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By John Helmer, Moscow

Nathaniel Rothschild (right, pointing) has told the UK High Court that a London newspaper report claiming he had tried ingratiating himself with Oleg Deripaska (centre) was defamatory, and that as a result of the publication he had been “seriously damaged in his character and reputation and has suffered considerable distress, embarrassment and injury to his feelings”. A trial on the claims has been ordered to commence in the High Court next month. The defendant is Associated Newspapers, which publishes the Daily Mail in London.

The Daily Mail report appeared on May 22, 2010. Rothschild, calling himself “a member of the well known Rothschild banking family [and] a financier with substantial international business interests”, filed suit on July 7, 2010. He gave his address as Riedweg 18, in Klosters, Switzerland.

According to Rothschild’s court submission, the Daily Mail report of a meeting he had attended at a Moscow restaurant with Deripaska in January 2005, had libeled Rothschild because it reported he had flown Peter Mandelson (Lilliputian, left) , then the European Union (EU) Trade Commissioner, on a private jet plane, to meet with Deripaska, who had also invited to the meeting Alain Belda, chief executive of Alcoa, and other Alcoa executives. They were meeting over a dining table at the Moscow restaurant Cantinetta Antinori, apparently to wind up and celebrate the closure of Alcoa’s purchase of Deripaska’s two aluminium rolling-mills in Samara and Rostov.

The meal wasn’t kosher, but the deal was. Noone on either side of the lawsuit claims that if Rothschild had played a role on his own in helping to finalize the deal, that would have been improper. Noone claims Rothschild played any such role.

The court papers reveal that Peter Munk, 84, the founder and chairman of goldminer, Barrick Gold, was also present at the restaurant dinner. This adds to the impression that the meeting may have covered broader business than the confidential terms of the Rusal-Alcoa mill transaction. Since 2010 Munk has employed Rothschild as a board member at Barrick Gold. Rothschild and Munk are reportedly co-investors in the conversion of a Yugoslav Navy base in the Gulf of Kotor, Montenegro, into a marina for luxury yachts.

The Rothschild submission is that the newspaper libeled him by reporting that “for the purpose of ingratiating himself with Russian oligarch Oleg Deripaska the Claimant [Rothschild] took extraordinary steps to ensure the attendance of his friend, EU Trade Commissioner Lord Mandelson at a meeting between Oleg Deripaska and American aluminium executives which he must have known Lord Mandelson had no official reason for attending…[and] that there were strong grounds to suspect that the Claimant had facilitated the attendance of EU Trade Commissioner Lord Mandelson at a meeting between Russian oligarch Oleg Deripaska and American aluminium executives so that Oleg Deripaska could close a ₤500 million deal by securing corrupt and improper disclosures and commitments concerning EU aluminium tariffs from Lord Mandelson.”

Rothschild was asked through a spokesman in London what, in addition to the report of his association with Deripaska and his role in chauffeuring Mandelson to Deripaska, was defamatory of him in the newspaper report, as distinct from what might be potentially defamatory of Mandelson. Officially, Rothschild’s spokesman replied, he is making no comment on the facts, the publication, or the proceedings.

Rothschild also declined to say if he owned or chartered the aircraft that was used to fly him and Mandelson to Deripaska; what reason he and Mandelson had for subsequently flying on from Moscow to Sayansk, in Siberia; and what Rothschild knew or discussed with the Alcoa executives of their interest to buy Deripaska out of Rusal, and merge into the Russian aluminium concern.

According to the court papers, Rothschild, Mandelson and Deripaska were all at the World Economic Forum at Davos, Switzerland, between January 26 and 30, 2005. Davos is just 10 kilometres downhill from Rothschild’s house. Rothschild and Mandelson then flew to Moscow in time to attend Deripaska’s dinner on the evening of the 30th. When Rothschild is cross-examined in the High Court, he will be asked whether Deripaska asked the two of them to come urgently, and if so, why.

If Rothschild says he decided suddenly to make the trip on his own initiative, he will be asked what his reason was – and why he took Mandelson along. That the move was sudden is suggested in the court papers because Mandelson travelled without a Russian entry visa. That, it is reported in the newspaper’s defence statement, was arranged at the last minute, at the airport in Moscow, by Valery Pechenkin, a former KGB general who headed the security department at Deripaska’s holding company, Basic Element. Pechenkin was first identified in this role by the Daily Mail more than a year earlier, in October 2008.

“These actions by the Claimant [Rothschild] and the resulting favours,” the newspaper has told the court, “exposed Lord Mandelson to the accusation that he was thereby beholden to Rusal.”

That Deripaska may have wanted Mandelson along was interpreted in the Daily Mail report as connected to applications Rusal had already made to the trade directorate at the European Commission, or would subsequently make, regarding tariffs then imposed on Russian aluminium products imported from the mills Alcoa was taking over; as well as from the Sayanal aluminium-foil plant Rusal continued to own and operate. This trade is also the focus of the publisher’s submissions to the court as the basis for the potential for conflict of interest Mandelson was exposing himself to, when having his meetings with Deripaska and subsequently concealing them

If Deripaska and Belda also had on their table a sale, purchase and merger transaction between Rusal and Alcoa, the money at stake for everyone would have been much, much greater. The implications for competition in the European aluminium market would certainly have occurred to both as a potential stumbling block to such a deal in Brussels. But Mandelson was trade commissioner; anti-trust and competition reviews are handled by another EU commissioner; in 2005 that was Neelie Kroes.

Rothschild’s court submission reports his aggravation at “the failure of the Defendant [Associated Newspapers] to acknowledge that the allegations were false or to apologize to the Claimant for having made them.” There is no itemization in the papers submitted by Rothschild’s law firm, Schillings, of precisely what factual elements in the publication he believes to be false.

The Daily Mail kept its story on its website for more than a year. It was there on October 17, when it was reported here. Six weeks later, it has gone. The reporter responsible for the article, Richard Pendlebury, declines to respond to questions. Lawyers for the publisher, RPC, will also not comment ahead of trial, which they say is scheduled to start in January.

In its defence filed with the High Court on September 17, Associated Newspapers for the Daily Mail claimed the facts in the report of Rothschild’s airplane trip to Moscow with Mandelson, and their attendance at Deripaska’s dinner with the Alcoa team, were true. The newspaper also argued that if there had been reputational impact from the facts, it fell primarily on Mandelson, not on Rothschild. That, claims the publisher, is because a discussion by Mandelson of aluminium business and European tariffs, before Deripaska and Belda had finalized their deal, would have “foreseeably exposed Lord Mandelson to accusations of conflict of interest and which were liable to bring Lord Mandelson and his office into disrepute”.

And Mandelson, the publisher and newspaper claimed, was “an experienced politician, well capable of making his own judgements as to what is or is not appropriate.” Rothschild was relatively unscathed because “the Article was very much focussed on Lord Mandelson.”

Rothschild suggests there was negligence, possibly malice, in the newspaper report because “no attempt was made to contact the Claimant prior to the publication of the words complained of to check the accuracy of the allegations or to provide the Claimant with an opportunity to respond to them.” The Daily Mail hadn’t contacted Rothschild, it now says, because his “conduct was not the focus of the Article which was overwhelmingly concerned with the behaviour of Lord Mandelson.”

Mandelson, the court document reports, had already supped with Deripaska three months earlier at an October 2004 luncheon at Café Pushkin, in Moscow. That was just days before he took up the trade commissioner’s post. Rothschild wasn’t in attendance then, and hasn’t been identified in the court papers as having transported Mandelson to the restaurant on that occasion. The other person identified at the lunch was German Gref, then Russia’s economic development and trade minister.

In its defence the Daily Mail counter-attacks Rothschild, detailing just how close he is and has been with Deripaska, and how much Rothschild’s financial interests have depended on him. Itemized are Rothschild’s investment interests through JNR Ltd and Atticus Capital, and following January 30, 2005, his positions on the International Advisory Board of Rusal (2007); his investment of more than $100 million as a cornerstone investor in the Rusal share listing in Hong Kong (2010); and his directorship on the board of EN+, another of Deripaska’s holdings. Before it crashed and closed, and Rothschild moved on, Atticus Capital issued a statement saying: “Mr. Deripaska is not and has never been an investor in Atticus, and Atticus has never had any business dealings [with the Russian investor].”

It is because Rothschild opted to sue, not because he provided freebie airplane trips and luxury digs, the defence claims, that he has made his relationship with Mandelson and Deripaska the object of scrutiny. According to the publisher, it had responded to Rothschild’s initial complaint on June 7, but was given too little time to investigate it before Rothschild went to court. Additional evidence, accumulating since 2005 and detailed in the court submission, suggested to the newspaper that Rothschild has been “seeking to divert political and media attention away from investigating the truth of Lord Mandelson’s relationship with Mr Deripaska.”

Rothschild’s submission to the court includes just 3 pages of particulars. The defence reply comes to 28 pages; read it here. In the defence, just 2 pages spell out Rothschild’s ties to Deripaska; 10 deal with Mandelson’s relationships with Deripaska and the regulation of the aluminium trade with the European Union; 4 pages detail Rothschild’s involvement in partying with Deripaska and Mandelson in August of 2008, and in what appears to have been an attempt by Rothschild to arrange a donation from Deripaska to the British Conservative Party through a UK company Deripaska controlled. The attempts by Rothschild and Mandelson to conceal what they were doing with Deripaska, and when, have been widely reported in the London media since 2008.

Why then Rothschild is launching a lawsuit to reopen forensic interest in Deripaska’s hitherto secret operations is difficult to understand, particularly as Deripaska himself faces trial in the UK High Court in April, on Michael Cherney’s (Mikhail Chernoy) lawsuit charging Deripaska with cheating him of his 13% shareholding in the Rusal company and its assets.

In January, when the court opens the Rothschild proceedings, Deripaska, present or not, will be on trial alongside Mandelson, present or not, in what is alleged to have been a potentially corrupt relationship Mandelson should have known better than to continue. In the circumstances, Rothschild’s defence of his reputation will rest on the court’s readiness to believe in his goodwill towards his friends; their innocence; his naivety in business affairs; and his hunger one winter’s night for an Italian eat-out.
 

The Antinori chain of restaurants is headquartered in Florence. The Moscow restaurant, decorated in pseudo-Tuscan style with a basement decked out like a farmhouse kitchen, was opened in 2004. If Rothschild, Mandelson, and Deripaska testify in the High Court next month, it’s possible they will say that there was nothing more to the affair than a remark by Mandelson to Rothschild that he wanted to eat Italian that evening. That Rothschild spared no expense to that end was indubitably kind. It may be asked why they didn’t drive or fly to the nearest Antinori restaurant. That is in Zurich, 117 kilometres from Davos. A trip to the restaurant in Florence covers 356 kilometres. Mandelson didn’t need a visa for either. As the crow flies, the trip to Moscow was 2,152 kilometres.

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