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By John Helmer, Moscow

Charlie Drake’s hit song has been celebrating its fiftieth anniversary in London, where it was created and first recorded, not far from the law courts on the Strand. Play it before you read another word, and listen carefully to the lyrics.

The song concerns a keen but naïve young fellow who gets into trouble with his father when he complains that his boomerang won’t come back. He is expelled from his tribe in disgrace. Then, after being mocked by passing kangaroos, the boy is rescued by a witchdoctor, who, for a serious consulting fee, advises him how to get his boomerang to come back. First, you’ve got to throw it, he’s told. When the boy implements the advice, he hits a passing airplane, and causes it to crash. He then runs away, pursued by the witchdoctor whose fee he fails to pay.

That’s the Oleg Deripaska story, as it is beginning to emerge from the testimony and documentary evidence in the UK High Court trial of Berezovsky v Abramovich. Deripaska is consistently referred to as a minor figure, attached to more powerful partners. Deripaska is also identified as figure noone trusted to honour a contract or a shareholder agreement.

On October 29, David Reuben, the London-based metals trader, testified that in 1999, when he was looking to sell his aluminium interests in Russia, he was keen to avoid any negotiation if Deripaska was a beneficiary. Asked about a plane ride to Moscow in 1999, when Reuben was accompanied by Vasily Anisimov, who controlled aluminium smelters and alumina refineries in northwestern Russia, as well as by Badri Patarkatsishvili, several options for a reorganization of the aluminium assets were discussed. According to Reuben, Patarkatsishvili translated from the Russian into English, so that Reuben could participate.

The conversation identified the new asset consolidators in the industry, according to what Reuben remembered, as “the Sibneft group”. In this group, Reuben said he believed were Eugene Shvidler, Boris Berezovsky and Badri Patarkatsishvili. Reuben testified that he was concerned enough about the identities of the buying group to ask Patarkatsishvili: “Is Mr Deripaska behind you in this aluminium [group]?”

“No”, came Patarkatsishvili’s reply. “No, we would only do it if Mr Abramovich was in it”. “Roman”, he used the word “Roman”, because I asked somebody, “Who is Roman?” and they explained to me.”

After the aeroplane conversation Reuben said he followed up, naming in court the others involved in the negotiations. “I .phoned up Mr Lev Chernoi and Dima Bosov and I tried to explain to them that I’m talking to these people and they — I had a call and they said they were going to come to London to meet with me. And when they came to London, they told me that they now have a fixed offer and that was the price. I refused the price.” In his testimony, Reuben went on to describe bargaining over the price until “they came back and they increased it to — a bit, where we all agreed to sell it, and that was in London. And we shook hands and they left and then I was called to come and sign that agreement [February 10, 2000].” At the contract signing, which Reuben remembers was at Abramovich’s office in Moscow, those attending were Shvidler, Bosov, Patarkatsishvili, and Lev Chernoy. Asked if Abramovich attended, Reuben said he did not, but representing Abramovich as his partner, he said there was Shvidler.

Reuben was selling aluminium assets into what is now known United Company Rusal, which Deripaska has subsequently claimed he created, and which he also claims to control through a 49% shareholding. But Deripaska wasn’t at the formation meeting with Reuben, and wasn’t identifiable as Abramovich’s partner; that role was played by Shvidler.

During the talks in 1999 and early 2000, leading up to the deal signing, Reuben has testified he “was afraid that Mr Patarkatsishvili is going to partner this deal, buy it and sell it to — or combine with Deripaska. And he said: no, he was not going to do it, that they were going to do it with Roman. They were going to do it with Roman and if he didn’t do it, they wouldn’t do the deal.”

Reuben’s distrust of Deripaska was to turn into a $300 million court claim against Deripaska for welching on his contracts. In that case, filed in the British Virgin Islands where the aluminium trading companies involved in the contracts were domiciled, Deripaska conceded and paid out before the trial got under way in June 2005.

For months after the February 10, 2000, agreement, distrust of Deripaska deepened among those creating the new aluminium holding. On December 6, 2000, there was a meeting of Abramovich, Patarkatsishvili, and Abramovich, to discuss, among other things, how the cashflow of the newly formed Rusal would be distributed among themselves, and what payment structures should be created to legalize the outlays and receipts to head off money-laundering investigations outside Russia, and reinforce eligibility rights inside Russia.

The meeting was at Le Bourget airport, near Paris, and was secretly recorded. The Wall Street Journal has published what it claims to be excerpts of their conversation.

“If we go legal, they would have to do the same,” Abramovich is recorded as telling Berezovsky and Patarkatsishvili. Whom Abramovich meant by the “others” he goes on to say. “They then will all appear: Bykov, Misha, Anton, and Aksyon, and Oleg Deripaska and [his]…companies.” The language Abramovich used is significant, and also the sequence of the names.

Bykov refers to Anatoly Bykov, the regional figure who controlled about 30% of the Krasnoyarsk smelter, the second largest in Russia. After he had sold to Abramovich, he was later cheated by Deripaska of his proceeds from the deal. He sued Deripaska in Switzerland, and despite criminal charges against Bykov in Moscow – later dismissed – won both an arbitration tribunal award and an appeal court ruling. Deripaska paid out $105 million to Bykov.

Misha, the only person Abramovich refers to with the Russian diminutive of his first name, is Mikhail Chernoi (Michael Cherney). The significance of his inclusion is that Abramovich knew he was a major shareholding figure in the creation of the Rusal holding, and the one Abramovich referred to in the most affectionate terms. As the Wall Street Journal has noticed, this is powerful evidence by Abramovich, contradicting the subsequent claims by Deripaska that Cherney was not a stakeholder in the aluminium assets Deripaska has claimed to be his own. The High Court trial of Cherney’s $6 billion equity and compensation claim against Deripaska commences in London next April – that is, if Deripaska survives the evidence of the Abramovich trial.

The naming by Abramovich goes to identify other stakeholders, as he understood them, in the Rusal holding. Anton refers to Anton Malevsky, who died in a sport parachuting accident in South Africa in 2001, and whose stake in Rusal Deripaska is also denying, despite evidence from Malevsky’s widow of how close they had been to Deripaska.

“Aksyon” is a nickname, possibly a code-name, whose identity is uncertain. Sources believe he may be an associate of another of Deripaska’s friends, Sergei Popov, whose stake in Rusal Deripaska is also accused of fraudulently taking for himself. The name may refer to Nikolai Aksyonenko. Now dead, Aksyonenko was a political appointee of Boris Yeltsin, who rose from the railways ministry in the 1990s to first deputy prime minister and then challenger for the presidential succession. He was dismissed by Vladimir Putin in January of 2000, and later charged with abuse of office.

In the current High Court proceeding, Berezovsky is arguing that “there is no sensible way of understanding this exchange other than as an admission by Mr. Abramovich as to the identities of the true owners of Rusal at that time.” The reference to Deripaska at the end of the list and the formality with which Abramovich identifies him are also indicative of the minor position he held at the time, subordinate to all the others.

During cross-examination in the High Court last week, Abramovich acknowledged that one of the reasons Patarkatsishvili asked for the December 2000 meeting at Le Bourget was because he believed that Deripaska could not be trusted to honour agreements he signed. According to Abramovich, after he had made his purchase, sale and resale agreements for the Rusal assets, “Badri was left with an aftertaste that Oleg will squeeze me out and he would not get anything at all at the end of the day.”

Abramovich also implies that he was sympathetic to the concern, because he admits he was ready to pay Patarkatsishvili so long as the latter accepted his word for it. But he doesn’t say whether he believed at the time that Deripaska would turn out to be a serial fraudster, breaking one aluminium trading or equity agreement after another.

Responding to further questioning in court, Abramovich said that Patarkatsishvili had been effective in mediating a conflict over the Krasnoyarsk smelter between Bykov and the regional governor, General Alexander Lebed (he died in a helicopter crash in 2002). That trouble, said Abramovich, had gone “out of control, and the catalyst for all of this was Oleg Deripaska.” Again, Abramovich speaks formally of Deripaska.

When asked to explain what the source was of the $300 million purchase price Abramovich agreed to pay to buy his stake in Rusal in February of 2000, Abramovich testified that most of the funds did not come from Deripaska at all: “100 million came from MDM Bank, part came from the oil trading companies and part was something that we got from Mr Deripaska after we reached an agreement with him.”

A month later, on March 4, 2000, at meetings in Moscow at the Baltschug Kempinski Hotel and at Abramovich’s dacha at Sareyevo, Abramovich says he negotiated a draft of a separate deal with Deripaska. The record of what they concluded was taken at the time by Alexander Bulygin, then working as chief executive of Sibirsky Aluminy, who would become the chief executive of Rusal. Bulygin, described in court as “frail” by Abramovich, was dismissed by Deripaska in 2009, and he now lives in London. He is testifying as Abramovich’s witness in the Berezovsky proceeding. “For some reason,” Abramovich told the court, “Mr Deripaska did not trust us at the early stage.”

So, Abramovich was asked to explain, why was it that the preliminary agreement with Deripaska which Bulygin had recorded, referred to “Parties 1 and 2, together with their partners”? As Berezovsky’s lawyer pursued Abramovich to confirm that the reference to partners of Party 1, Abramovich, meant Berezovsky and Patarkatsishvili, Abramovich was also asked to say who were Deripaska’s partners?

Abramovich said “there were problematic assets” in Siberia, by which he meant that Deripaska was in no position to represent himself as authorized to buy, sell, or merge them. According to Abramovich’s testimony, “this contract [March agreement with Deripaska] was written precisely to make sure that we did not need other people’s warranties and if you look at the substance of it, I think he [Deripaska] was contributing 36 per cent of the Nikolaevsky Alumina Plant and Mr Yaroslavsky I think was Deripaska’s partner there.”

In other words, Abramovich is testifying now in the High Court that his deal with Deripaska avoided all of the problems he knew were Deripaska’s in concealing who his stakeholding partners were, and then pushing them aside. Abramovich is conceding he knew that Deripaska was pulling the rug from underneath the others, and wanted an agreement to form the Rusal holding of assets that was vague enough to leave open how he would get away with it in future.

Later on, Abramovich has now testified, he remembered Patarkatsishvili as warning: “nothing good can come out of working with Oleg [Deripaska] because he’s a loner, he likes to work on his own and he will squeeze one out sooner or later at some point in time.”

The boomerang has come back.

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