Day 46

July 11, 2016 Day 46

(10.30 am)

Closing submissions by MR STROILOV (Continued)

MR STROILOV: Good morning, my Lord.

MR JUSTICE HILDYARD: Good morning.

MR STROILOV: My Lord, as it happens, one does remember

points over the weekend, so I would like to address

your Lordship ‐‐ first I would like to make some points

about the Morskoy Bank criminal case, then expand

a little on other criminal cases in Russia and, more

broadly, on what I might perhaps unscientifically term

as «political aspects» of this case in view of the

submissions made on behalf of the claimants in this

respect. Then I will come to the prospects of

refinancing of OMG and especially Mr Bromley‐Martin’s

evidence, and then I will just draw the threads together

in terms of the possible motivation of the Bank’s

decisions and what would have happened if not for the

fraud as we invite you to find.

Then I hope to pick up all outstanding points as we

go along.

MR JUSTICE HILDYARD: That seems fine. I mean, obviously

you can address me on them at least by identifying what

you wish to say before elaborating, but I won’t

encourage you to expand greatly on general political

context.

MR STROILOV: I appreciate, my Lord, why you are saying

that. I will simply respond to the submissions made in

that respect by the claimants.

MR JUSTICE HILDYARD: Very good.

MR STROILOV: I don’t expect it will take long. If you see

I am beginning to say something irrelevant, obviously

you will feel free to stop me.

My Lord, just a few points on the Morskoy Bank

evidence. I think a point is made rather vigorously in

the claimants’ submissions that essentially both sides

are at fault, and Mr and Mrs Arkhangelsky also did not

explain the full extent of a repo transaction to

the Russian authorities or Russian courts. I think that

is incorrect as it appears from the evidence of their

own witness, Mr Sklyarevsky. If we could look at

{Day24/19:4}, that is in the context of ‐‐ if we could

perhaps have on the other screen {Day24/18:1} to see the

context. It is in the context of the discussion of

Russian civil cases, and starting at line 5, I think,

I ask:

«Question: Now, Mr Sklyarevsky, I think the

explanation you have given is not what the judgment

says…»

And then ‐‐ I beg your pardon ‐‐ and page 19, yes

my Lord, I beg your pardon, I was looking at page 18.

At page 19, at line 4 I ask:

«Question: Now, I understand that

Mrs Arkhangelskaya’s lawyers did not explain the factual

context in their claim. They didn’t explain all about

the repo transaction and all that, did they?

«Answer: Well, as a matter of fact I seem to recall

that this information was provided to the judge, except

that the memorandum, the repo transactions are not legal

documents under Russian law, and they were not accepted

by the court.

«But Mr Erokhin did adduce those materials. At

least he showed those materials. He turned them up, he

handed them up to the judge.»

My Lord, it seems in this respect the position was

fully explained to the Russian court, and of course

there is nothing wrong and, indeed, nothing surprising

in the fact that their straightforward claim was

brought, focusing on one fact of the sale being at

a nominal price, and that the OMG lawyer sought to set

aside the transactions on that basis. So long as the

court was not misled there is nothing strange bringing a

simple claim rather than a complicated claim, such as

the counterclaim here.

MR JUSTICE HILDYARD: Well, on the basis of this evidence it

may not much matter, but there is a world of difference,

isn’t there, between a transaction at a nominal price

with an existing and enforceable counter contract

enabling re‐transfer back for a nominal price on the one

hand, and a bare sale at a nominal price with no right

of recourse on the other. They are very different

things, aren’t they?

MR STROILOV: Indeed, my Lord, and I accept it would have

been open to criticism, the line taken by OMG lawyers,

if not for what Mr Sklyarevsky explained to you.

MR JUSTICE HILDYARD: Yes.

MR STROILOV: Obviously on this evidence it is spotless.

They explain the context to the court but the court

resolved to focus on this one issue, rightly or wrongly.

But any criticism would really be against the Russian

court rather than OMG.

MR JUSTICE HILDYARD: And, of course, I suspect you would

emphasise that the Bank was there and knew these things

and could always refer the court to them. It wasn’t

an ex parte application or anything like that.

MR STROILOV: Indeed, my Lord.

MR JUSTICE HILDYARD: I’m not sure that further questions

were asked as to the phrase between 9 and 12:

«… except that the memorandum, the repo

transactions are not legal documents under Russian law,

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July 11, 2016 Day 46

and they were not accepted by the court.»

That wasn’t taken up, was it?

MR STROILOV: It was not, my Lord, that really is the end of

the line. But of course whether or not they are legal

documents, you are not bound by whatever view was taken

by the Russian courts on that. You have heard the

Russian law evidence and it is for your Lordship to

decide, with respect.

MR JUSTICE HILDYARD: Yes.

MR STROILOV: My Lord, so there is no parallel between the

way the matters were presented in these civil claims and

in the Morskoy Bank loan criminal case.

I think it is clear from the evidence which I have

shown to relevant witnesses that the fact that the repo

was fairly central to that criminal case. Just to

summarise briefly, the allegation was that

Mr Arkhangelsky caused Western Terminal to take a loan

from Morskoy Bank without the permission of

Sevzapalians, the original purchaser who was, at that

time, formerly the shareholder of Western Terminal. Of

course, Mr Arkhangelsky’s defence to this is that it was

not a genuine shareholder; it was a security arrangement

with the Bank. So he did not consider that

Sevzapalians’ consent was required, especially in

the light of the provisions of the memorandum whereby

the purchasers undertook not to interfere in

the day‐to‐day commercial ‐‐

MR JUSTICE HILDYARD: Prior to default?

MR STROILOV: Yes, my Lord. Well, it depends on whether or

not there was a default, which in turn depends on the

moratorium. Secondly ‐‐ and that is a side issue which

clearly was not explored in the criminal case, in any

event.

Secondly, whether Mr Arkhangelsky had proper notice

of the default, and that the Bank and the purchasers did

not consider themselves bound by the memorandum anymore.

Taking the Bank’s case at its highest, what they say

they have done, it was formal notice of default to

PetroLes, and Ms Mironova says that she phoned

Mr Arkhangelsky to tell him that the extension of

PetroLes loan was refused.

It is not suggested that at any time Mr Arkhangelsky

was told that: in the light of this default, the

memorandum is no longer in force and we feel free ‐‐

well, we are now the shareholders of the two companies.

All these undertakings are no longer in place. He was

never told that, on any view, even on the Bank’s view.

MR JUSTICE HILDYARD: I do apologise, I am a bit rusty, but

when the default is called on the PetroLes loan, was

there a cross‐default called on the rest of

the borrowing?

MR STROILOV: Gradually, my Lord, well, it developed over

some two months or thereabouts.

MR JUSTICE HILDYARD: A sort of cascade. Yes.

MR STROILOV: I could find the dates ‐‐ well, it might be in

the claimants’ chronology, I imagine, in the one I think

they attach to their opening.

MR JUSTICE HILDYARD: But is it accepted that by the time of

the Morskoy Bank loan, OMG was in default?

MR STROILOV: Well, we don’t accept that because we say

there was a moratorium, so there could be no default

before that.

MR JUSTICE HILDYARD: Subject to the six‐month moratorium.

MR STROILOV: Subject to the six‐month moratorium, yes, well

if you are against us on that then yes, PetroLes was in

default and Vyborg Shipping was several days in default

on one of its loans.

MR JUSTICE HILDYARD: And if I am against you on the six

months, does the fact of a default on PetroLes and

Vyborg, do you accept that that knocks you out in terms

of relying on the provisions which guaranteed you to be

able to run the company in the meantime prior to

default?

MR STROILOV: Yes, in terms of contractual analysis, clearly

the memorandum expressly provides that all these

undertakings are only in force so long as the group is

not in breach of its own obligations to the Bank.

However, in the context of the criminal allegations

in the Morskoy Bank case, the position is somewhat

different, then it becomes very important what notice

Mr Arkhangelsky was given, and whether he could honestly

believe that moratorium ‐‐ or that memorandum was still

in force. So long as there was a possibility of him

taking an honest view that Sevzapalians was not

a shareholder, the criminal case obviously must fail.

So it was quite ‐‐ well, the whole context was

enormously important, and presenting the whole

transaction as a genuine sale of the shares was

really ‐‐ well, was presenting the very opposite of

the truth to the investigator.

So on any view it is much more serious than

concealing these elements in any other context.

MR JUSTICE HILDYARD: But do you accept ‐‐ leaving aside the

question of notice or knowledge, and all the ingredients

which are relevant to the criminal process, as

I apprehend, in Russia, do you accept that if I am

against you on the six‐month moratorium, the nature of

the default was such that the obligation not to

interfere had fallen away prior to the date on which the

Morskoy Bank loan was contracted?

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July 11, 2016 Day 46

MR STROILOV: Yes, absolutely.

MR JUSTICE HILDYARD: You do.

MR STROILOV: It was the default ‐‐ on that view, if you are

against us on moratorium, the default was 5 March,

Morskoy Bank loan was 30 March.

MR JUSTICE HILDYARD: And the relevant default was

sufficient, is what I am getting at ‐‐ what date was the

Morskoy Bank loan?

MR STROILOV: 30 March 2009.

MR JUSTICE HILDYARD: 30 March. Because my understanding

was it was a default only on PetroLes and Vyborg, but

you accept that that worked a sufficient cascade effect

that they were entitled to intervene?

MR STROILOV: Yes, well I accept that on the terms of

the memorandum. I accept that.

MR JUSTICE HILDYARD: Thank you.

MR STROILOV: Now, my Lord, turning to the evidence given to

you by the Bank’s witnesses in relation to the criminal

case, you will recall that Mr Savelyev said several

times: I didn’t pay much attention to this, it wasn’t

our case, it was Morskoy Bank’s complaint. The Bank had

nothing to do with it, we were simply witnesses. And he

said the same in relation to explaining his own untrue

evidence, and Mrs Malysheva.

Now, that explanation is, I am afraid, untrue

because the criminal case was initiated on a complaint

of Mr Maslennikov, the new director general of

Western Terminal appointed by Renord. That complaint is

dated 27 August 2009, and it is at {D129/2085/1}.

I don’t propose to read it, but simply a reference for

your Lordship’s note.

Whereas Morskoy Bank only made its own complaint in

relation to the loan on 31 March 2010 and that complaint

is at {D137/2282/1}. So that complaint was only filed

after all six witnesses gave their evidence to the

investigator. At that time it was a complaint made by

the Renord director general of Western Terminal acting,

obviously, in the interests of the Bank.

MR JUSTICE HILDYARD: So in 2009 who is the actual

complainant?

MR STROILOV: It is the new director general of

Western Terminal just appointed by Renord in the ‐‐

well, not just appointed; it has been some time between

he was formally appointed ‐‐

MR JUSTICE HILDYARD: That’s in August 2009.

MR STROILOV: Yes, August 2009.

MR JUSTICE HILDYARD: And then in March 2010, by this time

Morskoy is controlled by BSP.

MR STROILOV: Morskoy Bank, I don’t think it is ‐‐

MR JUSTICE HILDYARD: Sorry, that element of the claim is,

but they have bought the right to the claim.

MR STROILOV: Yes, that is something I think I need to check

when they actually bought the right to the claim.

I will find the date, my Lord, in a moment.

I think not. I think it was some time later. I am

looking at my own, paragraph 122 of my closing

submissions. It doesn’t give the date, but it says the

writ of execution was issued on 3 December 2010, and

I understand that it was only after the writ of

execution was issued that Sevzapalians actually bought

the claim. Incidentally there is an error in this

paragraph which was pointed out to me earlier as well.

It wasn’t Sevzapalians who filed a claim.

MR JUSTICE HILDYARD: You explained, it took over the claim

filed by Morskoy Bank.

MR STROILOV: Yes, it was filed by Morskoy Bank, but then

Sevzapalians bought the loan and therefore took over the

execution proceedings.

MR JUSTICE HILDYARD: That’s where I’m becoming confused,

because my understanding from what you have told me is

that there were two events, as it were: the one occurs

in 2009 and the second in 2010. My understanding from

you was that the earlier 2009 was instituted by the

director general.

MR STROILOV: Yes.

MR JUSTICE HILDYARD: Director general of which company?

MR STROILOV: Of Western Terminal. It’s ‐‐ Renord appointed

director general of Western Terminal.

MR JUSTICE HILDYARD: Complaining that Western Terminal has

been, as it were, defrauded because it has been

committed to a loan without the proper organ of that

company authorising it.

MR STROILOV: Yes, my Lord.

MR JUSTICE HILDYARD: Then the other side, as it were, the

Morskoy Bank side, in March 2010, at that time

instituted by independent directors of Morskoy Bank, do

they adopt ‐‐ theirs is a separate claim, is it?

A separate proceeding?

MR STROILOV: Well, it was as it appears from the documents

we have disclosed, the ones we have actually received

from Mr Nazarov and disclosed in 2013, that the

proceedings were actually united because it was the same

criminal proceeding under two complaints, but the first

one ‐‐ well, it was initiated under the first complaint

of the director general of Western Terminal, and then

the Morskoy Bank complaint was simply merged into the

existing criminal investigation.

MR JUSTICE HILDYARD: So where you say in 122,

between July 2009 and December 2010 Sevzapalians took

over the claim filed by Morskoy Bank, which is,

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July 11, 2016 Day 46

I understand, how you now wish me to read it, which was

the claim that was taken over by Sevzapalians: The

director general’s or the Morskoy Bank claim?

MR STROILOV: No, no, these are different proceedings, what

I’m talking about are the criminal proceedings where the

evidence of Mr Savelyev and Ms Malysheva and

Ms Stalevskaya was given on which there was quite

lengthy cross‐examination.

Whereas the claim I discuss in 122 is the civil

claim under the loan agreement, and that is material

because it was used to enforce against Western Terminal

assets and ‐‐

MR JUSTICE HILDYARD: Well, when was the civil claim which

Sevzapalians took over filed by Morskoy Bank?

MR BIRT: There is a little passage in our closing which

gives the facts, my Lord, I don’t want to interrupt.

MR JUSTICE HILDYARD: Yes, could you give me the details?

MR BIRT: It is paragraph 909 of our written closing which

recites that Morskoy Bank commenced its proceedings

against Western Terminal in December 2009, there was

a judgment in favour of Morskoy Bank in December 2010,

and then the claim was assigned by Morskoy Bank to

Sevzapalians in February 2011. {AA3&4/14/480}.

MR STROILOV: I am very grateful for this.

MR JUSTICE HILDYARD: Right.

I mean, it is a bit confusing on that footing, isn’t

it, Mr Stroilov? What I thought you were telling me was

that Mr Savelyev has misrepresented the position; has

MR STROILOV: Indeed, of course. These are two very

separate issues except that they relate to the same

loan. There is a criminal complaint on the basis that

Mr Arkhangelsky fraudulently caused that loan to be

taken.

MR JUSTICE HILDYARD: Mm.

MR STROILOV: Separately there is a civil claim for the

recovery of that loan, and these are two quite separate

processes, if that makes sense.

MR JUSTICE HILDYARD: Yes. I am sorry to make heavy weather

out of it, but I just want to see exactly what you said.

MR STROILOV: I actually ‐‐ in my closing I discuss this in

quite different places. I talk about the Morskoy Bank

criminal case evidence starting at paragraph 94.

MR JUSTICE HILDYARD: And when you were saying that

Mr Savelyev did not tell us the truth, in your

submission, it all relates to the criminal case?

MR STROILOV: It all relates to the criminal case, yes,

my Lord.

MR JUSTICE HILDYARD: So the confusion has been focusing on

122 rather than on 94, really?

MR STROILOV: Well, it is just that it was really in answer

to your Lordship’s question as to when the Morskoy Bank

assigned its rights to Sevzapalians.

MR JUSTICE HILDYARD: Yes, I see.

MR STROILOV: As opposed to the chronology of the criminal

case on which I was addressing your Lordship.

MR JUSTICE HILDYARD: Okay.

MR STROILOV: So the point I was making is that whereas

Mr Savelyev sought to distance himself and the Bank from

that criminal case, and essentially the burden of his

evidence was: I did not pay much attention to this

interrogation, to this interview, because the case had

nothing to do with the Bank, it was a Morskoy Bank case,

whereas in reality, at the time he was interviewed, the

case was initiated on a complaint of the director

general of Western Terminal acting in the interests of

the Bank of St Petersburg, or controlled via Renord, and

Morskoy Bank complaint to the criminal authorities

post‐dates the evidence given by Mr Savelyev and

Mrs Malysheva and others.

MR JUSTICE HILDYARD: Yes.

MR STROILOV: Now, there is ‐‐ further, I think there is

more to it, there is significantly more to it than

simply failing to mention the second element of the repo

transaction and explain the context. If we could have

a look at Mr Savelyev’s evidence at {D138/2304/1} ‐‐

I beg your pardon, my Lord, I think I was wrong. In

fact it is dated 21 May 2010, so it post‐dates the

Morskoy Bank complaint. I beg your pardon, I confused

the dates.

MR JUSTICE HILDYARD: Well, I am sorry, I am getting

confused again.

MR STROILOV: I am sorry, my Lord, yes. Perhaps let me make

it clear, it is my fault entirely. I got lost in

the dates.

MR JUSTICE HILDYARD: So Mr Savelyev may have been accurate

after all, or …?

MR STROILOV: No, he was not accurate because that was the

criminal case initiated by their own servant,

effectively, by the Bank’s own servant nonetheless ‐‐

MR JUSTICE HILDYARD: Right.

MR STROILOV: ‐‐ but by that time, Morskoy Bank had also

joined, so to that extent, my submission was inaccurate

for which I apologise.

MR JUSTICE HILDYARD: Right. So by the time of May 2010,

this might be a criminal proceeding adopted by

Morskoy Bank?

MR STROILOV: Yes, my Lord. So there were two complaints by

that time.

MR JUSTICE HILDYARD: Yes.

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July 11, 2016 Day 46

MR STROILOV: But nevertheless, it was ‐‐ the criminal case

itself was ongoing.

MR JUSTICE HILDYARD: Was instigated in the first place?

MR STROILOV: Yes, my Lord.

MR JUSTICE HILDYARD: I see.

MR STROILOV: My Lord, if we could scroll down to page 3 of

this tab. So in the top paragraph, Mr Savelyev is

recorded as saying that he refused to assist

Mr Arkhangelsky in selling his assets {D138/2304/3} but,

importantly, further on, you find in the third paragraph

from the top, starting from the words:

«During this meeting either beforehand …»

An imperfect translation, but this is clearly

a response to the allegations substantively similar to

this counterclaim. Clearly he is responding to

an allegation that this was in exchange for

a restructuring of OMG loans.

In the next paragraph he is responding to

the allegations that he intimidated Mr Arkhangelsky, and

then he is explaining the process of recovery, and

finally he mentions in the third paragraph from the

bottom, he refers to out of court settlement with SO

Scandinavia, that’s the company we normally refer in

these proceedings as «Scan», and he specifically

mentions, also it is recorded that it was sold on

could have ‐‐ let me start again.{D138/2304/2}. So that

is Mr Savelyev’s evidence, and he explains in the second

paragraph from the bottom, he starts from:

«In November 2008 …»

And he presents a coherent but false account of what

happened, really directed to lead the investigation to

believe that Mr Arkhangelsky genuinely intended to sell

his companies and, indeed, did so.

MR JUSTICE HILDYARD: Mm.

MR STROILOV: If we could now look at the evidence given by

Mrs Malysheva, which is at {D137/2278/1}, and that is,

indeed, that appears to be March 2010. So several days

before the Morskoy Bank complaint, but that is a matter

of detail.

Then if we scroll down to page 3 {D137/2278/3},

again simply to remind your Lordship ‐‐ is that page 3?

Could we have page 2 {D137/2278/2}. Again, I think the

most material paragraph is the second one, starting

from:

«In December 2008 … «

That’s where she essentially explains what allegedly

happened.

MR JUSTICE HILDYARD: You want me to read the last

paragraph?

MR STROILOV: Well, the second paragraph, really, starting:

17 19

a public auction at the market price.

So it appears that, among other things, he was

confronted with allegations of sale at an undervalue.

This cannot be a coincidence. Clearly he was commenting

on the allegations substantively similar to this

counterclaim, and his evidence is plainly untrue on any

view and deliberately untrue, in my submission.

Also, if we could quickly have a look at

Mrs Malysheva’s evidence at D137 ‐‐

MR JUSTICE HILDYARD: What do you say about, in the top

paragraph, the phrase:

«In January 2009 I found out from the employees of

the bank, I cannot remember from whom, that both

companies owned by Arkhangelsky were sold.»

MR STROILOV: Yes, my Lord, it is plainly untrue. It was

something that Mr Savelyev negotiated with

Mr Arkhangelsky. That’s ‐‐ well, he admits it’s untrue,

but he says in his witness statement, essentially all he

says: I wasn’t paying much attention, it is inaccurate,

I apologise.

Clearly, again, he is misrepresenting it very

substantially. It is directed ‐‐ if we could scroll

down one page, simply to remind your Lordship.

MR JUSTICE HILDYARD: Up or down?

MR STROILOV: So the Savelyev part of it. Sorry, if we

«In December 2008 …»

MR JUSTICE HILDYARD: «In December 2008 …»?

MR STROILOV: Yes, my Lord, to the end of that paragraph.

(Pause).

My Lord, that is really clearly an untrue account,

but then in the next paragraph, and then in the last

paragraph on that page, an important detail is that

Mrs Malysheva names Mr Gavrilov, the nominal director of

Sevzapalians, as the person with whom she negotiated.

She avoids mentioning Mr Smirnov, she avoids mentioning

Renord. She clearly ‐‐ and one may ask why she would do

that, and in my submission the likeliest explanation is

that she intentionally does not want to bring too many

new names, too many potential witnesses, into something

she knows to be a fraud, and that is for two reasons:

firstly to avoid any risk ‐‐ well, any unnecessary risk

of the fraud being discovered, and; secondly, to avoid

the need, essentially to collude with more people in

terms of giving false evidence. It is better to keep it

in a relatively narrow circle, just so that you can

agree what you tell the authorities if you are telling

untruths.

MR JUSTICE HILDYARD: Well, that’s conjecture, but your

basic point is that both Mr Savelyev and Mrs Malysheva

just didn’t tell the truth; or certainly what they said

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July 11, 2016 Day 46

then was not what they say now?

MR STROILOV: My Lord, they plainly did not tell the truth

on any view of things. There is no question, neither

side and no one is suggesting that they told the truth

in these criminal proceedings. It’s just not suggested

on any side, and they have admitted it is not ‐‐ well,

Mrs Malysheva obviously hasn’t admitted to anything

because she has disappeared, but Mr Savelyev has

admitted that obviously it isn’t true, and we agreed

with that, and in Russia it was plainly in dispute long

ago.

So that was a deliberately false account that we say

that this alone destroys their credibility, but there is

more to it. Obviously if you have six witnesses giving

the same false account, that means there was collusion,

that means they were in this together, and then you also

have to ask why would they conceal the true nature of

that deal, and the answer, in my submission, at least

the likeliest answer, is that because they knew it was

fraudulent.

Another important detail in that evidence, if we

could scroll ‐‐ we don’t need to scroll down. On the

other screen you have page 3, and in the second

paragraph of that interview, Mrs Malysheva suggests to

the investigator that prior to the sale, as she calls

respect to the six people singing the same song was that

your submissions that that suggested collusion and

conspiracy was a leap too far, and the explanation might

have been, as it were, a single hand drafted their

respective statements and followed along a sort of

plotted course without any real intent on behalf of any

one of them to consciously mislead. I think that’s what

he told me, it is at transcript {Day44/60:1} or

somewhere around there.

MR STROILOV: Yes, my Lord. Well that would only be

possible and that conjecture would only make sense if

the investigator was intentionally trying to fabricate

a case.

Now, clearly, step one in the analysis of that case

makes it plain that whether or not there was a repo is

essential, and if she was told about the repo and then

failed to record it, that would be ‐‐ that can only be

understood as a deliberate fabrication of charges.

Now, then the question is if it was effectively on

the Bank’s own complaint, unless it was in the interests

of the Bank, why would she want to fabricate charges in

this way.

MR JUSTICE HILDYARD: Why would she what?

MR STROILOV: Why would she want to fabricate charges or to

trump up charges in this way, the evidence?

21 23

it, of Western Terminal shareholding to Sevzapalians,

there was an independent valuation of the market value

of the shares, and it was valued at RUB 12,000, so that

is plainly inconsistent with what you are now told by

both sides.

Clearly the sale for RUB 10,000 was deliberately

nominal price; it was not intended to be the market

price, and obviously from everything you are told about

the events of late December 2008, there was clearly no

question of and no time for obtaining any independent

valuation; indeed no need for that.

That, my Lord, in my submission, undermines any

contention you have heard from the claimants suggesting

that they may have honestly believed in low valuations

by various Russian valuers, believing that the assets

may have been sold at what turns out to be something

below market value, but we had valuations of Russian

valuation companies which suggested it was right, we

believed in that.

It is clear from this evidence that the Bank was

manipulating valuations in Russian proceedings, and that

really undermines any notion of honest belief in

valuations which we say are incorrect, if you agree with

Ms Simonova.

MR JUSTICE HILDYARD: Mr Birt’s submission to me with

Not to mention the fact that it is quite unlikely ‐‐

well, it may be that the investigator was trying to bend

the evidence in this way to select bits. Even if that

is possible, well it is quite impossible that six people

were so much in a hurry and irresponsible as to sign it

without correcting it. It is unlikely in the extreme.

I think it also deserves mentioning that both

Mr Savelyev and Ms Stalevskaya told you in

cross‐examination, as they were shown these records of

interview one by one, they eventually resorted to

telling you that: well, we did tell her about repo, we

probably did, she just didn’t record it. However,

that’s not what either of them says in their witness

statement. Both of them address this in witness

statements, essentially they say simply that: well, this

was wrong, we are sorry, and that’s all, but they don’t

suggest that it was misrecorded rather than they gave

a very seriously false account.

So in my submission that is simply quite a desperate

attempt, frankly, to wriggle out.

My Lord, to continue on this, I think in terms of

that alleged valuation report, to which you saw the

reference in Mrs Malysheva’s evidence, it also, just

very briefly, if we could look at {D131/2151/1}, it

appears that the same report or a similar report

L15/90/7

July 11, 2016 Day 46

featured in the defence to OMG civil claims in Russian

commercial courts, known as Arbitrazh, or arbitration,

courts.

MR JUSTICE HILDYARD: Mm.

MR STROILOV: So this is a claim of Mrs Arkhangelskaya

against Sevzapalians, the appeal decision.

If you look at ‐‐ if we scroll down to the second

page, there is in the second paragraph from the bottom,

there is a reference to Sevzapalians’ application to

adduce a valuation report {D131/2151/2}, and then the

court rejects that application.

Then there is a further reference to that report at

page 5. If we could have page 5 {D131/2151/5}. So in

the third paragraph from the top you will see that the

report is apparently dated 29 December 2008. So that it

appears, and it is difficult to find any alternative

explanation, that the report was actually backdated,

because obviously there is no mention in the very

detailed account which you have now had from the Bank

about the events of late December 2008, there is no

mention of any independent valuation and there is,

frankly, no place for any independent valuation.

But in these proceedings as they focused on the fact

of the purely nominal price, Sevzapalians suddenly

produces a report dated 29 December 2008, and valuing it

MR STROILOV: It is, if we go back to {D135/2235/1}, I think

the reasoning is actually at page 3 {D135/2235/3}. So

I think these paragraphs in the middle:

«A fictitious deal is a deal executed with failure

of intention …»

So I think these three paragraphs are really the

reasoning of the Federal Arbitrazh Court.

MR JUSTICE HILDYARD: Right. There it just says there is no

sufficient evidence of undervalue?

MR STROILOV: Yes, my Lord, yes.

MR JUSTICE HILDYARD: But you say that must have been

a misunderstanding at very best because the price had

been agreed to be nominal?

MR STROILOV: Yes, my Lord. Well, obviously we are not re

arguing these cases; it was on a fairly technical and

narrow point.

MR JUSTICE HILDYARD: I am just trying to remind myself.

Mrs says and wins twice: it’s at a grotesque undervalue.

You add the rider, of course, that the attempt to

justify it as being full value is absurd because it was

always stated to be nominal because of the back repo

provision.

MR STROILOV: Yes, my Lord.

MR JUSTICE HILDYARD: It gets to the Court of Appeal who say

there is no sufficient evidence of it being at

L15/90/8

July 11, 2016 Day 46

claim to reassess the Russian judgments, you are not

an appeal instance from Russian courts, you are

considering the facts and forming your own judgment.

But that is ‐‐ well, the only element on which I do

rely is, really, the evidential element and how ‐‐ and

what evidence was presented and what it demonstrates in

terms of the credibility or otherwise of each side.

My Lord, obviously the criminal complaint in

relation to Morskoy Bank loan was only one in a series

of various criminal complaints which the bank filed

against Mr Arkhangelsky, and you may recall the

cross‐examination of Ms Mironova, who ‐‐ that’s at

Day 34, starting at page 75, and moving on.

{Day34/75:1}. I think it is, just for your Lordship’s

reference, I don’t propose to read it in any detail now,

but essentially the picture is that Ms Mironova ‐‐ and

I think two of her employees ‐‐ were working quite hard

in investigating various records of transactions via the

Bank in search for material to bring various complaints

of fraud against Mr Arkhangelsky. Many of them totally

unrelated to the Bank’s interests in any way. It would

concern things like suspicion of tax evasion, and

matters like that.

What we say about this is that this kind of strategy

is quite inconsistent with their suggestion that the

Bank was acting commercially and trying to reach

an amicable settlement with Mr Arkhangelsky that

Mr Sklyarevsky was desperately trying to reach out to

Mr Arkhangelsky and agree on some mutually acceptable

restructuring of his business which would allow to repay

the loans. It was the Bank who in fact waged a war on

Mr Arkhangelsky from that stage. They now had control

of the shares, they had control of the assets, they

wanted him out of the way. That is ‐‐ whether or not

really there is anything in these criminal complaints,

whether or not there is any substance, it’s not

something you would expect a commercial bank to do so

enthusiastically in circumstances such as the situation

in 2009.

I will be brief on that, but that connects, really,

with the allegations we made in terms of the Bank’s

political connections and how it was able to work

together with law enforcement authorities.

Indeed, there is, I note, a remarkable change of

tune in the claimants’ submissions on this point,

because for years, really, the claimants essentially

kept telling your Lordship that the allegations we make

against Mrs Matvienko, against Mr Piotrovsky and Russian

authorities and law enforcement agencies are totally

irrelevant to the entire counterclaim; it is simply

a political campaign we are running in this court and it

shouldn’t be allowed. It should be, at least,

discouraged, and indeed, it has been discouraged by

your Lordship and I hope we have taken it on board

adequately.

But what they say now in their closing submissions,

it is suddenly the central element of the counterclaim

which we have failed to prove.

Well, it isn’t the central element. It is never

said it is the central element. It is simply an aspect

in the general train of events which explains some of

the matters which require explanation.

We have focused, rightly, on the commercial sides of

the counterclaim and in my submission we have proven it,

and that makes it, indeed, irrelevant, whether or not

Russian authorities were part of the conspiracy and, if

yes, what part they played.

I do, however, say that significant elements of

those allegations we make against Russian public

officials have been proven.

You will recall that some of the evidence at the

trial concerned the public official called

General Piotrovsky, who was at the time the head

of St Petersburg’s police. Mr Arkhangelsky’s evidence

was that Mr Savelyev, actually back in 2007 he

influenced General Piotrovsky to protect Mr Arkhangelsky

from various investigations he initiated into the group.

Mr Savelyev denied that. Mr Savelyev did tell you that

he knew General Piotrovsky, but no more than that.

However, he was the head of St Petersburg’s police

at the time. Most of the complaints, at least some of

the complaints from the Bank against Mr Arkhangelsky are

addressed personally to him.

Examples ‐‐ I don’t propose to go through all of

them, but examples are {D126/1995.1/0.1}, that’s the

complaint dated 15 July 2009 in relation to the alleged

personal loan specifically addressed to Mr Piotrovsky.

Another example is {D129/2091/1}, and that’s

a complaint from the Bank in relation to Vyborg Shipping

Company, which is really a follow‐up to earlier

complaints on the same subject. Again, it is addressed

to Mr Piotrovsky, so clearly he was in some way

supervising the investigation.

Further, you will recall the video which

Mr Arkhangelsky has shown you of riot police taking over

physically Western Terminal on 20 June 2009. Again, it

was clearly done by subordinates of Mr Piotrovsky. It

was 20 June 2009, so you will recall what you were told

by Mr Sklyarevsky about that period when the decision of

the arbitration court was forthcoming any day now. That

L15/90/9

July 11, 2016 Day 46

is when Mr Sklyarevsky expects that the repo transfer is

going to be set aside by the court. In preparation for

that a few days before the Bank takes the decision to

authorise the transfer of Western Terminal assets to

SKIF, and I think literally one or two days before the

decision of the court, riot police come in to capture

Western Terminal. That is unlikely to have happened

without the orders of Mr Piotrovsky, and that is very

unlikely to be a coincidence in terms of dates. That

must have been part of the conspiracy.

Then, my Lord, once Mr Piotrovsky retires from the

police in 2013, he is immediately appointed the economic

security adviser to the director general of

Baltic Fuel Company. It’s not disputed. That in itself

is a prima facie case of corruption; he has played his

role in the takeover of Western Terminal, he received

his reward.

So that part, we say, is, insofar as any proof is

required, proven on the balance of probabilities.

My Lord, I think in the same context, just very

briefly, as especially our pleading on that was

criticised, so I am keen to show you what we meant, it

is an odd reference, it may be somewhere ‐‐ it is part

of the exhibit to the affidavit of Mr Balandin in

support of the application for freezing order. So it

will be in the bundle, the reference number I have is

{N1,N2,N3,N4,N5&N6/3/1123}, if that makes sense at all.

No, page 1123. So here you have a letter from the

investigator, Levitskaya to Mrs Malysheva, dated

28 February 2011, which gives a very detailed account of

the investigations ongoing against Mr Arkhangelsky one

by one, what the allegations are, and what’s happening

on each.

MR JUSTICE HILDYARD: Who signs this?

MR STROILOV: That’s the investigator, Levitskaya. So it

goes on from this page, from page 1123 to page 1134, so

that’s an 11‐page account. So that was the basis of our

pleading that the investigator is reporting to the Bank.

I don’t propose to read it in full, but if we could

perhaps just slowly scroll it down just so your Lordship

sees that it is a very detailed account. That is really

all I am interested in.

My Lord, to complete this general scene, as

regards ‐‐ well, it is said that we haven’t proven the

participation of Mrs Matvienko in the conspiracy, that’s

the Governor of St Petersburg, well, I am prepared to

accept that, we have not proven her direct role in

the conspiracy as such. However, the finding which I do

invite you to make is that the Bank is closely connected

to Mrs Matvienko and her family in a number of ways.

You will recall that there is a cross‐examination of

Mr Savelyev on the shareholding in the Bank acquired by

Mrs Matvienko’s son, and then passed on to her husband,

about Mr Matvienko junior’s role as vice president of

the Bank, about the fact that Mr Savelyev and

Mrs Matvienko are old friends and business partners in

the past and all those matters.

My Lord, what I do invite you to find is that the

Bank is perceived by public officials in St Petersburg

as being sufficiently close to the Governor so that

public officials would take that into account. It is

what ‐‐ if your Lordship recalls the discussion we had

in ‐‐ I think literally on the first day of the trial in

the context of the pleadings, if I can respectfully

plagiarise your metaphor, it is a bit of a Henry II

situation, where the public officials, without being

actually parties to the conspiracy, they are given to

understand what the king, or in this case the Governor,

wants to happen, where the Bank has a conflict with

whatever other commercial party, the public officials in

St Petersburg know that if they stand on the way of

the Bank, the Governor won’t be pleased. That, in my

submission, is clear enough from the evidence of the

links between the Matvienko family and the claimants in

this case.

My Lord, I think without spending much time on it ‐‐

I will simply make a point, as we have looked at ‐‐ and

especially as all these criminal complaints and close

cooperation between the Bank on one hand and the law

enforcement authorities in Russia on the other hand in

relation to Mr Arkhangelsky, in my submission that makes

a remarkable contrast with how much the Bank would offer

to this court to substantiate their allegations of fraud

against Mr Arkhangelsky.

You will have seen at the ‐‐ well, I think we went

through this, unfortunately, rather superficially as

well, but in cross‐examination of Ms Mironova, she

translated to you some of the Russian complaints where

very detailed investigation appears to have been made

various OMG bank accounts and where the money went and

in what way and what it was all meant and all that was

given ready‐made to Russian law enforcement authorities.

Whereas in this case you are given one suspicious fact,

taken in isolation, or a few suspicious facts, well so

much money was transferred to City Centre, we don’t know

what City Centre is, it must be something to do with

Mr Arkhangelsky. That really undermines the credibility

of these allegations. They could have told you more if

they were willing to.

My Lord, in the same vein I now move to the issue of

L15/90/10

July 11, 2016 Day 46

a court and Vyborg Port.

MR JUSTICE HILDYARD: Is that a good moment for a break?

MR STROILOV: I think it is, my Lord. I am rather

disappointed as to my speed of progress.

MR JUSTICE HILDYARD: Will you finish by the short

adjournment, by lunch?

MR STROILOV: I expect to be finished by 1.00, my Lord, yes.

MR JUSTICE HILDYARD: Do you have any estimate for me,

Mr Birt, as to how long you are likely to be?

MR BIRT: My Lord, I am, as always at this stage, slightly

in my Lord’s hands. There are a number of points I can

deal with by way of references if we are running short

of time. I would imagine that if I am on my feet at

2.00 pm we will finish today, my Lord.

MR JUSTICE HILDYARD: We have to finish today, I am afraid,

because I am booked elsewhere.

MR BIRT: We can cut our cloth, my Lord, I’m sure, to

achieve that aim.

MR JUSTICE HILDYARD: Very good. Thank you.

(11.49 am)

(A short break)

(11.58 am)

MR STROILOV: So, my Lord, very briefly, in terms of Akort

and Vyborg Port, and you will recall this whole matter

of Vyborg Port shareholding being transferred to ‐‐

and I will give your Lordship the reference in a moment.

In correspondence, as I set out on Day 18, and

I think it is simply easier for your Lordship to really

read it, in correspondence the Bank was not candid about

it. They actually appeared to put us on the wrong track

about it. I think it was Day 26 where you find

Mrs Kosova ‐‐ it must be Day 25, sorry, my Lord. I am

afraid the system is slightly unhelpful on that.

(Pause).

Yes, I beg your pardon, my Lord, it is Day 26 after

all, and starting at page 108, line 23 {Day26/108:23},

where I cross‐examined Mrs Kosova about it, and

essentially she admitted that the information was given

to the Russian police investigator, the same resident(?)

Colonel Levitskaya.

Now, my Lord, in these circumstances I submit two

things: firstly, this shows how the claimants have been

unscrupulous with this court’s process and, indeed, in

trying to persecute the Arkhangelskys in any way they

could.

Secondly, that they are, really, if they are to make

good their various allegations of fraud and dishonesty

against Mr Arkhangelsky, they could and should have

given you a much fuller picture that, in fact, they

have.

37 39

MR JUSTICE HILDYARD: Akort, A‐K‐O‐R‐T?

MR STROILOV: Yes, my Lord.

On Day 18 I made an unsuccessful application to

exclude that evidence, and I think it is ‐‐ I will find

the exact correct reference.

So that will be starting at page 54 {Day18/54:1}.

Now, my Lord, I wonder if, to save time, perhaps

I should simply give you a reference and leave it there.

It includes all the references. What is helpful about

it is it includes the reference to the relevant

correspondence and how the issue arose between the

parties. I would simply submit in summary that clearly

the transfer is something that the Arkhangelskys

disclosed to the Bank themselves, having learned about

it. They did so pursuant to the disclosure obligations

under the freezing order. It was, therefore, subject to

the claimants’ undertaking not to use that information

anywhere else except for the purposes of policing the

freezing order. It has subsequently transpired that the

information was passed on to the Russian police and the

Russian police undertook an investigation and reached

the conclusion that this court’s order was breached,

which is a rather odd matter to investigate for the

Russian police.

There was cross‐examination of Mrs Kosova on this,

My Lord, in terms of ‐‐ I will spend a few more

minutes on the allegations of dishonesty, coming back to

your Lordship’s point on Friday about where the

RUB 4 billion have gone.

Now, of course, there is a danger of, as these

proceedings are naturally focused on Western Terminal

and next on Scan assets, including part of

Onega Terminal, and then the rest of the group is only

looked at marginally and in much smaller context. So

there is a danger of losing the perspective.

So, of course, the 4 billion was spent on the

operations of the whole group. There were loans to

Onega, which were spent on the development of

Onega Terminal, which your Lordship has heard has been

quite considerable. There were loans to

Vyborg Shipping, and that’s how the first three ships

were financed, and also that accounts a considerable

amount of money, obviously.

There were also various forestry operations and wood

processing plant which OMG was constructing, and a lot

of other businesses which Mr Arkhangelsky describes in

outline in his 16th witness statement.

So the only money which are somewhat unclear, well

the loans which may have been misspent, are the last two

Vyborg Shipping loans, which were intended to purchase

L15/90/11

July 11, 2016 Day 46

further ships. In fact, they were not purchased. Well,

it is common ground that the money was paid to

Land Breeze, as we say had been well known to the Bank

from the start, and indeed Mr Arkhangelsky told you that

the whole financial scheme of money going between

companies was developed with the Bank’s participation.

He also told you that the money was spent on paying

outstanding interest towards the end of events and as

the group was running into difficulties; a lot of this

money was spent on paying interest to the Bank under the

previous loans and that, as Mr Arkhangelsky told you,

was under an agreement with the Bank.

Other money went into further shipbuilding, which

unfortunately collapsed and the contracts were not

followed as Vyborg Shipping collapsed generally.

So, generally speaking in outline, there are no

black holes. Perhaps detailed analysis might provide

further questions and then possibly further answers, but

it is not the case that RUB 4 billion were provided and

has gone nobody knows where. It is more complex than

that.

MR JUSTICE HILDYARD: What do I know about Land Breeze?

MR STROILOV: You know that it was a Cypriot ‐‐ one of

the Cypriot offshore companies ‐‐

MR JUSTICE HILDYARD: Yes.

is better to find one of the internal documents

explaining this.

MR JUSTICE HILDYARD: All right, well don’t waste your time

now, but if at some point a synopsis of the various

references. I felt that I don’t really know a lot about

Land Breeze, beyond the fact that it is a Cypriot

company where Mr and Mrs Arkhangelsky did seem to

favour, and that they owned it, and that money in

respect of the Vyborg loans does not appear to have gone

where it was said to have gone.

MR STROILOV: No, I don’t think that’s what is suggested.

MR JUSTICE HILDYARD: Well, it didn’t go into the purchase

of the three extra ships, or … I thought you accepted

that.

MR STROILOV: No, I didn’t accept ‐‐ I accepted that the

three extra ships were actually never completed and

never became operational.

MR JUSTICE HILDYARD: Well, there is no evidence to suggest

they were sort of half complete or anything else. There

is just a silence, isn’t there? There is just

an assertion that for one reason or another they never

emerged onto the open seas, but there is nothing ‐‐ I’m

given very little by way of any sort of evidence that

there was sort of part payment or some disaster in

building or commissioning or anything. There is nothing

41 43

MR STROILOV: ‐‐ beneficially owned by Mr and

Mrs Arkhangelsky.

I believe the purpose of having this structure in

Cyprus was, if I am not mistaken, I think

Mr Arkhangelsky’s evidence was that that was the

requirement of either KIT Finance project, or European

Bank for Reconstruction and Development. It appears in

the context of these refinancing projects. I wonder if

I need to check, but it must be in the 16th witness

statement. (Pause).

If we go to the 16th witness statement of

Mr Arkhangelsky at {C1/1/27}, I think in paragraph 106

there is a reference to Land Breeze Holdings. That is

immediately not very detailed and rather appears in

the different context, but essentially I think he

explains the Vyborg Shipping project there. I think if

we go a little further to paragraph 113 {C1/1/29}, so

this is where Mr Arkhangelsky sets out the

Vyborg Shipping project.

I think other than that, I think it was set out in

the business plan and various internal documents of

the Bank that the scheme was there; that it would be

Land Breeze chartering vessels, and essentially it would

be a coordinating company which would take care of

the whole project, whereas the ‐‐ I will ‐‐ I think it

of that, is there?

MR STROILOV: Well, I think there is something, my Lord.

MR JUSTICE HILDYARD: Oh, is there?

MR STROILOV: I will show you that. I think the first thing

I would like to show you is the general description of

Vyborg Shipping project in the Bank’s internal

documents. If we could go ‐‐ there are a lot of them

essentially similar, but if we could go to {D1/2/4},

that’s one of the loan reports. Well, the ‐‐ if we

could go to page 1, just so that your Lordship sees what

it is. It is one of these loan officer’s opinions,

which we’ve turned quite a few of during the trial, and

that’s the one on opening the credit line for the limit

of RUB 2.1 billion for the Vyborg Shipping project.

If we scroll down to page 4, {D1/2/4}, in this

section, «Loan purpose», it is explained how it is meant

to work, and that shows the place of Land Breeze in that

structure.

MR JUSTICE HILDYARD: So:

«The purpose of the loan is to make advance payment

under the vessel lease contract. Ten vessels are

intended to be purchased monthly during the period

between February and November. The average cost of …

€9.5 million…»

A total capital investment in the purchase of

L15/90/12

July 11, 2016 Day 46

vessels, 3.5 million; is that right?:

«Total number of container ships to be purchased ‐‐

10. …

«100 per cent subsidiaries …

«These companies to act as vessel mortgages are

100 per cent subsidiaries.»

I mean, all this is sort of intent, but what

actually happened?

MR STROILOV: Yes, my Lord, I simply wanted to show you that

first to demonstrate the place of Land Breeze in this

and the fact that money went to Land Breeze is perfectly

in line with the plan which was presented to the Bank.

I hope to find something on that. There wasn’t a lot on

that, but I recall that this matter was discussed in

the context of the initial disputes over the freezing

order. I am just trying to find it. There was some

letter from shipbuilders I think outlining what happened

with the project.

MR BIRT: I don’t want to interrupt. I think shipbuilding

may be a red herring. One sees in the plan that the

first stage is for purchase of second‐hand tonnage,

which is what all these loans are meant to be about,

my Lord.

MR JUSTICE HILDYARD: I mean, a simple point is that

I haven’t seen any evidence of any boat to show for it:

envisaged that there would be separate companies for

each ship, where there’s no evidence that any of them

were set up. Are there any subsidiaries under

Land Breeze?

MR STROILOV: I think the companies are set up, and that’s

in the assets disclosure under the freezing order.

MR JUSTICE HILDYARD: Right.

MR STROILOV: I think that is really the only context in

which we …

MR JUSTICE HILDYARD: So there were 10 companies, whatever

it is, it may be 13 companies, I just don’t know, maybe

someone could provide me with the references to those.

MR STROILOV: I expect that will be in the first affidavit

of Mr Arkhangelsky in response to the freezing order.

MR JUSTICE HILDYARD: Right. Perhaps someone could just

give me or send me various references.

The point is Land Breeze is an area of ignorance for

me, but we do know that a lot of money went there.

MR STROILOV: Yes. My Lord, I will look it up, or perhaps

I can e‐mail it during the short adjournment, ideally,

if not later.

MR JUSTICE HILDYARD: Yes.

MR STROILOV: My Lord, in any event, really, all these

points only go to credit; they don’t directly affect the

counterclaim, really. All the points made about

L15/90/13

July 11, 2016 Day 46

I haven’t been able to find where I put to Mr Belykh

that the information memorandum was in disclosure, so

I think I was probably wrong; I probably meant to but

didn’t, so I withdraw that criticism of the claimants.

Nevertheless, my Lord, I do submit that the evidence

you were given about the Bank’s alleged ignorance of

these refinancing negotiations is not credible at all.

It is overwhelmingly inherently improbable, and indeed,

there is simply no conceivable reason why

Mr Arkhangelsky would have kept it secret from the Bank.

On any view, it was not in his interest to conceal that

from the Bank. He was trying to persuade the Bank that

he had good prospects of restoring solvency. So it is

inconceivable.

Indeed, Mr Belykh, I think he in his second witness

statement denied knowledge of that in rather strong

terms, and that statement is at {B2/16/2}, starting at

paragraph 7, essentially he denies. Then over the page

essentially he denies any knowledge of this.

I think he was not so sure when he was

cross‐examined if we … that’s on {Day3/94:1} and then

there I first asked him about the information

memorandum, as my learned friend has correctly said on

Friday, and then so page 94 and 95 is something

I particularly look at, and at line 22 he says:

«Answer: As I mentioned before, I had some very

brief information that he has these negotiations, but no

details were available to me.»

Then there is further questioning on {Day3/96:1}

about the alleged meeting they had with Mr Arkhangelsky.

On the whole, in my submission, it appears that

Mr Belykh was not as categorical in his denials as he

was in his witness statement. In my submission it is

simply implausible that this information was not given

to the Bank. Well, frankly, on any view of

Mr Arkhangelsky, one could rather believe that he would

be exaggerating the progress of those negotiations, but

not keeping it secret.

My Lord, in terms of the business claim and the

business valuation evidence, just to recap on the

position that has been reached previously, I think the

last time it was before the court was on Day 38 as part

of the housekeeping, and there were written submissions

made at that stage. Ours is at {I27/43/12}. I would

like to take your Lordship through this as actually

a number of points made there is something I would like

to rely on as part of the closing submission.

You can see in paragraph 1 what we were asking

your Lordship to do at that stage in terms of

the housekeeping problem of the difficulties in getting

Mr Steadman to attend.

Then further on I don’t think it is quite necessary

to re‐read the whole thing, but if you scroll down to

the next page, and several pages, really, we set out and

quote, I think, everything that had been said on the

issue in court previously {I27/43/13}.

Finally, my Lord, it is ‐‐ unless your Lordship is

minded to, I am not asking you to read it now,

necessarily, just so that you know where it is. Then if

we scroll down to page 20, we attempt some analogies of

the relevance of that evidence, and in my submission it

is helpful in terms of identifying the interrelations

between issues and between the primary counterclaim and

the alternative counterclaim in terms of quantum.

And here, yes, perhaps I think I will ask

your Lordship to read paragraph 18 {I27/43/20}.

MR JUSTICE HILDYARD: Mm hmm.

MR STROILOV: So, my Lord, in my submission that is pretty

close to the starting point: there are two claims

brought in the alternative, one is based on the

hypothesis that if not for the Bank’s fraud, OMG would

have avoided default, most likely but not necessarily

through refinancing, and on that basis, that the

business would have developed and reached such value as

Mr Steadman indicates in his reports.

Alternatively, if the default was inevitable on the

balance of probabilities, then it is limited to

the value of assets which should have been, and would

have been sold at honest public auctions, the surplus

would have been returned.

So in that sense, I think if we scroll down one page

more, we attempt some further analysis as to what

affects the choice between these two alternative bases

in paragraphs 22 and further {I27/43/21}. I think

I will ask you to read paragraph 22 through to 24, and

perhaps even further {I27/43/22}.

MR JUSTICE HILDYARD: I’ve got to the end of 21.

MR STROILOV: If we could scroll down, thank you. I will

ask your Lordship to read through to paragraph 28. I’m

sorry to …

MR JUSTICE HILDYARD: That’s all right. {I27/43/23}.

Yes? One more?

MR STROILOV: One more, I’m grateful.

My Lord, for completeness, just so that you see what

was the latest you said about this, if we could go to

the transcript of {Day38/70:1}. I think I haven’t shown

your Lordship the claimants’ note on that, which is

a bit of a discourtesy. Should I just give

your Lordship the reference? I am not going to rely on

anything in that, but their note will be in the same

L15/90/14

July 11, 2016 Day 46

tab, page 2. It is just before ‐‐ so it is {I27/43/2},

simply for your Lordship’s note.

Then the transcript of Day 38, page 70 {Day38/70:1},

and {Day38/71:1} as well. I think, really, the bottom

line of that discussion, and perhaps my learned friend

will take you into earlier parts of it, or your Lordship

will want to read more of it later, but I think the

bottom line in relation to that application starts at

line 22 on page 70, and continues for several pages

{Day38/70:22}, but I think the next two paragraphs to

page 71, line 21 is essentially what your Lordship has

decided on the last occasion {Day38/71:21}. It was

before the court. Later on you also warned that you may

need to order some limited cross‐examination of business

experts before you make your judgment, and I don’t think

that at any stage you give a clear indication that you

rule out a split of the trial on quantum if the dispute

between business valuation experts really comes to the

fore.

My Lord, we submit that this issue is still very

much open. We say that we have proven the alternative

counterclaim, based on the value of assets, as we have

shown fraud, we say, and we have shown that the correct

valuations are Ms Simonova’s, but that is not the end of

the matter, because there was also loss of business, and

that would be higher. That’s especially important in

relation to the business of Onega as for rather formal

reasons we have been unable to claim for the second half

of that terminal, the one owned by LPK Scandinavia, so

we cannot claim for the value of that asset even though,

on the evidence you have heard, it was clearly part of

the same plan which caused that loss. So that is where

the difference between the value of the only asset which

we can claim for, ie the Scan land, and the value of

Onega business, of the business of the entire Onega

Terminal, is particularly significant.

Now, my Lord, it obviously depends on two things:

firstly, is it likelier than not that if not for the

fraud, the default would have been avoided? Then there

is a second question of the actual value of the

businesses, and I accept that if you are against us on

the first question, if you decide that the default was

inevitable on the balance of probabilities, that’s the

end of the business claim, and there is no need to

resolve the issue of value, but the converse is also

true.

Now, in terms of the prospects of refinancing,

I submit that Mr Bromley‐Martin was a very credible

witness. He is entirely independent of Mr Arkhangelsky

for very many years now. He had no reason to distort

the reality either way.

By very nature of his business and the role he

plays, he is able to look at the position, both from the

point of view of the borrower and the lender, otherwise

he would have never succeeded in his business. It was,

with respect, a top class, vigorous cross‐examination

which he passed very impressively. In particular, he

defended his financial model very persuasively, it is

a realistic model, and his evidence on that should be

accepted.

Then obviously a lot of cross‐examination concerned

the several serious inaccuracies in the information

memorandum, and the most sensational of them, as it

were, is the one which Dr Arkhangelsky explained to you

by the bribes he had to pay to Mr Matvienko.

Now, my Lord, even though it has been rather

fiercely criticised by the claimants, I don’t resile

from my submission that the process of lending does not

include a cross‐examination on oath. He told you this

in court, and the only reason why he had to tell you

this was because he had sworn to tell the whole truth.

Bribes by their very nature is something you don’t tell

everyone about. Obviously it is reprehensible, the fact

that someone is paying bribes, but it is not a separate

point of criticism that not only did you pay bribes, you

have also failed to tell it to your lenders. Now,

that’s ridiculous: if you are bad enough to pay bribes,

you don’t tell about this to everyone.

So without trying to be what I think

Mr Bromley‐Martin described as «purist» about bankers,

realistically it wouldn’t have come out and the lenders

would have never learned about it.

Indeed, the burden of ‐‐ well, to save time, but in

any event, for a fuller picture to be seen by

your Lordship, rather than taking you to specific points

in Mr Bromley‐Martin’s evidence, I would recommend

re‐reading the whole cross‐examination as you deliberate

on your ruling on this issue. I submit that what

follows from the evidence of Mr Bromley‐Martin and

invite you to accept it is that few on the potential

lender’s side would actually notice the inaccuracies in

the information memorandum. The significance of

the acquisition price, as Mr Bromley‐Martin explained,

and is clear from his evidence, its significance is

simply because it is indicative of the market value;

nothing other than that.

So once a valuation report would have been obtained,

it would be quite easy to replace the acquisition price

with the value given by an independent valuer, and

that’s the figure at which the lenders would have

L15/90/15

July 11, 2016 Day 46

looked. Even though much was made of these inaccuracies

in cross‐examination and in submissions, in fact,

Mr Bromley‐Martin is right: they could be kicked into

the undergrowth, to use his phrase, with greater or

lesser degree of embarrassment, but they could be kicked

into the undergrowth.

Indeed, my Lord, well obviously the lenders who lend

to places like Russia, again, I think it is a point made

by Mr Bromley‐Martin that if they walked away whenever

there was a hint of bribery, there would be no lending.

They don’t take this idealistic, purist view of

business. Unless they are ‐‐ well, the reality is,

unless they are faced with clear evidence of something

as outrageous as what Mr Arkhangelsky told you about,

quite frankly, they don’t walk away: they are quite

happy to turn a blind eye to these things to an extent.

MR JUSTICE HILDYARD: «To an extent».

MR STROILOV: Indeed, my Lord, yes. But, of course, unless

Dr Arkhangelsky becomes as frank with them as if he was

in the witness box, it remains simply an inaccurate

figure of limited relevance, no more than that.

My Lord, I think Mr Bromley‐Martin told you that,

really, again ‐‐ and it seems to be common knowledge in

his business ‐‐ that businessmen in the emerging markets

are prone to exaggeration, it is not seen as something

extraordinary. It is important, my Lord, not to import

the high standards which you rightly apply in judicial

proceedings to parties which appear before you, and of

course if someone tells you about things like bribery,

well, you may give him some credit for candour, but you

would obviously condemn this quite severely.

That is not quite how lenders look at this. They

do ‐‐

MR JUSTICE HILDYARD: Yes. I mean, the problem, I think,

with the elephant in the room to some extent, it’s very

difficult for a court, isn’t it, on the one hand to say:

I’m very cross about this bribery but, on the other

hand, I’m going to give hundreds of millions by way of

recovery on the footing that although the court has

processes which enable it to be discovered, other people

might not. I mean, it is a pretty unattractive kettle

of fish, isn’t it? Even if I accepted, and I will

re‐read as, you are quite right, I should,

Mr Bromley‐Martin, but my recollection was that he

thought that all lenders would perform very considerable

due diligence and that due diligence, properly done,

even without cross‐examination, would expose the gap,

and once the gap was exposed, Mr Arkhangelsky had two or

three answers: one to show that it had been spent, which

would be difficult without a lie; the other was that it

was a bribe, which would put everyone off, and the third

that he had stolen it, in which case they would run

a mile. Those are difficult points, aren’t they, for

him?

MR STROILOV: Well, I think what ‐‐ then it would not

necessarily be a gap as such, really. It would expose

an inaccuracy in the information memorandum,

essentially.

MR JUSTICE HILDYARD: I know. I know when an inaccuracy

becomes a gap, but to my way of thinking, it is not

unlikely it will come in the 100 million area.

MR STROILOV: But my Lord, it’s not as ‐‐ there are gaps and

gaps.

MR JUSTICE HILDYARD: I agree.

MR STROILOV: In this sense, well really the simplest way of

kicking this into the undergrowth ‐‐ I’m slightly

anxious of trying to embark on, really, inventing ways

to do that.

MR JUSTICE HILDYARD: Mm.

MR STROILOV: But the simplest way is obvious: simply to

tell the lender: sorry, it was a mistake, the real

figure is different, and in any event, we now have

a valuation report, so rather than go by the acquisition

price, you have the market value in the report. It

clearly appears from Mr Bromley‐Martin’s evidence that

the only thing that is relevant, and to a limited extent

for the lender, is really the market value, and other

than that, acquisition price just does not come into

play.

While, obviously, the court takes a ‐‐ well, in

a way, one of the big questions on which your Lordship

focused and these proceedings focused, was simply how

honest is Dr Arkhangelsky, whereas the lender would look

at the commercial project first and foremost; they would

not be passing moral judgment. The only way in which it

would come into play is if he is so dishonest that we

risk him running away with the money, and then we simply

can’t trust him with anything.

That’s a much higher standard, if you see what

I mean. At the end of the day, my Lord ‐‐

MR JUSTICE HILDYARD: But I asked Mr Bromley‐Martin, and

I am not quoting because I haven’t got an accurate

recollection of it, my recollection as it is is that

I asked him whether the potential lenders identified

were the sort of lenders who would have held their nose.

My answer was ‐‐ my recollection of his answer was: no,

they weren’t. They weren’t the sort of lender. They

were main line lenders, fully conversant with the

absolute rule of knowing their client, fully conversant

with the need for due diligence, and not at all keen to

L15/90/16

July 11, 2016 Day 46

be involved in something which might land them in all

sorts of difficulties, including sort of prosecution in

America, FATCA legislation and all the rest.

MR STROILOV: My Lord, I think a lot of this, a big part of

the cross‐examination, really, proceeded on the premise

what would happen if the fact of these briberies would

come out?

MR JUSTICE HILDYARD: Yes, I accept that.

MR STROILOV: And really the first step is for your Lordship

to assess, realistically, how likely it is that they

would have come out in those circumstances ‐‐

MR JUSTICE HILDYARD: I see, okay.

MR STROILOV: ‐‐ rather than in this court.

My Lord, it is, perhaps unfortunately, the question

for you is not what should have happened in a morally

ideal world; it is what would have happened in this

world if not for the fraud which we say we have proven.

MR JUSTICE HILDYARD: Well, there are two aspects of this,

which is why I wanted some guidance on this: one is the

factual question, even if a hypothetical, as to what

would have happened. Would it have been revealed,

either to potential lenders or to the Bank itself, and

I can sort of take a view on that.

You urge the answer: no, it wouldn’t have been, and

kicked into the long grass in ways which are difficult

to define exactly how, but I shouldn’t assume that it

wouldn’t have been, and on that footing I should take

into account business potentiality and enormous figures

which that is the gateway to.

At that point there is a tremendous encouragement to

the court, isn’t there, to see whether there is some

legal objection to it rewarding someone it knows has

paid these whopping great sums for purposes it doesn’t

much like the look of. At that point, the question

arises as to what is the law as to illegality. One

can’t really sort of get away from this fact there is

a bit of a crunch here. Naturally, I think I should

confess, without asserting tremendous moral superiority,

that I would find it counterintuitive both to sweep the

matter under the carpet and then on that footing to give

someone hundreds of millions by way of reward by my

order. If the law is that I should, I will do that;

I will apply the law, but all that you say focuses

tremendous force, doesn’t it, on the issue as to what is

the law with respect to an admitted illegality.

MR STROILOV: Yes, my Lord, well, obviously these are two

very different issues. There is a factual issue as to

what would happen ‐‐

MR JUSTICE HILDYARD: They are different, but they bring

together, don’t they, they come ‐‐ I mean, we are now at

a late stage in trial, Day 46, I’m beginning to work out

how to resolve the issue.

MR STROILOV: Yes, my Lord. Simply these two issues have to

be kept separate on the factual issue of whether it

would have been kept quiet, it is an unattractive but,

in my submission, inevitable finding that unfortunately

in this imperfect world it will have been kept quiet,

otherwise there would never be any lending to Russia.

MR JUSTICE HILDYARD: I think all you can say, you may say

that short of cross‐examination, Mr Arkhangelsky would

not himself have revealed it. I don’t think you can say

it was inevitable it shouldn’t discover, I think it is

highly debatable at the very best. My own slightly,

I dare say, jejune faith in lenders asked to cobble

together hundreds of millions of dollars is that they do

go carefully. That might be absurdly innocent, but it

is my initial response.

MR STROILOV: My Lord, I think I would here simply rely on

Mr Bromley‐Martin’s comment, I think to the effect ‐‐

I’m not quoting directly, but realistically, if the

lenders walked away at any hint of bribery, there would

be no lending on the emerging markets.

MR JUSTICE HILDYARD: Mm.

MR STROILOV: And he drew quite a distinction between the

situation where there was evidence of bribery and merely

a suspicion or some inconsistency which perhaps pointed

towards bribery.

MR JUSTICE HILDYARD: Do I take the cohort of people who

might or might not discover this as being the cohort who

you say there was a realistic prospect of obtaining

finance from? Or do I imagine a whole series of more

unscrupulous lenders, possibly, who might be less

worried about their directors being locked up in America

or here? Which cohort should I envisage?

MR STROILOV: Well, in a way it is rather complex. I think

the question for your Lordship is simply: is it more

likely that the group would have defaulted or not? That

is the ultimate question you have to answer. Then

within that question, what comes into play is the

prospects of refinancing. It’s not even limited to

refinancing. Again, we can look at Mr Arkhangelsky’s

witness statement.

MR JUSTICE HILDYARD: No, it isn’t. I have ‐‐

MR STROILOV: It is not limited to this particular project,

it is not limited to Oxus, it is not limited to

BNP Paribas, it is not limited to refinancing at all; it

could have been restructuring, it could have been

selling part of the assets and, really, was the group

able to survive, is the question for you.

MR JUSTICE HILDYARD: Well, there are three means of

L15/90/17

July 11, 2016 Day 46

survival, aren’t there? One is restructuring with your

existing lender, right?

MR STROILOV: Yes.

MR JUSTICE HILDYARD: And I have to take a view as to

the extent to which if I find that they were conspiring,

if they had not conspired, what would have been the true

situation.

MR STROILOV: Yes.

MR JUSTICE HILDYARD: The second is I have to look at the

evidence of the potential funders if there was to be

replacement finance.

The third, and the question I am asking is am I

entitled also to take into account the un‐evidenced

prospects of some other lenders than EBRD and BNP and

front‐runners of that kind holding their nose, darting

in and saying: I know it looks a bit squiffy, but we

will lend a lot of money. I am sorry to put it broadly,

but it is just so that we know we are being quite candid

about the situation.

MR STROILOV: Indeed, my Lord, and I make this submission

without pleasure but I think you have to take this into

account.

MR JUSTICE HILDYARD: The prospect of rather less particular

lenders, I should, should I?

MR STROILOV: I think Mr Arkhangelsky’s evidence in

on searching for skeletons in the closet as, quite

rightly, my learned friend focused on that day. It is

just a totally different approach. It is not attractive

and we may all be philosophically unhappy about it, but

you have to find what the reality would be.

MR JUSTICE HILDYARD: Then the crunch comes: if you feel

philosophically unattracted by it, is that really the

law, that you are compelled to accept the possibility of

unscrupulous lending, therefore the possibility of

a recovered business on the footing of something

entirely unlawful, therefore lots and lots of money

under the claim caught, in effect, the engine for,

really a pretty awful situation.

MR STROILOV: My Lord, we are back to the public policy

defence.

MR JUSTICE HILDYARD: Yes.

MR STROILOV: In my submission it is clearly ‐‐ well,

obviously a lot has been made of it, but it is quite

remote from any issues in this claim. It is simply some

unattractive fact in the history of Mr Arkhangelsky and

Western Terminal. It’s no more than that. Certain

bribes have been paid, but how does that affect the ‐‐

I don’t ‐‐ well, I stand to be corrected if I am wrong:

I don’t believe Mr Arkhangelsky has even said that he

would have to continue to pay these bribes to develop it

65 67

the witness statement is that he was talking to a lot of

Russian banks as well as western banks, and I think it

is right to assume that both categories really include

unscrupulous or less scrupulous lenders in different

proportions.

MR JUSTICE HILDYARD: So what evidence do I have that they

might be interested beyond a general sort of ‐‐ I would

then be applying a rather idiosyncratic feel,

wouldn’t I, as to what more ‐‐ less mainstream lenders,

possibly more unscrupulous lenders might do? It would

be a guess, wouldn’t it, on my part. It would either be

an exercise in sort of slightly unrealistic piety, or it

would be an exercise in: my goodness, anything goes in

the commercial world.

MR STROILOV: I see the difficulty, my Lord.

In my submission, the bottom line is the market

lives by the laws of the market.

MR JUSTICE HILDYARD: Yes.

MR STROILOV: If you have a phenomenally profitable project,

as Mr Bromley‐Martin described it, then for the better

or for the worse, there will be a financing for it. And

that really resolves the issue.

MR JUSTICE HILDYARD: So with Cole Porter, anything goes?

MR STROILOV: My Lord, the skeletons, it is not ‐‐ the

lenders focus, really, on the project: they don’t focus

further. He simply explained that he did that in

the past.

My Lord, how would you look at it if, for instance,

our defence to the Bank’s claim was based along these

lines: well, the Bank only exists thanks to its corrupt

relationship with Mrs Matvienko. Therefore, it wouldn’t

be lending without it, and therefore it should not

recover its loans.

MR JUSTICE HILDYARD: I think, for clarity, the premise on

which I am most stuck is the premise that though I know

about this, I’m to assume that others would not have

found it out, and on that footing I should grant huge

damages. I think that’s the thing that I find most

anxious‐making. Have I made myself sort of ‐‐ is that

sort of …

MR STROILOV: I think, my Lord, that is inherent in the

extremity of the oath which every witness takes in

the witness box. Well, you have to take into account

that you are meant to know everything, but that’s not

what happens in the world outside the court.

MR JUSTICE HILDYARD: Mm. How are we doing on time,

Mr Stroilov?

MR STROILOV: Well, I think ‐‐ well, I don’t think I will

need more than 10 minutes, probably after the lunch

break is better because I will spend the lunch break ‐‐

L15/90/18

July 11, 2016 Day 46

MR JUSTICE HILDYARD: Would 2.00 suit you all, then Mr Birt,

you must finish by 4.15 pm; is that going to be all

right?

MR BIRT: My Lord, if I am up on my feet before 2.15 ‐‐

MR JUSTICE HILDYARD: I will give you until 4.30, I have

a meeting at 4.45.

MR BIRT: I will do my best, my Lord. It may be that I have

to skate over some points or give your Lordship some

references, but I will do what I can to accommodate

your Lordship.

MR JUSTICE HILDYARD: Just one question: am I going to get

some assistance on the legal point as to the illegality

point, as I will call it?

MR STROILOV: Well, you will recall that Mr Milner very

kindly volunteered to provide a note.

MR JUSTICE HILDYARD: Yes, will you discuss between you the

mechanics of that. They need to know when you get it

and they may need to reserve their position as to

an answer and you as to any further things. Will you

discuss that briefly?

MR BIRT: We will discuss it between us, my Lord, yes.

MR JUSTICE HILDYARD: Good. Thank you. 2.00 pm.

(1.10 pm)

(The Luncheon Adjournment)

(2.00 pm)

You would expect there to be some documentary record of

chasing; there is none.

You were told that the Bank learned about the arrest

of Tosno, and that changed its view of OMG’s situation.

In the Bank’s disclosure, there is no document

mentioning the arrest of Tosno prior to 5 March.

In my submission, the suggestion that having learned

of the tax investigation back in 2006 or 2007 which

resulted in Mr Arkhangelsky being cleared, that this may

have affected the Bank’s decision, that is also not

credible. The Bank would have considered the commercial

prospects of OMG, and refinancing would have been high

on the agenda.

It clearly did not and the inference I invite is

that because by that time the Bank was already

determined to call a default so as to be able to seize

the assets.

My Lord, some references on the points which came up

previously. It is our pleaded case that the transfer of

shares to subsequent purchasers was a breach

of December 2008 agreement. That’s paragraph 129 of our

re‐amended defence and counterclaim.

Coming back to my previous point, I’m sorry,

my Lord, the cross‐examination of Ms Mironova on that

was, in my submission, rather revealing: she was clearly

MR STROILOV: My Lord, as I said, I will be brief now, just

a couple of points and a few references to give you.

First, the difficult, perhaps, issues which we have

discussed just before the luncheon adjournment. Clearly

whatever the position on the public policy and indeed on

the facts is, they do only relate to the primary claim

for the value of the business; they do not affect the

alternative claim for the value of the assets, in my

submission. So if your Lordship is minded at all

possibly to split off that issue for a separate trial or

some hearing later, and to order interim payment as

a result of findings on this claim, there are obvious

advantages in deferring these issues to that second part

as well. The most obvious of which is getting rid of me

and getting proper lawyers.

My Lord, just very briefly on the facts I haven’t

covered. The explanations given on behalf of the Bank

for the decision to call a default in March 2009, are

not corroborated by documentary evidence at all. You

were told that Mr Arkhangelsky was chased for

documentary evidence of outstanding timber payment.

I stand to be corrected; there is apparently no written

record of such chasing.

You were told by Mrs Volodina that he was asked to

come up with a recovery plan, but never provided it.

not credible. That’s {Day32/59:18}.

There is also, I think, one point on the moratorium,

which I haven’t explored sufficiently in written

submissions or in oral submissions, is that apart from

Mr Savelyev’s BVI statement, there have been some other

statements publicly made explaining the Bank’s position,

which we say are inconsistent with the Bank’s present

case.

Again, I cross‐examined Ms Mironova on that in some

detail on Day 32 {Day32/80:9}, and going on through to

{Day32/89:1}.

Further, my Lord, on references, I have promised

Ms Mironova’s admission that the settlement agreement

with VECTOR Invest was not meant to be implemented.

That’s on Day 33, and then the cross‐examination on that

settlement agreement starts at page 104, line 17, and

continues for some pages {Day33/104:17}.

I hope I am not galloping too fast, my Lord. If

I am, tell me.

MR JUSTICE HILDYARD: Thank you.

MR STROILOV: The minutes number 1 of the auction sale which

named Globus as a second bidder, that’s at

{D161/2715/1}.

Now, a couple of additional points. I think what my

learned friend has submitted last week in response to

L15/90/19

July 11, 2016 Day 46

your Lordship’s question on this spreadsheet exhibited

by Ms Stalevskaya, naming various companies as belonging

to the Bank, on our interpretation.

Now, Mr Birt submitted that this column «belonging»

was linked with projects. Perhaps it makes sense to

have a look very quickly at the actual table at

{D139/2329/21}, just so that you follow what I am

talking about.

So, my Lord, you look in the far right column you

have «projects» and then «belonging», so it’s in

the middle, it’s column 6, and I think the claimants’

interpretation is that the «belonging» column being, as

they say, the funder or the lender, corresponds to

projects, whereas we say it corresponds to the share in

charter capital and to column 5 which we say is

a nominal shareholder.

Now, that explanation is something Ms Stalevskaya

has expressly rejected, and agreed with me that the

projects column just gives you a list and does not

correspond to other sub lines. That’s on {Day9/103:5}.

Finally, my Lord, just a few words on Mrs Malysheva

and her non appearance. It is, with respect, not

correct that she was only named as a conspirator in

the latest amendment to pleadings. The amendment was ‐‐

well, she was named, I think the earliest time she is

consistent in saying that Mrs Malysheva acted on behalf

of the Bank with full authority; there was no attempt,

really, to denounce her actions, no suggestion that she

was acting outside her authority in any way.

So whether she decided not to answer allegations of

dishonesty in relation to these actions or the Bank

decided that she shouldn’t answer, either way you are

entitled to draw adverse inferences and, indeed, we

invite your Lordship to do so.

MR JUSTICE HILDYARD: Adverse inferences of what? Of

conspiring?

MR STROILOV: The inference is, well, really a refusal to

answer these kind of allegations in these circumstances

amounts to an admission, in my submission. She has

nothing to say. Either she considered or the claimants

considered that her cross‐examination on these issues

would only make matters worse. That is the inference we

invite.

My Lord, unless I can assist you on any further

specific points, I should, at last, give way to my

learned friend.

MR JUSTICE HILDYARD: Just hold on one sec. (Pause).

You accept, do you, as regards Mrs Malysheva, the

evidence that under Russian employment law she couldn’t

have been required by contract to give evidence?

73 75

named in the list of conspirators is in the version of

our pleadings dated 21 January 2013. I will just give

you the paragraph reference, my Lord. In the bundle

that is {A2/11/42}, and then in paragraph 177 she is

named expressly as one of the conspirators, and there

are more detailed pleadings about the ownership or

co‐ownership of Baltic Fuel company and Renord by her

husband and son.

The only thing that changed recently is that we

expressly pleaded that the Bank was acting by ‐‐ the

previous pleading was acting principally through or by

Mr Savelyev, and now we have changed it into acting

principally by Mr Savelyev and/or Mrs Malysheva. But

she was named and very serious allegations of dishonesty

were made against her.

Whether it was her decision not to respond to them

and to refuse to give evidence or the Bank’s decision

not to call her depends on the credibility of

Mr Savelyev. He told you that she was dismissed for

reasons unrelated to this case, and he told you that he

asked her to give evidence but she refused.

We say Mr Savelyev is not credible at all, and very

little weight can be given to his evidence. But

ultimately it doesn’t matter very much because the

claimants admit, and all claimants’ witnesses were

MR STROILOV: No, my Lord. No. Well, it’s just what

Mr Savelyev told you. Unless I have missed something,

there was no Russian law evidence on this, and

essentially it sounds rather incredible, the suggestion

that in parting company and in making some payments to

her, it was not possible to come to some arrangement

where she would give evidence here.

MR JUSTICE HILDYARD: So as regards that, you simply say

that Mr Savelyev is not a lawyer and his opinion in that

regard is worthless?

MR STROILOV: Indeed, my Lord. If, indeed, he was

truthfully giving his opinion. Well, we say his

credibility is zero.

MR JUSTICE HILDYARD: You stress the position of Mr Lokai in

paragraphs 178 and onwards in your closing submissions;

was there anything you wanted to say in that regard?

MR STROILOV: Yes, my Lord, the position of Mr Lokai, well

obviously the whole system of companies associated with

Mr Lokai shows a number of points. It shows that there

is, indeed, a system probably wider than Renord of

various companies associated with Bank of St Petersburg

and Mr Savelyev’s denials that BSPB stands for

Bank of St Petersburg and all other similarities of name

is really not credible.

He is associated with Solo, he is the founder of

L15/90/20

July 11, 2016 Day 46

Solo, and that’s obviously one of the crucial companies

in this case and I would submit crucial, among other

things, to the understanding of what Renord is.

Essentially the picture which, in my submission,

seems most likely from this vast investigation of

various companies associated with the Bank, is that in

the reorganisation of the Bank’s investment department,

to which Mr Smirnov refers in his witness statement, it

simply involved separating a number of companies, and

people who worked within the Bank on investment,

including Mr Lokai and Mr Smirnov and various employees

who are now the management team of Renord, they became

separated, they became essentially, in practice, BSP

Capital, the bad bank, only for the reasons which

perhaps Mr Savelyev and Mr Turetsky and a number of

witnesses explained to you: the connection with the Bank

was kept hidden, but essentially it became the bad bank

associated with BSP, and both Mr Lokai and Mr Smirnov

seem to be managers of that system.

MR JUSTICE HILDYARD: There was in the last substantive

part, part 14 of the claimants’ closing submissions,

focus on various aspects of the conduct of

the litigation on behalf of the defendants with relation

to disclosure, publicity given, bandstanding, I think

they would call it; is there anything you wanted to say

in that respect?

MR STROILOV: Well, it is so enviably comprehensive that it

takes some time to find it, my Lord.

MR JUSTICE HILDYARD: Yes. It is paragraph 1186 and onwards

is where the part begins.

MR STROILOV: 1126.

MR JUSTICE HILDYARD: 1186.

MR STROILOV: I beg your pardon, my Lord.

MR JUSTICE HILDYARD: It may well be you don’t wish to

respond, but we haven’t looked at that and I just wanted

you to …

MR STROILOV: Yes, my Lord, I think obviously there has been

a lot of dispute in relation to disclosure, and I’m

grateful: I meant to draw your attention to the ‐‐

pursuant to your Lordship’s order there was a disclosure

statement with a very comprehensive appendix answering

all the questions which the claimants asked in

correspondence that will be in volume {P1/10/10}.

Really, essentially there were two interrogatory

letters, as it is, which we were directed to answer

insofar as we can, and so we did at length. So in

response to these criticisms, I would simply invite

your Lordship to read this.

MR JUSTICE HILDYARD: Yes, anything else on that section?

MR STROILOV: Yes, my Lord. As regards the suggestion that

V‐Bank did not withdraw from BVI proceedings because of

pressure, well, you don’t have to resolve it because you

did not ‐‐ a number of years ago you did not admit this

part of the counterclaim, and essentially that depends

on what has been ‐‐ on whatever you find generally about

the parties and their credibility.

On the so‐called media campaign, well, we reject the

allegations of conducting a specific campaign. This was

a case which attracted very considerable media attention

in Russia. Both parties were briefing the media and

essentially there is nothing wrong with that. That is

only to be welcomed. Apart from a particular Facebook

publication, which was unfortunate, for which

Mr Arkhangelsky has apologised.

I think the suggestion that we were distributing the

cartoons of Mrs Matvienko, that’s also incorrect. That

comes from some further re‐posting of our press release,

and someone else added the cartoon; we were not

producing any cartoons, my Lord.

I think there are some criticisms of me which, with

respect, I don’t think ‐‐ well, with no disrespect,

I don’t think they deserve an answer.

MR JUSTICE HILDYARD: Good. Thank you very much indeed.

Have you agreed between you as to how you deal with

the important point of progress with the issue as to

illegality?

MR BIRT: We had a discussion at the beginning and at the

end of the short adjournment, my Lord. Mr Stroilov ‐‐

he will speak for himself, but he suggested because he

is reliant on Mr Milner really, here, and Mr Milner’s

diary is not clear and is assisting pro bono, they need

a little bit of time.

Shortly before we started it was suggested that they

might be able to produce anything in writing that they

wanted to produce by two weeks today, which is 25 July.

That would give us the balance of that week to produce

any reply to that, if it is to be in before the long

vacation. The difficulty if it doesn’t come that week

is certainly I’m unavailable during the long vacation,

but we will endeavour to get something in and, assuming

that is what your Lordship has in mind, by Friday

29 July, and we would hope to be able to do that, if we

do indeed get something in writing on 25 July, and we

would say preferably 10.00 in the morning or lunchtime

and then we would be able to find, Mr Eschwege and I, in

the last crowded days of term that no doubt everybody

experiences, we would endeavour to get something back to

your Lordship then.

If that suits. If your Lordship isn’t fussed until

getting something much later, then more relaxed, but

L15/90/21

July 11, 2016 Day 46

assuming your Lordship wanted to get that done and

dusted, that’s what we would endeavour to deal with,

my Lord.

MR JUSTICE HILDYARD: I’m going to be candid about this.

I had hoped that I would have the rest of the term to

write or begin to write judgment, but that has all, or

substantially all, been taken away from me, so it is

unlikely that I would immediately make progress on the

judgment. My real aim is to make sure that these sort

of things which are fresh to the mind now, but may pass

out of it, as the summer rolls on, don’t get forgotten.

What I suggest is you keep, broadly, to that

timetable, but if either one of you faces some

difficulty, please keep me through my clerk updated,

partly as a matter of my knowing what you are doing, and

partly so that we keep this matter to the fore.

MR BIRT: My Lord, very well, we will do our best, and if it

looks like either Mr Stroilov or Mr Milner have needed

a few more days which, in effect, runs us out of time,

we may have to write to your Lordship with a proposal.

MR JUSTICE HILDYARD: Yes.

MR BIRT: The other potential unknown which may impact on

this is if the Supreme Court does indeed hand down

a judgment in a new leading case we may both to have

a fresh look at that, but in which case we can both

similarly e‐mail my Lord’s clerk and come up with a

fresh proposal.

MR JUSTICE HILDYARD: Well broadly speaking, I am fairly

glued up in July, I am away in August, and then I’m here

from at least the second week of September. Then I am

applications judge in the last week, or the second to

last week, I can’t remember, so I will be around

in September.

MR BIRT: I think we have a working plan and we would hope

that if it looks like we’re not going to get the note on

25 July, then we would have an idea of when so we can

plan our work accordingly, my Lord.

MR JUSTICE HILDYARD: Very good.

Submissions in reply by MR BIRT

MR BIRT: First of all, my Lord, I am obviously going to

pick up points that have emerged or been made by

Mr Stroilov in his submissions or emerged in discussions

between my Lord and Mr Stroilov over the last few days.

I don’t intend to repeat the earlier oral submissions

I made or, indeed, the written document that we have put

As I mentioned earlier, on some occasions it may be

a question of just giving my Lord references,

particularly given the time.

MR JUSTICE HILDYARD: Yes.

MR BIRT: I was just going to start off by giving a few

references arising out of some exchanges this morning,

while those points are fresh in our minds.

First of all, Mr Bromley‐Martin and his evidence

about what could have been achieved given the

information memorandum discrepancy, as one might put it

kindly. We have dealt with those in our closing

submissions in paragraph 478 and 479. I think my Lord

remembered some of his evidence earlier in answer to

your own questions, and I think there was first a short

passage where my Lord asked a question as part of, or in

the middle of, Mr Lord’s cross‐examination. That was at

{Day20/41:1}. Then coming back to it after

re‐examination my Lord asked some more questions, and

that was {Day21/23:1} to {Day21/26:1} on the point

I have in mind which demonstrates, in our submission,

that his evidence as to the difficulties of getting any

of these lenders really interested was not confined to

the discovery of the bribe as such, or the alighting on

that as the right characterisation, but it was

effectively the discrepancy. I think my Lord at one

point described the discrepancy itself as a «huge

clunking skeleton» that would emerge from the closet on

any degree of due diligence by any of the lenders.

My Lord, I think those are the passages, I won’t go

through them now but that, in our submission, was quite

valuable evidence on this point.

Insofar as Mr Stroilov went on today to make

a submission that: well, there might have been some

other Russian lenders out there, or perhaps some lenders

with fewer scruples who might have held their noses or

be prepared to go ahead and lend, we say it is just not

open to him now to advance that sort of case based, as

it is, entirely on speculation and not evidence. There

is no evidence as to any particular lenders who would

have gone ahead on that sort of basis, knowing what they

inevitably would have come to know through any due

diligence process.

Indeed, once one moves beyond were there any

lenders, the next question that would inevitably arise

would be: well, on what sort of terms would those sorts

of lenders lend, and the sort of lender who might lend

on that basis might demand much more onerous terms than

a western bank in terms of rates, in terms of covenants,

in terms of security, and of course, none of that was

explored and none of that was put into evidence,

my Lord.

Generally in relation to the prospects of

refinancing, we have dealt with that comprehensively in

the written submissions. I wasn’t intending to make any

L15/90/22

July 11, 2016 Day 46

further points on that immediately.

My Lord, just briefly on Land Breeze, my Lord made

the observation this morning that there is not much that

the court knows about it and, indeed, there is not much

that the claimants know about it either. But what we do

know in relation to the Vyborg Shipping business and

Land Breeze we have set out in our closing submissions

from paragraphs 222 onwards, and that describes it, we

know, and the Vyborg Shipping scheme and, in particular,

around paragraph 228, and then we note in footnote 666

that we recently discovered that Land Breeze had been

dissolved. We wrote to the Arkhangelskys about that and

they said: we weren’t involved in that, but we found

that slightly surprising {AA3&4/14/138}.

Then there was another passage, again, just the

reference, in our written opening at paragraphs 45 and

onwards that dealt with the Vyborg Shipping scheme and

Land Breeze and effectively there were time charters put

up for vessels which didn’t exist, and it was money paid

to Land Breeze under those time charters that went into

what we would say was the black hole {AA3&4/14/32}.

MR JUSTICE HILDYARD: Maybe I have misunderstood this, but

do the Arkhangelskys not admit that they were

shareholders in Land Breeze?

MR BIRT: My understanding is they admit that they were

certainly the ultimate beneficial shareholders. I’m not

sure if they were the direct shareholders or whether

that was through a network of Cyprus companies and a BVI

trust. Some of the companies were held in different

ways.

MR JUSTICE HILDYARD: But ultimately they were the owners?

MR BIRT: My understanding is they were ultimately owners of

Land Breeze, my Lord, yes.

MR JUSTICE HILDYARD: That is accepted, isn’t it,

Mr Stroilov?

MR STROILOV: Yes, my Lord, through the BVI trust which you

will remember featured heavily in the freezing order

proceedings. That’s, I think ‐‐

MR JUSTICE HILDYARD: It just seems odd that they knew

nothing of the dissolution if they were the ultimate …

MR STROILOV: Yes, my Lord. I think it is explained in

the letter which Mr Arkhangelsky sent.

MR JUSTICE HILDYARD: Okay, where is the letter? 666,

footnote 666.

MR BIRT: It is footnote 666, so I think ‐‐ ah, we haven’t

got a reference. It was a letter dated 9 June 2016.

MR JUSTICE HILDYARD: Where can I find that?

MR BIRT: I will ask somebody to find the reference.

I expect that came in at around the same date as the

submission went in, my Lord, so it will be towards the

back end of bundle I.

MR JUSTICE HILDYARD: Thank you.

MR BIRT: Then, my Lord, some other references arising out

of this morning. There were some submissions about the

Morskoy Bank loan, and just to remind my Lord a little

bit about that, we dealt with that story in various

places, but in paragraph 808 of the written closing

{AA3&4/14/432} we gave some explanation about some of

the evidence about it.

My Lord knows a number of the allegations about who

the shareholder was and whether or not that was the

right way of approaching it, but the story ‐‐ there was

a part that wasn’t really gone through this morning, and

going through to 808(4), and this ought not to be

forgotten in the Morskoy Bank loan story, it was a loan

taken out by Western Terminal, so Western Terminal

assumed the obligation of repayment to Morskoy Bank, but

the money was paid straight on by Western Terminal out

to another OMG company, LPK Scan, which of course was

outside the repo. That was contrary to the purpose for

which the loan was advanced by Morskoy Bank, which was

supposed to be for the purposes of Western Terminal’s

working capital.

So the loan itself was of no benefit to

Western Terminal at all and Mr Arkhangelsky’s

explanation was: ah, it was of benefit for the group,

but, of course, that was rather contrary to the idea

that Western Terminal itself would not, whilst subject

to the repo arrangements, be the subject of action or

conduct or manoeuvring which would be to its own

financial disadvantage. Indeed, that was one of

the terms of the memorandum that Mr Arkhangelsky relies

on under clause 3, he was not, whilst still involved in

Western Terminal, to act to its financial disadvantage

in that way, to its detriment.

So that is part of the story that will come up again

later, because one of the claims against LPK Scan was

then trying to get that money back that Mr Arkhangelsky

had procured Western Terminal to transfer out.

But at the moment, the loan itself was a breach of

the memorandum. Obviously my Lord knows that we say the

memorandum isn’t binding, but Mr Arkhangelsky does, he

relies on it. We say even if it was binding then the

action in relation to Morskoy Bank was a breach, whether

or not there was a moratorium, because it was a taking

out a loan which was obviously to the financial

detriment of Western Terminal and for the advantage of

a different OMG company.

We return, just for completeness, it comes back in

paragraph 962 of our written closing. I will come back

L15/90/23

July 11, 2016 Day 46

to that later, but that’s then how it fits in with the

claim against LPK Scan. {AA3&4/14/508}.

My Lord, coming back to some points that were made

last week, in going back to the conspiracy allegations,

and in particular there were some submissions made by

Mr Stroilov about the bailiffs or the other auction

organisers, and we would say there was a fair amount of

equivocation from him about what he says, those who were

involved in those auctions in that sort of capacity

knew, what their level of involvement was, and what

their case is about it.

His pleaded case, which we cite at paragraph 8821 of

our closing, was that the defendants contend that the

court bailiffs acted under the claimants’ direction

and/or their co‐conspirators, and the direction of their

co‐conspirators and/or were themselves co‐conspirators.

He seemed to backtrack from that in his oral

submissions, because he said it didn’t matter that much,

perhaps the auctioneer was misled is what he says, but

he never said what he thought the auctioneer might have

been misled about or who had misled the auctioneer and

it was certainly not suggested to any of the Bank’s

witnesses that they had done any such thing.

{AA3&4/14/468}.

So in any event there is actually nothing to suggest

they would have wanted to do their duty and ensure

a fair auction to get the best price.

Indeed, the evidence from the witnesses who talked

about it was that so far as they knew, the rules were

followed. It’s also important to note how the starting

price at the auction is set, and we have dealt with that

at paragraph 876 of the closing: it is either the amount

set out in the mortgage contract itself, in other words,

a previously agreed price between the pledgor and the

pledgee, or by the court after an independent valuation

report {AA3&4/14/466}, and in that situation the pledgee

has no role in setting the price. That was

Professor Maggs’ evidence, we have cited that

at paragraph 876.

So it’s not as if the Bank can rig how the auction

starts: it has either been agreed in the mortgage

contract or it is independently determined, and the

evidence of the experts was that is the starting price

and the only way to increase it is by people bidding.

So we don’t understand how it is said, if it is

said, that those conducting the auctions were either

conspirators or were misled, or what the Bank is said to

have done in that regard, and in fact, the evidence is

that they were not.

MR JUSTICE HILDYARD: I mean, that may well be a fair point,

89 91

that the bailiffs or the auction organisers were

co‐conspirators or were, in fact, misled. The evidence

that we have set out on Russian law at 873(3) is that

the auction organisers had a duty to comply strictly

with all the requirements of the law governing the

auctions and there is nothing to suggest that they would

not have done their duty and invalidated the auction if

they had apprehended a breach of the rules.

It was certainly not suggested to anybody that they

had procured any of the organisers or the bailiffs to

breach their duty or, indeed, that they had misled them

in any way. {AA3&4/14/464}.

And we also have noted in the written closing

submissions that the organisers of the auctions had

their own incentive to get the best price: they got

a percentage of the sale price, and that was the

evidence of Ms Mironova, which we have cited at

paragraph 865, and indeed, Ms Kosova as well at 931(2)

{AA3&4/14/460} and Mr Turetsky, our banking practice

expert, said that the range of fees payable was between

1 and 5 per cent of the selling price to the auction

organiser. He said that in his report at paragraph

8.33, which can be found on the {E2/8/28}, so that is

potentially quite an incentive on the organiser to get

the best price, leading to the inherent probability that

I will have to review it, but any sort of auction

bidding or auction barring from interested people, or

any curiosities in the valuations, will be unlikely to

be known, still less within the remit of the bailiffs,

who are really in a ministerial capacity just to see to

it that the rules, which are fairly basic, are not

themselves confounded.

But your case is that so long as the sale takes

place at an auction, it is protected from enquiry except

by action against the bailiffs; is that really right?

MR BIRT: My Lord, that is right. Absent proof of

effectively dishonesty on behalf of another party, that

was the gist of both Dr Gladyshev and Professor Maggs’

evidence, that there was a set of rules and the bailiffs

are responsible for adhering to them.

My Lord is right that the bailiffs are the

court‐appointed officials and, as one sees from the

documents, quite often the actual auction process is

sent to an auction organiser. The Russian Auction House

was an independent one for the Onega properties, and

that wasn’t through the court process, but the other

ones were through different auction organisers on

different occasions. There was one called Aurora,

I think there is one called Tymen, and there are

different companies that fulfil that function, and all

L15/90/24

July 11, 2016 Day 46

those people have their own incentive in seeing that

there is a fair auction, getting the best price from the

market.

The bailiffs have the responsibility of seeing that

the rules are followed. Unless there has been a

starting price agreed, or even if there has, they can go

and get an independent appraisal. That’s what the

bailiffs do, and then that’s the starting price, subject

to the court’s approval, and in some cases there is

a 80 per cent level to reflect the fact that it is

starting in an auction, my Lord.

So there’s not ‐‐ you would have to have all those

people, or at least, a substantial number of those

people, in on it, because if you ‐‐ first of all you

have to get the starting price a long way down where you

want it, so you have to somehow skew the independent

appraisal, you have to get that ‐‐

MR JUSTICE HILDYARD: Subject to it being in the mortgage,

there is no actual ‐‐ all it has to be is an independent

valuation of which the bailiffs have no control.

MR BIRT: Well, we will have to check the evidence. I think

the bailiffs or the auction organisers ‐‐

MR JUSTICE HILDYARD: I know, but they wouldn’t be able

to… what I’m getting at is that there must be all

sorts of reasons why an auction which looks like

an auction isn’t really an auction, but your case is

that as long as it is something which takes place in

accordance with the rules of an auction, so nominalistic

rules, really, it is an auction.

MR BIRT: My Lord, I don’t quite accept that. If it takes

place within the rules of the auction, which are more

than nominalistic rules, they are an auction, because

the rules are set down there in long ‐‐ we took

Dr Gladyshev to some of the parts of the law on

mortgages and things and there is quite a lot of rules

about it, and that is the process through which Russian

law has dictated that a security holder is entitled to

enforce his security, and that’s what he’s entitled to

Just because a bank who is having difficulty with

its borrower who is not repaying and having difficulty

in selling the property in a difficult market chooses to

exercise legal rights and says: I can’t get anywhere,

I’m just going to have to press the button of putting

this into the court auction process now and seeing what

goes on. That’s where we are, my Lord. The rules are

followed, the relevant people who are involved from the

bailiffs and the auction organisers do their job, and

the price is produced according to the normal rules.

MR JUSTICE HILDYARD: It may be that there is no evidence on

this and therefore you can’t answer, but what would be

the recourse if there were an auction ring, for example?

I mean, the bailiffs wouldn’t be able to tell that?

MR BIRT: Well, if there’s an auction ring, my Lord,

meaning …?

MR JUSTICE HILDYARD: Meaning that there is a pre‐compact

between bidders either not to bid or to stop at

a certain amount or to yield to another at a certain

level, or any of the other well known tricks of

the auction trade.

MR BIRT: My Lord, if dishonesty can be proved, then there

is a claim, the expert said, under the relevant

provisions of Russian law against those who are involved

in it.

But absent the proof of dishonesty, none of that

goes anywhere.

MR JUSTICE HILDYARD: Supposing the auction is a sham

because there are two people with different names who

happened to be controlled by the same person?

MR BIRT: My Lord, there are different ways of approaching

that and, first of all, we would say that wasn’t a sham,

that’s an auction that’s been set up in accordance with

the rules.

MR JUSTICE HILDYARD: Really?

MR BIRT: But there is a further point, which is that, just

take a step back and look at the situation here. One

says ‐‐ one looks at the situation and says: it has all

been put up for auction and two companies come along to

bid at the auction, and as we know, they are both

associated with Renord. Well, what are people to do

about it? Was the Bank to say at that stage: stop the

auction, you can’t have this? Well, it is not in their

gift to say that. They are not entitled to. Are they

to say ‐‐

MR JUSTICE HILDYARD: Who was saying that to the Bank?

MR BIRT: Well, nobody was saying that to the Bank.

MR JUSTICE HILDYARD: No, but if it had.

MR BIRT: What was the Bank to do if no other bidders came

forward? They put these assets up for auction in

the hands of the court and its processes, and it has to

be followed through. They are not then entitled to say:

oh, there are not enough bidders come forward I want to

call it all off. They are not entitled to say: oh,

I don’t like starting price, it has to go higher. That

was the evidence of the experts; they have to live with

What happens if they say: Renord, you can’t do this,

only one of you can come forward. Maybe they have

a conversation with them, or maybe the bailiffs say:

we’re not happy with this, invalid. Then what happens?

L15/90/25

July 11, 2016 Day 46

Then what happens is that the price reduces and you go

off for another auction some 7 or 14 or 21 days later,

and it starts at a lower price, and you see whether

anybody else comes forward.

Now, nobody is going to come forward to bid higher

than the first auction. You are inevitably going to get

a lower price. So one asks where does all that go if

there aren’t any bidders out there?

Again, as my Lord knows, if it still fails, it goes

down again, and ultimately, if nobody comes in to bid,

the Bank can take the property at the last starting

price and just write it off against the debit.

Standing back, if the Bank had actually wanted to

take these properties for the lowest possible price for

itself, which is ultimately the defendants’ case, there

was a much better and cleaner way for them to do it,

which was to put it up for auction and have nobody

attend, or have one Renord bidder attend and have it

declared invalid and run it again at a lower price.

MR JUSTICE HILDYARD: Prices were so low I shouldn’t think

it was worth their while, even if you thought about

that. The thing is, it is very, very odd that in none

of the auctions did anyone other than a Renord Company

or a Savelyev company ever attend, and in none of them

does the price go more than one step up above the

the spiral of going downward.

MR JUSTICE HILDYARD: Do you have a list for me of

references to marketing efforts?

MR BIRT: My Lord, I have a list of references for you,

which I am …

MR JUSTICE HILDYARD: Well come to them in due course,

Mr Birt.

MR BIRT: Yes, my Lord, they are behind one of the sheets of

paper.

MR JUSTICE HILDYARD: That’s fine.

MR BIRT: We noted Mr Stroilov’s position on Friday that he

said it wasn’t essential to the alleged conspiracy that

no independent bidder ever came forward. He said that

{Day45/71:1}. In other words, he seemed to be wanting

to accommodate in the conspiracy the risk of an

independent bidder coming forward, no doubt because

putting the properties up for auction did include that

risk, if you want to put it that way, or that

possibility. That seemed to be on his basis that

because the theory that the money goes around in

a circle, the Bank wasn’t actually fussed about what

price they got it, as long as they got it below a price

that was sufficient to discharge the loans.

That seems to us actually to undermine the idea of

the conspiracy because how then is the conspiracy going

97 99

auction reserve, and one has never seen that. I have to

say, I’ve never seen anything like it.

MR BIRT: My Lord, first of all, none of these are Savelyev

companies, we take issue with that: they are Renord

companies.

MR JUSTICE HILDYARD: I mean, that’s a debate, isn’t it?

MR BIRT: Well, I just wanted to make that clear. My Lord,

it may be the case my Lord has never seen it. It may be

the case that one has never seen a market such as that

which prevailed in St Petersburg over this period after

many people will say in the financial market: we have

never seen a financial crisis like 2008. We have

Mr Millard’s evidence that nobody was buying property.

Now, there is absolutely no reason to doubt that

evidence: he is an expert, he has come to this court to

give his honest professional view, and he gave evidence

that they could not sell property over that period. It

is not surprising that when it goes up for auction

nobody really wants it. That was the reality of

the market at the time. No other bidders came forward.

So we do say that attaching some sort of label to

this such as the bid‐rigging label that Mr Stroilov

attaches, doesn’t really get you anywhere unless you can

show that there is somebody else out there who would

have paid a higher price. Otherwise you just end up in

to work? If an independent bidder does come forward as

was obviously possible, the price could go all the way

up on Mr Stroilov’s case, to sort of Simonova levels, or

at least substantially higher than the money

outstanding. Then there would be no way ‐‐

MR JUSTICE HILDYARD: No, because he says as long as it was

lower than that, then there wasn’t very great risk on

all that you say of that, the Bank, if he is right about

the ownership of the companies, would be removing money

from one pocket to stuff in another.

MR BIRT: Yes, but that’s where I pause to say ‐‐ the

trouble is once you allow the possibility of

an independent bidder in, how is the Bank to say: that

is okay, as long as we cap it at the levels of

the outstanding debt. The Bank doesn’t have any control

over it at that stage.

MR JUSTICE HILDYARD: The question of risk analysis on your

scenario the market was so feeble that there wasn’t even

the prospect of anyone attending. Mr Stroilov then

says: supposing it wasn’t quite that feeble, the Bank

could have taken the risk of it not being so feeble so

long as there was no realistic prospect of the money

being paid in such an amount as would come close to

discharging the loan. You say that is a real risk, do

you? I thought your whole case was miles under water.

L15/90/26

July 11, 2016 Day 46

MR BIRT: No, no, my Lord, I don’t say it was a real risk,

but what I say is on Mr Stroilov’s case, if one takes

the defendants’ case where these properties are worth

stratospherically greater amounts than they were

auctioned for, then these conspirators are acting at

risk to their own conspiracy by putting these on the

market, because if Mr Stroilov is right that these

properties really were worth even in the range of

Ms Simonova, then somebody would have come out of the

woodwork and bid for them and destroyed the whole house

of cards, my Lord.

MR JUSTICE HILDYARD: I think he says at that point that

while there might have been any risk they took steps to

ensure that unless you are in control on both sides of

the equation, you put something in like the Gunard

lease, which cooled the thing so much that no one in

their right mind would buy it.

MR BIRT: My Lord, we have handled the Gunard lease in our

written closing, and I won’t repeat all the points

there, but the key point for present purposes is that it

is nowhere to be seen when the property is put up for

auction. It is long lost in time. It is not in any of

the sales particulars, it’s not in the documents put

into the auction house, we have put the reference there.

So there is no suggestion that anybody had been

low prices. They were sold for the best prices

achievable in the market at that time.

One has to remember, for example, I know I made this

point already, but Mr Arkhangelsky acquired the

Western Terminal for around a billion roubles at a point

where the market had increased, or was increasing, to

its unsustainable levels. There was then a crash, and

whether you say it is a 30 per cent loss or as

Ms Saltykova said a 50 per cent loss in the property

market, you get quite close to the price that it

achieved at auction.

MR JUSTICE HILDYARD: Assuming nothing was spent on it to

improve it?

MR BIRT: My Lord, yes, of which there is no evidence apart

from Mr Arkhangelsky’s say‐so that he spent a few

million putting some concreting down.

MR JUSTICE HILDYARD: There were some buildings, weren’t

there? I’m not indicating whether I thought it was

a lot of improvement or a little improvement, but it

wasn’t quite just the asphalt, was it? It was a new

building, we saw that picture of him in an office, sort

of low rise office.

MR BIRT: I’m not sure that was at Western Terminal,

my Lord.

MR JUSTICE HILDYARD: Wasn’t it? Where was that? Onega?

101 103

frightened off by the Gunard lease, it is just not part

of the piece at that stage, my Lord, so I come back to

the point that if this was a conspiracy it was a risky

one to put them up for auction, and going back to

my Lord’s points about the sale price was low and so on,

and we have given the references in paragraphs 857 to

858 of the closing, and that was Mr Millard’s evidence,

and my Lord will remember I think I referred to this as

well last week, about the crash in real estate prices in

Russia and that bank lending for commercial development

dried up. We have Ms Simonova saying that the prices

increased during 2007 and the early part of 2008 to a

sort of unsustainable level and then crashed again, and

we have Mr Arkhangelsky’s chief accountant,

Ms Saltykova, giving her statement in the French

proceedings on Mr Arkhangelsky’s behalf saying as

a result of the 2008 crisis prices for real estate

dropped by almost half, and Mr Millard explaining there

was a complete lack of buyers in the property market …

MR JUSTICE HILDYARD: You have given me the references.

MR BIRT: Yes, my Lord, I have given you the references

already.

So, my Lord, that is the context through which one

has to see the prices that were obtained and we simply

don’t accept the premise that these were sold for very

MR BIRT: I think that may have been the main OMG offices,

which were neither at Scan or at Western Terminal, but

was an office closer in St Petersburg. The problem with

that video, one of the problems was, it wasn’t clear

where each of the extracts was taken.

Certainly the buildings where the outside was shown,

they looked rather like sort of portacabin type

structure, rather than anything perhaps more permanent

or solid, my Lord.

Just going back, again, a last point on the auctions

and how various points that have to be remembered, is

that the sales of some assets were undertaken not at the

behest of the Bank in enforcement of its pledge rights

or even enforcement of a judgment, but by the bankruptcy

receiver of Scan for the benefit of creditors generally.

And so there again ‐‐ the Bank is even one step further

removed there and there has been no even allegation,

I think, that the bankruptcy administrator has been

party to a conspiracy and there would be no basis for

that. There were other real creditors of Scan who had

an interest. My Lord may remember that the Pravdy

Street offices which were owned by Scan were sold by the

bankruptcy administrator in August 2012. We have given

the reference at paragraph 953 of our written closing.

MR JUSTICE HILDYARD: Are the bankruptcy receiver sales

L15/90/27

July 11, 2016 Day 46

there mentioned as well?

MR BIRT: They are, my Lord.

MR JUSTICE HILDYARD: At 953?

MR BIRT: Paragraph 953, there is a footnote there I think

to 2723, to the reference to his receiver’s report,

dating from October 2012, which is at {D162/2728/0.1},

and with those offices they were sold for

RUB 19.15 million which was distributed to Scan’s

creditors, and we have given the references there in

the closing.

MR JUSTICE HILDYARD: What was that? D162 ‐‐

MR BIRT: The reference is at footnote 2723 of our closing

and it is at {D162/2728/0.1}. I was just going to

finish the point that of the 19.15 million which was

realised from the sale of those offices, and it was all

distributed to Scan’s creditors, the Bank received about

3.745 million.

MR JUSTICE HILDYARD: Which should I take, just for my note,

as the conversion to dollars?

MR BIRT: It changed over the course. In bundle AA we set

out a table, I will have to get the reference, at the

beginning of the trial we put it in there and over the

period it is ‐‐ it has come up on screen {AA2/12/1},

my Lord.

MR JUSTICE HILDYARD: Thank you.

LPK Scan is not a party and nor is it shareholder who,

if there was even a claim for reflective loss, she might

have it, but she is not a party, and the shareholder is

Mr Arkhangelsky’s mother‐in‐law, Ms Tarasova. But there

has never been any suggestion that she was going to

bring a claim or could bring a claim and no claim has

been brought for the LPK Scan land.

The second general point about the land at Onega,

the Scan land and the LPK Scan land, is it had no access

to the sea. My Lord will remember, it had no berths of

its own; it was entirely dependent upon its neighbour to

grant those rights of access.

My Lord, I think I mentioned last week, and we have

given the references in our closing as well, that we

think it is instructive to see the prices at which the

land at Onega was acquired, which is around in total

RUB 136 million, and that was late 2005 or 2006. We

have given the references and the figures in our closing

at paragraph 22(1)(a) and footnote 38 and also in

paragraph 945(4) {AA3&4/14/20} and I think again,

paragraph 1109 with footnote 3206, and those are prices

which, as Ms Yatvetsky said in her evidence, we have

cited that in that last paragraph, were really not

a million miles away from the prices they ultimately

realised at auction, and again, remembering the

105

MR BIRT: So, standing back, we say that the auctions were

all organised, actually, by different people: some of

them were the Bank enforcing its pledge, of which some

of them were done through the courts and some of them

through an independent auction house. Some were in

execution of their judgments, some were by the

bankruptcy receiver. All of those people, we say, would

have been seeking to discharge their duties faithfully

and indeed, many of them had an incentive to do so in

terms of their percentage take on the sale proceeds.

My Lord, briefly in relation to Onega Terminal and

the land there, my Lord knows that there are two

separate plots of land at the Onega Terminal, one

belonging to Scan Insurance and one to LPK Scan. In

relation to the Scan land, first of all in terms of

valuation, Mr Milner said a little bit, but not very

much, about this on Friday, and we have dealt with it

quite fully in our written closing, so I am not going to

take up too much time on the detail. It is

paragraph 1101 and following. For present purposes,

I just want to note two points about it {AA3&4/14/580}.

One is that it is not to be forgotten that it is only

the Scan land at Onega that is in issue in terms of any

claim in these proceedings. There is no claim for the

LPK Scan land. My Lord may recall why that is, because

107

intervening financial crash {AA3&4/14/583}.

Mr Stroilov tries to get away from some of this and

the difficulty he recognises he has with the acquisition

prices by saying that Mr Arkhangelsky acquired these

assets at an undervalue due to his connections in

the criminal underworld, to which we say there is

absolutely no evidence, apart from his own say‐so, that

he acquired them at an undervalue, and one can’t trust

that sort of thing from Mr Arkhangelsky.

My Lord, one of the other aspects that comes out of

the land at Onega Terminal is the LPK Scan land and

my Lord mentioned at some earlier point in

the submissions that you would just be helped by being

reminded how the sale of that came about. Just to give

the references and a brief summary, it is in our written

closing starting at paragraph 960 and goes on for

a number of pages there {AA3&4/14/507} and I should also

give this reference, which is related to it, which is

one of my Lord’s questions to Mr Stroilov, was whether

there was any evidence when ROK Prichaly had become

interested in acquiring the land at Onega.

MR JUSTICE HILDYARD: Oh yes.

MR BIRT: And I think Mr Stroilov wasn’t sure, but we have

given a reference in paragraph 961(2) {AA3&4/14/508} to

Mrs Yatvetsky’s evidence, and she remembered it as early

L15/90/28

July 11, 2016 Day 46

2011. That was her evidence at {Day39/55:21}.

Coming back to the LPK Scan land, it’s also to be

remembered that LPK Scan was not controlled by the Bank

or the original purchasers. It wasn’t part of, or party

to, the repo arrangements in terms of the shares in

Western Terminal or Scandinavia Insurance; it was

a company that Mr Arkhangelsky appears to have

controlled through his mother‐in‐law, and its land at

Onega had been pledged to the Bank in support of two

different loans to the Bank: there was a second Onega

loan and the 2007 LPK Scan loan.

How the original enforcement against LPK Scan land

came about goes back to a point I made earlier, my Lord,

which was that the monies that Western Terminal had

borrowed from Morskoy Bank had been sent straight on by

Western Terminal at Mr Arkhangelsky’s behest to

LPK Scan. That was RUB 56.5 million. We say that was

all part of his scheme to get money out of

Western Terminal, even though it was under the repo

arrangements, but whilst he still had the chance.

Obviously Western Terminal as a company had

an interest in getting that back. So it sued LPK Scan

for repayment, not surprisingly the Russian court agreed

and ordered that it be repaid. So there was enforcement

against LPK Scan by Western Terminal against its assets,

way of ROK Prichaly, and we have given the explanation

in 967 of the closing and following, 968 sets out the

mechanics. 969 looks at the value for which it was

transferred which was very close to the value at which

the LPK Scan land had been included in the OMG accounts.

It was transferred for 27 million and actually OMG

accounts had recorded it as worth RUB 29 million. So

that is definitely a valuable comparison.

Then, importantly, the Bank wrote off the balance ‐‐

MR JUSTICE HILDYARD: I don’t know whether it is or not.

I have no idea the basis on which the OMG accounts were

drawn up.

MR BIRT: No, there isn’t much evidence about that figure,

but it is one of those things to take into account if

one ‐‐ the trouble is, in this case, if one starts with

looking at things like Ms Simonova’s valuations and then

you look at 27 million, you might think: oh, that’s

a bit low, but then if you look at all the figures in

context, you find that actually there’s quite a lot of

figures, wherever they come from, which are similar to

the price at which it was sold and this figure happens

to come from OMG’s own accounts.

MR JUSTICE HILDYARD: But in classical accounting you would

normally include in the accounts the acquisition cost,

and so it wouldn’t take you any further than the

109 111

namely the land.

So that land in support of that judgment,

remembering that judgment only came about because of

Mr Arkhangelsky’s channelling the Morskoy Bank loan to

LPK Scan, through that judgment there was an enforcement

against the land, it was put up for auction, and it was

that auction at which Mercury bought the land, but

obviously always subject to the pledges to the Bank

because those pledges hadn’t been released. That first

auction was nothing to do with the Bank’s pledges; it

was to make good the debt. So a separate legal process.

It is to be remembered that at this time we have

given the reference in footnote 2756, the outstanding

debts to the Bank secured by this land was some

RUB 865 million.

So naturally the price at which Mercury were able to

acquire those assets at auction was low because the

assets were always subject to that RUB 865 million debt.

This is one of those auctions that was reported in

the press shortly after the event, we have given the

reference at paragraph 965 of the closing.

Then what happens in the story of this land, there

was the transfer of the loans and the pledge over the

LPK land to Mercury. By this time, this is when it

became apparent that there might be a final purchaser by

acquisition price.

MR BIRT: Well, I don’t know if we have the evidence to go

into where it came from. But, my Lord, even if that is

the case, then it is still a relevant factor to bear in

mind and it goes back to the point I made just now about

the acquisition cost, my Lord.

An important feature of this, of course, is that the

Bank entirely wrote off the balance of the debt, and

Mercury, as Mr Sklyarevsky, I think it was, gave

evidence, brought no claim. So the upshot was that the

Oslo Marine Group, under these two loans, the second

Onega loan and the LPK Scan 2007 loan, were forgiven the

entirety of the 855 million debt.

So it doesn’t actually matter whether the land had

been sold for 3 per cent of that outstanding debt or

30 per cent of that outstanding debt or 90 per cent of

that outstanding debt, because the balance was forgiven.

The ultimate result is the same.

In fact, the evidence is that it was sold for what

was thought to be an appropriate value for the land at

the time, but the credit ‐‐ or, rather, the relevant OMG

companies get, makes the precise percentage write‐off

slightly irrelevant because the entirety of the debt was

written off, and they actually got quite a large benefit

from that.

L15/90/29

July 11, 2016 Day 46

Again, if this really was the sort of conspiracy

theory that it is said to be when they are bankers

intent on persecution and running people out of town and

bankrupting them, it is not very consistent with a big

write‐off of the debt in that amount.

Another point was made in relation to another set of

auctions, but this time in relation to

the Western Terminal assets, and Mr Stroilov made

something of the fact that the assets were separated

into pledged on the one hand and unpledged on the other,

before being sold, and that’s relied upon as something

that artificially reduces the price, as I understand it.

But one needs to unpack it a bit and put it in

the context and ask how did they get there, because this

wasn’t the Bank starting with a blank sheet of paper and

making it up. It was a fact that some of the assets

were pledged and some were unpledged.

Now, the assets that were owned by Western Terminal,

subject to the Bank’s pledges in respect of some of

them, they came into the hands of Nefte‐Oil, but that

is, again, a bit like the first sale of LPK Scan land;

that was because of a different enforcement action.

That wasn’t a process by which the Bank was seeking to

realise a pledge. That was an attempt to pay off the

Morskoy Bank debt.

assets into some auction process that was being held

pursuant to the rules of enforcing one’s pledge.

They would have been now criticised if they hadn’t

followed the rules on auctions and instead tried to do

some sale outside the whole scope of it, and that would

have led to another round of complaints.

So that, really, is a bit of a red herring, we say.

The Bank had to go through that process of auctioning

the pledged assets because ‐‐ it is a circular thing to

say, but those were the assets that were pledged and the

others weren’t.

We have put in our written closing that actually the

unpledged assets themselves were worth little and they

don’t really generate their own claim for loss because

of the fact that Western Terminal had been encumbered by

this debt by Mr Arkhangelsky to Morskoy Bank that had to

be paid off in any event, so that was what the assets

went to; to pay off that debt that Mr Arkhangelsky had

lumbered Western Terminal with at the death.

Just going back, briefly, to valuation. We were

glad to hear the confirmation that it wasn’t said that

Mr Millard had performed anything other than an honest

and professional calculation. Obviously the other side

say that there were certain flaws in his calculations,

but we do say that that being the case, that it was

113 115

Now, by the time the finalisation of the enforcement

that debt had ‐‐ we looked at the chronology this

morning ‐‐ been assigned to Sevzapalians, but

Sevzapalians of course themselves had paid off the debt

to Morskoy Bank to stop Morskoy Bank driving the

process.

So that first auction was simply an attempt to get

some value out of the unpledged portion of the assets to

repay Sevzapalians, who had in turn repaid the debt to

Morskoy Bank. So there’s nothing very surprising or

suspicious about that.

But then the assets are held, as it turns out, by

Nefte‐Oil, subject in part to a pledge to the Bank. So,

again, some assets are pledged, some are not.

What is the Bank to do? It only has security rights

over the pledged assets. Nefte‐Oil now owns all of

the assets, subject to that pledge, and those assets

which weren’t pledged, it owns, having acquired them

validly, at an auction that wasn’t to do with

enforcement of the Bank’s rights. So it is difficult to

see how the Bank could have done anything other than

enforce its pledge over the assets which were pledged to

it. It certainly couldn’t have enforced its pledge over

the unpledged assets, that’s obvious, nor could it have

compelled the auctioneer to somehow bring unpledged

an honest and professional valuation, it is quite

difficult for them to say that an auction price which

comes within the range of or the region of his valuation

can be redolent of fraud.

Now, we dealt with Mr Millard’s valuations in oral

submissions last week and in our written closing. The

references, just for completeness, Western Terminal, it

is paragraph 1041 onwards and the land at Onega 1106

onwards, we’ve also dealt with other assets in part 11,

and I don’t intend to go through the details now.

A couple of points arising out of things that were

said earlier in the submissions by Mr Stroilov, or

probably Mr Milner. It was acknowledged, and

acknowledged by Ms Simonova, that she didn’t perform any

sensitivity analysis on her DCF calculations. We say

that is an important point. Such an analysis may well

indicate the range of numbers that would be generated by

the calculation once one tests some of the assumptions.

We say that would have been quite important in assessing

what the relevant range of values might be.

It would show how much slight difference in

the input might make to the final calculation, and when

you are asking to infer fraud from a valuation, it is

quite important to know where the range is. Knowing

where the centre point is is only, really, half the

L15/90/30

July 11, 2016 Day 46

information that you need, because if slight changes in

assumption actually lead to a hugely wide range, then it

may well be that the price came within that range,

albeit maybe towards the lower end, but that, again, we

say, is not a safe basis on which to infer fraud from

price.

We noted that the Sestroretsk assets were something

of an example here. I mean, Mr Milner noted that

Mr Millard had performed an alternative cash flow

analysis for the Sestroretsk houses. Without going into

the detail, that is the plot where we disagree on

whether it really was high value housing or as

Mr Millard said, the plot next to the rusty ditch.

Anyway, the two experts took different views on

a number of assumptions, and Mr Milner fairly said there

wasn’t any hard evidence to support the assumptions

either way but it was just a matter of judgment, and of

course he said he would prefer Simonova.

We say that just shows that if you change the

assumptions within the range of reasonable, professional

valuation might happen, it shows the sale price was

within the range; in other words, whether you are a bit

lower or a bit higher just depends on professional

judgment, and that’s certainly not in the realm of

inferring fraud.

of land that had exchanged hands, and trying to build up

from there what a sensible figure would be.

It wasn’t a bizarre or irrational way of doing it.

MR JUSTICE HILDYARD: It was, slightly, in one sense, in

that having accepted there wasn’t really a market so

that you have to sort of homebake some add‐ons to some

different market, one wondered why he had approached it

in that way at all. I mean, if there is no

market, market analysis is simply an exercise in

comparing different and not comparable things. I think

I should ‘fess up: I did find it rather odd.

MR BIRT: Well, he recognise that direct comparables were

hard to come by.

MR JUSTICE HILDYARD: They weren’t hard to come by, they

weren’t there: there was no market.

MR BIRT: There was no direct comparable, and what he was

trying to do was find the closest comparables and use

a rational and sensible methodology to get to what this

property might have been worth based on the closest that

he could find, and we do say that at least it was

grounded in actual figures for which property had

changed hands, and as he recognised, it might not be

ideal, but it had the virtue of being grounded in actual

prices and, as he pointed out, was consistent with

certain other valuations and prices, my Lord.

117

My Lord, I won’t go back through all Ms Simonova’s

points and the points I made the other day. I just did

want to make it clear, because Mr Milner said it seemed

we only really challenged her assumptions at

Western Terminal in respect of the annual TEU figure,

and that’s absolutely not the case: we challenge quite

a few of her assumptions. We have set them out in

closing at paragraph 1054, but the TEU was the one

I picked out at oral submissions, both because of

the constraints of time and because it is one that she

was obviously wrong about, but we challenge the others

that we set out there as well {AA3&4/14/552}.

My Lord, I was going to come on to say something

about Russian law, but I wondered if that was

an appropriate moment for a short break.

MR JUSTICE HILDYARD: I mean, on valuation the real

criticism that was made was that there was simply no

basis for assuming there to be a market.

MR BIRT: My Lord, yes, it was as I said the other day,

really, which is that Mr Millard was doing his best, and

he had looked, as he said in his evidence, at doing

a DCF calculation. He had said in respect of

Western Terminal, for example, it was just too uncertain

and the assumptions would be too wild and difficult to

predict. So he did his best, based on looking at plots

MR JUSTICE HILDYARD: Good. Right, well I shall look

forward to Russian law.

(3.21 pm)

(A short break)

(3.31 pm)

MR BIRT: My Lord, one reference from earlier, I said

I would get the reference to the Arkhangelskys’

communication where they said they were nothing to do

with the dissolution of Land Breeze.

MR JUSTICE HILDYARD: Oh yes.

MR BIRT: That’s an e‐mail that can be found at I28 ‐‐

MR JUSTICE HILDYARD: Hold on, I am just going to … yes,

thank you.

MR BIRT: Yes, {I28/45/19}. They say they really don’t know

anything about it.

MR JUSTICE HILDYARD: I can’t remember where we had got to,

and it is my sort of failings, but did we get to

an agreed chronology as regards the Morskoy Bank loan

sequence?

MR BIRT: I think my Lord asked me this last Wednesday or

Thursday.

MR JUSTICE HILDYARD: Yes.

MR BIRT: And I did address it. Perhaps the quickest thing

for me is to find the bit of transcript where

I addressed it rather than going back over things now,

L15/90/31

July 11, 2016 Day 46

given the time.

MR JUSTICE HILDYARD: Thank you. Russian law.

MR BIRT: My Lord, really the main issue that I am just

going to say one or two things about is reflective loss.

MR JUSTICE HILDYARD: Yes.

MR BIRT: And we have covered this in our written closing

submissions starting at paragraph 985 and then going on

from there {AA3&4/14/522} and Dr Gladyshev’s position

appeared to be that it ought to be recoverable in any

situation, but there was no case actually saying that

and the boundaries were not known, particularly in

the citation we gave at paragraph 995 of the closing.

As we understand the position that Mr Milner was

setting out on Friday, he did not go as far as to say

that a claimant could always recover what might be

characterised as reflective loss. In fact, he accepted

that normally a claimant could not, and he said that at

{Day45/29:12‐16}, he said that ordinarily claims for

reflective loss would not be allowed in a Russian court.

And that was also one of the ways he was able to

accommodate the Fiona Trust decision in this

jurisdiction, and that was {Day45/52:1}, but he said it

could be recovered in particular circumstances, and he

said in particular where a company has been disabled

from bringing a claim by the wrongdoing in question.

121

No, there is no Russian court guidance on that and

we don’t accept it, but we also say that in any event it

doesn’t actually help the defendants in situations where

the point arises in this case. I will come on to

explain that.

The other piece of the jigsaw worth bearing in mind

in terms of what the Russian law experts said is the

evidence that that sort of claim could not be used to

circumvent the insolvency process; we have given some

references at paragraph 991 and 1016 of our written

closing {AA3&4/14/525} but without being too technical

about how one might look at Russian law, one has to

remember how this point arises in relation to some of

the claims.

So first of all, the claim for Onega’s business

loss, well that is Onega’s claim, we would say, and

Onega, it is to be remembered, was not part of the repo,

its shares weren’t transferred. The Bank has not

prevented Onega from bringing any claim by some method

of control. Onega went into consultancy about five

years after the alleged wrongdoing, and we have set that

out in paragraphs 1015 to 1016 of the closing

{AA3&4/14/532}, so any claim that Onega might have

belongs to its bankruptcy administrator, not to its

shareholders.

One also has to look at the claim for Scan’s loss,

Scan Insurance, and that is a claim which, certainly in

the first instance, would be for Scan to bring, and it

is to be remembered that Scan also went into bankruptcy.

So even if there was a principle, contrary to our

submissions, allowing a shareholder in Scan Insurance to

recover the loss in value of its shareholding in Scan,

one must remember that that shareholder would be the

company Group Oslo Marine, referred to generally in

the parties’ submissions as GOM. GOM, of course, does

not bring a claim in these proceedings.

We have dealt with this a little bit further in

paragraphs 991(3), 997, and footnote 2862

{AA3&4/14/525}, and GOM, it is to be remembered, is also

in bankruptcy, and that is not a bankruptcy at the suit

of the Bank and not owing the Bank money {AA3&4/14/527},

there are other creditors and the submissions set out

some of the evidence about that ‐‐ yes, that is the

footnote 2862, and we explain that:

«No case has been advanced by the defendants as to

how any loss to Scan would have been reflected in

the loss value in the shares of its parent company, GOM,

in particular where GOM was put into liquidation by

a third party creditor…»

Who is named by Mr Arkhangelsky as Mr Yuri

123

Chichoyan, nothing to do with the Bank, and so there is

no attempt to prove how, if at all the value of their

shares in GOM would have been affected by anything done

by the Bank as opposed to the enforcement by third

parties of their debts against GOM.

So that is not only a double reflective loss

problem, but there is also a double bankruptcy problem

and there would also be a causation problem.

So, my Lord, really one doesn’t have to get into too

much of a tangle on this, because in those sorts of

situations you are outside even Mr Milner’s narrow

principle, and in relation to Western Terminal, it

depends in our submission, really, on what is the

wrongdoing in question and what is claimed?

Now, as we have accepted, if the wrongdoing is

taking the shares and the loss is the loss of

the shares, that is not reflective loss in the hands of

OMGP; it would be a loss, namely the loss of their

shares, although, of course, it wouldn’t be a loss

claimable by Mr Arkhangelsky; it would be reflective in

his hands.

However, if the wrongdoing is said to be something

else or ultimately turns out to be something else later

in the chronology, like wrongfully selling the assets at

an undervalue, then the loss is framed by reference to

L15/90/32

July 11, 2016 Day 46

that. The loss is then felt by Western Terminal itself.

That is not a loss of the shares but a loss to

Western Terminal reflected in the value of its shares.

So, in a sense, that comes back to what can the

defendants prove about the wrongdoing, and if the repo

itself is the wrongdoing, or at least if that is the

point at which one says that was wrong, and there was

a loss there, and the wrong was ‐‐ and the loss was the

loss of the shares, that’s the first situation.

If, however, the repo itself, there’s nothing

actionable about it ‐‐ and I will make some more

submissions about the repo shortly, but remembering it

was something, we say, consensually entered into, and

one is really looking at there was a wrongful sale of

the shares which hit the company that owned ‐‐ sorry,

a wrongful sale of the assets which hit the company that

had owned the assets, and that’s a loss to

Western Terminal and, therefore, if it reflects at all

on Mr Arkhangelsky, it is, indeed, a reflective loss, or

reflects at all on OMGP, it is reflective, my Lord.

There was a discussion between my Lord and Mr Milner

as well about the English law of reflective loss, and of

course that doesn’t impact directly, but just because

I know my Lord is interested in the point, there is what

we would suggest is an useful discussion of the recent

why it could not bring the claim, there was a deadlock

situation imposed.

That, in the judgment of Mr Justice Birss, based on

the Kazakh case, was that that didn’t amount to

an impossibility. That is his conclusion at

paragraph 58.

If any guidance is to be obtained from English law,

that is where we say a useful recent summary and

discussion of the authorities on that exception, which

even in English law is extremely narrow and, indeed,

Lord Millett, obviously sitting in the Hong Kong Court

of Final Appeal is not binding in this jurisdiction, but

he said it wasn’t really an exception at all.

My Lord, I was just going to very quickly cover the

limitation arguments which we heard briefly from

Mr Milner on. Really by way of references to start

with, we have covered those at paragraphs 998 to 1008

and 1014 of the closing {AA3&4/14/528}, setting this out

as well in paragraphs 505 to 511 and 705 in our opening.

I will just very briefly summarise the points that

arise. {AA3&4/14/531}, {AA3&4/14/286}.

There are three points where this arises, and we

have dealt with those one by one starting at 998

{AA3&4/14/528}. I am going to deal with them in

a slightly different order for reasons that will become

125 127

authorities in a case called Peak v Tarek which is in

the authorities bundle at {AUTH5/21/1}, and we’ve

referred to that in our footnote 2860. Just to give

your Lordship the references, this is a judgment of

Mr Justice Birss dating from September last year, his

discussion of the law starts at paragraph 29 and he goes

on to discuss the so‐called exception of

the Giles v Rhind case, which is something that

Mr Milner relied upon which is where a company itself is

disabled from bringing the claim.

He goes on to explain how that has been rejected as

an exception by Lord Millett sitting in the Hong Kong

Final Court of Appeal in a case called Waddington, and

then there has been subsequent confirmation that

Giles v Rhind remains good law in England, subject to

the Supreme Court saying otherwise.

But he also refers to the judgment of the Court of

Appeal in the Kazakh case, and this is paragraph 41 of

Peak v Tarek, which characterises Giles v Rhine as a

very narrow doctrine, very limited. It only applies

where it would be impossible for the company to bring

a claim, and as a result, the exception did not apply in

that case, in the Peak v Tarek case, even though the

company in question there was controlled by the

conspirators themselves, which was no doubt the reason

apparent. Starting with Article 179, which is a claim,

obviously it is a contractual‐type claim but for

invalidation of the alleged 2008 agreement. It is

common ground between the experts that the limitation

period under Russian law was one year and we pleaded

that by way of defence at paragraph 42(h) of our

re‐re‐amended reply, and the defendants never pleaded

back to that, so they never actually pleaded or relied

upon the Foreign Limitation Periods Act in relation to

that defence.

But in any event, we say that would not assist the

defendants because whilst the court did apply that act

and permitted the Article 1064 claim at an earlier

stage, it is not as simple as saying: therefore it must

also be applied now for a different and new claim under

a different provision because much of the reasoning of

this court and of the Court of Appeal when considering

this issue in its previous judgments, in other words,

considering whether the application of the Russian law

limitation period was unduly harsh was centred around

the circumstances in which this matter had come before

these courts and, in particular, in light of the fact

that claims had been pursued in the BVI and then there

had been agreement to come here.

The relevant factors were summarised by the Court of

L15/90/33

July 11, 2016 Day 46

Appeal in paragraph 17 of its judgment at {K1/15/8}, and

for my Lord’s note, also your judgment

from November 2013 at paragraph 110, which is {K1/6/22}.

As I say, the relevant factors largely related to

the fact that claims had been brought in the BVI which

the parties had then agreed would be brought here, and

the defendants had encountered difficulty in serving

their claim here in time.

But in relation to the new Article 179 claim, the

same factors aren’t present. Most importantly, that

wasn’t a claim that was ever brought in the BVI or that

the defendants sought to bring when they issued

proceedings here in the Commercial Court, and it is no

answer to say: ah, well, no representation, they don’t

know what they are doing, because of course in the BVI

they did have representation. I think they had leading

counsel.

So it just wasn’t in play, and there’s been no

explanation why it wasn’t in play or why it wasn’t

brought earlier. So when one is looking at: is there

undue hardship here, one would expect at least to see

an explanation why it is only now that it is brought.

And there is no relation back for this claim, that

was carved out my Lord’s order at {J1/16/2}, so the

claim was only commenced in July 2015, so it would be

129

time‐barred even if there was a 6‐year English law

limitation period because this is a claim under 179,

effectively, to invalidate the December 2008 agreement

because of alleged threats. So that was a wrong that

occurred and a claim that would have accrued, indeed,

in December 2008.

The second claim in relation to which it arises is

the new claim for the loss of the Onega business. We

deal with this at 1009 and following, and whether this

is advanced under Article 179 or 1064 it is a new claim,

it is not a mere head of loss, and we have dealt with

this further at 1014. {AA3&4/14/530} {AA3&4/14/531}.

It is not enough to say: new head of loss. That may

be an answer if what you are talking about is simply

further particulars of an existing claimed loss, but

this is something entirely new; it is, effectively,

a new ingredient and therefore, that turns it into

a distinct cause of action.

If, as they say, it is a conspiracy formed

in December 2008, loss started to be felt once the

shares in Scan were put into the repo transaction. So,

my Lord, we say that it goes back all that way and is

time‐barred on either basis.

The other point we have considered in our

submissions starting at paragraph 999 is the new

conspiracy claim, in other words, the alternative

conspiracy claim, only starting later {AA3&4/14/528}.

We have put what we say in writing, I won’t develop it

further because it is not really a case that has been

advanced in oral submissions.

I was just going to touch next, my Lord, on one or

two points in relation to the repo. I’m not intending

to go back over points made last week or repeat them, we

have obviously made quite a lot of submissions as well

in our written document, but we do say it is relevant

and must not be forgotten that Mr Arkhangelsky and the

OMG companies agreed to enter into those arrangements.

He had time to consider them with his lawyers, and he

decided to do it. It wasn’t something that the Bank

unilaterally imposed upon him.

Now, albeit he says he thought he was getting

a six‐month moratorium when, in fact, he wasn’t, and we

have made our submissions on the moratorium, we say it

wasn’t understood to be part of the deal, but even if

Mr Arkhangelsky thought it was, we say on the evidence

it is clear, there was no prospect of his raising the

finance or paying back the loans within that six‐month

period but, nevertheless, he was willing to enter into

the repo on that basis, or taking that risk. He knew he

was risking his shares if he could not get the money in

131

that sort of time period, even on his case. That was

the deal he struck, and so the risk he was prepared to

run. There was nothing wrong with the repo arrangements

themselves, namely the agreement to transfer the shares

with the quid pro quo of the agreement to transfer them

back. Indeed, there has not actually been an attempt to

invalidate those repo contracts themselves in this case

at all.

We made submissions earlier about the various points

concerning what the parties might have thought about the

legal mechanics or how it was going to work. Again, not

to repeat those. But at the end of the day we say none

of that really matters: the Bank had security rights

over the various assets, and that’s not disputed. OMG

defaulted, having not paid back its loans, and that is

not, or really ought not to be, disputed, and the Bank

had an entitlement to enforce those security rights. It

did so in accordance with the law and the pledges were

realised for whatever value they could be realised for,

and all that is what the Bank would have been entitled

to do regardless of the repo.

We say questions about what might have happened to

any surplus value are perhaps interesting but academic.

There was no surplus value in the property that was

auctioned, so at the end of the day it doesn’t really

L15/90/34

July 11, 2016 Day 46

matter. Those, as I explained earlier, those parts of

the Western Terminal property that were not pledged had

to be sold in any event to clear the Morskoy Bank debt

that Mr Arkhangelsky had saddled the Western Terminal

with, so that can’t really be a matter of complaint.

My Lord, I don’t intend to go back over the

submissions on the finances and financial position of

OMG and its various companies, but we do say that our

submissions do not depend either on the Lair valuations

being incorrect, or Mr Arkhangelsky embezzling the

assets. Mr Stroilov suggested that it being a financial

pyramid was dependent upon both those being right. We

say, of course, that both of those are right, but even

if they were not, for some reason, accepted by the

court, that does not mean that the various businesses

were real ones sustained by their operating profit and

so on. For the various reasons set out in our closing

submissions, that just was not how they were operated or

what happened.

Just to make one or two points about the

25 December 2008 meeting. It is important to remember,

we say, that it is not the defendants’ case that

a legally binding agreement was formed at the meeting.

It is their case that an agreement was entered into on

or around 30 December 2008, and that’s their pleading at

133

paragraph 117(a), which is {I25/39/147}, and also at

paragraph 180(a) at {I25/39/184}.

The second of those references, one sees it clearly:

they plead an agreement that was partly oral and partly

in writing. The reason they say that is because they

want to rely upon the written terms of the memorandum,

and they tack on to that what they say is an oral part,

namely the moratorium.

But that does rather give rise to the question: when

is it said that this agreement really was made? It

appears that it must be, that it is when the memorandum

is signed, and is that, we ask rhetorically, when the

defendants say it became binding? Because otherwise it

is difficult to see how the agreement could have been

partly in writing. And if that is the case, then it

coincides with our case, which is that the parties were

happy to leave the meeting on 25 December without

an agreement at the meeting.

On the defendants’ case, it sounds like they say

there may have been an oral agreement on a moratorium at

the meeting, perhaps they say this, which only became

binding once the memorandum was signed up to.

We say that sounds very odd, because if that was the

case, why was that not reflected in the memorandum,

particularly given that the memorandum was listing the

loans which they say a moratorium was being granted in

respect of.

Or, we wonder, do they say that there was a binding

oral agreement for the moratorium at the meeting but

without any agreement on the repo; in other words, the

Bank just unilaterally agreed to grant them a moratorium

at the meeting without a quid pro quo. We say that

obviously wouldn’t make sense from the Bank’s point of

view and there is no reason to think that the Bank would

make or intend to make a legally binding agreement on

those terms, a six‐month moratorium, all interest in

capital, without getting anything in return.

We also note that this six‐month moratorium is

supposed to have been made in respect of loans to

a number of different OMG companies. Those companies

weren’t at the meeting: Mr Arkhangelsky was at the

meeting and, actually, he wasn’t even director general

of some of the companies. For example, he wasn’t

director general or direct shareholder in PetroLes or,

by this time, Vyborg Shipping. He couldn’t have bound

them. So it is unlikely that people at the meeting were

considering they were entering into that sort of binding

agreement in relation to the loans to those companies.

Mr Arkhangelsky’s position is that he didn’t make

any agreement on his own behalf anyway. His evidence

135

was that he only made an agreement on behalf of OMGP and

GOM. That’s what he said. We have given the reference

in our closing at paragraph 709 {AA3&4/14/384}. Again,

we say that makes it less likely that he would be or the

Bank would think he was entering into a binding

agreement at a meeting on an oral basis.

Now, as I say, OMGP and GOM were not even

shareholders in PetroLes or in LPK Scandinavia or, by

this point in time, Vyborg Shipping. By this point in

time, Vyborg Shipping shares had been transferred, or at

least 99 per cent of them had been transferred, to

a Cyprus company called Alwildama, that was

in October 2008, and we have given some references at

footnote 213 of our opening, but those documents are at

{D89/1156/1} and {D89/1157/1}. So as of December 2008

OMGP and GOM were not shareholders in Vyborg Shipping

and Mr Arkhangelsky was not general director of

Vyborg Shipping. That was Ms Krygina.

We have already LPK Scan of course was owned by

Ms Tarasova and she was the general director so again,

query whether it can really have been thought or

intended that extensions to all of those companies’

loans were really thought to have been granted in

legally binding way when those companies were not, in

a formal sense, at the meeting. We just say it is not

L15/90/35

July 11, 2016 Day 46

likely and one just cannot infer that sort of intention,

especially when one adds that a few days later they do

write down the basic arrangement in an aide‐memoire of

the memorandum, of course, without the moratorium.

My Lord asked during the course of ‐‐ it was either

my submissions or Mr Stroilov’s submissions, for some of

the references in relation to the debate that was had on

disclosure in September 2015. We have added, in case it

is useful, to the bundle the skeletons exchanged for

that hearing. The claimants’ skeleton is at

{G4/103.1/1}, the defendants’ skeleton at {G4/103.2/1}

and the passages dealing with disclosure from the

original and subsequent purchasers in the claimants’

skeleton start at 112 onwards, the section dealing with

the disclosure application coming this way, having

started at paragraph 90; and the defendants’ skeleton

starts their argument on disclosure from ‐‐ I think they

called it «Renord et al as custodians» that started at

paragraph 38. My Lord may or may not remember now,

because the passage of time, one has other things to

remember, but there were heavy disclosure applications

in both directions, and there were a number of points

that had come both from the claimants, complaining about

the defendants’ disclosure, and the defendants

complaining about the claimants’ disclosure.

be found at {K1/11/1} and the order that was

subsequently made is the one at {J1/20/1}, paragraph 16,

which was an order for letters to be sent to a listed

number of individuals and companies and the letters

themselves were settled by my Lord, set out at schedule

D of that order.

What informed that order was the need to keep in

mind the distinction between Renord and its companies in

a general sense and the original purchasers and

subsequent purchasers specifically because the

foundation of my Lord’s judgment was that it was the

original purchasers and the subsequent purchasers that

should be written to, not the whole of the Renord Group.

Now, the Bank is entirely entitled to test the scope

of its disclosure obligations in court, and once the

court has ruled, it is entitled to fulfil those

obligations but it doesn’t have to voluntarily go

outside them at all. And among other things, and

especially in this case, there is a proportionality

issue, suggesting that all companies within the Renord

Group ought to be searching through all their documents

for anything to do with this case, we say would be, and

always would have been, entirely disproportionate, and

that was, indeed, one of the bases on which we resisted

the order. Not just Renord; it was sought to be made

137 139

One, but one of quite a large number of points, was

whether the Renord Companies themselves were

sufficiently within the control of the claimants, or at

least whether their documents were sufficiently within

the control of the claimants so as to give rise to

a disclosure obligation upon the claimants for those

documents.

One will see from the skeleton argument of

the claimants starting at 112 onwards, the principal

objection was that the request was just far too wide and

onerous and lacked any real definition. There had been

no attempt to define which documents held by those

companies were alleged to be within the Bank’s control

and which were not {G4/103.1/32}. We say, for example,

we said you can’t just ask for all documents held by the

Renord Group, because even on your case about original

purchases, for example, there are all sorts of companies

in the Renord Group, nothing to do with this or the

Bank.

Now, the Bank did seek to be constructive in that

skeleton and at paragraph 114 it offered to consider

more focused requests for documents. None were

forthcoming. There was, as my Lord knows, a hearing

about it, it was argued out and my Lord delivered

a judgment on it. Again, for the note, the judgment can

anything held by Mr Sklyarevsky and Mr Zelyenov as well,

I think.

There were all sorts of other issues and these were

all ventilated at the time: potential confidentiality

points, difficulties in Renord tracking them down, costs

for Renord or Mr Sklyarevsky, and obviously they

wouldn’t just let the Bank go in and root around

themselves.

My Lord also considered the issue about working

papers and invasion of rights, and that informed the

particular formulation of the order and the draft

letter.

But at the end of the day, my Lord, we say that the

court process was gone through and my Lord gave

a judgment on it and formulated the approach that had to

be followed, and that was followed. And I don’t think

there has ever been any complaint, at least no

articulated complaint or anything on a proper basis,

that the Bank did not comply with its obligations under

paragraph 16 and schedule D of that order.

Once the boundaries of a particular disclosure

obligation have been set in that way, it is not right to

draw inferences against a party from choosing not to go

beyond those obligations. It has, by definition,

fulfilled its obligations. If Mr Stroilov wanted to

L15/90/36

July 11, 2016 Day 46

invite my Lord to draw inferences from a failure to go

beyond a disclosure obligation, then a further order

should have been applied for and there could have been

an argument about it and the Bank then would have known

whether it ought or ought not to do anything else.

But what you can’t do, we say, is make a disclosure

application, lose it in part, and then say that because

the other party did not go beyond what they had to do

under the order that was made ‐‐ in other words didn’t

carry out the stuff that they succeeded on and you

lost ‐‐ what you can’t then say is an inference should

be drawn about that.

My Lord, in relation to disclosure, you probably

have the references, but Mr McGregor dealt with what the

Bank did in a series of witness statements, and in

particular in relation to the September order and the

searches that followed it, Mr McGregor’s fifth statement

is at {H2/32/1}, Mr McGregor’s sixth statement is at

{H2/33/1}, he sets out there all the details of the

searches that were undertaken, the search terms that

were included, the reasons for those. There was also,

my Lord may remember, a further debate about those

search terms and in the end my Lord decided that others

did not have to be added.

In the end, my Lord may remember that the Bank also

141

added the search term «Renord», having completed all the

other searches, Mr Stroilov of course saying that really

should be a term, and that ended up producing no further

disclosable documents. That was a letter at

{I19/19/51}. So we do say the Bank had reached the end

of any sensible disclosure process.

There’s also Mr McGregor’s seventh statement, for

completeness, which is {H2/35/1}, which sets out the

fruits of the letters written under my Lord’s order, the

schedule D letters.

I have summarised the points, really, already, but

there was an obvious proportionality point here, as

explained by Mr McGregor, and the efforts that had

already been made; and, as with any litigation on this

scale, it was a question of getting the balance right

and bearing in mind the fruits of the various searches

and the cost of them, and that was the boundary my Lord

drew and that the Bank stuck to.

My Lord, on the forgery case, I think there is very

little I want to say, save that on Friday Mr Stroilov

propounded what seemed to be slightly new theories about

it that hadn’t really been advanced or put before.

We say there is no basis for them, and we still don’t

understand what is really alleged to have happened or

who is alleged to have forged what or when. It has

never been suggested who it was that has actually

committed the huge number of forgeries or who is even,

in terms of the individuals, said to have known about

them.

The theories seem to be: well, nothing happened

until December 2008 but, amongst other things ‐‐ and we

rely on everything we have put in our written closing ‐‐

that is entirely inconsistent with Mrs Arkhangelskaya

having signed the first Onega loan spousal consent,

which is dated from back in the middle of 2006, and on

which the experts are agreed there is very strong

evidence it was her signature. In a sense, that brings

the whole house of cards crashing down.

But it is not just that: there’s also the OMG

internal debt schedules which refer to the guarantees,

and they predate that period. We have dealt with those

in our written closing at paragraphs 81 and following.

One also has to remember that there are direct debit

agreements with the other banks for the Scan guarantees,

and they are completely inconsistent with the idea that

the Scan guarantees were only drawn up and either

backdated, or forged, or both, in December 2008.

We have dealt with these in our written closing at

paragraphs 99 and following {AA3&4/14/68}, and the

various documents are referred to as we discuss each

143

loan, starting at paragraph 89 {AA3&4/14/56}. But they

were, my Lord, remember, contracts which referred to

the Scan guarantees and were signed not only by the

Bank of St Petersburg and Mr Arkhangelsky, but also by

various third party banks at which Scan Insurance held

accounts, and there is simply no explanation for those

save that they were in support of valid Scan guarantees

that had been entered into at the time they were made,

inconsistent with this all just happening

in December 2008.

As a last point on this, there was a point that is

sought to be made on the basis of Ms Volodina’s evidence

in his witness statement. Mr Stroilov relied on her

paragraph 63 {B1/5/13}.

MR JUSTICE HILDYARD: Yes.

MR BIRT: We say that is not fair and doesn’t work. It is

not an obvious reading of her witness statement,

particularly when one considers earlier paragraphs where

she gave evidence of the need for guarantees. I think

I pointed out paragraphs 7, 10 and 15, but if this was

ever a point that was going to be run, and this reading

put on paragraph 63 of Ms Volodina’s witness statement,

it obviously had to be put to her and it was not. So,

my Lord, that is, we say, an end of that.

A few brief points, I think I am making just about

L15/90/37

July 11, 2016 Day 46

sufficient progress, my Lord, on Mr Stroilov’s

submissions about connections with Renord. An emphasis

is placed on Mr Maleev and his role in what is said to

be a nominee for Mr Savelyev. I think quite a lot of

emphasis was placed on Mr Maleev and what was said to be

a sort of habitual role as a nominee, but actually

he wasn’t a nominee for Mr Savelyev; he was a director

general of a number of companies, about which

Mr Savelyev was asked questions, and we have listed some

of those in our submissions at paragraph 671(2)

{AA3&4/14/368}.

But that is different: he was not, in fact,

a nominee for Mr Savelyev. It was only put to

Mr Savelyev, as far as we are aware, that Mr Maleev was

his nominee, meaning holding shares on his behalf, in

relation to a company called Teknopark, said to be

a minor shareholding, that was {Day27/102:1}, and

Mr Savelyev denied that he was holding it as his

nominee, and he went on to point out the difference

between a director general who is working in

an administrative capacity and somebody who was

a nominee. He said Mr Maleev did fulfil the role of

director general because he was good at keeping the

documents in order, paying the tax and so on and so

forth, that was {Day27/107:1} but he was not a nominee.

We have summarised the points at paragraph 877 of

our closing {AA3&4/14/466} and, as I think Mr Stroilov

accepted the other day, I noted down {Day44/91/16} and

{Day44/92/7}. They don’t actually challenge that they

were advertised according to the rules, but we have

given references in our written closing to the adverts

for the Western Terminal auction at footnote 2654

{AA3&4/14/493} and for the auction for the Pravdy Street

assets at footnotes 2724 and 2725 {AA3&4/14/504}

We also rely on Ms Mironova’s evidence which we have

cited at footnote 2511 {AA3&4/14/466} where she said the

bailiffs had to publish the information in the media and

advertise, et cetera, and also her evidence at

{Day33/120:1} to {Day33/121:1} where she explained that

the Bank took all possible steps and measure to

advertise the auction of Western Terminal as widely as

possible.

She also said in relation to the Scan Onega land ‐‐

MR JUSTICE HILDYARD: She gives no examples there.

MR BIRT: My Lord, there is not a document reference I can

give you for that.

She also said at {Day34/29:1} and we have cited this

in our closing at paragraph 944 {AA3&4/14/500} in

relation to the Scan Onega land auction, that that was

published in various media outlets and promotional

145 147

My Lord also asked a question, and I owe

a reference, for whether Ms Mironova’s shareholding

arrangements are reflected in various of the Bank’s

public documents.

MR JUSTICE HILDYARD: Oh yes.

MR BIRT: And the reference, I don’t suggest we look it up

now, but in the 2014 annual report there are some

references at {D210/3064/74} and {D210/3064/86}.

My Lord, also ‐‐

MR JUSTICE HILDYARD: Which was the first? D210?

MR BIRT: I’m sorry {D210/3064/74} and {D210/3064/86}

My Lord also asked me to revert on things like

advertisements for the auctions and efforts that have

been made to sell the properties. I’ve already

referred, I think, to the various bits of the witness

evidence saying that the auction rules were complied

with and, indeed, nobody was challenged on the basis

that they had been complied with, including that the

appropriate adverts had been placed, and it repeats my

earlier submission to say that there is no reason to

believe that the bailiffs wouldn’t have ensured that

they had been advertised properly, or they would have

let the auctions go ahead without the proper adverts.

So one has to assume the rules, including those as to

advertising, were followed.

publications. As before, my Lord, I do not have

a document reference for that day.

Various references in our written closing to

the efforts to sell the properties, and they include

evidence given by Mrs Yatvetsky, which we refer to at

paragraphs 161, 916, and 917 {AA3&4/14/103}

{AA3&4/14/485} and Ms Mironova at paragraph 924.

I have already made, I think, submissions along the

lines that one has to bear in mind that these were

properties that the Bank was entitled to sell at auction

in satisfaction of the pledges which were there as

security for debts which had not been repaid.

An auction in those circumstances does have the

character of a forced sale. It is likely to raise less

than a sale where there is a seller who does not have to

sell unless he likes the price. One has to keep that in

mind.

There is no obligation under the rules for the Bank

to conduct a lengthy marketing exercise. Yes, efforts

were made to find buyers. That is the witness evidence

that I have referred to: they were not successful. So

the assets had to be realised through the enforcement

process in what was, ultimately, the only way that the

Bank was going to see any money out of their security,

and I made submissions earlier as to what else were they

L15/90/38

July 11, 2016 Day 46

supposed to do.

My Lord, I think you also asked for what the rules

were. I was going to give one example that the experts

referred to, I don’t suggest we go to it now, but it is

Article 57.3 of the law on mortgages, which is at

{E2&E3/12/329}, and it has to be advertised under those

rules in a periodical which is an official source of

information and on the internet under a government

procedure. We have seen examples ‐‐ some of

the examples that I gave earlier, I think the Pravdy

Street properties were advertised for sale in

Kommersant, which is one of the publications that

my Lord has been taken to. There were a number of

articles and I think it is a publication with quite wide

circulation.

Mr Eschwege reminds me, it is the auction organisers

who are responsible for making sure that the right

adverts are placed in the right place at the right time.

My Lord also asked for a reference as to where we

deal in our written closing with Mr Savelyev’s BVI

witness statement. We have dealt with that.

MR JUSTICE HILDYARD: Have you given me within that ‐‐ I’m

sorry, you are going quite a pace, I don’t criticise you

for that ‐‐ have you given me within that whether there

is any evidence of any ‐‐ any documentary evidence of

149

any approaches to ROK Prichaly or its holding company

with respect to sales at Onega?

MR BIRT: My Lord, as far as I know, there is not in

the trial bundle such documentary material. I have

given you the references to what the witnesses say,

albeit I’m not saying that if you look there you will

find them referring to documents giving the references

to the witness evidence.

MR JUSTICE HILDYARD: I think my interest was that there was

an obvious purchaser, possibly the only potential

purchaser, so I was interested to know what feelers had

been put out by the Bank, but perhaps that is

undocumented.

MR BIRT: My Lord, it is undocumented, yes.

MR JUSTICE HILDYARD: Yes.

MR BIRT: And I don’t think that specific question was asked

of the witnesses either in cross‐examination or

re‐examination, my Lord.

I was going to give my Lord the reference, we had

dealt with Mr Savelyev’s BVI evidence. You asked me for

that reference at some point, we dealt with it briefly

at paragraph 304(6) of our closing {AA3&4/14/181} where

we also give the references to where he dealt with it in

his witness statement, which is paragraphs 48 and 49,

and in the transcript of {Day29/41:1} to {Day29/42:1}

The gist of it was that the trial statement was put

together with the benefit of a more detailed review of

the documents and with the opportunity of the statement

to make clear what Mr Savelyev’s recollection was as

opposed to something being done in a rush in response to

the freezing order, which is the circumstances in which

the BVI statement was put in. My Lord, I think that

is ‐‐ the explanation is in Mr Savelyev’s evidence in

those two references.

I think this may be the last point, subject to

anything else being handed up to me. Mr Stroilov, at

the end of his submissions, made a point about the

defendants’ disclosure, and they said that everything

was answered in the annex to the disclosure statement

that he referred to at {P1/10/1}, which was

in October 2015.

In fact, we say that does not answer everything, in

fact, it raises more questions than it answered. We

wrote a letter about that on 19 November that can be

found at {I19/19/9} and that was explaining why that

annex was not satisfactory and trying to follow up on

some of the points without going into the detail.

My Lord may remember, there were issues about what he

had done with his laptop that he said had been ‐‐ there

were inconsistent statements, let’s just leave it at

151

that for now, about what had happened to it. There were

memory sticks he said he had brought from Russia,

containing documents, there were all sorts of things.

So that was our letter then. We never got

a response to that. There was a short summary of some

of the ‐‐

MR JUSTICE HILDYARD: That’s at I19/9, is it?

MR BIRT: {I19/19/9}, it is one of those slightly difficult

to read references if you haven’t got your teeth in.

There is a short summary of some of the key points

in our opening at paragraphs 755 to 756, and again

a short summary in our closing at 1186 to 1188

{AA3&4/14/623} where we also refer to Mr Nazarov’s

documents, which my Lord will well remember, and there

was always going to be a proposal for Mr Stroilov as to

how those were to be reviewed, and my Lord gave a fair

amount of licence to him about when he did that, and the

position remains that we never had that proposal and as

far as we know, they have never been reviewed, my Lord.

Can I just check whether there is anything else that

I ought to say to my Lord? (Pause).

My Lord, I am sorry that has been a slight gallop

through, I have done my best to stick to the allotted

time, but obviously I’m still here if my Lord wants to

pick up on any of those points or go back into them.

L15/90/39

July 11, 2016 Day 46

Ah yes, sorry, there was one more point, I knew

there would be one. My Lord asked where I dealt with

the Morskoy Bank and the change of directors chronology.

That was discussed on {Day44/53:1} to {Day44/55:1}.

That’s when I set out my position on that.

Unless there is anything else I can now help you

with, my Lord, those are what we say.

MR JUSTICE HILDYARD: At various points in your closing

submissions you have made, or at least you have stated,

that there were points now relied on not put to

the witnesses. I shall have to comb through those, but

do you say that the same rigour applies notwithstanding

the somewhat different array of forces on each side of

the court?

MR BIRT: My Lord, I wasn’t trying to make, if you like,

a technical not‐put point in a general sense, but ‐‐ and

it may be that it carries a different character on the

different occasions when I made it.

I think the thrust of my points when I was saying

that was really if there was a coherent case here it

would have been suggested to this witness or that

witness or the other witness.

The point I came to at the end, I think, is

potentially in a slightly different category, where

Mr Stroilov is saying: read paragraph 63 of

153

Ms Volodina’s witness statement, it means X, when there

would at least be a debate about that. In my

submission, one should really pause before accepting or

going much further with that submission, because it is

difficult to see why it would be fair to accept that

submission without having heard the witness on it,

my Lord.

To complete that, I’m sorry to interrupt my Lord,

that is, we say, something that arises in relation to

the forgery case where, really, we say one can almost

disregard it because the evidence is so one way,

my Lord.

MR JUSTICE HILDYARD: At some point my feeble recollection

is that though Mr Lord cavilled against it I rather

indicated that given the disparity in force of

representation that if there were points on which the

not‐put argument was going to be made, I would rather

like them identified.

MR BIRT: My Lord, which is why ‐‐ I’m not disagreeing that

my Lord made that known. My recollection is that you

asked Mr Lord to keep an eye on questions that might

have been rolled up or ambiguous to avoid us having to

pore over the transcript. My Lord may be right. As

I say, I’m not trying to make a technical not‐put point.

MR JUSTICE HILDYARD: No.

MR BIRT: And, indeed, I don’t think any of the points

I have made have really been: he can’t advance that

because it is not put, rather than: this doesn’t really

appear to have been the case that has been suggested.

There is the forensic point, really, which is the

meandering case theory, in a sense. You can’t assume

a witness wouldn’t ‐‐ in a sense it comes to weighing

the evidence as well. It is difficult for Mr Stroilov

to say: ah, so‐and‐so didn’t say anything about it if he

wasn’t asked about it. I’m not saying those sorts of

points cannot be pursued to some extent but one has to

sometimes weigh the witnesses’ evidence in the context

of what they were asked.

Then the Ms Volodina point may be slightly

different, because it is quite difficult for us to stand

up and say when she is giving evidence: you haven’t put

that, when it is not actually part of their case. It

only became part of Mr Stroilov’s case when he stood up

to make the point last week. So I’m not sure we can

really be expected to police a case that is not being

met, my Lord.

As I say, in the main we are not taking a technical

rigour: you haven’t put it, you can’t advance it, but

that’s not to say there is no point at all when one is

trying to work out what the witnesses’ evidence was, and

155

whether the case theory actually works or is coherent

because of course, the case is being put on the

instructions of Mr Arkhangelsky and certainly on matters

where one would expect him to have some input, one would

expect that to relate to his evidence at least to some

extent, my Lord.

MR STROILOV: In case it assists, actually my recollection

is as my learned friend’s is, that your discussion with

Mr Lord concerned rolled‐up questions rather than

not‐put points.

MR JUSTICE HILDYARD: That is very fair of you. I must have

a misrecollection. Thank you.

You seek declaratory relief. Is there anything you

wish to add to that, or may I take it that I simply have

to read with care the closing submissions again?

It is unusual. I can understand that a bank or many

claimants wish to have such vindication, but the

ordinary rule is you either win or you lose, sort of

thing?

MR BIRT: My Lord, yes, I don’t think there is anything in

detail I want to add to what’s in part 13 of our written

closing. My Lord knows the gist of what is sought is,

a declaration that the claimants haven’t committed the

wrongs that Mr Arkhangelsky has been alleging for many

years.

L15/90/40

July 11, 2016 Day 46

We summarise there, we have given the citation to

the case, the FSA v Rourke case, which can be found

behind {AUTH1/2/8}, and what Mr Justice Neuberger, as he

then was, said which is the court has an unfettered

discretion and the question is whether it is an

appropriate situation to make an order for

a declaration, taking into account justice for the

claimant and the defendants, whether it would serve

a useful purpose, or whether there is another special

reason.

We have sort of summarised the reasons there, but

effectively one can step back and say: these allegations

have been made against the Bank and against Mr Savelyev

over a long period of time in different jurisdictions.

As we would characterise it, the war has been waged by

Mr Arkhangelsky in various courts, and one hesitates to

say: but is there anything to suggest that he does

intend to stop here? It has been waged not only in

the courts, but also in the press and on the internet.

Again, that is a campaign that he has not said he is

going to stop. We say it has been an all out attempt to

stigmatise the name of the Bank and, indeed, personally,

the name of Mr Savelyev. Indeed we would say it has

become something of a vendetta. The allegations are

serious ones and as we would say there is no evidential

earlier. If there is a reference to give my Lord, could

I send that in ‐‐

MR JUSTICE HILDYARD: Yes.

MR BIRT: ‐‐ because I don’t have it to hand?

Housekeeping

MR JUSTICE HILDYARD: I have photographs to bring back the

witnesses to me, as I wrestle with the case. I’m not

sure I have a photograph of Mr Turetsky. Perhaps you

could provide me one.

MR BIRT: My Lord, I’m sorry about that. We will seek to

remedy that.

MR JUSTICE HILDYARD: That’s all right. And so far as the

defendants are concerned, I think I remember Mr and

Mrs Arkhangelsky, and I do remember Mr Bromley‐Martin.

MR STROILOV: Is it unnecessary, my Lord? I am afraid

I forgot to take care of that.

MR JUSTICE HILDYARD: I think I can remember. There were

fewer.

MR STROILOV: I’m grateful.

MR JUSTICE HILDYARD: Good. Well, thank you both very much

indeed. As I said, I have reserved the right to get

back to you and, if necessary, reconvene. Obviously

I will do everything I can to avoid that.

I should say that it is always a rather sort of

weird moment when you hand over the case to the judge,

157 159

basis for them, the Bank has been forced to defend

itself both inside and out of court against the

allegations at great cost and as my Lord knows, has even

paid effectively for both sides of this trial in some

respects.

My Lord has in mind as well the various press

releases and media interviews in which the allegations

have been propagated outside the courts. We have

selected some for inclusion at paragraph 1184

{AA3&4/14/621} and in fact, Mr Arkhangelsky has not

shied away from publicity, he has rather courted

publicity during the course of the trial. We say there

can’t really be a complaint that the court sets clear in

the record what the position is, and in terms of

injustice to Mr Arkhangelsky, well, there obviously

wouldn’t be, we say, if the declarations were sought but

justice to the claimants given the history and the

extent to which the allegations have been broadcast,

my Lord. I think that is a rough summary of what is in

the written document and our submissions on the point.

MR JUSTICE HILDYARD: Did you want to say anything about the

suggestion that you had improperly used information

derived from the freezing order in these proceedings?

MR BIRT: My Lord, my recollection is that we had this

debate in court and I couldn’t find the reference

and on this particular context it feels even more

daunting than usual. There is a great volume of

material, some considerable part of which has actually

been referred to, which is not invariable, and it will

take me, inevitably, some considerable time to get back

to you, quite apart from the intervention of holidays,

which I don’t intend entirely to ignore.

As I will say, I’m extremely indebted to everyone,

to you, Mr Birt, for taking over from Mr Lord whilst he

is elsewhere in the building, but also to your entire

team, Mr Eschwege and all the solicitors. I know the

ferocious amount of work which is involved in any case,

but in a case like this it must have been really quite

staggering.

MR BIRT: Thank you, my Lord.

MR JUSTICE HILDYARD: And to Mr Stroilov, who has had to

take on a very, very considerable burden, and whose

conduct I think has been notable and much appreciated,

and I hope that Mr and Mrs Arkhangelsky will see what

I have said in this regard and have also been kept

abreast of the proceedings over the last four days,

which have been very useful to me. So thank you very

much.

The other thing is I do think that the transcription

service and the whole Magnum product has been quite

L15/90/41

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165

July 11, 2016 Day 46

A‐K‐O‐R‐T (1) 38:1 A2/11/42 (1) 74:4

AA (1) 105:20

AA2/12/1 (1) 105:23

AA3&4/14/103 (1)

148:6

AA3&4/14/138 (1)

85:14

AA3&4/14/181 (1)

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127:21

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85:21

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145:11

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136:3

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87:8

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90:19

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90:12

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91:11 147:2,11

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AA3&4/14/485 (1)

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89:2 108:24

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121:8

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127:18,24 131:2

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130:12

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AA3&4/14/532 (1)

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118:12

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144:1

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106:21

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108:1

AA3&4/14/621 (1)

158:10

AA3&4/14/623 (1)

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AA3&4/14/68 (1)

143:24

able (15) 7:22 30:17 49:1 55:3 64:24 71:16 80:9,17,20 93:23 95:3 110:16 121:20 162:2,17

abreast (1) 160:21 absent (2) 92:11 95:15

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July 11, 2016 Day 46

162:23 average (1) 44:23 avoid (4) 20:16,17

154:22 159:23 avoided (2) 51:22

54:14

avoids (2) 20:10,10 aware (1) 145:14 awful (1) 67:13

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83:13 87:1 88:13 88:24,25 89:3,4 96:1 97:13 102:2,4 104:10 106:1 109:2 109:13,22 112:5 115:20 118:1 120:25 125:4 128:8 129:23 130:22 131:8,22 132:6,15 133:6 143:10 152:25 157:12 159:6,22 160:5 161:11

backdated (2) 25:17 143:22

background (1) 46:13 backtrack (1) 89:17 bad (3) 56:2 77:14,17 bailiffs (17) 89:6,14

90:1,10 92:4,10,14 92:16 93:4,8,20,22 94:23 95:3 96:24 146:21 147:12

balance (8) 33:19 52:2 54:18 80:11 111:9 112:8,17 142:15

Balandin (1) 33:24 Baltic (2) 33:14 74:7 bandstanding (1)

77:24

bank (172) 1:9 2:9 4:18 5:12,18,23 6:10 7:9 8:2,4,25 9:5,8,21 10:7,13,24 11:15,16 12:10,11 12:21,25 13:3,14 13:19,21,22 14:17 15:2,9,13,13,17,18 16:4,17,22 18:13 19:13 22:20 23:21 25:19 29:9,10,19 30:1,6,12 32:7,14 33:3 34:13,24 35:2 35:5,9,19,22 36:4,7 36:15 38:14 39:4 41:3,10,12 42:7,22 45:12 46:11 49:10 49:12,12 50:10 61:22 68:5 70:17 71:3,11,15 73:3 74:10 75:2,6 76:21 76:23 77:6,10,14 77:16,17 84:19 87:5,15,17,21 88:19 91:15,22 94:15 96:6,10,11 96:13 97:11,13 99:21 100:8,13,15 100:20 102:10 104:13,16 105:16 106:3 109:3,9,10 109:15 110:4,8,14 111:9 112:8 113:15 113:23,25 114:5,5

54:10,10,19 55:2,5 57:12,24 62:3 67:10 70:7 85:6 122:15 130:8

businesses (3) 40:21

54:16 133:15

businessmen (1)

57:24 button (1) 94:19 buy (1) 101:17 buyers (2) 102:19

148:20 buying (1) 98:13

BVI (11) 72:5 79:1 86:3,11 128:23 129:5,11,15 149:20 150:20 151:7

C1/1/27 (1) 42:12 C1/1/29 (1) 42:17 calculation (4) 115:23

116:18,22 118:22

calculations (2)

115:24 116:15 call (6) 69:13 70:18

71:16 74:18 77:25 96:18

called (10) 6:24,25 31:22 92:23,24 126:1,13 136:12 137:18 145:16

calls (1) 21:25 campaign (4) 31:1

79:7,8 157:20 cancelled (1) 46:16 candid (3) 39:4 65:18

81:4 candour (1) 58:5 cap (1) 100:14

capacity (3) 89:9 92:5 145:21

capital (5) 44:25 73:15 77:14 87:23 135:12

capture (1) 33:6 cards (2) 101:11

143:13

care (3) 42:24 156:15 159:16

carefully (1) 63:16 carpet (1) 62:15 carries (1) 153:17 carry (1) 141:10 cartoon (1) 79:18 cartoons (2) 79:16,19 carved (1) 129:24 cascade (2) 7:4 9:12 case (93) 1:9,12 5:12

5:15 6:7,12 8:4,10 9:19,21 10:1 14:18 14:21,22 15:6,10 15:12,13,15 16:14 17:1 23:13,14 28:16 33:15 35:18 35:25 36:18 41:19 59:2 71:19 72:8 74:20 77:2 79:9 81:24,25 84:8 89:11,12 92:8 94:1 97:15 98:8,9 100:3 100:25 101:2,3 111:15 112:4 115:25 118:6 121:10 122:4 123:20 126:1,8,13 126:18,23,23 127:4 131:4 132:1,7 133:22,24 134:15 134:16,19,24 137:8 138:16 139:19,22

142:19 153:20 154:10 155:4,6,17 155:18,20 156:1,2 156:7 157:2,2 159:7,25 160:12,13

cases (4) 1:10 2:20 27:15 93:9

cash (1) 117:9 categorical (1) 50:7 categories (1) 66:3 category (1) 153:24 caught (1) 67:12 causation (1) 124:8 cause (1) 130:18 caused (4) 5:17 14:8

28:19 54:7 cavilled (1) 154:14 cent (10) 45:4,6 90:21

93:10 103:8,9 112:15,16,16 136:11

central (5) 5:15 31:7,9

31:10 162:13

centre (4) 36:20,21

48:1 116:25 centred (1) 128:20 certain (5) 67:21 95:8

95:8 115:24 119:25 certainly (10) 20:25

80:14 86:1 89:22 90:9 104:6 114:23 117:24 123:2 156:3

cetera (1) 147:13 challenge (3) 118:6,11

147:4 challenged (2) 118:4

146:17 chance (1) 109:20 change (3) 30:19

117:19 153:3 changed (5) 71:4 74:9

74:12 105:20 119:22

changes (1) 117:1 channelling (1) 110:4 character (2) 148:14

153:17

characterisation (1)

83:20 characterise (1)

157:15 characterised (1)

121:16 characterises (1)

126:19

charges (4) 23:18,21 23:24,25

charter (1) 73:15 chartering (1) 42:23 charters (2) 85:18,20 chased (1) 70:20 chasing (2) 70:23 71:2 check (4) 11:2 42:9

93:21 152:20

Chichoyan (1) 124:1 chief (1) 102:14 choice (1) 52:8 chooses (1) 94:17 choosing (1) 140:23 chronology (6) 7:6

15:5 114:2 120:18 124:24 153:3

circle (2) 20:20 99:21 circular (1) 115:9 circulation (2) 149:15

161:20

circumstances (9)

30:13 39:16 61:11 75:13 121:23 128:21 148:13

151:6 162:16 circumvent (1) 122:9 citation (2) 121:12

157:1

cite (1) 89:12

cited (5) 90:17 91:13 107:23 147:11,22 City (3) 36:20,21 48:1 civil (6) 2:20 5:11 13:9

13:13 14:11 25:1 claim (72) 3:5,18,23 3:23 10:25 11:1,3 11:11,13,14 12:12 12:25 13:2,3,9,10

13:13,22 14:11 25:5 29:1 48:4,22 50:14 54:3,5,9,19 67:12,19 68:4 70:6 70:8,12 89:2 95:12 106:24,24 107:2,6 107:6,6 112:10 115:14 121:25 122:8,15,16,19,23 123:1,2,11 126:10 126:22 127:1 128:1 128:2,13,15 129:8 129:9,11,23,25 130:2,5,7,8,10 131:1,2

claimable (1) 124:20 claimant (3) 121:15 121:17 157:8 claimants (20) 1:13 2:4 22:13 30:21

35:24 39:17 49:4 55:17 74:25 75:15 78:17 85:5 137:23 138:3,5,6,9 156:17 156:23 158:17

claimants’ (12) 2:11 7:6 30:20 38:17 52:22 73:11 74:25 77:21 89:14 137:10 137:13,25

claimed (2) 124:14 130:15

claims (8) 5:11 25:1 51:19 88:12 121:18 122:14 128:23 129:5

clarity (1) 68:9 class (1) 55:6 classical (1) 111:23 clause (1) 88:8 cleaner (1) 97:16 clear (15) 5:13 16:9

22:20 35:23 53:16 56:19 57:13 80:6 98:7 104:4 118:3 131:21 133:3 151:4 158:13

cleared (2) 71:9 162:19

clearly (22) 6:7 7:24 17:13,15 18:4,21 20:5,11 22:6,9 23:14 26:1 32:17 32:22 38:12 54:6 59:25 67:17 70:4 71:14,25 134:3

clerk (2) 81:14 82:1 client (1) 60:24 close (6) 35:10 36:3

51:19 100:23 103:10 111:4 closely (1) 34:24 closer (1) 104:3

closest (2) 119:17,19 closet (2) 67:1 83:23 closing (52) 1:3 11:6

L15/90/44

L15/90/45

168

July 11, 2016 Day 46

dollars (2) 63:15 105:19

double (2) 124:6,7 doubt (4) 80:21 98:14

99:16 126:25 downward (1) 99:1

Dr (7) 48:18 55:14 57:19 60:8 92:13 94:9 121:8

draft (1) 140:11 drafted (1) 23:4 draw (5) 1:16 75:8

78:14 140:23 141:1 drawn (3) 111:12

141:12 143:21 drew (2) 63:24 142:18 dried (1) 102:11 driving (1) 114:5 dropped (1) 102:18 due (9) 26:12 46:21

58:21,21 60:25 83:24 84:12 99:6 108:5

dusted (1) 81:2 duties (1) 106:8 duty (4) 90:4,7,11

91:1

e‐mail (3) 47:20 82:1 120:11

E2&E3/12/329 (1)

149:6

E2/8/28 (1) 90:23 earlier (21) 11:12,23

32:15 53:6 82:19 82:22 83:9 108:12 109:13 116:12 120:6 128:13 129:20 132:9 133:1 144:18 146:20 148:25 149:10 159:1 162:14

earliest (1) 73:25 early (2) 102:12

108:25 easier (1) 39:3 easily (1) 162:3 easy (1) 56:23 EBRD (1) 65:14 echo (1) 161:5

economic (1) 33:12 effect (5) 9:12 46:15 63:19 67:12 81:19 effectively (9) 16:15 23:19 83:21 85:18

92:12 130:3,16 157:12 158:4

efforts (5) 99:3 142:13 146:13 148:4,19

either (22) 17:12 24:13 42:6 55:1 61:22 66:11 75:7 75:15 81:13,18 85:5 91:7,16,21 95:7 117:17 130:23 133:9 137:5 143:21 150:17 156:18

elaborating (1) 1:24 element (7) 10:25

15:24 29:4,5 31:7,9 31:10

elements (2) 8:17 31:18

elephant (1) 58:10 embark (1) 59:17 embarrassment (1)

57:5

embezzling (1) 133:10 emerge (1) 83:23

L15/90/46

169

July 11, 2016 Day 46

fuller (2) 39:24 56:9 fully (4) 3:16 60:23,24

106:18 function (1) 92:25 funder (1) 73:13 funders (1) 65:10 funny (1) 28:13 further (34) 4:22

15:22 17:10 25:12 26:10,16 32:19 41:1,13,18,18 42:17 50:4 51:2 52:7,9,11 68:1 69:19 72:12 75:19 79:17 85:1 95:25 104:16 111:25 123:12 130:12,15 131:4 141:2,22 142:3 154:4

fussed (2) 80:24 99:21

G4/103.1/1 (1) 137:11

G4/103.1/32 (1)

138:14

G4/103.2/1 (1) 137:11 gallop (1) 152:22 galloping (1) 72:18 gap (4) 58:22,23 59:6

59:10

gaps (2) 59:12,13

Gatchina (1) 46:4 gateway (1) 62:4 Gavrilov (1) 20:8 general (27) 1:25 10:2

10:12,16 11:24 12:1,3,20 15:16 31:11,23 32:1,4 33:13 34:18 44:5 66:7 107:8 135:17 135:19 136:17,20 139:9 145:8,20,23 153:16

general’s (1) 13:3 generally (6) 41:15,16

79:5 84:23 104:15 123:9

generate (1) 115:14 generated (1) 116:17 genuine (2) 5:22 8:13 genuinely (1) 19:7 getting (13) 9:7 16:6

50:25 70:14,15 80:25 83:17 93:2 93:24 109:22 131:16 135:12 142:15

gift (1) 96:8

Giles (3) 126:8,15,19 gist (3) 92:13 151:1

156:22

give (32) 11:7 13:17 26:22 38:8 39:1 47:16 52:23 53:16 58:5,13 62:15 69:5 69:8 70:2 74:2,17 74:21 75:20,25 76:7 80:11 98:16 108:14,18 126:3 134:9 138:5 147:21 149:3 150:19,23 159:1

given (44) 2:23 8:6 9:17 13:7 15:19 19:10 35:17 36:17 36:18 39:13,24 43:23 49:6 50:9 56:24 70:17 74:23 77:24 82:24 83:5 102:6,20,21 104:23

105:9 107:14,18 108:24 110:13,20 111:1 121:1 122:9 134:25 136:2,13 147:6 148:5 149:22 149:24 150:5 154:15 157:1 158:17

gives (5) 13:16 34:5 46:13 73:19 147:19

giving (9) 20:19 21:14 28:17 76:12 82:23 83:1 102:15 150:7 155:16

glad (1) 115:21 Gladyshev (2) 92:13

94:9

Gladyshev’s (1) 121:8 glaring (1) 28:11 Globus (1) 72:22 glued (1) 82:4

go (38) 1:21 27:1 32:9 42:11,17 43:12 44:7,8,10 46:9 47:24 52:20 59:23 63:16 83:25 84:7 93:6 96:19 97:1,7 97:25 100:2 112:2 115:8 116:10 118:1 121:14 131:8 133:6 139:17 140:7,23 141:1,8 146:23 149:4 152:25 161:21

goes (14) 34:11 66:13 66:23 94:21 95:16 97:9 98:18 99:20 108:16 109:13 112:5 126:6,11 130:22

going (44) 33:2 41:5 52:24 58:13 69:2 69:11 72:10 81:4 82:10,15 83:1 87:14 89:4 94:19 97:5,6 99:1,25 102:4 104:10 105:13 106:18 107:5 115:20 117:10 118:13 120:12,25 121:4,7 127:14,24 131:6 132:11 144:21 148:24 149:3,23 150:19 151:22 152:15 154:4,17 157:21

GOM (10) 123:10,10 123:14,22,23 124:3 124:5 136:2,7,16

good (15) 1:4,5 2:5 37:2,19 39:22 49:13 69:22 79:23 82:13 110:11 120:1 126:15 145:23 159:20

goodness (1) 66:13 governing (1) 90:5 government (1) 149:8 Governor (4) 34:21

35:10,18,22

Gradually (1) 7:2 grant (3) 68:12 107:12

135:6 granted (2) 135:1

136:23 grass (1) 61:25

grateful (7) 13:24 52:18 78:14 159:19 161:4 162:12 163:1

great (4) 62:8 100:7 158:3 160:2

greater (2) 57:4 101:4 greatly (1) 1:25 grotesque (1) 27:18 ground (2) 41:2 128:4 grounded (2) 119:21

119:23

group (14) 8:1 32:2 40:8,12 41:9 64:12 64:23 88:1 112:11 123:9 138:16,18 139:13,21

guaranteed (1) 7:21 guarantees (6) 143:15 143:19,21 144:3,7

144:19 guess (1) 66:11

guidance (3) 61:19 122:1 127:7

Gunard (3) 101:15,18

102:1

H2/32/1 (1) 141:18 H2/33/1 (1) 141:19 H2/35/1 (1) 142:8 habitual (1) 145:6 half (5) 43:19 54:3 102:18 116:25

161:3

hand (10) 4:5 23:4 36:4,5 58:11,13 81:23 113:10 159:4 159:25

handed (2) 3:14 151:11

handled (1) 101:18 hands (7) 37:11 96:15

113:20 119:1,22 124:17,21

happen (4) 35:19 61:6

62:23 117:21 happened (15) 1:18

19:6,22 33:7 45:8 45:17 61:15,16,21 95:19 132:22 133:19 142:24 143:5 152:1

happening (2) 34:7 144:9

happens (8) 1:6 26:3 68:20 96:22,25 97:1 110:22 111:21

happy (3) 57:16 96:25 134:17

hard (4) 29:17 117:16 119:13,14

hardship (1) 129:21 harsh (1) 128:20 head (4) 31:23 32:5

130:11,13 hear (1) 115:21 heard (8) 5:6 22:13

28:16,18 40:14 54:6 127:15 154:6

hearing (3) 70:11 137:10 138:23 hearsay (1) 28:17 heavily (1) 86:12

heavy (2) 14:14 137:21

held (9) 60:20 84:6 86:4 114:12 115:1 138:12,15 140:1 144:5

help (2) 122:3 153:6 helped (1) 108:13 helpful (2) 38:9 51:12 helps (1) 26:23

Henry (1) 35:15 herring (2) 45:20

115:7

hesitates (1) 157:16 hidden (1) 77:17 high (3) 58:2 71:12

117:12

higher (7) 54:1 60:14 96:19 97:5 98:25 100:4 117:23

highest (1) 6:12 highlighted (1) 162:5 highly (1) 63:13 HILDYARD (211) 1:5

1:22 2:5 3:25 4:11 4:17,22 5:9 6:3,23 7:4,8,13,18 8:18 9:2,6,10,16 10:14 10:20,22,25 11:14 11:19 12:1,4,9,23 13:13,17,25 14:10 14:14,19,24 15:4,7 15:21 16:6,11,16 16:20,25 17:3,5 18:10,24 19:9,23 20:2,23 22:25 23:23 25:4 26:3,6 26:14,19,24 27:8 27:11,17,24 28:8 28:11,15,20 34:9 37:2,5,8,15,19 38:1 41:22,25 43:3,12 43:18 44:3,19 45:24 46:3,14,18 46:21,24 47:7,10 47:15,22 51:17 52:12,16 57:17 58:9 59:9,14,19 60:16 61:8,12,18 62:24 63:9,23 64:3 64:18,25 65:4,9,23 66:6,18,23 67:6,16 68:9,21 69:1,5,11 69:16,22 72:20 75:10,22 76:8,14 77:20 78:4,7,9,24 79:23 81:4,21 82:3 82:13,25 85:22 86:6,9,14,18,22 87:2 91:25 93:18 93:23 94:25 95:6 95:17,24 96:10,12 97:20 98:6 99:2,6 99:10 100:6,17 101:12 102:20 103:12,17,25 104:25 105:3,11,18 105:25 108:22 111:10,23 118:16 119:4,14 120:1,10 120:12,16,22 121:2 121:5 144:15 146:5 146:10 147:19 149:22 150:9,15 152:7 153:8 154:13 154:25 156:11 158:21 159:3,6,12 159:17,20 160:16 161:14 162:7,10,21 162:25

hint (2) 57:10 63:21 history (2) 67:20

158:17

hit (2) 125:15,16 hmm (1) 51:17

hold (3) 75:22 120:12 162:20

holder (1) 94:12 holding (4) 65:15

145:15,18 150:1

L15/90/47

170

July 11, 2016 Day 46

Holdings (1) 42:13 hole (1) 85:21 holes (1) 41:17 holidays (1) 160:6 homebake (1) 119:6 honest (7) 8:9 22:22

52:4 60:8 98:16 115:22 116:1

honestly (2) 8:6 22:14 Hong (2) 126:12

127:11

hope (7) 1:20 31:4 45:13 72:18 80:17 82:9 160:19

hoped (1) 81:5 hour (1) 161:3 house (5) 92:19

101:10,24 106:5 143:13

housekeeping (4)

50:18,25 159:5 164:5

houses (1) 117:10 housing (1) 117:12 huge (3) 68:12 83:22

143:2 hugely (1) 117:2

hundreds (3) 58:13 62:16 63:15

hurry (1) 24:5 husband (2) 35:3 74:8 hypothesis (1) 51:21 hypothetical (1) 61:20

I19/19/51 (1) 142:5 I19/19/9 (2) 151:20

152:8

I19/9 (1) 152:7 I25/39/147 (1) 134:1 I25/39/184 (1) 134:2 I27/43/12 (1) 50:19 I27/43/13 (1) 51:6 I27/43/2 (1) 53:1 I27/43/20 (1) 51:16 I27/43/21 (1) 52:9 I27/43/22 (1) 52:11 I27/43/23 (1) 52:16 I28 (1) 120:11 I28/45/19 (1) 120:14 idea (5) 82:11 88:2

99:24 111:11 143:20

ideal (2) 61:16 119:23 idealistic (1) 57:11 ideally (1) 47:20 identified (2) 60:19

154:18 identifying (2) 1:23

51:12 idiosyncratic (1) 66:8 ignorance (2) 47:17

49:6

ignore (1) 160:7 II (1) 35:15

illegality (4) 62:10,20 69:12 80:1

imagine (3) 7:6 37:13 64:6

immediately (4) 33:12 42:14 81:8 85:1

impact (2) 81:22 125:23

imperfect (2) 17:13 63:7

implausible (1) 50:9 implemented (1)

72:14 import (1) 58:1

important (14) 8:5,12

L15/90/48

171

July 11, 2016 Day 46

80:16,23,24 81:1 81:20 126:4

Lordship’s (7) 10:6 15:2 29:14 40:3 53:2 73:1 78:15

lose (2) 141:7 156:18 losing (1) 40:10

loss (36) 53:25 54:7 103:8,9 107:2 115:14 121:4,16,19 122:16 123:1,7,21 123:22 124:6,16,16 124:17,18,18,19,25 125:1,2,2,8,8,9,17 125:19,22 130:8,11 130:13,15,20

lost (4) 16:9 26:21 101:22 141:11 lot (17) 40:20 41:9 43:5 44:7 45:13

47:18 55:11 61:4 65:17 66:1 67:18 78:13 94:10 103:19 111:19 131:9 145:4

lots (2) 67:11,11 low (8) 22:14 28:2

97:20 102:5 103:1 103:22 110:17 111:18

lower (6) 97:3,7,19 100:7 117:4,23

lowest (1) 97:14

LPK (24) 54:4 87:19 88:12 89:2 106:14 106:25 107:1,7,9 108:11 109:2,3,11 109:12,17,22,25 110:5,24 111:5 112:12 113:21 136:8,19

lumbered (1) 115:19 lunch (3) 37:6 68:24

68:25 luncheon (2) 69:24

70:4

lunchtime (1) 80:19

Maggs’ (2) 91:13 92:13

Magnum (2) 160:25 161:7

main (4) 60:23 104:1 121:3 155:22 mainstream (1) 66:9 making (5) 15:8 76:5 113:16 144:25

149:17

Maleev (4) 145:3,5,14 145:22

Malysheva (13) 9:24 13:6 15:20 19:11 20:8,24 21:7,24 34:4 73:21 74:13 75:1,23

Malysheva’s (2) 18:9 24:23

management (1)

77:12 managers (1) 77:19 manipulating (1)

22:21 manipulation (1) 26:1 manoeuvring (1) 88:5

March (10) 9:4,5,9,10 10:8,22 12:10 19:12 70:18 71:6

marginally (1) 40:9 Marine (2) 112:11

123:9

L15/90/49

172

July 11, 2016 Day 46

obligations (7) 8:2 38:15 139:15,17 140:19,24,25

observation (1) 85:3 observed (1) 162:1 obtained (3) 56:22 102:24 127:7 obtaining (2) 22:10

64:5

obvious (7) 59:20 70:12,14 114:24 142:12 144:17 150:10

obviously (44) 1:22 2:7 4:12 8:10 10:13 21:7,9,14 22:8 25:18 27:14 29:8 40:18 46:2 48:2 54:12 55:11,23 57:7 58:6 60:5 62:21 67:18 76:18 77:1 78:12 82:15 88:16,21 100:2 109:21 110:8 115:23 118:11 127:11 128:2 131:9 135:8 140:6 144:23 152:24 158:15 159:22 161:6

occasion (1) 53:12 occasions (3) 82:22 92:23 153:18 occurred (1) 130:5

occurs (1) 11:21 October (3) 105:6

136:13 151:16 odd (7) 28:1 33:23

38:23 86:14 97:22 119:11 134:23

offer (1) 36:7 offered (1) 138:21 office (3) 103:21,22

104:3 officer’s (1) 44:11

offices (4) 104:1,22 105:7,15

official (2) 31:22 149:7 officials (6) 31:20 35:9 35:11,16,20 92:17

offshore (1) 41:24 oh (7) 44:3 96:17,18 108:22 111:17 120:10 146:5

okay (4) 15:7 61:12 86:18 100:14

old (1) 35:6

OMG (23) 1:15 3:20 4:9,16 7:9 17:17 25:1 36:15 40:20 51:21 71:12 87:19 88:23 104:1 111:5 111:6,11 112:21 131:12 132:14 133:8 135:15 143:14

OMG’s (2) 71:4 111:22

OMGP (5) 124:18 125:20 136:1,7,16

once (10) 33:11 56:22 58:23 84:14 100:12 116:18 130:20 134:22 139:15 140:21

one’s (1) 115:2

Onega (28) 40:8,13,14 54:2,10,10 92:20 103:25 106:11,13 106:23 107:8,16 108:11,21 109:9,10 112:12 116:8

122:17,19,20,23 130:8 143:9 147:18 147:24 150:2

Onega’s (2) 122:15,16 onerous (2) 84:18

138:11

ones (4) 12:15 92:22 133:16 157:25 ongoing (2) 17:2 34:6

onwards (8) 76:15 78:4 85:8,17 116:8 116:9 137:14 138:9

open (4) 4:9 43:22 53:21 84:8

opening (6) 7:7 44:13 85:16 127:19 136:14 152:11

operated (1) 133:18 operating (1) 133:16 operational (1) 43:17 operations (2) 40:12

40:19

opinion (2) 76:9,12 opinions (1) 44:11 opportunity (1) 151:3 opposed (3) 15:5

124:4 151:5 opposite (1) 8:14 oral (11) 72:4 82:19

89:17 116:5 118:9 131:5 134:4,7,20 135:4 136:6

order (29) 33:25 38:16 38:19,22 45:16 47:6,14 53:14 62:17 70:11 78:15 86:12 127:25 129:24 139:1,3,6,7 139:25 140:11,20 141:2,9,16 142:9 145:24 151:6 157:6 158:23

ordered (1) 109:24 orders (1) 33:8 ordinarily (2) 121:18

161:17

ordinary (2) 156:18

161:25 organ (1) 12:6

organise (1) 161:7 organised (1) 106:2 organiser (3) 90:22,24

92:19 organisers (9) 89:7

90:1,4,10,14 92:22 93:22 94:23 149:16

original (8) 5:19 46:3 109:4,12 137:13 138:16 139:9,12 Oslo (2) 112:11 123:9 ought (9) 87:14 121:9 132:16 139:21 141:5,5 152:21

161:17,24 outlets (1) 147:25 outline (2) 40:22

41:16 outlining (1) 45:17

outrageous (1) 57:14 outside (8) 68:20 75:4 87:20 104:6 115:5 124:11 139:18

158:8 outstanding (10) 1:20

41:8 70:21 100:5 100:15 110:13 112:15,16,17 161:14

overruled (1) 26:11 overwhelmingly (1)

49:8

owe (1) 146:1 owing (1) 123:16 owned (9) 18:14 42:1

43:8 54:4 104:22 113:18 125:15,17 136:19

owners (2) 86:6,7 ownership (2) 74:6

100:9

owns (2) 114:16,18

Oxus (1) 64:20

P1/10/1 (1) 151:15 P1/10/10 (1) 78:18 pace (1) 149:23 page (34) 2:25 3:1,2

17:6 18:23 19:15 19:16,17 20:7 21:23 25:8,13,13 27:2 29:13 34:3,11 34:11,11 38:6 39:11 44:10,15 49:18,24 51:4,10 52:6 53:1,3,9,11 72:16 164:2

pages (4) 51:4 53:9 72:17 108:17 paid (11) 41:2 62:8

67:22 85:19 87:18 98:25 100:23 114:4 115:17 132:15 158:4

paper (2) 99:9 113:15 papers (1) 140:10 paragraph (79) 11:6

11:12 13:18 14:18 17:7,10,18,21 18:11 19:3,18,24 19:25 20:3,6,7 21:24 25:8,14 42:12,17 49:18 50:23 51:16 52:10 52:14 71:21 74:3,4 78:4 83:8 85:10 87:7 88:25 89:12 90:18,22 91:7,14 104:24 105:4 106:20 107:19,20 107:21,23 108:16 108:24 110:21 116:8 118:8 121:7 121:12 122:10 126:6,18 127:6 128:6 129:1,3 130:25 134:1,2 136:3 137:16,19 138:21 139:2 140:20 144:1,14,22 145:10 147:1,23 148:7 150:22 153:25 158:9

paragraphs (19) 27:3 27:6 52:9 53:10 76:15 85:8,16 102:6 122:22 123:13 127:17,19 143:17,24 144:18 144:20 148:6 150:24 152:11

parallel (1) 5:10 pardon (6) 2:25 3:1

16:2,4 39:10 78:8 parent (1) 123:22 Paribas (1) 64:21 part (36) 18:25 31:16

31:17 33:10,18,23 40:7 43:24 50:17 50:22 54:6 61:4

L15/90/50

173

July 11, 2016 Day 46

111:1 150:1 prima (1) 33:15 primary (2) 51:13 70:6 principal (1) 138:9 principally (2) 74:11

74:13 principle (2) 123:5

124:12

prior (5) 6:3 7:22 8:24 21:25 71:6

pro (3) 80:6 132:5 135:7

probabilities (4) 33:19 48:14 52:2 54:18 probability (1) 90:25

probably (7) 24:12 49:3,3 68:24 76:20 116:13 141:13

problem (6) 50:25 58:9 104:3 124:7,7 124:8

problems (1) 104:4 procedure (1) 149:9 proceeded (1) 61:5 proceeding (3) 12:13

12:18 16:21

proceedings (20)

11:18 12:17 13:4,5 13:19 17:24 21:5 22:21 25:23 40:6 58:3 60:7 79:1 86:13 102:16 106:24 123:11 129:13 158:23 160:21

proceeds (1) 106:10 process (18) 8:20

17:20 39:18 55:18 84:13 92:18,21 94:11,20 110:11 113:23 114:6 115:1 115:8 122:9 140:14 142:6 148:23

processes (3) 14:13 58:15 96:15 processing (1) 40:20 procured (2) 88:14

90:10

produce (3) 80:9,10 80:11

produced (1) 94:24 produces (1) 25:25 producing (2) 79:19

142:3

product (1) 160:25 professional (5) 98:16

115:23 116:1 117:20,23

Professor (2) 91:13

92:13

profit (1) 133:16 profitable (1) 66:19 progress (5) 37:4

50:12 79:25 81:8 145:1

project (11) 42:6,16 42:19,25 44:6,14 45:18 60:9 64:19 66:19,25

projects (5) 42:8 73:5 73:10,14,19

promised (1) 72:12 promotional (1)

147:25 prone (1) 57:25

proof (3) 33:18 92:11 95:15

propagated (1) 158:8 proper (5) 6:9 12:6 70:15 140:18

146:23

properly (2) 58:21 146:22

properties (9) 92:20

97:14 99:17 101:3 101:8 146:14 148:4 148:10 149:11

property (11) 94:17

97:11 98:13,17 101:21 102:19 103:9 119:19,21 132:24 133:2

proportionality (2)

139:19 142:12 proportions (1) 66:5 proposal (4) 81:20 82:2 152:15,18

propose (4) 10:5 29:15 32:9 34:14

propounded (1)

142:21 prosecution (1) 61:2 prospect (5) 64:5

65:23 100:19,22 131:21

prospects (8) 1:14 48:23 49:13 54:22 64:15 65:14 71:12 84:23

protect (1) 32:1 protected (1) 92:9 prove (3) 31:8 124:2

125:5 proved (1) 95:11

proven (7) 31:14,20 33:19 34:19,22 53:21 61:17

provide (4) 41:17 47:12 69:15 159:9

provided (3) 3:8 41:19 70:25

provides (1) 7:25 provision (2) 27:22

128:16

provisions (3) 5:25 7:21 95:13

public (17) 18:1 31:19 31:22 35:9,11,16 35:20 52:4 67:14 70:5 146:4 161:15 161:18,24,25 162:6 162:14

publication (3) 79:13 149:14 162:19

publications (2) 148:1

149:12

publicity (3) 77:24 158:11,12

publicly (1) 72:6 publish (1) 147:12 published (1) 147:25 purchase (4) 40:25

43:12 44:25 45:21 purchased (3) 41:1

44:22 45:2 purchaser (4) 5:19

110:25 150:10,11 purchasers (9) 6:1,10 71:20 109:4 137:13

139:9,10,12,12 purchases (1) 138:17 purely (1) 25:24 purist (2) 56:5 57:11 purpose (6) 28:25

42:3 44:16,20 87:20 157:9 purposes (5) 38:18

62:8 87:22 101:20 106:20

pursuant (3) 38:15

78:15 115:2 pursued (2) 128:23

155:11

put (37) 39:5 49:1 59:1 65:17 82:20 83:6 84:21 85:18 96:3,14 97:17 99:18 101:15,21,23 101:24 102:4 105:22 110:6 113:13 115:12 123:23 130:21 131:3 142:22 143:7 144:22,23 145:13 150:12 151:1,7 153:10 155:3,16,23 156:2

putting (4) 94:19 99:17 101:6 103:16

pyramid (1) 133:12

quantum (2) 51:14 53:17

query (1) 136:21 question (31) 2:22 3:3

8:19 15:2 21:3 22:10 23:19 54:15 54:17 61:14,20 62:9 64:11,13,14 64:24 65:12 69:11 73:1 82:23 83:11 84:15 100:17 121:25 124:14 126:24 134:9 142:15 146:1 150:16 157:5

questioning (1) 50:4 questions (12) 4:22 41:18 60:6 78:17 83:10,14 108:19

132:22 145:9 151:18 154:21 156:9

quickest (1) 120:23 quickly (3) 18:8 73:6

127:14

quid (2) 132:5 135:7 quiet (2) 63:5,7 quite (47) 8:11 13:7

14:12,17 24:1,4,19 28:10 29:17,25 40:15 44:12 51:2 56:23 57:15,15 58:6,7,18 63:24 65:18 67:1,18 84:1 90:24 92:18 94:5 94:10 100:20 103:10,20 106:18 111:19 112:24 116:1,19,24 118:6 131:9 138:1 145:4 149:14,23 155:15 160:6,13,25

quo (2) 132:5 135:7 quote (1) 51:5 quoting (2) 60:17

63:20

raise (1) 148:14 raises (1) 151:18 raising (1) 131:21 range (10) 90:20

101:8 116:3,17,20 116:24 117:2,3,20 117:22

rates (1) 84:19 rational (1) 119:18

L15/90/51

L15/90/52

175

July 11, 2016 Day 46

superiority (1) 62:13 supervising (1) 32:18 supplied (1) 161:8 support (5) 33:25

109:9 110:2 117:16 144:7

supposed (3) 87:22 135:14 149:1

supposing (2) 95:17

100:20

Supreme (2) 81:23 126:16

sure (10) 4:22 37:17 49:20 81:9 86:2 103:23 108:23 149:17 155:19 159:8

surplus (3) 52:4 132:23,24

surprising (4) 3:17 85:14 98:18 114:10

surprisingly (1) 109:23 survival (1) 65:1 survive (1) 64:24 suspect (1) 4:17 suspicion (2) 29:22

64:1

suspicious (3) 36:18 36:19 114:11

sustained (1) 133:16 sweep (1) 62:14 sworn (1) 55:21 synopsis (1) 43:4 system (4) 39:8 76:18

76:20 77:19

tab (2) 17:7 53:1 table (2) 73:6 105:21 tack (1) 134:7

take (29) 2:6 5:17 26:16 35:11 42:24 46:6 50:20 53:6 57:11 61:23 62:2 64:3 65:4,13,21 68:18 96:1 97:11 97:14 98:4 105:18 106:10,19 111:14 111:25 156:14 159:16 160:5,17

taken (12) 4:9 5:2,5 13:2 14:9 31:4 36:19 81:7 87:16 100:21 104:5 149:13

takeover (1) 33:16 takes (8) 33:3 60:5 68:17 78:3 92:8

94:2,5 101:2 talk (1) 14:17 talked (1) 91:3 talking (4) 13:5 66:1

73:8 130:14 tangle (1) 124:10 Tarasova (2) 107:4

136:20

Tarek (3) 126:1,19,23 tax (3) 29:22 71:8

145:24

team (2) 77:12 160:11 technical (5) 27:15

122:11 153:16 154:24 155:22

teeth (1) 152:9 Teknopark (1) 145:16 tell (15) 6:15 14:20

20:21,25 21:2 24:11 32:3 55:20 55:21,22 56:1,3 59:21 72:19 95:3

L15/90/53

176

July 11, 2016 Day 46

99:18 100:2,5 111:1 117:17 119:3 119:8 127:16 128:6 130:22 136:24 137:15 140:22 148:23 154:11

ways (6) 34:25 59:17 61:25 86:5 95:20 121:20

we’re (2) 82:10 96:25 we’ve (3) 44:12 116:9

126:2 weather (1) 14:14

Wednesday (1)

120:20

week (12) 72:25 80:11 80:13 82:5,6,7 89:4 102:9 107:13 116:6 131:8 155:19

weekend (1) 1:7 weeks (1) 80:10 weigh (1) 155:12 weighing (1) 155:7 weight (1) 74:23 weird (1) 159:25 welcomed (1) 79:12 went (12) 36:10,15

41:13 45:11 47:18 84:3 85:20 86:25 115:18 122:20 123:4 145:19

weren’t (10) 60:22,22 85:13 103:17 114:18 115:11 119:14,15 122:18 135:16

western (54) 5:17,20 10:3,12,17 12:2,3,4 12:20 13:11,20 15:16 22:1 32:21 33:4,7,16 40:6 66:2 67:21 84:19 87:16 87:16,18,22,25 88:3,9,14,22 103:5 103:23 104:2 109:6 109:14,16,19,21,25 113:8,18 115:15,19 116:7 118:5,23 124:12 125:1,3,18 133:2,4 147:7,16

whilst (5) 88:3,8 109:20 128:12 160:9

whopping (1) 62:8 wide (3) 117:2 138:10

149:14 widely (1) 147:16 wider (1) 76:20 wild (1) 118:24 willing (2) 36:24

131:23 win (1) 156:18 wins (1) 27:18

wish (5) 1:24 13:1 78:9 156:14,17 withdraw (2) 49:4

79:1

witness (31) 2:16 18:18 24:13,14 40:22 42:9,11 49:15 50:8 54:24 57:20 64:17 66:1 68:17,18 77:8 141:15 144:13,17 144:22 146:15 148:20 149:21 150:8,24 153:21,22 153:22 154:1,6 155:7

witnesses (14) 5:14

9:18,22 10:10 20:14 21:14 74:25 77:16 89:23 91:3 150:5,17 153:11 159:7

witnesses’ (2) 155:12 155:25

wonder (3) 38:7 42:8 135:3

wondered (2) 118:14 119:7

wood (1) 40:19 woodwork (1) 101:10 word (2) 48:8,9 words (9) 17:11 73:21

91:8 99:14 117:22 128:18 131:1 135:5 141:9

work (9) 30:17 44:17 63:1 82:12 100:1 132:11 144:16 155:25 160:12 worked (3) 9:12 77:10

161:7 working (5) 29:17

82:9 87:23 140:9 145:20

works (1) 156:1 world (6) 4:1 61:16,17

63:7 66:14 68:20 worried (1) 64:8 worse (2) 66:21 75:17 worth (7) 97:21 101:3

101:8 111:7 115:13 119:19 122:6

worthless (1) 76:10 wouldn’t (15) 56:6

61:24 62:2 66:9,11 68:6 93:23 95:3 111:25 124:19 135:8 140:7 146:21 155:7 158:16

wrestle (1) 159:7 wriggle (1) 24:20 writ (2) 11:8,9 write (5) 81:6,6,20

97:12 137:3 write‐off (2) 112:22

113:5

writing (5) 80:9,18

131:3 134:5,15 written (31) 13:18

50:18 70:22 72:3 82:20 84:25 85:16 87:7 88:25 90:13 101:19 104:24 106:18 108:15 112:24 115:12 116:6 121:6 122:10 131:10 134:6 139:13 142:9 143:7 143:17,23 147:6 148:3 149:20 156:21 158:20

wrong (13) 3:17 16:2 24:16 39:5 48:25 49:3 67:23 79:11 118:11 125:7,8 130:4 132:3

wrongdoing (7)

121:25 122:21 124:14,15,22 125:5 125:6

wrongful (2) 125:14 125:16

wrongfully (1) 124:24 wrongly (1) 4:14 wrongs (1) 156:24 wrote (4) 85:12 111:9

112:8 151:19

X (1) 154:1

Yatvetsky (2) 107:22 148:5

Yatvetsky’s (1) 108:25 year (2) 126:5 128:5 years (5) 30:21 54:25

79:3 122:21 156:25 yield (1) 95:8

Yuri (1) 123:25

Zelyenov (1) 140:1 zero (1) 76:13

1 (6) 44:10 50:23 72:21 90:21 161:22 164:3

10 (4) 45:3 47:10 68:24 144:20

16th (3) 40:22 42:9,11 17 (2) 72:16 129:1

179 (4) 128:1 129:9 130:2,10

18 (4) 3:1 38:3 39:2 51:16

180(a) (1) 134:2

19 (3) 2:25 3:2 151:19

19.15 (2) 105:8,14

2 (3) 19:17 53:1 161:22

(4) 37:14 69:1,22 69:25

(1) 44:14

2.15 (1) 69:4

20 (3) 32:21,23 51:10

102:12,17 128:3 130:3,6,20 133:21 133:25 136:13,15 143:6,22 144:10

82:11 133:21 134:17

3 (8) 11:8 17:6 19:15 19:16 21:23 27:2 88:8 112:15

3.21 (1) 120:3

L15/90/54

3.31 (1) 120:5

3.5 (1) 45:1

3.745 (1) 105:17

4 (5) 3:2 40:4,11 41:19

42(h) (1) 128:6

5 (7) 2:20 9:4 25:13,13

6 (1) 73:11

6‐year (1) 130:1

63 (3) 144:14,22 153:25

666 (4) 85:10 86:18,19 86:20

671(2) (1) 145:10

7 (3) 49:18 97:2 144:20

70 (2) 53:3,9

705 (1) 127:19

709 (1) 136:3

71 (1) 53:11

75 (1) 29:13

755 (1) 152:11

756 (1) 152:11

8.33 (1) 90:23

80 (1) 93:10

808 (1) 87:7 808(4) (1) 87:14

81 (1) 143:17

82 (1) 164:4

855 (1) 112:13

857 (1) 102:6

858 (1) 102:7

865 (3) 90:18 110:15 110:18

873(3) (1) 90:3

876 (2) 91:7,14

877 (1) 147:1

8821 (1) 89:12

89 (1) 144:1

9 (2) 4:23 86:21

9.5 (1) 44:24

90 (2) 112:16 137:16

909 (1) 13:18

916 (1) 148:6

917 (1) 148:6

924 (1) 148:7 931(2) (1) 90:18

94 (3) 14:18,25 49:24

944 (1) 147:23 945(4) (1) 107:20 95 (1) 49:24

L15/90/55

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