Email This Post - Print This Post Print This Post

By John Helmer, Moscow

After claims a week ago that the Daily Mail newspaper and its publisher were expecting to go to trial next month on a libel claim by Nathaniel Rothschild relating to the Russian aluminium business, it has now been revealed that Rothschild has exposed an even more secret business deal he was attempting to pull off with Oleg Deripaska, with hand-holding assistance from Lord Peter Mandelson. This one in Russian gold and silver-mining.

What is now known from a combination of UK and US court records is that the newspaper was having trouble breaching the wall of silence over what exactly was said when Rothschild and his friend, EU Trade Commissioner Mandelson met with Oleg Deripaska in Moscow on January 30, 2005. Also at the dinner were Alain Belda, chief executive of Alcoa of the US and two of his senior executives.

It is now known that resistance on the part of witnesses at the dinner led the publisher, Associated Newspapers, to apply to the High Court to modify its defence just in case it couldn’t prove that one of the purposes of the visit to Moscow, and of the dinner meeting, had been a deal nearing completion for Alcoa to buy two aluminium rolling-mills from Deripaska’s Rusal.

A ruling issued last night by High Court Justice Sir Michael Tugendhat reveals evidence, already submitted in the case but not disclosed before, that Deripaska had done the inviting, and that the dinner with the Alcoa executives was only one of the items on the busy Rothschild-Mandelson fly-by.

It now turns out, according to this court record, that Deripaska was hatching a takeover scheme for Polymetal – then as now, Russia’s largest silver miner and second largest goldmining company. In that scheme, Peter Munk, chairman of Canada’s Barrick Gold, had a big interest. Since Munk already had a large stake in Highland Gold, another but smaller Russian goldminer, and since Polymetal’s gold and silver reserves were so large as to comprise a strategic resource according to the Russian rules, this move to take over Polymetal potentially ran into all sorts of problems with Russian and Europe-wide regulations. Here is Tugendhat’s new ruling.

At the start of 2005 Polymetal belonged to Alexander Nesis and a group of his partners from St. Petersburg. A year later, they sold out for $930 million to Suleiman Kerimov. He went on to list the company internationally and sell out at double his buying price. There were suspicions during the course of the Kerimov operation that he may have been fronting for silent partners.

What is now revealed for the first time is that Rothschild and Munk, along with Alcoa’s Belda, were discussing with Deripaska how they might buy Polymetal as a group, but discreetly so as not to trigger alarm bells at the Kremlin or elsewhere. Rothschild’s attempt to clear his reputation of a conflict of interest allegation relating to Mandelson now exposes them all to another, previously unheard-of business deal.

High Court sources in London say the libel case has been put down for a 10-day trial commencing on January 16. A hearing on December 15 before Justice Tugendhat and the release of his ruling on December 21, have resulted in an order to confine this trial to judgement by judge, not by jury.

Until now, it appeared that testimony and cross-examination of witnesses would probe why Rothschild had flown Mandelson, apparently at great haste and little advance preparation, to a meeting in Moscow with Deripaska, as the latter was finalizing with Alcoa executives an agreement for Alcoa to buy two aluminium rolling mills in Russia from Rusal. The date of the dinner was January 30, 2005.
 

A little fact about what happened there depends on the hands of the clock on the dining-room wall – was it ticking before Alcoa and Rusal completed and signed their deal, or afterwards? Whether the clock was made of aluminium or not, the point was whether it recorded Mandelson doing something in his official power to influence the outcome of the deal, before the deal was finalized?

Rothschild has accused the Daily Mail of defaming him because its report fostered the “suspic[ion] that the Claimant [Rothschild] 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.”

Associated Newspapers replied in its court defence that Mandelson had discussed aluminium tariff issues with Deripaska before the sale and purchase deal with Alcoa was closed “in terms which are open to criticism as inappropriate, and the claimant facilitated that contact.” Thus, the defence ran, the publication “expressed the inferential opinion that if Lord Mandelson had so conducted himself, the Claimant knowingly facilitated that conduct.”

Mandelson is reported in the original Daily Mail article as saying through a spokesman that he “declined to comment on the circumstances of his attendance at the dinner. But he stated: ‘There was no personal intervention by Lord Mandelson in his capacity as Trade Commissioner in favor of Russian aluminium company Rusal.”

That Mandelson was involving himself in a Russian gold and silver mining deal is now reported for the first time.

In August of this year, the publisher of the Mail was confident enough in the veracity of the report and in the outcome of the threatened litigation to keep its article openly available on the newspaper’s website. This, claimed Schillings, the law firm acting for Rothschild, defied the request to remove it, and aggravated the offence. The first sign that Associated Newspapers was buckling under the pressure, and may have been thinking of abandoning its defence, came sometime in November or this month, when the article disappeared from the website.

It retrospect, that happened, not because the Mail was throwing in the sponge, but because it had discovered a fresh story, with new implications for Rothschild and Mandelson.

A second sign appeared after Private Eye, in its current December 9-22 edition, reported that Associated Newspapers had gone to a federal US court in New York to oblige Richard (aka Jake) Siewert, one of the Alcoa executives at the Moscow dinner, to testify to what exactly had happened at the dinner table, when Rothschild and Mandelson arrived. Associated Newspapers refused to release the submission it made in the US court, even though the action is in the US court record, and also appears to have been successful. According to Private Eye, “Siewert has now agreed to give evidence.”

The application by the Mail’s lawyers in New York runs to just 8 pages. To obtain it requires accreditation and access to the court’s public filing system. Read it in full here. The date on the application is September 28, 2011, and the signatory is Laura Handman, an attorney with the firm of Davis Wright Tremaine.

The court file reveals that Siewert was, in a manner of speaking, on the run from the US Government, and not only from Rothschild, Mandelson, Deripaska, and the High Court in London. Until August of 2011, he had been working in Washington as counsellor to the US Treasury Secretary, Timothy Geithner, and had left that job in order to return to his home and family in New York. The court papers reveal that during July of 2011, Siewert and Alcoa were refusing to answer telephone-calls and letters from the London publisher. These not only asked Siewert for his recollection of the January 30, 2005, meeting. They also requested “a copy of the contract between Alcoa and UC Rusal”. If that document contained sensitive commercial secrets, the lawyers told Siewert and Alcoa, they could still be kept secret. All the lawyers wanted from Siewert was evidence of whether Rothschild and Mandelson were downing their gnocci before Alcoa and Rusal had done their deal, and what came out of their mouths, rather than what went in.

Alcoa has many pending troubles over its secret negotiations of aluminium deals with officials inside foreign governments, as well as those on the periphery of governments, close enough, potentially, to violate the US Foreign Corrupt Practices Act. As Siewert and his former company were trying to duck the Daily Mail’s lawyers, Alcoa’s agent in Bahrain and other parts, Canadian Victor Dahdaleh, had been arrested in London on charges of corruption over-pricing aluminium raw materials and paying kickbacks between Alcoa and Aluminium Bahrain (Alba). Dahdaleh has pleaded innocent and confidently awaits his day in court next month.

For the Daily Mail and its publisher, Handman wrote in her pleading that the federal US court had a duty in law and in defence of the public interest to support the newspaper’s right to information relevant to the Moscow meeting between Rothschild, Mandelson and Deripaska. “The nature and character of the proceedings in England warrant the Court’s assistance, Intel Corp., 542 U.S. at 264. The libel claim is brought against a publication for an article reporting on a matter of significant public import: the propriety of the European Union’s Trade Commissioner’s attendance at a dinner prior to the closing of a multimillion pound aluminum deal between two titans of industry and the conflict of interest issues that may have arisen.”

The request for an order against Siewert was also, the attorney argued, “not a bad faith attempt to circumvent proof-gathering restrictions in the foreign proceedings, but rather is a good-faith effort to secure relevant evidence that is beyond the jurisdiction of the foreign court..” Finally, Siewert, a US citizen subject to the US courts but not to the UK courts, should be made to provide evidence because “the discovery requests are not unduly intrusive or burdensome, since the subjects of inquiry relate to one dinner Mr. Siewert attended and to the closing date of a deal in which Mr. Siewert was involved. Proprietary information, such as the financial terms of the deal can be redacted or subject to a protective order. The date of the closing does not implicate sensitive, proprietary information.”

Judge Kevin Duffy of the Manhattan court issued a show-cause order on October 5, giving Siewert extra time in which to object. When he didn’t, the subpoena was made compulsory on October 20. This orders Siewert to disclose what he knows, and what records he holds, relating to “3. What happened at the dinner and whether EU trade tariffs were discussed and if they were, who discussed and what was said. 4. That date on which the deal between UC Rusal and Alcoa Inc. was signed.”

At that point in time, lawyers for the Daily Mail were advising to continue to publish the original article on the newspaper’s website. Having attached a copy of this to their US court application, that became publicly accessible in the US court file. Read the newspaper here.

Why would the Daily Mail and its London lawyer take sudden fright at republication in the US of a report it swears in the London court was both truthful and important? Jaron Lewis, the mail’s lawyer, says he’s sworn by his client to silence.
 

The answer is hinted in the record of Justice Tugendhat’s review of the case yesterday. What the Daily Mail has discovered shifts the focus of the case on to Deripaska’s friend Munk (right), and complicates Mandelson’s exposure even more.

According to the new documentation, Rothschild, Deripaska and Munk had agreed in Switzerland, before the flying visit to Moscow, to “make a joint bid via their respective companies for Polymetal, a leading Russian gold producer. This is now pleaded in the Draft Amended Defence at 6.42.2 which also pleads that: At the relevant time, the issue of whether foreign-owned companies should be allowed to compete for the rights to exploit the countries strategic natural assets (and if so on what terms) was a matter of considerable political sensitivity in Russia”. The trio, it is now revealed, had talked about this deal at a dinner Munk held in Davos on January 29. Belda of Alcoa was also in attendance that night, as he was in Moscow on the next night. What the aluminium mogul was doing in talks on a goldmining takeover isn’t revealed in the court papers, at least not yet.

It also turns out, according to the evidence pleaded in court so far, that at the Moscow restaurant dinner meeting, Mandelson was also meeting with a Russian government minister at the same restaurant, but over a different table. Mandelson, according to other court records, had already met the Russian trade minister, German Gref, at a different restaurant and on an earlier occasion. On January 30, it appears Mandelson was meeting the Russian finance minister, Alexei Kudrin.

What they were talking about hasn’t surfaced in the court records yet. What the Tugendhat ruling allows a glimpse of, for the first time, is that Rothschild had a special goldmining interest of his own, and that Mandelson went along for that ride too.

According to the newly available record, “the parties (including Lord Mandelson) flew from Moscow to Abakan in Mr Deripaska’s private jet. This had not previously been revealed… On arrival at Abakan airport the parties immediately travelled to the industrial plants, (a visit which took up the majority of the day). It appears that Lord Mandelson also accompanied Mr Rothschild, Mr Deripaska and Mr Munk on their site visit… The parties then travelled to Mr Deripaska’s Siberian compound or chalet where they stayed the evening (with Mr Munk and Lord Mandelson sharing a chalet and the latter presumably leaving some time before his scheduled departure to Brussels on Mr Rothschild’s jet at 5.15 am.”

This is the first time Mandelson is recorded as having had a sleep-over with Deripaska. Why it happened in Abakan is yet to come out in court.

Leave a Reply