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By John Helmer, Moscow

The Russian oil company Tatneft has launched a successful surprise attack in the UK High Court on the personal assets of Igor Kolomoisky (lead, left) and Gennady Bogolyubov (right). It is claiming $334 million in payment for crude oil Tatneft delivered in 2008 to a Ukrainian refinery which Tatneft controlled at the time. The two Ukrainian oligarchs subsequently took over the refinery with almost as much stealth as Tatneft’s retaliation in London.

The details of the case are being kept secret by Tatneft and the London lawyers for all sides. The case became public at a High Court hearing late last week when the court sustained a freeze order against Kolomoisky’s and Bogolyubov’s worldwide assets. This had been imposed on March 22, catching the two men unprepared. Kolomoisky lives in Geneva on a temporary residency permit; Bogolyubov lives in London. The High Court order limits ATM withdrawals for their personal expenses and transfers from their bank accounts to £5,000 per week.

Tatneft is a London and Moscow-listed oil company controlled by the Tatarstan Republic of Russia, which holds 36% of the issued shares, plus a controlling golden share. Ostensibly, the free-float of the company is the remainder of the share issue. However, a filing by Tatneft to the US Securities and Exchange Commission revealed in 2005 that blocs of Tatneft shares are also controlled through subsidiaries of the parent company and by other related-interest schemes concealed from the company’s public reports. Revealed by this report on recent share operations by the principal independent stakeholders is a traded free-float of less than 5% of the company’s stock. The Bloomberg charts confirm daily turnover volumes are minuscule.

The current market capitalization of Tatneft is $11.5 billion. According to its latest report for 2015, Tatneft’s oil output was up last year by almost 3% to 531,800 barrels a day, plus 15,500 barrels of oil equivalent (boe) of gas. Almost all of the oil and gas comes from fields in Tatarstan.


The company reports its 2015 sales revenues were up 16% to Rb552.7 billion; earnings (Ebitda), up 22% to Rb128 billion; profit, up 7.3% to Rb98.9 billion.

In London stock market sentiment towards Tatneft has been less positive than towards Rosneft but more positive than for LUKoil.



Key: Tatneft = yellow; LUKoil = blue; Rosneft = red
Source: http://www.bloomberg.com/quote/ATAD:LI

On April 21, a month after Tatneft had struck in the High Court, the company tipped off the Moscow wire service Interfax with a precis of its claim against Kolomoisky, Bogolyubov and two other Ukrainians, Pavel Ovcharenko and Alexander Yaroslavsky. The Russian business press followed without adding details or asking questions.

On April 22, Bloomberg was in court to hear lawyers for Kolomoisky and Bogolyubov fail in their bid to remove the freeze order against their assets. The assets which have been frozen include Kolomoisky’s home in northern France, across the border from Geneva (below, left); Bogolyubov’s home in Belgrave Square, London (right); boats, planes, and bank accounts.


Source: http://egalite.com.ua/articles/1233 and http://www.independent.co.uk/news/uk/home-news/heard-the-one-about-the-rabbi-and-the-oligarch-business-deal-turned-sour-sends-shockwaves-through-8950314.html"

Apparently untouched are Kolomoisky’s property in Geneva, where he holds a temporary Swiss residency permit under current review; a house in Israel ; and commercial properties in the US. For more on the Kolomoisky inventory, read this.

Yesterday Tatneft’s spokesman in Almetyevsk, Nuriya Valeeva, was asked for a copy of the London court papers setting out the company’s claim. She referred the request to the company’s Russian lawyers. They have not responded.

Tatneft’s advocate in London is Richard Millett QC (below, left). He refused to answer questions about the case. He also refused to identify his instructing solicitor.


Bogolyubov’s lawyer, Ali Malek QC (above, right), was asked to confirm he had been correctly quoted in court last Friday when, according to Bloomberg, he said: “This is a stale claim, concerning historic events. We submit there is a real possibility that the claim is time-barred.” Since the Tatneft claim has been in continuous litigation since 2007, Malek was asked this morning, “and [since] the claim in London is pursuant to the Paris arbitral ruling of 2014, may I understand your argument in court on the issue of the statute of limitations?” Malek replied: “It is probably easier if the solicitor who instructs me responds to this.”

The solicitor representing Bogolyubov, David Kavanagh of Skadden Arps, has not responded to email and telephone requests.

From Tatneft’s annual reports it is possible to piece together the claim, starting in 2005 when Tatneft’s control of the Kremenchug refinery – the largest in Ukraine (pictured below) — and of UkrTatNafta, the refinery company, was first challenged by Ukrainian government officials.


By 2007 the Ukrainians had succeeded in reversing Tatneft’s share purchases, and then ousting Tatneft appointees from operational control of the company. As they did this, they stopped paying for the crude Tatneft supplyied to Kremenchug for refining.

According to the year-end report from Tatneft’s directors issued at the end of 2008, this is what happened: “In December 2007 the Company acquired a substantial interest in AmRUZ Trading AG (‘AmRUZ’) and a controlling interest in Seagroup International Inc. (‘Seagroup’), whose principle [sic] activities are investments in Closed Joint Stock Company Ukrtatnafta (‘Ukrtatnafta’), the owner of the Kremenchug refinery located in Ukraine. As of September 30, 2008, the Company’s investments in Ukrtatnafta totalled RR 3,342 million [equivalent at the time to $135 million]. Historically, and in particular during the course of 2007, there had been a number of attempts by Ukraine to challenge AmRUZ and Seagroup’s acquisition of shares in Ukrtatnafta, and in particular, by the State Property Fund and NJSC Naftogaz of Ukraine (‘Naftogaz’). Naftogaz is 100% owned by the Ukrainian Government and is also the owner of the record of 43% [of] Ukrtatnafta’s common shares.”

“The challenges were suspended in April 2006 when the Supreme Court of Ukraine ruled the payment for Ukrtatnafta shares made with promissory notes issued by AmRUZ and Seagroup was lawful. However, in May 2007 the Ministry of Fuel and Energy of Ukraine (‘MFEU’) resumed its attempts and, as a result, succeeded in obtaining alleged and doubtful court decisions, after which it announced the transfer into Naftogaz’s custody [of] 18.3% of Ukrtatnafta’s shares, representing the entire holdings of AmRUZ and Seagroup in Ukrtatnafta. Subsequent to these actions, MFEU effectively began to exclude the Group from exercising their shareholder rights related to Ukrtatnafta. In October 2007 the existing management of Ukrtatnafta, as appointed by its shareholders, was forcibly removed based on an alleged court order.”

“Subsequently, individuals who obtained the ability to manage Ukrtatnafta took certain actions effectively assisting MFEU in taking control over the shares in Ukrtatnafta owned by SeaGroup and AmRUZ. In addition, Ukrtatnafta subsequently refused to settle its payables to ChMPKP Avto, a Ukrainian intermediary that previously purchased crude from the Group for deliveries to Ukrtatnafta. Following this forced change of control of Ukrtatnafta, the Company (originally the key crude supplier to the Kremenchug refinery) suspended its crude oil deliveries to Ukrtatnafta and initiated legal proceedings against the Ukrainian owners in international arbitration.”

“In May 2008, Tatneft commenced international arbitration against Ukraine on the basis of the agreement between the government of the Russian Federation and the Cabinet of Ministries [sic] of Ukraine on the Encouragement and Mutual Protection of Investments of November 27, 1998 (‘Russia-Ukraine BIT’). The arbitration concerns losses suffered by Tatneft as a consequence of the forcible takeover of Ukrtatnafta. Tatneft requested the arbitral tribunal to declare that Ukraine has breached the Russian-Ukraine BIT and to order MFEU to restore Ukrtatnafta’s lawful management and pay compensation in excess of US$1.1 billion. On September 4, 2008, the Business Court of Kiev, at the request of the Ukrainian General Prosecutor’s Office, ruled to liquidate Ukrtatnafta, effectively requiring a return of initial shareholder contributions, including reversion of the Kremenchug refinery assets to the Ukraine shareholders. This decision has not become effective and is currently under appeal. There are a number of legal proceedings currently in process in the Ukraine, Russian Federation and international courts to recover the Group’s assets.”

According to Tatneft’s report for 2009, the amount owed by the refinery company for the Tatneft crude oil deliveries was $334.3 million. That appears to correspond to the claim now in the London court.

Tatneft reported in its directors’ report for 2013 that “as a consequence of the forcible takeover of Ukrtatnafta and seizure of shares of the Group in Ukrtatnafta”, it was doubling its compensation claim from $1.1 billion to $2.4 billion. The Paris arbitration court judgement was issued in July 2014. Tatneft won, but was awarded only a tiny fraction of the capital loss, and that was immediately contested in the Paris Court of Appeal.

A month ago, this is how the Tatneft directors’ report for 2015 described the position: “In May 2008, Tatneft commenced international arbitration against Ukraine on the basis of the agreement between the Government of the Russian Federation and the Cabinet of Ministries of Ukraine on the Encouragement and Mutual Protection of Investments of 27 November 1998 (‘Russia-Ukraine BIT’) in connection with the forcible takeover of Ukrtatnafta and seizure of shares of the Group in Ukrtatnafta. In July 2014 the arbitral tribunal issued the award holding Ukraine liable for violation of the Russia-Ukraine BIT and required Ukraine to pay Tatneft US$ 112 million plus interest.”

Because the appeal has not been decided, the award hasn’t been paid by the refinery company. Instead of waiting to collect the smaller sum, the lawyers for Tatneft decided to go after the bigger one immediately; this is the old oil deliveries bill. Without disclosure of the London court papers it is not possible to report how Tatneft has substantiated Kolomoisky’s and Bogolyubov’s interests in the refinery company in order to justify freezing enough of their money to cover their potential liability for Kremenchug’s debts. Reported to control Kremenchug through their Privat group’s 42% stake in Ukrnafta, the refinery’s parent, their connexion appears to have been judged by the Paris arbitration court ruling, though that too remains inaccessible. It also appears the new claim amount identified in the High Court last Friday, $334 million, is equal to the old one.

1804_6The last time Kolomoisky’s reputation as a raider was tested in the UK courts, he won; for the details, click to open. This time, however, Tatneft’s lawyers have calculated that he and Bogolyubov are as susceptible to an out of court settlement as they proved to be, when they settled with Victor Pinchuk (right) on the High Court steps in January; almost three years after Pinchuk filed his lawsuit. For more details of that case, click.

That settlement cost Kolomoisky and Bogolyubov about $500 million. Another $334 million won’t be easy to stump up quickly. The penalty of delay will register, however, every time they go to the ATM.

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