $30 million as 50% of $60 million, would appear to suggest)? If that were so, there would, it is to be supposed, have had to have been a fairly complex annual calculation of what the Trading Companies were making prior to such acquisition (as they were already making profits and trading with Noyabrskneftegaz and Omsk Oil), followed by a calculation which stripped out those profits, as well as those generated by trading with non-Sibneft entities, from the quantification of Mr. Berezovsky’s and Mr. Patarkatsishvili’s 50% profit share. On that basis, there would also have had to have been a calculation of the profits earned by Sibneft itself. Or was the claimed share to include all profits of Mr. Abramovich’s Trading Companies, even those generated as a result of trading with non-Sibneft entities? And would a proportionate share of the losses incurred by Sibneft in 1995 and 1996 have fallen to be deducted from Mr. Berezovsky’s and Mr. Patarkatsishvili’s 50% share? Mr. Berezovsky’s evidence did not attempt to provide the answers to any of these questions.

Fifth, the evidence showed that no attempt was ever made at the time to relate the payments made to Mr. Berezovsky and Mr. Patarkatsishvili either to the profits of Sibneft, or to the profits made by Mr. Abramovich or his Trading Companies by virtue of their trading with, or his control of, Sibneft. Mr. Abramovich’s evidence, which I accept, was that Mr. Berezovsky was never interested in the activities of his Trading Companies or Sibneft, and that no one ever sought to audit, or verify the profits, for the purposes of distributing some defined share to Mr. Berezovsky or Mr. Patarkatsishvili. No information was ever provided to Mr. Berezovsky or Mr. Patarkatsishvili about Sibneft’s profits, although they did have access to the information publicly available in the company’s published financial statements. Nor was any information given to them about the profits of any of Mr. Abramovich’s Trading Companies. The following passages from Mr. Abramovich’s third witness statement explained the position:

Mr. Berezovsky said in his oral evidence that he did not know how much money was paid to him and Mr. Patarkatsishvili, and that the latter was responsible for checking Sibneft’s profits

Berezovsky Day 6, page 38.

If indeed there had been an express agreement that Mr. Berezovsky and Mr. Patarkatsishvili were to be jointly entitled to a 50% share of the net profits after tax of Sibneft and/or Mr. Abramovich’s Trading Companies, one might have expected that at least some sort of informal audit process would have taken place. I find the absence of evidence of any such process (other than Mr. Berezovsky’s vague assertions about Mr. Patarkatsishvili) surprising, if, indeed, Mr. Berezovsky’s case were correct.

Sixth, the process by which the timing, the amounts and the method of the payments were agreed did not support Mr. Berezovsky’s theory that such payments related to, or correlated with, any specified proportion of profits made by Mr. Abramovich, whether directly from Sibneft and/or indirectly through Mr. Abramovich’s Trading Companies, as a result of his involvement with, or control of, Sibneft. The following summary of the evidence in this respect gives a clear flavour of what I find as a fact, was

At about the beginning of each year Mr. Abramovich would discuss with Mr. Patarkatsishvili how much Mr. Berezovsky could expect to receive in that year for his “expenses”. Mr. Abramovich described the process as follows

Abramovich 3rd witness statement, paragraph 69.

In cross-examination Mr. Abramovich supported this account:

Thereafter payments would be demanded and made in the course of a continuous process of ad hoc negotiation, as Mr. Shvidler and Ms. Goncharova described. Most of the requests were oral. Sometimes Mr. Berezovsky would telephone Mr. Abramovich directly; sometimes Mr. Patarkatsishvili would telephone him and make the request on Mr. Berezovsky’s behalf. Sometimes the request was for hard cash; sometimes it was for payment of particular bills or items of expenditure, whether for ORT, Mr. Berezovsky personally, or otherwise. Mr. Patarkatsishvili would call Ms. Goncharova on a daily basis with instructions for payment. Mr. Abramovich said that Mr. Berezovsky was only concerned about Mr. Abramovich’s ability to pay and just assumed that he would pay whatever he asked. Mr. Berezovsky described the process in his oral evidence, as follows:

Dr. Nosova’s evidence also emphasised the ad hoc nature of the arrangements:

Mr. Berezovsky acknowledged this was a partially correct description, but went on to suggest that it did not reflect the fact that Mr. Abramovich and Mr. Patarkatsishvili “calculate[d] the balance all the time”. The cross-examination went as follows:

Mr. Rabinowitz submitted that the point that Mr. Berezovsky was making was that, if Mr. Berezovsky asked for money, Mr. Abramovich would only pay it if Mr. Berezovsky and Mr. Patarkatsishvili were indeed owed that sum “calculating what is our interest.” I do not accept Mr. Berezovsky’s assertion that calculations were made, whether at the time payments were demanded (or at other times), of what, at any given moment in time, Mr. Berezovsky and/or Mr. Patarkatsishvili were entitled to receive by way of their alleged 50% profit share of Sibneft profits, or of the profits of Mr. Abramovich’s Trading Companies. There was no evidence (apart from what Mr. Berezovsky said) that any such calculation process occurred. I accept Mr. Abramovich’s evidence, as described in his witness statement, that he had meetings with Mr. Patarkatsishvili for the purpose of discussing Mr. Berezovsky’s likely future financial requirements, not to calculate any profit share entitlement

Abramovich 3rd witness statement, paragraph 69.

See Mr. Berezovsky’s First Schedule, page 12.

Further evidence of the ad hoc nature of the process of requesting and making payments was found in the evidence relating to payments in connection with Mr. Berezovsky’s French properties in December 1996. Mr. Berezovsky had purchased Chateau de la Garoupe at Cap d’Antibes, France, for FF55 million through a French company controlled by him, Société d’Investissements France Immeubles Sari (“SIFI”). The purchase of the Chateau, and subsequently of the antique furniture in it, and its redecoration, had been funded by payments from Mr. Abramovich’s Trading Companies. These had been purportedly structured as loans, but it was common ground that there was no intention that such so-called loans should be repaid. Subsequently, in July 1997, an adjoining property, Clocher de la Garoupe, was also purchased by SIFI, for FF90 million, and was similarly funded. Mr. Jenni, Mr. Berezovsky’s Swiss lawyer, described the “… rather chaotic system which evolved …” as “… a result of the constant demand for additional monies” to meet Mr. Berezovsky’s expenses associated with his French properties. What happened was that Mr. Berezovsky’s property agent, M. Bordes, would demand some payment from Mr. Jenni or his associate, Mr. Stiefel, who would pass the demand on to Mr. Shvidler. If Mr. Shvidler resisted it, as he sometimes did, Mr. Berezovsky would ring Mr. Patarkatsishvili so that he could contact Mr. Abramovich and demand that it be paid.

Other evidence showed that payments from Mr. Abramovich’s Trading Companies, through an offshore corporate vehicle, also funded payment of Mr. Berezovsky’s and his family’s credit card expenditure between 1998 and 2000. Pavel Ivlev (“Mr. Ivlev”), a Russian lawyer, who worked in Moscow, dealt with Mr. Berezovsky’s Russian tax affairs from 1997 onwards and fled Russia in November 2004, described the process. Although he suggested in his written evidence that the payments came from Sibneft, he admitted in cross-examination that he had never made “… any due diligence or any analysis of the source of funds”. His concern was simply to ensure that the bills were paid

Ivlev Day 14, pages 99-100.

It was common ground that, at the Dorchester Hotel meeting in March 2000, Mr. Deripaska asked Mr. Berezovsky to repay a debt that the latter owed him and that Mr. Berezovsky turned round to Mr. Abramovich and asked him to pay off the debt. It was duly paid. Mr. Berezovsky claimed that the funds to pay came out of his profit share entitlement, which was disputed by Mr. Abramovich. What is instructive, however, for the issue presently under consideration, is the manner in which an ad hoc demand was made by Mr. Berezovsky, and complied with by Mr. Abramovich without, it would appear, any discussion as to what at that particular moment in time was either side’s profit share.

Seventh, I do not accept the submission made by Mr. Rabinowitz that the figures shown in the Bolshoi Balance for the payments made in 2000 to Mr. Berezovsky and Mr. Patarkatsishvili demonstrate a correlation between such payments and the financial performance of Sibneft and Mr. Abramovich’s Trading Companies, thereby supporting Mr. Berezovsky’s case that it was agreed that he and Mr. Patarkatsishvili should have a 50% profit share in the profits of Sibneft and those generated Mr. Abramovich’s Trading Companies, as a result of Mr. Abramovich’s involvement with, or acquisition of control of, Sibneft.

The FOM table of the Bolshoi Balance recorded the payments to Mr. Berezovsky or Mr. Patarkatsishvili in 2000. The Bolshoi Balance also included details of the payments received or made month by month by Mr. Abramovich’s companies from the whole of his investments, including but not limited to the oil and aluminium businesses. In his witness statement Mr. Shvidler explained that he was never asked by Mr. Abramovich, Mr. Berezovsky or Mr. Patarkatsishvili at any time to provide them with a summary of Sibneft profits or trading group profits belonging to Mr. Abramovich, for the purpose of calculating what Mr. Berezovsky should be paid. He described the function of the Bolshoi Balance in the following terms:

I accept Mr. Shvidler’s evidence as set out in these paragraphs.

Mr. Rabinowitz submitted

See paragraph 266 of Mr. Berezovsky’s written closing submissions.

Mr. Abramovich’s own evidence to the effect that he agreed to pay Mr. Berezovsky $305 million plus $160 million in 2000, totalling $465 million

Abramovich 3rd witness statement, paragraph 232.

payments of this amount “tagged as being for Mr. Berezovsky as shown in the Bolshoi Balance: namely the PRB total of $461,367,441, at cell Q19”;

from which fell to be deducted “two payments - $7,614,470 labelled “Bili [Mr. Patarkatsishvili] (loan)” and $16,271,042

This was the $16 million related to the repayment of Mr. Berezovsky’s debt to Mr. Deripaska.

to which fell to be added the PRBR section referring to cash payments of $3,670,500.

I deal below with the submissions made in relation to the Le Bourget transcript, but I do not accept the submission made by Mr. Rabinowitz that the figures shown in the Bolshoi Balance for the payments made in 2000 to Mr. Berezovsky and Mr. Patarkatsishvili demonstrate the correlation for which he contends. First, wherever Mr. Patarkatsishvili obtained the $900 million figure from, it bore no relation either to Sibneft’s actual profits in 2000 ($675 million), or the net cash flow sums which the Bolshoi Balance records as having been received by Mr. Abramovich’s oil-related businesses including ZATOs in 2000

The “BS” (i.e. oil industry) Balance for 2000 was shown as $1.386bn. This appears to have been a net figure after deducting payments.

Accordingly, I do not accept Mr. Rabinowitz’s submission that the payments made to Mr. Berezovsky and/or Mr. Patarkatsishvili were either actually calculated as 50%, or correlated to 50%, of Sibneft’s profits and/or those generated indirectly from Mr. Abramovich’s acquisition of influence and control of Sibneft, through his own Trading Companies.

My eighth reason for rejecting Mr. Rabinowitz’s arguments under this head is that I do not accept that the fact that payments were made to both Mr. Berezovsky and Mr. Patarkatsishvili was persuasive support for Mr. Berezovsky’s case. It was common ground on the evidence that it was Mr. Patarkatsishvili who controlled the payments and generally handled the “commercial side” of Mr. Berezovsky’s affairs. It was also common ground that both Mr. Patarkatsishvili and Mr. Berezovsky would make requests for payments and that payments were made to one or other or both of them (whether in cash or otherwise, and whether directly or indirectly to entities or persons associated with them) pursuant to Mr. Abramovich’s arrangements with Mr. Berezovsky.

However, on the evidence before the Court, a precise breakdown of the distribution of the payments as between Mr. Berezovsky and Mr. Patarkatsishvili was not possible. This was because payments were generally made to accounts designated on Mr. Berezovsky’s behalf, which were either those of nominee companies whose exact beneficial ownership was not apparent, or else those of third party payees who had provided goods or services to Mr. Berezovsky or Mr. Patarkatsishvili or to ORT. Even in 2000, when some payments were, possibly, allocated in the Bolshoi Balance to either Mr. Berezovsky or Mr. Patarkatsishvili (although even this was unclear on the evidence before me), it was possible that amounts were redistributed between the two of them after receipt.

In the circumstances, I am not persuaded by Mr. Berezovsky’s argument that the fact that payments were made to both Mr. Berezovsky and Mr. Patarkatsishvili is inconsistent with Mr. Abramovich’s krysha allegation and supports Mr. Berezovsky’s partnership allegation. Mr. Abramovich’s evidence explained Mr. Patarkatsishvili’s role and involvement, and Mr. Abramovich’s (limited) understanding of the association between him and Mr. Berezovsky. I accept Mr. Abramovich’s evidence that Mr. Patarkatsishvili clearly did provide krysha type services, not only in relation to RusAL but also in relation to Sibneft – for example “persuading” Mr. Ovodenko to withdraw Sameko’s bid in the loans-for-shares auction. If there had been any evidence of periodic, or indeed any, calculations as to what was due in respect of “the partners’” alleged 50% or calculation of what was each of their respective profit shares, the submission might have had more force. But the reality was that the manner in which monies required by Mr. Berezovsky were demanded, negotiated and paid had all the hallmarks of krysha type payments, and not payments of a specific profit share to either man.

Unknown to both Mr. Berezovsky and Mr. Abramovich, Mr. Patarkatsishvili recorded the meeting attended by all three men at Le Bourget on 6 December 2000. In December 2009 Mr. Berezovsky purchased the audio recording from an intermediary, whose identity he was unwilling to disclose on grounds of concern for the physical safety of such person. Under the terms of Mr. Berezovsky’s agreement with the intermediary, the latter stands to make an enormous financial gain in the event that Mr. Berezovsky were to win this litigation; the deal gives the intermediary 5% of Mr. Berezovsky’s winnings. A transcript of the recording was first disclosed by Mr. Berezovsky on 3 December 2010; the audio recording was first provided on 5 January 2011. The original transcript, which was wrongly dated, contained errors of transcription and translation (which have since been corrected). The recording itself contains gaps and sound distortions. Mr. Rabinowitz criticised Mr. Abramovich for not admitting the authenticity of the recording or transcript, or even that the Le Bourget meeting had taken place, until his third statement served on 31 May 2011. I do not consider that, in the circumstances surrounding the production of the recording, such criticism was well-founded.

The meeting took place over ten years ago and, accordingly, actual recollections of the content of the meeting (and its date) were bound to be limited, as both Mr. Berezovsky and Mr. Abramovich acknowledged in their evidence. Indeed Mr. Berezovsky said that he did not remember the meeting at all before receiving the recording. I do not find it surprising that Mr. Abramovich (or his legal team) considered it necessary to subject the recording to forensic examination and consideration of its contents before accepting it as authentic, nor that it took them five months to do so.

Before I consider the respective submissions of the parties as to what the Le Bourget transcript shows, it is necessary to say something about the transcript itself and the factual context in which the meeting took place. A transcript of the recording, in translation, together with Mr. Berezovsky’s and Mr. Abramovich’s respective commentary on each statement made, was supplied to me

It comprised some 234 pages and tabulated every statement by each of the three men at the meeting in a numbered box.

Many of the exchanges are incomprehensible, unless one had an understanding of the previous discussions between Mr. Abramovich and Mr. Patarkatsishvili (or in some cases Mr. Ruslan Fomichev). Moreover, as he acknowledged in his cross-examination, Mr. Berezovsky’s understanding of the context of the discussion was very limited at the time, because he left the management of his financial affairs to others (i.e. Mr. Patarkatsishvili and Mr. Fomichev) and knew little or nothing about recent discussions between Mr. Abramovich and Mr. Patarkatsishvili. It was therefore difficult, as he acknowledged, for him to follow what Mr. Abramovich and Mr. Patarkatsishvili were talking about

Berezovsky Day 7, page 5.

By the time of the Le Bourget meeting, Mr. Berezovsky was an exiled fugitive living in France; Mr. Patarkatsishvili in his turn was to become an exile in April 2001, when he left Russia and went to live in Georgia, although his relations with Mr. Putin in December 2000 were apparently still amicable. Mr. Abramovich explained that his relationship with Mr. Berezovsky changed after the Kursk tragedy of August 2000. Mr. Abramovich took the view that the former had taken an overtly hostile and one-sided stance in using the media which he controlled, to exploit a public tragedy of that sort to further his own political agenda against the government. Mr. Abramovich had made clear to Mr. Berezovsky what his views were. As he did not openly disagree with Mr. Berezovsky very often, this fact had adversely affected their relationship, and thereafter they almost stopped meeting in person and Mr. Abramovich increasingly dealt with Mr. Berezovsky through Mr. Patarkatsishvili.

The principal purpose of the meeting was to discuss the mechanics of how to structure the ORT share sale and the state of the mutual accounting as between Mr. Abramovich on the one hand and Mr. Berezovsky and Mr. Patarkatsishvili on the other. Both Mr. Berezovsky and Mr. Patarkatsishvili were concerned by this stage that the vast sums of money that were required to fund their lifestyles should be received by them out of Russia. They were concerned, for example, as to whether exchange control would be given to remit the proceeds of the sale of their ORT shares outside Russia. Previously, Mr. Berezovsky and Mr. Patarkatsishvili had received an income stream from two non-Russian sources. One was Andava SA, which from 1996 had taken on the role of a treasury vehicle for Aeroflot. As I have already described, Andava produced an income stream for Mr. Berezovsky which was derived from Aeroflot’s dealings with Andava in Switzerland. But, by 2000, that income stream had dried up, not least because of the allegations by the Russian public prosecutors that the Andava monies had been misappropriated by Mr. Berezovsky from Aeroflot, and the charges against Mr. Berezovsky which had led to his flight from Russia in October 2000. The other providers of funds to Mr. Berezovsky outside Russia were the Runicom companies, which had been used to pay most of the sums which Mr. Berezovsky had received from Mr. Abramovich, including in particular the sums he received for buying and doing up the properties on the Cote d’Azur.

But, as Mr. Abramovich explained at the Le Bourget meeting, the Russian government had announced certain changes to the Russian tax system, as a consequence of which, the oil businesses of his Trading Companies (through which he had previously made most of the payments to Mr. Berezovsky and Mr. Patarkatsishvili) were going to be consolidated into Sibneft; in future, therefore, Mr. Abramovich’s main source of income would be dividends declared by Sibneft. These could be paid only twice a year and would be subject to Russian tax, making it more difficult for him to pay Mr. Berezovsky and Mr. Patarkatsishvili. Payments would also be visible to the Russian authorities, a potential problem now that Mr. Berezovsky was a fugitive from Russia

Abramovich Day 20, page 68.

From the beginning of 2000, and well before Mr. Berezovsky left Russia in October 2000, he and Mr. Patarkatsishvili had been trying to transfer their assets into offshore structures in the West. As he accepted in his evidence, by December 2000 he and Mr. Patarkatsishvili were certainly aware of the money-laundering regulations in force in most Western jurisdictions, and the consequent need to obtain documentary explanation of the origins of any payment in order to satisfy money-laundering enquiries from transferee banks or asset managers. Indeed the evidence of Mr. Ivlev (one of Mr. Berezovsky’s witnesses) was to the effect that Western financial institutions were, at that time, more than usually sensitive in relation to the transfer of substantial monies from wealthy Russians, because of the scale on which such Russians were attempting to transfer monies out of Russia. They were particularly so in relation to Mr. Berezovsky. Mr. Ivlev said:

Thus, it was critical that any future payments made to Mr. Berezovsky and Mr. Patarkatsishvili (whether, as Mr. Berezovsky contended, in respect of their interest in Sibneft, or as Mr. Abramovich contended, by way of krysha payments), should be documented and capable of satisfying the stringent money-laundering enquiries that they knew they would be bound to face from recipient financial institutions.

So any analysis of what the Le Bourget transcript establishes has to be conducted against the fact that, at the time, Mr. Berezovsky and Mr. Patarkatsishvili would have been particularly concerned to ensure that the necessary documents were generated to “legalise” (which was the word they used) their receipts of payments from Mr. Abramovich’s companies. Indeed their concern was borne out by the fact that subsequently there were official or judicial enquiries into allegations of money-laundering by Mr. Berezovsky and/or Mr. Patarkatsishvili in Switzerland, The Netherlands, France and Brazil, in addition to Russia itself.

Mr. Rabinowitz submitted that the Le Bourget transcript was:

that payments made to Mr. Berezovsky and Mr. Patarkatsishvili had been in the past – and were planned to continue to be in the future – calculated by reference to the profits that Mr. Abramovich was making from his ownership and control of Sibneft;

that Mr. Abramovich acknowledged Mr. Berezovsky and Mr. Patarkatsishvili’s interest in Sibneft; and

that Mr. Berezovsky and Mr. Patarkatsishvili wished to formalise (“legalise”) their interest in Sibneft, but that Mr. Abramovich was resisting this.

A number of evidential points were relied upon by Mr. Rabinowitz. It is not necessary or feasible for me to deal with them all. In my judgment the transcript did not provide the support for his case which Mr. Berezovsky contended.

The beginning of the meeting was spent discussing the sums which Mr. Abramovich owed to Mr. Berezovsky and Mr. Patarkatsishvili. Mr. Abramovich came to the meeting with a spreadsheet (which no longer survives) which set out what had been paid, and what was still owing. In his third witness statement and in his commentary to the transcript, Mr. Abramovich gave evidence to the effect that there had previously been an agreement between Mr. Abramovich and Mr. Patarkatsishvili in September or October 2000 that Mr. Abramovich would pay Mr. Berezovsky a sum of $305 million. Mr. Abramovich’s evidence was that this agreement had been made in October, when Mr. Berezovsky’s position in Russia was becoming increasingly difficult and his finances were strained. Mr. Patarkatsishvili asked for a large payment to keep “for a rainy day”

Abramovich 3rd witness statement, paragraph 204; Abramovich Day 20, page 50.

Mr. Rabinowitz attacked this evidence on the grounds that, in cross-examination, “extraordinarily” Mr. Abramovich had admitted that he had no actual recollection of any agreement to pay $305 million and that, in re-examination, he was asked for further details of the proposal and purported to provide them, despite the fact that he said he could not remember. I do not accept this criticism. First of all, it was clear from Mr. Abramovich’s evidence and his reference to reconstruction, that his memory had been jogged by what he had read in the Le Bourget transcript. Second, Mr. Abramovich’s evidence about the amount and the timing was borne out by the Bolshoi Balance, which shows a significance increase in the payments made to Mr. Berezovsky from October 2000. Although the transcript records Mr. Patarkatsishvili initially complaining that he and Mr. Berezovsky had at that stage received only $100 million out of the $305 million, subsequently the transcript shows that he accepted that in fact only $85 million was outstanding. Third, Mr. Rabinowitz’s reference

At paragraph 291 of Mr. Berezovsky’s written closing submissions.

Moreover, in cross-examination

Berezovsky Day 7, page 8.

Thus Mr. Berezovsky contended that the references in the Le Bourget transcript to $30 million being described as coming from “aluminium” demonstrated that what was being discussed was his and Mr. Patarkatsishvili’s entitlement to $30 million of profits from their investment in RusAl and $275 million of profits from their investment in Sibneft, which supported his case. Mr. Abramovich was cross-examined to that effect. In support of this contention Mr. Rabinowitz submitted that, whilst it made perfect sense for Mr. Abramovich to have identified how much money was due from each of the oil and aluminium investments, if the other two men were indeed his partners, it was impossible to see why Mr. Abramovich should have identified the source of the money, if there was really just an agreement to make a krysha payment of $305 million.

I do not agree that the passages relating to this discussion in the Le Bourget transcript demonstrate that Mr. Abramovich was referring to, or recognising, any contractual entitlement of Mr. Berezovsky’s and Mr. Patarkatsishvili’s part to share in Sibneft’s or RusAl’s profits. The wording in the transcript, neither in itself, nor in context, is sufficiently clear to support such an interpretation. Moreover, I accept Mr. Abramovich’s evidence, as given in his commentary on the transcript and in cross examination

See, for example, Abramovich Day 20, pages 50-51.

Accordingly I reject Mr. Rabinowitz’s submission in this respect.

Mr. Rabinowitz submitted that the discussion in the Le Bourget transcript relating to the possibility of Mr. Berezovsky and Mr. Patarkatsishvili being registered as shareholders in Sibneft and receiving payment of dividends strongly supported Mr. Berezovsky’s case.

From Box 450 there was a section of the discussion which addressed a question raised by Mr. Patarkatsishvili about how he and Mr. Berezovsky should plan for the next year. As explained by Mr. Abramovich, the government had announced the withdrawal of certain tax reliefs from oil companies, which would result in additional tax liabilities for his companies. In consequence, the oil businesses of his Trading Companies (through which he had previously made most of the payments to Mr. Berezovsky and Mr. Patarkatsishvili) were going to be consolidated into Sibneft; in future, therefore, Mr. Abramovich’s main source of income would be dividends declared by Sibneft. These could be paid only twice a year and would be subject to Russian tax, making it more difficult for him to pay Mr. Berezovsky and Mr. Patarkatsishvili.

The passages upon which Mr. Rabinowitz relied in this context ran from Box 458 and following. The transcript records the discussion between Mr. Abramovich, Mr. Berezovsky and Mr. Patarkatsishvili as follows:

Mr. Berezovsky’s case

See, for example, paragraph 294 of Mr. Berezovsky’s written closing submissions.

See, for example, paragraph 229(3) of Mr. Berezovsky’s opening submissions.

Mr. Berezovsky’s written opening, paragraph 229(3).

Abramovich Day 20, pages 83-84.

In relation to what was a partially inaudible Box 462, Mr. Abramovich’s evidence was that he was referring to a previous proposal made by Mr. Fomichev for legalising Mr. Berezovsky’s and Mr. Patarkatsishvili’s receipts from Mr. Abramovich, by transferring Sibneft shares to them, or to a bank acting as their nominee, so that they could have a documented right to receive dividends by way of cover for the payments that Mr. Abramovich was making to them; this proposal was unacceptable to Mr. Abramovich not only because it would have made them owners of a substantial proportion of Sibneft which, according to him, they had no right to be, but also that, by this date, he had no wish to increase Sibneft’s association with Mr. Berezovsky, by now a fugitive from Russian justice.

Mr. Rabinowitz submitted that Mr. Abramovich’s evidence about the alleged Fomichev proposal was incredible and

He subjected the evidence to a detailed critique as to the manner in which he alleged that Mr. Abramovich had changed his case in this respect. Mr. Berezovsky also apparently relied

See , for example, Mr. Berezovsky ’ s commentary on paragraph 59 (5) of Mr. Abramovich written closing submissions.

These were proceedings in which Mr. Berezovsky was suing Mr. Fomichev for repayment of a loan in excess of $52 million.

I reject Mr. Rabinowitz’s submission on this point and accept Mr. Abramovich’s evidence about Mr. Fomichev’s proposal and the subject matter of the discussion. But in any event, the passages relied upon in the transcript simply are not clear enough to support Mr. Berezovsky’s case that these passages demonstrate an acceptance or recognition on Mr. Abramovich’s part of an existing, albeit unregistered, 50% interest, or entitlement to such an interest, in Sibneft vested in Mr. Berezovsky and Mr. Patarkatsishvili.

There then follows from Box 468 onwards various discussions about Mr. Berezovsky and Mr. Patarkatsishvili becoming registered shareholders in Sibneft, whether through the nomineeship of a Western bank or otherwise. Mr. Abramovich was clearly reluctant for this to occur because of the adverse effect that any public association of the two men as registered shareholders of Sibneft would have on the company. Mr. Berezovsky contended that these passages were only consistent with him and Mr. Patarkatsishvili having existing interests in Sibneft. For example, he referred to Box 495, where he said “… but this does not mean my legalisation, and this is the heart of the problem”. He relied on this as demonstrating that he wanted his existing stake in Sibneft formally recognised. I am unable to accept this analysis of the transcript. In so far as anything is clear from what (at least in translation) appears to be a disjointed and incompletely recorded conversation, that is difficult to follow, Mr. Berezovsky and Mr. Patarkatsishvili’s concerns appear to be centred on the “legalisation” of their income stream; in other words their need to receive future funds from Mr. Abramovich legally in Western bank accounts with some plausible and innocent explanation of their origins. It is in that context that the men were discussing the possibility of Mr. Berezovsky and Mr. Patarkatsishvili becoming registered shareholders. Whilst the transcript shows that Mr. Berezovsky and Mr. Patarkatsishvili considered they had an entitlement to receive future payments from Mr. Abramovich and every expectation of doing so, the language used goes nowhere near to recognising some existing contractual or beneficial entitlement to a 50% shareholding interest in Sibneft.

Mr. Rabinowitz pointed to the various references to dividends in the discussions between Mr. Abramovich and Mr. Patarkatsishvili, particularly at Box 519 to 541 and then from Boxes of 587 to 592. He submitted that these discussions were only consistent with word “dividends” being used in the conventional sense and that Mr. Abramovich’s attempt in his commentary on the transcript to characterise Mr. Patarkatsishvili’s use of the word as a reference to krysha payments was “utterly implausible.” Mr. Rabinowitz submitted that the only analysis of the transcript in these passages was that this was a discussion between shareholders as to the dividends that “we” (i.e. the three men) would be entitled to receive, and would be receiving, from Sibneft.

But my reading of the transcript, coupled with the evidence from Mr. Berezovsky and Mr. Abramovich, leads me to no such conclusion. It was not surprising that Mr. Patarkatsishvili was interested in the likely quantum of Sibneft dividends, and in the manner in which they would be paid, given that Mr. Abramovich had previously explained that the only way of his (i.e. Mr. Abramovich) deriving revenue in 2001, and consequently paying Mr. Berezovsky and Mr. Patarkatsishvili their required income stream, would be out of dividends declared to him by Sibneft. Nor, on Mr. Abramovich’s case, would it have been at all surprising for Mr. Patarkatsishvili to have been keenly interested in how much Sibneft would be declaring by way of dividends, since not only would they have provided the means by which he and Mr. Berezovsky would be paid, but also, no doubt, would have determined how much Mr. Patarkatsishvili could demand and expect Mr. Abramovich to agree to pay. Indeed Mr. Abramovich said as much when accepting in cross-examination that, at least to some extent, the amount of Sibneft dividends would determine how much Mr. Berezovsky and Mr. Patarkatsishvili would receive in the year; he said

See Abramovich Day 20, page 105.

When reading the transcript one also has to remember that, at various stages, the parties go back to discussing what, at that stage, was only a proposal that the two men might become formally registered as shareholders, as well as other alternative mechanisms for paying monies to them. The fact that Mr. Patarkatsishvili refers, for example, at Box 540 to dividends in the following way:

Likewise, I was not persuaded that Mr. Patarkatsishvili’s (or indeed Mr. Abramovich’s) use of the pronoun “we” in various passages in the transcript went anywhere near demonstrating unequivocal, or indeed any real, support for Mr. Berezovsky’s case. Mr. Abramovich’s evidence was that Mr. Patarkatsishvili mixed up the singular and plural pronouns

Abramovich Day 20, page 113; Day 20, page 116.

Abramovich Day 20, page 114.

In the Le Bourget transcript various references were made by Mr. Abramovich to 44% of the Sibneft shares being held “in trust with the management”. Thus for example, at Boxes 468 to 470 there is the following passage, starting with a proposal by Mr. Patarkatsishvili that a bank should become a shareholder in Sibneft as Mr. Berezovsky’s and his nominee:

And at Box 540-541, the three men returned to the question how, if Mr. Berezovsky and Mr. Patarkatsishvili were not to become Sibneft shareholders, they might be able to receive money from Mr. Abramovich in the future, given the changes that the latter had explained earlier:

Mr. Rabinowitz submitted that these passages clearly showed that Mr. Abramovich was explaining to Mr. Berezovsky and Mr. Patarkatsishvili that their 44% interest in Sibneft (namely half of the total of 88% of the share capital of Sibneft, which Mr. Abramovich directly or indirectly held at the time), which they then owned under the terms of the alleged 1995 Agreement and the alleged 1996 Agreement, was held in a trust; and that the 44% described as being held in trust “in a management-controlled trust” was the half that was being held for Mr. Berezovsky and Mr. Patarkatsishvili. He submitted that when Mr. Abramovich, as recorded in Box 470, even went so far as to ask Mr. Berezovsky: “are you happy with such a setup?”, that could only make sense where the manner of how shares were held was relevant to Mr. Berezovsky, which could not have been true of a krysha relationship. Mr. Rabinowitz also submitted that Mr. Abramovich gave misleading evidence to the court, both in his commentary on the Le Bourget transcript and in his cross-examination, for the specific purpose of obscuring the real position relating to Mr. Berezovsky’s and Mr. Patarkatsishvili’s ownership of their 44% interest.

Mr. Abramovich was cross-examined at considerable length about this matter. Mr. Shvidler and Ms. Panchenko also gave extensive evidence about the trust structures which (at this time) held, directly or indirectly, effectively 88% of Sibneft, through intermediate holding companies. The position was confirmed by a statement made by Mr. Sumption on instructions, which was not challenged. There were two successive trusts: a Liechtenstein foundation operative between 1999 and 2001; and a Cyprus trust operative from 1 March 2001. The beneficiaries of the Liechtenstein foundation were Mr. Abramovich and, on his death, his children. The foundation had the power to add Mr. Abramovich’s relatives to the list of beneficiaries, provided that there was the consent of the protector, Mr. Shvidler. There was also power to alter the regulations governing the foundation to change the beneficiaries, provided Mr. Abramovich consented. The beneficiaries of the Cypriot trust were Mr. Abramovich, and, on his death, his children. The trustees had power to add anybody as a beneficiary provided the protector, Mr. Shvidler, consented. The trustees were Ms. Panchenko, Mr. Tenenbaum and a lawyer, Mr. Demetris Ioannides. The trust arrangements covered the whole of Mr. Abramovich’s Sibneft holding. I was not however provided with the relevant trust deeds.

It was clear from the evidence given by both Mr. Abramovich and Mr. Shvidler that in public statements at the time Mr. Abramovich was keen to disguise the fact that (according to him) he was the ultimate sole beneficial owner of 88% of the shares in Sibneft. In order to do so, Mr. Abramovich and Mr. Shvidler adopted a standard formula, namely that Mr. Abramovich controlled half of the 80% shareholding, and that the other half was controlled by “a management trust”. Both Mr. Abramovich and Mr. Shvidler said that, for security reasons, Mr. Abramovich never wanted to say publicly that he owned all the shares in Sibneft; so he always said that he controlled half, with half being controlled by “the management”. This misleading stance was also adopted in contemporaneous press interviews; see for example an interview with Mr. Shvidler published in Petroleum Intelligence is Weekly in November 2000, where he was quoted as saying

I have no doubt that Mr. Abramovich’s security concerns were genuine. They were supported by the evidence of Mr. Anisimov, who explained in his evidence that, given the prevailing circumstances in Russia at the time, he too had concerns about publicly disclosing his control of his businesses.

The euphemism about half of the Sibneft stake being controlled by “management” was untrue in the sense that, in reality:

the entirety of Mr. Abramovich’s indirect share holding in Sibneft was held in trust;

that, as lifetime beneficiary of the relevant trust, he was no doubt in a position to exercise considerable control over the shares (although there was no evidence before me as to what the precise position in respect of control actually was, under Liechtenstein or Cypriot law); and

as lifetime beneficiary, he was no doubt entitled to enjoy the economic interest in the shares (subject, of course, to such, if any, entitlement of Mr. Berezovsky and Mr. Patarkatsishvili).

Whilst the fact that Mr. Abramovich and Mr. Shvidler were prepared to misrepresent the position to the Press has some adverse effect on their credibility, I do not, in the circumstances, regard the effect as so serious that I should disregard their evidence in relation to this issue.

It is against that background that I have to consider Mr. Rabinowitz’s submission that Mr. Abramovich’s comments in the transcript suggest or support the proposition that 44% of the Sibneft shares, or an interest in 44% of the Sibneft shares, were held, whether in a “management trust”, or otherwise, for the benefit of Mr. Berezovsky and Mr. Patarkatsishvili pursuant to the alleged 1995 and 1996 Agreements.

I do not read, in the manner suggested by Mr. Rabinowitz ,what, on any basis, are Delphic comments made by Mr. Abramovich at the meeting. Having heard the evidence, I do not accept that Mr. Abramovich’s comments as recorded in the transcript (or indeed his commentary), support the analysis that he was referring to a 44% entitlement being held on trust for Mr. Berezovsky and Mr. Patarkatsishvili, despite the fact that they are in some respects untrue or misleading as to the precise trust structures. Thus in my view both Boxes 468 and 541 were referring to Mr. Abramovich’s existing arrangements for ownership of Sibneft shares, and Box 541 was explaining the mechanisms by which payments could continue to be made to Mr. Berezovsky and Mr. Patarkatsishvili. Nor does Mr. Rabinowitz’s criticism of the evidence given by Mr. Abramovich in his commentary at Box 470 take the matter any further. Whilst the statement was not true, I do not accept that it was being made “to obscure the true position” that he was explaining to the other two men that “their 44% of Sibneft -the half of his holding in which he held for them under the 1995 Agreement and the 1996 Agreement-was held in trust.” There is no warrant for such a conclusion; Mr. Abramovich said that at the time he did not recall the details about the trust arrangements, even if he had once known them, and in any event he was perpetuating the myth about the “management trust”.

I do not find that a close analysis of the Le Bourget transcript supports Mr. Berezovsky’s case as to the alleged 1995 and 1996 Agreements relating to Sibneft. Even if I were to be wrong in this conclusion, such passages as Mr. Rabinowitz suggests do support Mr. Berezovsky’s case are so equivocal when placed in the full evidential context, that on any basis they would carry little weight in my final assessment of where the probabilities lie.

In addition to relying upon the Le Bourget transcript, Mr. Berezovsky contended that his case was supported, and Mr. Abramovich’s shown to be untrue, by what Mr. Rabinowitz referred to as a substantial body of contemporaneous and near contemporaneous oral and documentary evidence showing that it was the belief of Mr. Berezovsky, Mr. Patarkatsishvili, Mr. Abramovich and a significant number of their friends, employees and associates that Mr. Berezovsky and Mr. Patarkatsishvili did indeed have a shareholding interest in Sibneft, and not merely an entitlement to indeterminate payments

See, for example, paragraph 385 and 386 of Mr. Berezovsky’s written closing submissions; Day 41, pages 63 et seq of his written closing submissions; and section D of his opening submissions.

Mr. Rabinowitz submitted that Mr. Berezovsky and Mr. Patarkatsishvili’s belief that they did have an interest in Sibneft was also a powerful indicator:

that they did have such an interest; and

that the alleged 1995 Agreement was made on the terms that Mr. Berezovsky claims.

Relying on this, Mr. Rabinowitz submitted that:

such an approach would necessarily apply, a fortiori, in a situation such as this, in which the contract was made entirely orally, and more than 15 years ago, so that, entirely predictably, the memories of the parties to that contract about the exchanges by which it was made have faded;

the fact that both Mr. Berezovsky and Mr. Patarkatsishvili, two of the three parties to the alleged 1995 Agreement appear to have concluded that they were Mr. Abramovich’s partners under that agreement, and that the agreement gave them a 50% interest in Sibneft and an entitlement to participate in 50% of the profits it generated, and conducted themselves on that basis, was a reflection of the true position; and

it was common ground that the agreement which the parties made was to be objectively determined from their external conduct

See Mr. Abramovich’s written closing, paragraph 117.

Mr. Sumption, on the other hand, submitted that the available materials provided support for Mr. Abramovich’s case.

Mr. Rabinowitz also sought to rely

See paragraphs 221 and 390-396 of Mr. Berezovsky’s written closing submissions.

As made in paragraph 61 of Mr. Abramovich’s written closing submissions.

However that in my judgment is not a correct reading of the relevant paragraphs in Mr. Abramovich’s written closing submissions - namely both paragraphs 61 and 62. I quote them below (without footnotes), to demonstrate what the point was that was there being made:

But, as was pointed out in Mr. Sumption’s closing submissions

Day 39, pages 76-83.

Page 37, reference to paragraph 221.

I agree with the analysis made in paragraphs 61 and 62 of Mr. Abramovich’s written closing submissions, as amplified in Mr. Sumption’s oral submissions, save possibly in one respect. I do not consider that Mr. Berezovsky genuinely believed that, because of his indirect control of a 50% shareholding in NFK, he was in some way entitled to be an owner of 50% of the share capital of Sibneft. I do not think that Mr. Berezovsky held any such belief. In Mr. Berezovsky’s second Particulars of Claim, it was originally pleaded that the “ownership interest” in Sibneft was “acquired” by NFK

See paragraph 35.

See paragraph 36.

Berezovsky Day 5, page 67.

that Mr. Berezovsky’s indirect control of a 50% shareholding in NFK and its participation in the loans for shares auction fed, or contributed to, his sense of entitlement to some sort of interest in Sibneft;

that, as demonstrated by the evidence referred to at paragraphs 61(2) (a), (b) and (d) of Mr. Abramovich’s written closing submissions, Mr. Berezovsky used his indirect control of a 50% shareholding in NFK on occasions to support his assertion that he was, or had a contractual entitlement to become, a shareholder in Sibneft;

but that he never genuinely believed that his indirect interest in NFK of itself gave him a shareholding interest in Sibneft or a contractual entitlement to one.

In a fact-heavy case, it is vital to be able to discern the pattern in the carpet. The pattern in this case (as was manifestly clear from Mr. Berezovsky’s own evidence) was that Mr. Berezovsky regarded Mr. Abramovich’s successes in relation to Sibneft as achieved directly as a result of Mr. Berezovsky’s (and Mr. Patarkatsishvili’s) own political and other efforts in ensuring the privatisation of Sibneft. Mr. Berezovsky also regarded Mr. Abramovich as a subordinate, whom he had made, put in place and, as Mr. Sumption put it, “owned”. I have no doubt that Mr. Berezovsky, and probably also Mr. Patarkatsishvili, considered that, as a result, they were entitled to a substantial piece of the Sibneft action

Including profits generated by Mr. Abramovich’s trading companies from their dealings with Sibneft.

I turn now to consider some of the documentary materials upon which Mr. Berezovsky and Mr. Abramovich respectively relied in this context.

The formal position, so far as directorships were concerned, was that Mr. Berezovsky had been elected to Sibneft’s Board of Directors on 26 September 1996. He resigned in December 1996, having become the Deputy Secretary of the Russian Security Council on 29 October 1996 (a body of which he remained a member until November 1997). Mr. Abramovich’s evidence was that he supported Mr. Berezovsky’s appointment as a director of Sibneft, because it continued the public association between Mr. Berezovsky and Sibneft, which was valuable to Mr. Abramovich. Mr. Berezovsky on the other hand, suggested that Mr. Abramovich had said that such appointment would give the impression that Mr. Berezovsky had no shareholding interest in Sibneft. I consider this to have been an unlikely reason. Mr. Abramovich was appointed to the Board of Directors of Sibneft in September 1996, and remained a director until December 1999. Mr. Shvidler became the CFO and Vice President of Sibneft in 1996. In June 1997, Mr. Patarkatsishvili joined the Sibneft board. He remained a director until mid 1999.

Mr. Berezovsky never publicly claimed to have had any substantial interest in Sibneft until June 2001. From an early stage, however, it was widely assumed in the media that Mr. Berezovsky was a substantial shareholder in Sibneft. There were regular statements in the press and in books to that effect, which are now relied upon by Mr. Berezovsky as evidence supporting his case. However, whilst he was still living in Russia, when questions were asked of him in press interviews on the assumed basis that he was a shareholder, he neither confirmed nor denied the assumption, but simply did not engage with it. Mr. Abramovich’s evidence was that, at the time, he had no problem whatsoever with the public assumption that Mr. Berezovsky was a shareholder, because, within Russia, Mr. Abramovich was anxious that he should indeed be publicly associated with a protector as influential as Mr. Berezovsky. As Mr. Abramovich said in his oral evidence :

However, I was referred to a number of Press and other public statements where the journalist speculated that Mr. Berezovsky was a shareholder in Sibneft. In my judgment, they cannot be regarded as evidentially reliable for the purposes of this trial. As the evidence showed, holdings in Russian companies were frequently opaque, as a result of the interposition of complex networks of holding companies whose ownership was unclear other than to the ultimate beneficial owners and their lawyers. There was nothing to suggest that the press statements were anything more than speculation and gossip by journalists and others with no means of actual knowledge.

Importantly, as and when formal statements were required as to whether he had an interest in Sibneft, Mr. Berezovsky himself expressly denied to the media that he had such an interest. For example:

In the newspaper The Kommersant Vlast dated 26 December 1995 he was reported as suggesting that he had failed to acquire an interest in the oil industry although the paper commented that “… rumours persist[ed] in the oil business community that Sibneft is a project of Berezovsky”.

When FNK acquired 51% of Sibneft at the auction in 1997, when the State had defaulted on the loan, Mr. Berezovsky immediately made a public statement to Reuters that he had “no ties to FNK”.

At the same time, in FSO Energy News, he was reported as referring to his position as a State official which barred him from business activity and denied that he had any connection with FNK.

However, the most significant piece of evidence in this context was not press reportage, but a statement included in an offering circular (“the Offering Circular”) issued by Salomon Brothers AG on 14 August 1997. The circular related to a proposed Eurobond issue of $150 million Floating Loan Participation Certificates and Loan Sub-Participations for the purpose of financing a loan to Sibneft. The Eurobond issue was traded on the New York Stock Exchange and was marketed in the West. It therefore had to satisfy standards of due diligence prevailing in Western capital markets. The Offering Circular set out a list of the registered shareholdings in Sibneft, immediately followed by the following statement

See page 16 of the Circular.

The evidence demonstrated that the American lawyers, Cleary, Gottlieb, Steen & Hamilton, as well as Salomon Brothers, had performed due diligence on matters such as share ownership prior to the issue of the Offering Circular

Tenenbaum 3rd witness statement, paragraph 9.

See page 43 of the Circular.

The evidence about the extent to which Mr. Berezovsky was consulted about this statement was disputed. I summarise it as follows:

In his oral evidence Mr. Berezovsky acknowledged that he was aware of the proposed Eurobond issue but denied that he was consulted about the terms of the statement. He claimed that he had not seen the Offering Circular until 1998, when he first saw it in the context of libel proceedings which he brought against Forbes magazine

Berezovsky Day 4, pages 82-83.

He was cross-examined about the following paragraphs in Dr. Nosova’s witness statement to the effect that she had been told by Mr. Berezovsky that Mr. Abramovich had consulted with him and Mr. Patarkatsishvili about the circular “… before it was published”:

He was then cross-examined about a passage in an attendance note prepared by Ms. Michelle Duncan, a solicitor at Cadwalader, his solicitors at the time, of a meeting in Tel Aviv with Mr. Patarkatsishvili and himself in November 2007. Ms. Duncan’s attendance note recorded Mr. Berezovsky saying as follows:

Again, Mr. Berezovsky denied that this was what he had said to Ms. Duncan. But, thereafter he seemed to be saying that he had indeed been at least “informed” by Mr. Abramovich about the circular in the following passage of cross-examination:

Oh yes. Sorry, sorry, sorry, my Lady. It’s my … I was not consulted by Mr. Abramovich, yes? I was informed by Mr. Abramovich that this is the certificate to get credit on the market for Sibneft company. That’s it. And he said that, ‘We worry about that Sibneft strong connect to you’. I said, ‘Roman’, I don’t remember, ‘Roman’, I said, I don’t remember, ‘Roman’ -- I said that I completely share their position to obtain the credit and, you know, ‘My position, it’s clear that I am -- I hold -- you hold my shares, but put in the way which you like to put but without damaging me’”.

Dr. Nosova had been sitting in court when Mr. Berezovsky gave his evidence. When she came to be cross-examined about the relevant passage in her witness statement, she attempted to put a gloss on what she had said in her witness statement in a number of inconsistent and confusing ways. At one stage she appeared to suggest that what she was referring to in her statement as “technically correct”, was another draft of the statement, which only related to legal interests in the shares; at another stage she seemed to be suggesting that what had been agreed with Mr. Abramovich and Mr. Shvidler, who were instructing the lawyers and the investment advisers on this circular, was that a statement which only referred to the legal interests in the shares would go into the circular, but this they had failed to do; at a yet further stage, she said that what had been agreed was that they would explain the real position to the lawyers and the investment advisers and get their advice as to whether or not it was possible to include a statement that covered only legal interests in the shares. What was clear however (from its reference number) was that the document which she had referred to in her witness statement was indeed the final version of the statement as it appeared in the circular, which was produced from Mr. Berezovsky’s own disclosure. I found Dr. Nosova’s evidence on this point unclear and unsatisfactory.

In his principal (third) witness statement, Mr. Abramovich referred to the statement in the Offering Circular as follows:

Mr. Abramovich was not cross-examined about whether any discussion had, or had not, taken place with Mr. Berezovsky about the wording in the circular. In the wholly different context of cross-examination about his education he said that, although he did not remember, it was most likely that he had indeed read the Offering Circular, before it went out, although he had had difficulties with it, as it had been in English. Mr. Rabinowitz submitted that this meant “he could not, therefore, have discussed the precise wording with Mr. Berezovsky (and did not claim that he had done so).” If indeed it was Mr. Berezovsky’s case that (irrespective of any specific discussion about the precise wording of the statement), he and Mr. Abramovich had agreed that a misleading statement was to go in the Offering Circular concealing the true facts about Mr. Berezovsky’s direct or indirect interests in, or entitlement to, Sibneft shares, because of Mr. Abramovich’s, or potential investors’, concerns about public association with Mr. Berezovsky, Mr. Abramovich should have been cross-examined directly on the point.

In his witness statement in relation to the offering circular Mr. Shvidler said as follows:

The reason why it was necessary to make a statement about Mr. Berezovsky in the Offering Circular was described by Mr. Tenenbaum. At the time, he was a director of Salomon Brothers, in London, and was part of the team working on the bid, although he himself was not directly involved in the due diligence exercise into share ownership. Subsequently he joined Sibneft in 1998 and thereafter became a close business associate and colleague of Mr. Abramovich. In his written evidence he gave the following explanation as to why Salomon Brothers and Cleary Gottlieb perceived it necessary for there to have been a specific statement about Mr. Berezovsky’s position:

On the basis of this and other relevant evidence, I conclude that, despite his denial, the probability is that Mr. Berezovsky and Dr. Nosova, or at least someone in Mr. Berezovsky’s team, probably did see the statement in the Offering Circular before it was published, but did not discuss its wording with Mr. Abramovich. Although there was no direct evidence on the point, the strong inference must be that someone from the due diligence team at Salomon Brothers and Cleary Gottlieb, or from Sibneft’s own English lawyers, Frere Cholmeley Bischoff, would have confirmed the statement with him, with Mr. Patarkatsishvili, and/or with someone in Mr. Berezovsky’s office, before its inclusion. This was clearly a material statement in the context of this offering, for which the company and its directors would have taken responsibility, and one in respect of which a high degree of due diligence was, in the circumstances, necessary, given the structure of the registered shareholdings and the adverse, and in certain cases, defamatory, press reports about Mr. Berezovsky, such as the 1996 Forbes article which were in the public domain at the time.

If Mr. Berezovsky did not see the statement in the Circular, or a draft, at the time, then it is difficult to see how his statement to Ms. Duncan and the evidence of Dr. Nosova could have been anything other than wholly fabricated. But on either basis, I do not accept Mr. Berezovsky’s evidence that he and Mr. Abramovich agreed that a false statement should be included in the Offering Circular to conceal the true nature of his interest in Sibneft, whether because of investors’ concerns or for some other reason. I find that he and Dr. Nosova appreciated that the statement in the Offering Circular (whether or not he saw it) presented real difficulties in the way of his case and that it was accordingly necessary for a story to be concocted that laid the blame for the inclusion of such statement in the Offering Circular on Mr. Abramovich.

In 1998, Mr. Berezovsky brought a libel action in the English High Court, Queen’s Bench Division, 1997 B No. 240, against Forbes Inc in respect of the 1996 Forbes magazine article referred to above. The defendants made an application to strike out the claim on the grounds that Mr. Berezovsky had no sufficient reputation in England to protect. In opposition to the application, Mr. Berezovsky relied upon an affidavit from Mr. Shvidler dated 11 September 1998, which he had asked Mr. Shvidler to supply. The affidavit was drafted by solicitors at Carter Ruck, the firm acting for Mr. Berezovsky’s in the libel action. The affidavit expressly referred to the 1997 Offering Circular and exhibited it. Mr. Shvidler said as follows:

In his oral evidence, Mr. Berezovsky claimed that he had been extremely cross when he read Mr. Shvidler’s affidavit, not only because he saw the Offering Circular for the first time, and what had been said in that document, but also because he had wanted Mr. Shvidler to describe in the affidavit “… in terms which coincide with reality”, the nature of his interest in Sibneft, whereas Mr. Shvidler had effectively put it more strongly than that. He claimed that Mr. Shvidler had:

In Mr. Abramovich’s written closing submissions, it was submitted that the statements made by Mr. Shvidler in his Forbes affidavit were, as Mr. Berezovsky must have appreciated at the time, wholly misleading if what he said about the terms of the alleged 1995 and 1996 Agreements were true. Mr. Rabinowitz on the other hand submitted that such criticism was unjustified because:

As a preliminary point, the Forbes affidavit of Mr. Shvidler contradicted Mr. Abramovich’s case in this action, and Mr. Shvidler’s evidence, which was to deny that Mr. Berezovsky ever had a shareholding in Sibneft.

Mr. Berezovsky explained in his evidence that he considered the statement made by Mr. Shvidler to be true, because he did not hold any shares in Sibneft, and only had an interest in Sibneft under his agreement with Mr. Abramovich: as he said, “It’s written that I [don’t] have ‘any shareholding’. It’s absolutely correct written here

Berezovsky Day 4, page 88.

The criticism was itself very unfair given that the distinction between a “shareholding” - used to mean direct legal ownership of shares in a company - and an interest in the company not comprising direct legal ownership of its shares, which was one drawn and relied on by Mr. Abramovich and his own witnesses (in particular Mr. Tenenbaum), as well as by Mr. Berezovsky.

Having heard Mr. Berezovsky’s evidence on the matter, I conclude that these statements in Mr. Shvidler’s affidavit, taken in their context, would indeed have been highly misleading statements, if Mr. Berezovsky’s case about the alleged 1995 and 1996 Agreements had been true. That was particularly so in circumstances where the Offering Circular was also put in evidence in the Forbes litigation, albeit with no direct reference to the statement contained in it. If Mr. Berezovsky were really angry, as he suggested, with Mr. Shvidler when he first saw the content of the Offering Circular, and Mr. Shvidler had accepted that criticism, as Mr. Berezovsky also suggested, it is highly unlikely that Mr. Shvidler would have expressed himself in his affidavit in the way that he did, or have exhibited the Offering Circular, without explaining that, although Mr. Berezovsky was not a registered shareholder, and contrary to what was expressly stated in the Offering Circular, Mr. Berezovsky did indeed have an enforceable interest or entitlement to Sibneft shares and to participate in its profits. If Mr. Berezovsky, by his reference to the fact that the statement in the Offering Circular “could be very useful for me” was suggesting that he and Mr. Shvidler had deliberately agreed to deploy the statement in the Forbes litigation, notwithstanding that it was untrue, that was an allegation of dishonesty that should have been expressly put to Mr. Shvidler in cross-examination and was not.

Nor was the suggestion put to Mr. Shvidler that the statement in paragraph 1 of his Forbes affidavit (“… whilst he no longer has any role in the management of the company nor any shareholding …”) [Emphasis supplied] contradicted Mr. Abramovich’s case in this action: that Mr. Berezovsky had never had a shareholding in Sibneft. There was nothing in the other points made by Mr. Rabinowitz but it is not necessary for me to deal with them in detail.

Other public statements made by Mr. Berezovsky were similarly misleading if indeed he had had a contractual entitlement, together with Mr. Patarkatsishvili, to a 50% interest in such shares, or to have Sibneft shares transferred to him. For example, in an interview in July 1999, when he held no public office, Mr. Berezovsky was reported as saying in an interview with Vremya MN:

No public claim was made by Mr. Berezovsky to the effect that he was a substantial shareholder in Sibneft until 27 June 2001, when he made an announcement in Kommersant (a newspaper owned by him) to the effect that he owned half of Sibneft. According to a report published in The Moscow Times the following day, Mr. Berezovsky said that “… his shares in Sibneft were being managed by a team overseen by” Mr. Abramovich and that he, Mr. Berezovsky, did not “keep close tabs on the stake”. The Moscow Times commented that Mr. Berezovsky’s announcement:

In my judgment, the evidence relating to this issue undermines Mr. Berezovsky’s case and supports that of Mr. Abramovich. It also demonstrates Mr. Berezovsky’s ability to use his access to media reportage to further his particular commercial goal at any one time. The timing of this statement was curious, to say the least. On Mr. Berezovsky’s own case, in this action, prior to the date of the interview (27 June 2001), he had recently parted with his alleged interest in Sibneft pursuant to an agreement referred to as the Devonia Agreement, which was entered into on 5 June 2001 and said to have become effective on 12 June 2001. I deal with the agreement in greater detail below, but, in summary, it provided, or purported to provide, for the sale by Mr. Berezovsky and Mr. Patarkatsishvili to Devonia Investments Ltd of their beneficial interests in 2,062,335,000 Sibneft shares. In cross-examination Mr. Berezovsky suggested that he made the announcement to encourage Mr. Abramovich to keep up payments of $1.3 billion (which the latter had agreed to make at that time).

I reject that explanation. The documentary evidence obtained from the files of Clydesdale Bank and other circumstantial evidence clearly demonstrated that the statement had been made to the press in order to provide material to satisfy the bank’s money-laundering enquiries into the provenance of the funds. Mr. Curtis, Mr. Berezovsky’s solicitor at the time, had been trying to satisfy the bank of the existence of the interest being sold. Mr. Curtis had written to Mr. Fomichev, Mr. Berezovsky’s financial assistant, on 1 June 2001 saying that the bank was likely to require more information, and suggesting that Mr. Fomichev should find some press copy supporting its existence. There was no such copy, as Mr. Berezovsky had not previously claimed in public to have any interest in Sibneft, and the Offering Circular asserted that he did not. The press cutting was sent to Mr. Curtis shortly after it appeared, and was duly supplied by Mr. Curtis to the bank.

The conclusion which I reach is that the reason why Mr. Berezovsky made a press statement that he owned a large part of Sibneft, three weeks after he claimed to have disposed of it pursuant to the Devonia Agreement, was that he needed to do so in order to generate press copy to satisfy the bank’s money-laundering enquiries. Mr. Berezovsky himself admitted in cross-examination that his press announcement, if not a lie, was at least “disinformation”, a comment typical of Mr. Berezovsky’s flexible attitude to the truth. It was certainly not a statement that could be relied upon to support his case as to any interest under the alleged 1995 and 1996 Agreements in Sibneft.

Apart from private conversations with friends, associates and employees (which I deal with below), Mr. Berezovsky and Mr. Patarkatsishvili first began to claim to third party professional advisers that they were major shareholders in Sibneft sometime in 2000, when they were in the process of setting up offshore structures which were to hold their assets. As Mr. Jenni explained, as a result of the Aeroflot case, Mr. Berezovsky and Mr. Patarkatsishvili had experienced problems in 1999 in Switzerland, involving the sequestration of their funds and the blocking of their bank accounts as a result of a request for legal assistance by the Russian prosecutors. Although Mr. Jenni tried to suggest that the principal purpose of the exercise of setting up offshore structures was a wish on the part of Mr. Berezovsky and Mr. Patarkatsishvili to “structure their relationship in a way that it was clear who was holding what shares in what”, there was little doubt that the real driver was to establish a complex structure of trusts and companies, with the assistance of Swiss confidentiality laws, in order to protect their assets from attack from the Russian authorities.

To this end, at some date in 2000 Mr. Berezovsky and Mr. Patarkatsishvili were introduced to a Mr. Christopher Samuelson (“Mr. Samuelson”) of Valmet Trust Group (“Valmet”), trust and corporate service providers. After an original presentation by Mr. Samuelson, various meetings appear to have taken place in August and September 2000 to explore, on behalf of Mr. Patarkatsishvili and Mr. Berezovsky, the setting up of offshore structures into which they could place their assets. Some meetings with Valmet staff were attended by the two men themselves, and their in-house advisers, such as Mr. Fomichev, Mr. Kay and Dr. Nosova, as well as Mr. Jenni; others were merely attended by the in-house advisers.

Mr. Rabinowitz relied upon various documents, compiled by Mr. Berezovsky’s and Mr. Patarkatsishvili’s advisers as part of this process, that appeared to refer to some kind of interests in Sibneft and RusAl. These included:

An undated explanatory memorandum (“the Explanatory Note”) which referred to a payment of $100 million commission to Mr. Patarkatsishvili

I refer to this Explanatory Note further in the context of the RusAl issues.

a list of documents dated 21 April 2000; apparently connected to the Explanatory Note; although this document referred to Mr. Jenni, he denied that he had ever seen it;

a structure chart which indicated four companies labelled as “Sibneft” purchasing certain of the underlying aluminium assets

I likewise refer further to this structure in the context of the RusAl issues.

an inter-office memorandum prepared by Mr. Samuelson of Valmet dated 5 September 2000 (“Mr. Samuelson’s Inter-Office Memorandum”);

an email from Mr. Samuelson to Mr. Maillard attaching structure charts for the Hotspur and Octopus Trusts.

Mr. Samuelson’s Inter-Office Memorandum gave a flavour of the nature of these documents. He recorded in the document his introduction to Mr. Berezovsky and Mr. Patarkatsishvili, and their plan to use offshore structures. The memorandum included the following passages:

Mr. Jenni said that the explanation of the source of the funds came from Mr. Fomichev, who, by late 2000, was closely involved in the management of Mr. Berezovsky’s finances. Mr. Jenni himself did not know the details of what he referred to as Mr. Berezovsky’s participation in Sibneft.

On 11 October 2000, Mr. Ian Gardiner of Valmet prepared a memorandum recording a meeting which he had had the previous day. Mr. Bond and Mr. Samuelson of Valmet were both present, as were Mr. Fomichev, Dr. Nosova, Mr. Jenni, and Mr. Kay, “… and at one point during the meeting Mr. Borris Berisovsky [sic] attended the meeting for a couple of minutes”. The memorandum recorded as follows:

In January 2008, Mr. Samuelson was interviewed by the French and Swiss authorities during the course of criminal investigations into Mr. Berezovsky’s affairs. In the course of that interview, Mr. Samuelson explained that he first met Mr. Berezovsky in Cap d’Antibes in 1999

I suspect that this should have been a reference to 2000, given the dates of the various memoranda and the reference in Mr. Samuelson’s Inter-Office Memorandum to “our new clients”.

This was wrong, since on any basis Mr. Berezovsky’s and Mr. Patarkatsishvili’s claim to an interest in RusAl was never for more than 50% of Mr. Abramovich’s 50% holding.

Mr. Rabinowitz submitted that it was inconceivable that Mr. Berezovsky and his team had given instructions to Valmet to put Mr. Berezovsky’s interests in Sibneft (and for that matter, RusAl) into formal structures, in the terms set out in these documents, unless – at the very least – Mr. Berezovsky and his team believed that Mr. Berezovsky had such interests. He also submitted that Mr. Abramovich could provide no coherent reason why in early 2000 Mr. Berezovsky should be asserting to his professional advisers that he had interests in assets, if indeed he did not do so.

I disagree. The evidence clearly showed that by the beginning of 2000 Mr. Berezovsky not only was keen to have his assets held outside Russia so as “to provide protection from political attacks” but also appreciated that

As Mr. Sumption submitted, and I accept, the fact that Mr. Berezovsky and Mr. Patarkatsishvili, or possibly Mr. Fomichev on their behalf

As Mr. Jenni said in his oral evidence.

Such as Mr. Fomichev or Mr. Joseph Kay.

As was submitted on behalf of Mr. Abramovich

See paragraphs 434 -435 of his written closing submissions.

Whilst in ordinary circumstances, the fact that information of this kind was being imparted to third party professional advisers might carry some weight, in the particular circumstances in which Valmet was being giving such instructions, I cannot attribute much, if any, weight to them. The evidence showed that Mr. Berezovsky made inconsistent statements in public and in private about his assets, and that, by this stage, Mr. Berezovsky, Mr. Patarkatsishvili and their staff were extremely concerned by the need to satisfy Western money-laundering regulations, at a time when they were trying to shelter their assets in offshore trusts and companies, and were receiving very large sums of money from undocumented sources.

Moreover, it was clear from the evidence that on occasions professional advisers and other third parties were told that Mr. Berezovsky and Mr. Patarkatsishvili had shareholdings or other interests in capital assets, when they simply did not do so. For example, Mr. Samuelson’s Inter-Office Memorandum referred to Mr. Berezovsky and Mr. Patarkatsishvili “… own[ing] a large stake in Aeroflot”, and the Explanatory Note listed Aeroflot as one of Mr. Berezovsky’s and Mr. Patarkatsishvili’s business interests. Likewise Mr. Curtis told Clydesdale Bank in 2001, presumably on the basis of what he had been told by Mr. Berezovsky or Mr. Patarkatsishvili, or one of their staff, that Mr. Berezovsky “has shares in Aeroflot and receives Russian flyover fees”. Mr. Berezovsky’s English accountants, PwC, were also subsequently told that he had an interest in Aeroflot in the course of their investigation of his tax affairs. However the reality was (as Mr. Berezovsky accepted), that these statements were untrue and in fact the two men had no more than an income stream derived from the management of Aeroflot’s non-rouble treasury operations by the Swiss company Andava.

The fact that Mr. Berezovsky, or members of his staff, were prepared to tell lies for the purposes of persuading the bank and others that an undocumented income stream from Aeroflot was legitimate income generated from a capital asset, does not provide me with any confidence that I should accept Mr. Berezovsky’s contention that similar statements made to third parties as to his shareholding or interests in Sibneft are to be regarded as corroborative evidence of his case in relation to the alleged 1995 and 1996 Agreements.

I deal with these materials in greater depth in the section of this judgment relating to the RusAl issues.

Mr. Berezovsky also sought to rely on statements which he, or Mr. Patarkatsishvili, had made to friends and staff to the effect that he and Mr. Patarkatsishvili owned a large stake in Sibneft. I did not find such evidence to be of any real corroborative weight or assistance in my assessment of the truth of Mr. Berezovsky’s case. None of the statements were recorded in writing; the witnesses who spoke about them had been loyal and close friends of Mr. Berezovsky for many years; and some had received financial support from him. It was unclear precisely what Mr. Berezovsky had told them about his alleged “interest”, and when. The evidence given by such persons was vague.

The evidence of Mr. Vladimir Voronoff was typical of this type of witness. He had been a very close friend of Mr. Berezovsky since 1994. In 2002 Mr. Berezovsky had bought him a flat to live in, in Holland Park Avenue, London. Mr. Berezovsky retained ownership of the flat. Mr. Voronoff did not suggest in his evidence that he made any payment in respect of his occupation of the flat. Apart from some meetings with potential Western investors, which came to nothing, because no Western investor was prepared to take the risk, he had had no involvement in the creation or acquisition of Sibneft. He admitted that what he knew “was all sort of second-hand information

Voronoff Day 12, pages 142-143.

In paragraph 28-30 of his witness statement, he said:

He appeared to suggest that in the fairly close circle of friends “certain things were just taken entirely for granted

Voronoff Day 12, pages 143-144.

Voronoff Day 12, pages 144-145

It was clear from his cross-examination that his recollection and his understanding were extremely vague and that they both derived from what he had been told by Mr. Berezovsky and Mr. Patarkatsishvili. The following passage serves as an illustration:

I was unable to place any serious weight on Mr. Voronoff’s evidence as supporting Mr. Berezovsky’s case.

My conclusions are similar in relation to the evidence of Mr. Alexander Davidovich Goldfarb, another close friend of Mr. Berezovsky’s. Mr. Goldfarb had been employed by Mr. Berezovsky for a brief period in 1997/98, when he provided political consultancy services to Mr. Berezovsky from New York. Thereafter he had been employed by him from late 2000-2006 as the chief operating officer of Mr. Berezovsky’s International Foundation for Civil Liberties, which Mr. Goldfarb established in New York and of which Mr. Berezovsky was the sole funder. From 2006, the activities of this foundation reduced. Nonetheless, Mr. Goldfarb continued to be paid consultancy fees by Mr. Berezovsky thereafter. He said that, in the period from 2006, approximately 40-50% of his time was spent working for Mr. Berezovsky or his entities, and that, in the period from 2001 – 2006, approximately 40-50% of his income derived from Mr. Berezovsky. He said that Mr. Berezovsky had introduced Mr. Abramovich to him as his “partner”, but his recollection was very vague

Goldfarb Day 13, pages 25-26.

Goldfarb 1st witness statement, paragraphs 30-31.

Goldfarb Day 13, page 27.

Likewise, I was unable to place any serious weight on the evidence of Mr. Leonid Nevzlin as to his belief that Mr. Berezovsky was a shareholder in Sibneft. Mr. Nevzlin was another longstanding friend of Mr. Berezovsky. He had been inter alia President of Bank Menatep, Vice President of Yukos in 1996, and later First Deputy Chairman of the Yukos-Moscow board. He had left Russia on 31 July 2003 and moved to Israel in August 2003, before becoming an Israeli citizen later that year.

His evidence in relation to Sibneft can be briefly summarised as follows. In his written statement, he said:

Like Mr. Berezovsky, Mr. Nevzlin is also a fugitive from Russia. He described his personal position in his witness statement as follows:

Mr. Nevzlin gave his evidence through a translator and by means of a video link connection from New York. Despite these practical constraints, I was not impressed with him as a witness. A few days before Mr. Nevzlin gave his evidence, Mr. Berezovsky had, in the middle of this trial, gone to Tel Aviv. The two men had met and they had discussed the case. According to Mr. Nevzlin, what had been discussed was

Whilst per se there is nothing inherently surprising or suspicious about such discussion, I formed the impression that Mr. Nevzlin had crafted his evidence to suit Mr. Berezovsky’s case. As his witness statement and his oral evidence made clear, because of what Mr. Nevzlin regarded as Mr. Abramovich’s obstructive and opportunistic approach to two successive proposals for a merger between Sibneft and Yukos, he was antagonistic towards Mr. Abramovich. Both in his witness statement and in cross-examination, he was tendentious and expressed opinions about matters in respect of which he had no knowledge. His evidence was undermined to a considerable extent in cross-examination. He had not been personally involved in the Sibneft project, the loans-for-shares auction or the subsequent privatisations

Nevzlin Day 15, page 58; Day 15, page 64.

Nevzlin Day 15, page 86.

Mr. Nevzlin also repeated in cross-examination his evidence about what Mr. Khodorkovsky had told him at the time of the abortive Yuksi merger project of 1998, albeit in slightly different terms from paragraph 20 of his witness statement. Initially he said that Mr. Khodorkovsky had told him that he, Mr. Khodorkovsky, had seen:

Subsequently he said that Mr. Khodorkovsky had not told him “anything about whether these were signed or not signed”; and asserted that the translation had been wrong, and what he had said was that:

It was apparent that Mr. Nevzlin could say very little about the alleged documents. Mr. Abramovich’s evidence is that no such documents existed

Abramovich 4th witness statement, paragraph 37 .

In the circumstances I cannot attach any significant weight to Mr. Nevzlin’s evidence.

Mr. Rabinowitz submitted that Mr. Berezovsky’s case on the alleged 1995 Agreement was supported and corroborated, and Mr. Abramovich’s case shown to be untrue, by some undated handwritten notes referred to in these proceedings as “the Curtis notes”. The notes were written by a solicitor, Stephen Curtis, a former partner in Curtis & Co, who died on 3 March 2004. He acted for Sheikh Sultan and his companies (Spectrum and Devonia) in relation to the sale of Mr. Berezovsky and Mr. Patarkatsishvili’s shares in ORT and in relation to the Devonia transaction, to which I refer below. The notes purported to record a meeting with Mr. Patarkatsishvili at his house in Georgia in the summer of 2003, attended by Mr. Curtis, Mr. Fomichev, Mr. Tenenbaum and an unidentified fourth participant named “Igor”.

In relation to Sibneft, the notes purport to record Mr. Patarkatsishvili stating:

Given their author, the circumstances in which they were produced and the evidence of the only participant in the meeting to have been called as a witness, namely Mr. Tenenbaum, I conclude that they are of very little evidential weight. In my judgment I cannot rely upon them as providing any real support for Mr. Berezovsky’s case in relation to Sibneft. I address the evidence relating to the Curtis notes in more detail in the context of the issues relating to RusAL.

Mr. Rabinowitz submitted that Mr. Berezovsky’s account of the alleged 1995 and 1996 Agreements was also corroborated by a considerable body of evidence given in other proceedings. He referred in particular to the Valmore and Summit Proceedings. These were proceedings issued on 21 April 2008, in the Chancery Division of the Supreme Court of Gibraltar by Miselva Etablissement, a Liechtenstein trust company (“Miselva”), and Nexus Treuhand AG, a Swiss trust company (“Nexus”) (“the Gibraltar proceedings”). Nexus was the trustee of a trust called the Valmore Trust. Miselva was a trustee of a trust called the Summit Trust. Nexus and Miselva, as the claimant trustees, sought directions from the court as to how to distribute the assets of the two trusts. The defendants to the claim were Ms. Gudavadze, Mr. Patarkatsishvili’s widow and one of the Family Defendants; Joseph Kay; Iya Patarkatsishvili and Liana Zhmotova, daughters of Mr. Patarkatsishvili by his marriage with Ms. Gudavadze; and Fallon Invest & Trade Inc, a British Virgin Islands company and protector of the Valmore and Summit Trusts.

Mr. Rabinowitz relied upon the following evidence in the Gibraltar proceedings:

evidence given by Mr. Samuelson to the effect that Mr. Berezovsky and Mr. Patarkatsishvili had each established trusts to receive sale proceeds from their Sibneft interests;

evidence given by Ms. Gudavadze, to the effect that Mr. Patarkatsishvili had “sold part of his assets”, agreeing that “He sold Sibneft, he sold ORT, he sold his interest in RusAl”;

evidence given by a Mr. De La Paz, an adviser of Mr. Kay, to the effect that Mr. Patarkatsishvili had held interests in Sibneft, ORT and RusAl;

the fact that, in those proceedings, it was the Family Defendants’ case that Mr. Berezovsky and Mr. Patarkatsishvili had sold their interests in Sibneft to Mr. Abramovich, via Devonia.

On 20 August 2008, North Shore Ventures Limited (“North Shore”), issued proceedings in the Chancery Division of the High Court in London against Anstead Holdings Inc (“Anstead”) (“the North Shore proceedings”). In those proceedings North Shore, a company incorporated in the British Virgin Islands and affiliated with Mr. Berezovsky, claimed repayment of the outstanding portion of a loan of $50 million, made to Anstead pursuant to a written agreement dated 14 March 2003, together with interest. North Shore also sued Mr. Fomichev and Vasily Peganov, shareholders in Anstead who had guaranteed Anstead’s obligations under the loan agreement.

Mr. Rabinowitz relied in particular upon the evidence given by Mr. Fomichev the North Shore proceedings, to the following effect:

In relation to the initial discussion of the loan made to Anstead Holdings Limited, Mr. Fomichev said in oral evidence:

In relation to the provenance of the loan monies, Mr. Fomichev said as follows:

In cross-examination, when questioned about how the terms of the loan from North Shore to Anstead could have been agreed orally between the parties, Mr. Fomichev said:

Mr. Rabinowitz also relied upon what the trial judge, Newey J, said in relation to “the Sibneft transaction” in the following passage of his judgment:

In this context, Mr. Rabinowitz submitted that:

The Court should accept Mr. Fomichev’s evidence in this respect on the grounds that it:

Witnesses for both sides in the North Shore proceedings had made reference to “the Sibneft transaction”; had they not believed the transaction to have been genuine, it is reasonable to suppose they would not have spoken about it at all whilst under oath.

Mr. Fomichev’s oral evidence about the Sibneft transaction was consistent with that of the other witnesses, including Mr. Berezovsky and Dr. Nosova (amongst others), whom the trial judge had held to be truthful.

Since the nature of the Sibneft transaction was not in issue in the North Shore action, it is probable that Mr. Fomichev told the truth about it: what he said would have no impact on the issues in the case, and there was therefore no reason for him to lie.

I conclude that little weight, if any, can be attached to the evidence given in the Gibraltar proceedings or in the North Shore proceedings, in relation to Sibneft. Neither Mr. Abramovich, nor any related company of his, was party to such proceedings and neither he, nor they, had any interest or involvement in them. They were classic - if one is permitted to use the Latin tag - res inter alios acta.

My reasons for this conclusion, in summary, are as follows:

The dispute in the Gibraltar proceedings was one between Mr. Patarkatsishvili’s family and Mr. Kay; the principal issues were:

who had settled the assets of the Valmore and Summit trusts;

who was to be regarded as the “real settlor of each asset”; and

whether trusts known as the Valmore and Summit Trusts had been established primarily for the benefit of Mr. Patarkatsishvili’s family (comprising for these purposes, Ms. Gudavadze, Ms. Patarkatsishvili and Mrs Zhmotova); or, alternatively, whether they had been established for the benefit of Mr. Kay.

Thus the issue whether Mr. Berezovsky or Mr. Patarkatsishvili had a shareholding interest or entitlement in Sibneft, or merely an income stream or cash payment “entitlement” under an arrangement with Mr. Abramovich, which related to Sibneft, was simply not an issue in contention in the Gibraltar proceedings. There was no doubt that substantial payments had indeed been received by Mr. Berezovsky and Mr. Patarkatsishvili. It was not in the least surprising in the circumstances that that all parties proceeded on the assumption that they derived from some sort of “interest in Sibneft”.

The evidence given by Mr. Samuelson was dependent upon, and derived from, what he had been told by Mr. Berezovsky and his in-house advisers. I have already addressed the quality of the instructions which he was given above. Mr. Berezovsky did not choose to call Mr. Samuelson in these proceedings.

Evidence given by other advisers to Mr. Berezovsky, Mr. Patarkatsishvili or by Mr. Kay (or by his adviser) was similarly dependent upon what they had been told by Mr. Berezovsky or Mr. Patarkatsishvili. It was not suggested that they had any direct knowledge of the alleged 1995 and 1996 Agreements. Similar comments may be made about the evidence given by the Family Defendants or the case presented on their behalf. There was simply no need to explore the detail of the so-called “Sibneft interest” in those proceedings.

Mr. Fomichev, who was Mr. Berezovsky’s general financial factotum from 1999 onwards, was described by Mr. Berezovsky in his evidence in the North Shore litigation, as “the only person who knew everything” in the period after his flight from Russia in October 2000. He told Mr. Samuelson in 2000 that Mr. Fomichev was “effectively the most trusted lieutenant of BB and AP, who handles their personal affairs”. He was not called as a witness in these proceedings by Mr. Berezovsky. The latter regarded Mr. Fomichev as a “crook” against whom one of his companies had an outstanding judgment, as a result of the North Shore proceedings, for over $35 million. Mr. Fomichev was not present at the time of the making of the alleged 1995 and 1996 Agreements, so again his evidence would have derived from his understanding, or interpretation, of what Mr. Berezovsky or Mr. Patarkatsishvili told him. Whilst one can understand Mr. Berezovsky’s reluctance in such circumstances to call Mr. Fomichev, given his absence as a witness in these proceedings, I would be reluctant to place any weight on his evidence in the North Shore proceedings, where the relevant issue for present purposes simply did not arise for determination. The fact that his evidence on this point was - not surprisingly – not contested by Mr. Berezovsky hardly makes it more valuable. That view is reinforced by my view as to Mr. Fomichev’s conduct in connection with the Devonia transaction, to which I refer below. I also deal, in the RusAl section of this judgment, with Mr. Rabinowitz’s argument that adverse inferences should be against Mr. Abramovich for his failure to call Mr. Fomichev.

Mr. Kay, who was a relative of, and formerly aide and adviser to Mr. Patarkatsishvili, was held in the Gibraltar proceedings to have forged documents. Similar considerations apply to him as to Mr. Fomichev.

In the circumstances, the comments in the judgments of Newey J in the North Shore proceedings and of the Gibraltar Court in the Gibraltar proceedings are of no assistance in relation to my determination of the issues relating to Sibneft.

Mr. Rabinowitz submitted that Mr. Patarkatsishvili’s proofs of evidence and proofing notes corroborated Mr. Berezovsky’s account of the alleged 1995 Agreement, and demonstrated that Mr. Abramovich’s recent attempts to re-categorise that relationship as one of krysha to be false. He pointed to the evidence of statements made by Mr. Patarkatsishvili during his proofing sessions which, Mr. Rabinowitz claimed, unequivocally recognised that Sibneft was jointly owned by Messrs Berezovsky, Patarkatsishvili and Abramovich. By way of example, he referred to the notes prepared by Mr. Andrew Stephenson, a partner in Carter-Ruck, Mr. Berezovsky’s solicitors at the time, taken at a meeting in June 2005 at Mr. Patarkatsishvili’s home in Tbilisi. These notes record the following:

Mr. Rabinowitz also referred to the notes of another solicitor, Mr. James Lankshear, of Streathers, another firm acting for Mr. Berezovsky at the time. His notes of the same meeting similarly recorded:

Mr. Rabinowitz also submitted that such evidence was confirmed by the evidence of Ms. Michelle Duncan, a partner at Cadwalader, solicitors, who subsequently acted for Mr. Berezovsky in these proceedings. She gave evidence based on a meeting which she had had with both Mr. Patarkatsishvili and Mr. Berezovsky in Tel Aviv in November 2007. She understood Mr. Patarkatsishvili’s position to be that Sibneft was acquired 50:50 between Mr. Abramovich, on the one hand, and Mr. Berezovsky and Mr. Patarkatsishvili on the other. Mr. Ian McKim, a barrister at Cadwalader working on the case at the time, was also at the meeting and gave similar evidence.

In my judgment, it is not possible to attach any significant weight either to the proofing notes of what Mr. Patarkatsishvili said in 2005 and 2007, or indeed the (very) draft “proofs of evidence” produced by the solicitors as corroborative of Mr. Berezovsky’s case. Neither the notes nor the draft proofs were ever sent to Mr. Patarkatsishvili for his approval or comment.

By the time of the meeting in Tbilisi in 2005, Mr. Berezovsky had already decided to bring proceedings against Mr. Abramovich. Mr. Patarkatsishvili was clearly willing to assist Mr. Berezovsky in formulating his claim, but not, apparently, prepared to be a co-claimant. According to Ms. Duncan’s evidence, by the date of the Tel Aviv meeting in 2007, Mr. Patarkatsishvili’s position was that he still had relations with Mr. Abramovich, and hoped that he might be able to resolve the matter with Mr. Abramovich, but there was a possibility that he, Mr. Patarkatsishvili, would join Mr. Berezovsky’s action later. At the meeting in 2005, Dr. Nosova was present and, according to a draft proof of evidence prepared by Mr. Stephenson and Mr. Lankshear, translated Mr. Patarkatsishvili’s evidence into English (except over lunch, when Mr. Patarkatsishvili’s wife did so). The proof recorded that “At other times, Mr. Patarkatsishvili spoke English”. At the meeting in 2007, where Mr. Berezovsky was present throughout, both Ms. Duncan and Mr. McKim said that Mr. Berezovsky did most of the talking, and indeed, Ms. Duncan’s subsequent (2011) attribution of who said what at the meeting suggests that it was Mr. Berezovsky who was referring to the 50:50 split of share ownership and profit entitlement in relation to Sibneft. Accordingly, it is highly likely that the statements recorded as having been made by Mr. Patarkatsishvili were not only based upon discussions with Mr. Berezovsky and/or Dr. Nosova as to how best to present Mr. Berezovsky’s case, but also self-serving.

By the time of the interviews, both Mr. Patarkatsishvili and Mr. Berezovsky had made numerous representations to Western professionals which allowed funds to be moved by them in the west and which would have been wholly undermined if Mr. Patarkatsishvili had departed from them. Moreover, such representations had been supported by documents produced for that purpose. Had Mr. Patarkatsishvili now given any other account as to the source of their funds, it would have harmed not only the interests of his friend, Mr. Berezovsky, but his own. It is unsurprising that he chose not to do so. What Mr. Patarkatsishvili did not do, however, at any stage, was to threaten or assert any claims against Mr. Abramovich.

The unreliability of the notes is demonstrated, for example, by what Mr. Patarkatsishvili is recorded as having said about the financing of the acquisition of the 51% interest in Sibneft. In the proof prepared by Messrs Stephenson and Lankshear after the meeting, the following is recorded:

That passage reflected what had been recorded in both Mr. Stephenson’s and Mr. Lankshear’s notes. It was clearly incorrect in a number of respects:

Mr. Abramovich’s Trading Companies had provided in excess of $17 million;

Mr. Patarkatsishvili and Mr. Berezovsky did not provide “… the remainder of the capital”, or, indeed, any capital from their own resources;

Mr. Patarkatsishvili and Mr. Berezovsky did not “pledge assets” or “obtain bank credits”; and

it was not Mr. Berezovsky who raised the finances.

The draft proof of evidence was sent to Dr. Nosova. It was never sent to Mr. Patarkatsishvili. Similarly, a subsequent draft statement prepared by Mr. McKim was not sent to Mr. Patarkatsishvili. Nor were the attendance notes.

Taken at face value, and put at their highest, the notes recording Mr. Patarkatsishvili’s statements about 50:50 shareholdings and 50:50 profit share undoubtedly support Mr. Berezovsky’s case. They also reflect what appears to be Mr. Patarkatsishvili’s sense of entitlement to a 50:50 interest in Sibneft.

But given the date at which, and the circumstances under which, the proofing materials were compiled, and the inevitable absence of Mr. Patarkatsishvili for cross-examination on their content, I do not regard them as having sufficient evidential weight to persuade me not to accept Mr. Abramovich’s evidence on the issues which the notes address. Ultimately, the notes reflect self-serving statements by Mr. Patarkatsishvili and Mr. Berezovsky. They are not corroborative evidence as to the terms of the alleged 1995 and 1996 Agreements, or any legal entitlement to an interest in Sibneft.

I deal with these topics in subsequent section of this judgment: the payment of $1.3 billion is dealt with in Sections XI and XII; the payment of $585 million is dealt with in Section XV. My conclusion, as stated, is that the evidence relating to these payments does not support Mr. Berezovsky’s case.

Mr. Rabinowitz submitted that the nature and constant shift of Mr. Abramovich’s case on krysha could not be the product of any honest mistake on his part, but rather was a deliberate strategy agreed with other witnesses. He submitted that there was no allegation of krysha in the defence; that it had been redefined at trial to extend no further than lobbying; that the allegation that the krysha provided went beyond lobbying to include physical protection had been abandoned; that, Mr. Abramovich could not even identify any alleged acts of krysha provided by Mr. Berezovsky after 1995; and that the constantly shifting sands of Mr. Abramovich’s case on krysha served only to demonstrate its obvious falsity.

I do not accept these submissions, which were not supported by the evidence. The Defence had always referred to the provision of Mr. Berezovsky’s personal and political influence to benefit Mr. Abramovich, and Mr. Berezovsky’s provision of “protection” in respect of Sibneft: see in particular paragraphs D32, D33 and D45.2. It had always been part of Mr. Abramovich’s pleaded case that Mr. Patarkatsishvili had provided physical protection in respect of RusAL; see paragraph D59. Whilst I accept that there was some lack of clarity in Mr. Abramovich’s pleaded case, Mr. Sumption stated the position perfectly clearly in his oral opening submissions, as well as in his closing submissions. The detailed nature and extent of the relationship was one essentially for evidence and Mr. Abramovich had fully set out the position in his witness statement. In cross-examination Mr. Abramovich gave a plausible explanation as to why the word krysha had not appeared in the pleading:

Moreover, contrary to Mr. Berezovsky’s assertion, there was evidence that Mr. Abramovich had continued to utilise his services after 1995 (for example in relation to the Yuksi merger) and, as the latter explained, the mere fact that such an apparently powerful man as Mr. Berezovsky appeared to be associated with Mr. Abramovich and Sibneft was, at least during the height of Mr. Berezovsky’s powers, protection in itself. As described by Mr. Berezovsky’s expert on Russian contemporary history, krysha is a relationship of protection by association with a powerful person

Fortescue 1st Report, paragraph 188-190.

Abramovich 3 rd witness statement , para graph 35 .

I have already dealt with the alleged change (or rather expansion) of Mr. Abramovich’s case in relation to the original purpose of the payments being to finance ORT.

Accordingly, I do not accept the submission that the nature or such change as there may have been in the articulation of Mr. Abramovich’s case in relation to krysha provides a sufficient reason for rejecting his evidence in relation to the issue.

My conclusion in relation to this issue is that there was no such agreement of the nature and in the terms alleged by Mr. Berezovsky in paragraphs C33-C34 of the Re-re-re-Amended Particulars of Claim and paragraphs 97-105 of Mr. Berezovsky’s fourth witness statement, nor as subsequently developed in his case at trial. Nor was any agreement reached in 1996 between Mr. Berezovsky, Mr. Patarkatsishvili and Mr. Abramovich in the terms alleged in paragraph C37 of the Re-re-re-Amended Particulars of Claim.

On the contrary, the evidence established that the arrangement between the parties was that Mr. Abramovich would provide payments towards Mr. Berezovsky’s (and subsequently Mr. Patarkatsishvili’s) expenses, not only in connection with ORT, but also generally, in exchange for Mr. Berezovsky’s assistance, protection or krysha, and subsequently that of Mr. Patarkatsishvili. The actual amounts to be paid were agreed each year as between Mr. Abramovich and Mr. Patarkatsishvili as a result of a process of negotiation.

In the light of my findings in relation to Issue A1, this issue does not arise for determination. In case this matter goes further, I nonetheless express my conclusions in relation to the issue, but without rehearsing, at any great length, the evidence of the Russian law experts, or the respective arguments of the parties, in relation to what, in the event, was a wholly hypothetical issue. It will be obvious that I have not addressed every one of the numerous and sophisticated arguments which were presented on this point in the course of hundreds of pages of written expert evidence and written submissions, and three and a half days of oral evidence.

The Russian law issues in relation to the alleged 1995 and 1996 Agreements as formulated in the Agreed List of Issues were considerably more complex than the issue as I have formulated it above. In order for my conclusions to be comprehensible, I set out the Russian law issues as defined in the Agreed List of Issues in relation to the alleged 1995 and 1996 Agreements:

Mr. Abramovich did not pursue his arguments that any claim by Mr. Berezovsky would be time-barred under Russian law by May or June 2001.

Expert evidence about Russian law was given:

on behalf of Mr. Berezovsky by Ilia Vitalievich Rachkov (“Dr. Rachkov”), a practising Russian attorney and a partner of NOERR, an international law firm;

on behalf of Mr. Abramovich by Mikhail Andreevich Rozenberg (“Mr. Rozenberg”), Senior Partner of the Moscow office of Chadbourne & Parke LLP;

and on behalf of the Family Defendants, by Professor Peter Maggs (“Professor Maggs”), a Professor of Law at the University of Illinois College of Law, specialising in Russian law, the law of the other former Soviet republics, and the law of the former Soviet Union.

Their joint memorandum on Russian law (“the Joint Memorandum”) recorded a very substantial amount of agreement between the experts. Save in certain specified respects, Professor Maggs for the most part agreed with Mr. Rozenberg. By the end of the trial it had become clear, following the giving of evidence by Dr. Rachkov and Mr. Rozenberg, that there were relatively few disagreements between them on relevant matters of legal principle. Where they differed, I tended to find Mr. Rozenberg a more careful and objective witness, who both in his written and in his oral evidence was clear and focused. Dr. Rachkov presented his arguments in a more partisan fashion, and gave the impression at times that he was arguing Mr. Berezovsky’s case for him.