By John Helmer, Moscow
Once upon a time, Oleg Deripaska was the protégé of Mikhail Chernoy (Michael Cherney). In that relationship, Cherney, the older, taller one, called Deripaska, the younger, shorter one, Zaichik (“hare”). When he grew up, Cherney made him his business partner.
In the year 2000, the man who is today Deripaska’s principal Russian lawyer, strategist of all his litigation, advisor to the initial public offering of Rusal in 2010, and current member of the Rusal board, knew that Deripaska and Cherney were business partners. That is because he said so in filings to the federal US District Court for the Southern District of New York. The man’s name is Dmitry Afanasiev. In December 2000, he was one of the lawyers who filed this case:
BASE METAL TRADING, S.A.; Base Metal Trading, Ltd.; and Alucoal, Ltd., Plaintiffs,
RUSSIAN ALUMINUM; Sibirsky Aluminum Products USA Corp. a/k/a Sibirsky Aluminum (US); Sibirsky Aluminum (Russia); Bauxal Management, S.A.; Metcare Management, S.A.; Unimetal Limited, S.A.; Oleg Deripaska; Mikhail Chernoi; Chernoi Companies 1 to 10; and Novokuznetsk Aluminum Zavod, Defendants.
No. 00 Civ. 9627.
Plaintiffs Demand Trial by Jury
Stroock & Stroock & Lavan, LLP By: Robert Abrams, Esquire, (A Member of the Firm), New York, NY
Epam, LLC By: Bruce S. Marks, Esquire, Eleven Penn Center, Philadelphia, PA
Afanasiev worked for EPAM LLC. EPAM stood for Egorov Puginsky Afanasiev and Marks, which had offices in Philadelphia and Moscow.
The very first paragraph drafted with Afanasiev declared: “The instant case concerns a conspiracy beginning in the 1990’s (the “Conspiracy”) among, inter alia, business mogul Oleg Deripaska, the head of Sibirsky Aluminum (collectively, with its affiliates, including Russian Aluminum, “Sibirsky”); his partner, Mikhail Chernoi and his American companies, identities unknown (collectively, the “Chernoi Side”); and the Izmailovo Russian-American Mafia group (the “Izmailovo Mafia”) to take over and monopolize the Russian aluminum industry (the “Illegal Scheme”).”
Afanasiev’s client in that case, Mikhail Zhivilo, owned Base Metal Trading, whose supply of aluminium came from Zhivilo’s control of the Novokuznetsk Aluminium Smelter (NkAZ), which was taken over and absorbed by Sibirsky Aluminum in February 2000, and then integrated later that year within Russian Aluminium (Rusal), where it remains to this day. Afanasiev introduced Mikhail Zhivilo to EPAM.
Ultimately, the US courts refused to accept jurisdiction over the case. But Afanasiev was instrumental in arranging for Deripaska to pay Zhivilo a compensation prize of about $60 million. By then Zhivilo was living in France, on the run from trumped-up Russian charges of conspiracy to assassinate the Governor of Kemerovo region, Aman Tuleyev. The French courts dismissed the Russian extradition warrant, and gave Zhivilo asylum. He’s been living happily ever after.
So has Afanasiev. Since no court, neither in the US, nor in Russia, nor in France ever heard out and adjudicated Afanasiev’s claims of what Deripaska had done to Zhivilo, and the out of court settlement put a gag on the allegations, all that remains of the case that is demonstrably true is this: according to Deripaska’s chief lawyer, Deripaska and Cherney were business partners and together authorized a collective defence in the US courts against the Zhivilo claims. The time period for that litigation, and that part of their business partnership, ran from the year 2000 until the year 2004.
Here is more from Afanasiev:
“31. Defendant Mikhail Chernoi (“Chernoi”) is a Russian and/or Israeli citizen who controls, indirectly or directly, SibAl.”
“38. Sibirsky US, SibAl, Bauxal, Metcare and Unimetal are all owned and controlled, directly or indirectly, by Deripaska and/or Chernoi and shall be referred to collectively as “Sibirsky.””
“40. Russian Aluminum is owned and controlled, directly or indirectly, by Deripaska and Chernoi.”
“82. In the 1990’s, Deripaska and Chernoi were able to take control of SAZ which became the first Zavod owned by SibAl, which served as their base in effecting consolidation of the Russian aluminum industry.”
“270. Sibirsky (including Russian Aluminum), Deripaska, Chernoi, and Trans-Commodities together constitute an “association-in-fact,” formed for the common purpose of taking over the Russian aluminum industry…”
“274. The associations-in-fact had continuity of structure and personnel because, from the 1990’s through the current date, it featured a hierarchical structure dominated by Deripaska and Chernoi.”
As already reported, Deripaska is now swearing in the UK High Court that all of this is false. He’s also agreed with Afanasiev that the allegations Afanasiev had filed in US court a decade ago should be reversed, and lodged now against Cherney alone. The gangster defence, on which Deripaska’s grip of his shares in Rusal now hangs , also depends on noone remembering what Deripaska’s lawyer Afanasiev was once so certain of, he put it in writing many times before panels of federal US judges.
In a preliminary High Court ruling issued on July 12, Justice Andrew Smith, presiding in the trial of Cherney v Deripaska, explained why he has rejected the claims of Deripaska’s lawyers to allow concealment of identities of witnesses and of evidence Deripaska is proposing to substantiate the gangster defence. According to Deripaska, his 12 witnesses might be at risk of being attacked to prevent them testifying, or in revenge after they do. In addition, according to the judge’s summary, they are fearful of incriminating themselves, and “concerned that evidence given at the trial will provide the Russian authorities with information that they will use to investigate the activities of OCGs [organized crime groups] and possibly to bring prosecutions.”
Again according to the judge, three of Derkipaska’s witnesses were (maybe still are) on his payroll at Russian companies in the Deripaska group. Four additional ones were (maybe still are) employees at the Sayansk Aluminium Plant (SaAZ) from the time Deripaska was working there in the 1990s. Three have been identified as employees at “public offices” in the nearby town of Sayanogorsk. One is an expert on organized crime because he was (maybe still is) a gangster; and one is described in the court as an “investigative journalist”. The criminal and the journalist are evidently two different people.
Lawyers for Cherney argued that the rigmarole was “part of a campaign to discredit him in the eyes of the court and of public opinion, and to this end to present him as a threat to those who are to give evidence at the trial.” They explicitly objected to concealment of the identity of one of the witnesses, a Deripaska employee, who was termed “one of [Deripaska’s] right hand men.”
In fact, all of the witnesses have already testified in written sworn statements which are in the court record, and according to Justice Smith, “there is no specific evidence, or reason to think, that any of the twelve witnesses has in fact been the subject of any threats or pressure not to give evidence.” He wrote there is also “no specific reason to think that without protection their evidence will be the less full or the less frank than otherwise.”
Testimony from others to support Deripaska were dismissed by the judge as nothing more than hearsay “about Mr Cherney rather than any evidence about any specific threats that he made or for which he was responsible.” As for the lot, wrote the judge, “this evidence is not of a quality that provides convincing support for allegations of the seriousness of those made against Mr Cherney on these applications or is required to justify orders of the special nature of those for which applications are made. I conclude that the contention of a risk of violence used against witnesses for evidence prevention purposes is not made out: it has not been shown that this risk is such that rights of witnesses or their relatives under the Convention should be protected, or that otherwise witness protection orders are justified.”
Regarding Deripaska’s “right hand man” — termed Witness A in the court papers — the judge dismissed the application for concealment on the ground that “the nature of his evidence is not such as to justify the inference that there is a real or immediate threat to his life or the lives of his relatives.”
The investigative journalist – called Witness D— is described in the ruling as having not yet provided testimony that will be allowed as relevant or admissible in the trial. So until he does, Justice Smith deferred deciding whether his name and face should be concealed.
Out of the twelve proposed by Deripasaka, just one witness, code-named K, was accepted by the judge for a covering order. That is because he is (or was once) a gangster, not because his evidence bears directly on the particulars at trial. “His evidence is limited in scope and does not directly relate to what is said by Mr Cherney or his witnesses in their statements.” The risk to his testifying openly, according to the judgement, “does not result so much from the contents of his witness statement as from the very fact that witness K, who I must suppose truthfully claims, in effect, to have belonged to an OCG, should be willing to speak before a court about their activities. ..because of the predictable reaction of criminals when those of their own ranks speak about their activities, I am persuaded that protection orders are justified in his case.”
The judge also ruled that if there may have been intimidation of witnesses which he doubted but Deripaska is alleging, “there is evidence that Mr Cherney has faced comparable difficulties.”