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By John Helmer, Moscow

The key figure behind years of allegations against three Russian partners — Oleg Deripaska, Michael Cherney (Mikhail Chernoy), and Iskander Makhmudov — appears to have turned turtle, and sought a meeting with Cherney in Israel late last month.

The figure, Jalol Khaydarov, is the former director of the Kachkanarsky iron-ore mining complex, in central Russia, one of the country’s largest producers of vanadium-rich iron-ore used in steelmaking. The mine and processing plant were taken over by the Evraz steel group in 2000. Challenging the legality of the takeover, and seeking $500 million in compensation for his lost shareholding in the plant, Khaydarov was the principal witness in a 2001 lawsuit in the US federal district court for the southern district of New York. This was dismissed in 2003 for lack of jurisdiction, and rejected on appeal in March 2004. In November of the same year, the claims were refiled in the Delaware state court. The original court documents cite claims by Khaydarov that he had worked for Deripaska, Cherney and Makhmudov in the mid-1990s as their “financial advisor”. In 1999, he alleged, he had become an independent businessman, and took control of Kachkanarsky, only to lose it to a scheme of “physical force, bribery and extortion”.

Khaydarov charged that he had been ousted by the “Izmailovo mafia, one of the most powerful Russian-American organized crime groups” to which, he claimed, Deripaska, Cherney, Makhmudov and others belonged. He accused them of framing him with false narcotics possession charges, and forcing him to flee for his life in November of 2000, arriving ultimately in Israel, where he reportedly has adopted a Hebrew name.

The Delaware state court dismissed the claims for lack of jurisdiction, and then in May of 2009 an injunction was issued barring Khaydarov and his associates from initiating future litigation on the same claims anywhere else in the US. A further ruling by the appeals court in Delaware last year upheld this bar to further claims.

By then, Khaydarov had launched a parallel set of allegations in Stuttgart, Germany, and in Madrid, Spain. According to Der Spiegel, Khaydarov was “the key witness” in the German investigation of three Russians – Alexander A., Alexander L., and Oleg R., whose full names have not been published. Also accused were Germans who are named in full in the court reports. The Russians were accused of money-laundering offences in connexion with the Izmailovo gang.

In April of 2007, Khaydarov gave his testimony to a panel of German judges and prosecutors. According to the German press report published four months later, the accused in the Stuttgart case had laundered about €8 million of Russian gang proceeds by buying properties in the Stuttgart area.

Participating in the questioning of Khaydarov in Stuttgart were the Spanish judge of the Audiencia Nacional, Fernando Andreu Merelles; a special prosecutor in Madrid for corruption cases, José Grinda Gonzales; and Andrés Ionesco of the National Police of Spain. Andreu and Grinda have continued their case, focusing on alleged money-laundering in connexion with almost €8 million worth of real estate purchases in southeastern Spain. The two Spanish officials then came to Moscow in May of last year to question Deripaska.

At that time, Deripaska claimed he was a cooperating witness; subsequent Spanish reports and a report in the Mail on Sunday (London) indicate he has become a target of the investigation. Two others identified in the Spanish court documents as partners of Deripaska in the alleged schemes on Spanish territory are Cherney and Makhmudov. The Spanish officials have yet to finalize arrangements to interview them.

They have requested the assistance of the UK High Court and the UK Financial Services Authority to provide evidence they have gathered on the partnership between Cherney and Deripaska. Although Khaydarov has accused Deripaska of being Cherney’s accomplice in schemes to defraud him, Deripaska’s defence in the High Court has rested on claims Khaydarov has made that he too was the target of threats of violence by the Izmailov gang, and that payments Deripaska made to Cherney, according to Deripaska, were extorted.

In his High Court papers, Cherney says he started Deripaska as the junior in his aluminium business; this has become United Company Rusal today. Cherney’s central claim is that Deripaska has violated a partnership and trustee agreement the two of them signed in March of 2001, in which Deripaska undertook to hold in trust and return in value Cherney’s stake in their aluminium businesses. The shareholding is now worth more than $3 billion.

Deripaska’s principal defence in the UK proceeding so far is that he was extorted for money by Cherney. To date, the High Court and the UK Court of Appeal have ruled against Deripaska’s credibility. According to his ruling on jurisdiction in 2007, which requires Deripaska to face trial in London, Justice Christopher Clarke said: “One side or other is plainly telling lies on a grand scale. But I am satisfied that, on the material presently before me, Mr Cherney has a good arguable case on this point, in the sense that he has a strong argument and that, insofar as any judgment can be made on present material, he has much the better side of the argument.” According to the judge, “I am satisfied that Mr Cherney has a reasonable prospect of success in respect of his claim.”

As the UK High Court moves towards trial, expert evidence and witness statements are being exchanged between the two legal teams. A preliminary order by Justice Nigel Teare has limited expert evidence to just three issues – Russian law, Liechtenstein law, and the handwriting on the 2001 contract signed between Deripaska and Cherney. Teare has also rejected claims by Deripaska’s lawyer to have evidence on Russian crime gangs included in the trial. “The Defendant’s [Deripaska] application for permission to adduce expert evidence on organised crime groups and/or protection rackets in Russia is dismissed,” Teare decided last October. Khaydarov’s value as witness in that case has dwindled.

But if Khaydarov’s claims to be in fear of his life from Cherney are credible, the disclosure that he met with Cherney in Israel a few days ago suggests something else. According to two reports by IzRus, an Israeli website publishing in Russian, Cherney met with Khaydarov for an hour at the Tel Aviv Hilton Hotel; to the IzRus reporter, the meeting appeared to be a cordial one. Cherney’s lawyer in Israel has confirmed that the meeting took place on January 23, and that it followed requests for the meeting by Khaydarov over many preceding months.

Cherney’s spokesman declines to characterize the substance of the conversation, except to reinforce the report that the meeting was sought by Khaydarov and took the place.

In the US, German and Spanish record of his allegations against Cherney, Khaydarov has claimed Deripaska had been Cherney’s subordinate; that both, along with Makhmudov, had belonged to the Izmailovo gang; and that they had set the gang on to Khaydarov with threats to kill him or his family.

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