- Print This Post Print This Post

By John Helmer in Moscow

Unprecedented disclosure of the financial intimacies of world tanker leader, state-owned Sovcomflot, continues in the UK High Court in London as Igor Borisenko, the former chief financial officer and deputy CEO of Sovcomflot, returns to the witness stand today and tomorrow.

Borisenko has told the judge that, although he was in charge of Sovcomflot’s finances, he could not remember offers of sale and lease-back transactions with Sovcomflot vessels from Clarksons, Boeing Capital, and other sources, at a time when Sovcomflot’s new CEO, Dmitry Skarga, was struggling to repay a Soviet-era loan debt of $500 million . “Are you saying that there was no discussion at all around this time, that you are aware of, about whether sale and lease-back might be a source of finance?” asked Justice Andrew Smith. “I do not remember, my Lord, that this matter was discussed with me.”

Skarga’s replacement Sergey Frank and Sovcomflot claim the sale and leaseback (SLB) transactions Skarga undertook were non-commercial and involved corruption. Borisenko acknowledged in court that the Sovcomflot board had approved the SLB option as the best one available for clearing debt, while maintaining crewing levels and fleet numbers, and reserving mortgage financing for newbuild orders. But he added he knew nothing about the transaction particulars. Regarding an April 2002 discussion, following a meeting at JP Morgan in London, of the framework of the SLB deals now in claim, Borisenko said: “I can’t remember, I can’t recall any discussion. So I don’t remember such a discussion, I think I didn’t discuss that.”

Borisenko also claimed memory failure over transactions that have been documented through the Swiss bank Wegelin and two British Virgin Island companies owned by Borisenko and Yury Privalov, the former head of Sovcomflot’s London broker and newbuild operations. Asked by the judge for clarification, Borisenko changed his testimony several times during the last hearing.

The company is claiming that hush money was paid to Borisenko by Skarga and Sovcomflot’s chartering partner Yury Nikitin, after Borisenko complained he was not receiving adequate bonus compensation. Skarga’s advocate, Graham Dunning QC, has presented evidence showing Borisenko received his full entitlement, and did not make the claim for more until after Frank ousted Skarga in October 2004, and began seeking evidence of Skarga’s wrongdoing.

In his evidence, Borisenko claims Skarga had introduced him to Wegelin. Evidence was presented in court from Wegelin that Privalov had been the introducer. “I was shown this document,” Borisenko said, “but I don’t trust it’s a true reference to Mr Privalov.”

Asked by Dunning QC (for Skarga) what he was doing in Zurich in 2003, together with Privalov, signing Wegelin bank papers, when “you went to see Mr Baum on 25 February and you both signed forms, authorising the execution of orders given by fax?” Borisenko replied: “I don’t remember that.”

“You were in Zurich on 25 February 2003, and so was Mr Privalov. That is correct, isn’t it?”

“I don’t remember.”

“I suggest that you and Mr Privalov saw Mr Baum on 25 February and signed then together in his presence?”

“No. I don’t — I don’t believe it is true. I can’t explain it, actually, but I don’t think I was in — I was meeting Wegelin on the date we mentioned, 25 February 2003, together with Mr Privalov.”

Dunning then presented documentary evidence. “This is one of the travel documents, the Sovcomflot travel documents, showing that you were authorised to go on the trip to Zurich, from 24 to 27 February 2003.”


“Do you see that?”


“I suggest that you did go to Zurich, and you were in Zurich on 25 February 2003.”

“Yes, on the basis of this standing order, I think I went, yes.”

“Yes. That’s the time when you signed the replacement fax declaration form…”

“Yes, but I honestly do not remember how I signed it.”

“I suggest to you that it cannot have been a coincidence that your form and Mr Privalov’s form were both cancelled and replaced with new forms, signed on 25 February 2003, at a time when you were in Zurich and I suggest that Mr Privalov was in Zurich.”

“He was here [London].”

“If you want to see a document showing that Mr Privalov was there, I can show you a couple of documents. Would you like to see them?”

“Yes, please.”

“This is your visa statement of account, with the Fiona Cyprus company. Do you see that?”

“Yes, yes, yes. Now, I start to remember. It was a trip to Davos.”

“If you look at this entry on this page, 143, if you look in the middle where it says “details”, there’s a very long number and then it says “25 February 02″. Do you see that?”

“No, I don’t. What — where?”…

“There is a long number that starts 106.”

“Yes, yes, yes.”

“Then at the end of that line, before the next column, “25 February”. Do you see that?”

“Yes, I see that.”

“And Hotel Baur au Lac?”


“So you were using your credit card in the Hotel Baur au Lac on 25 February 2003, which was also when Mr Privalov was there?”


The defence is claiming in court that Borisenko and Privalov shared commissions that were diverted from the company, and were then blamed on Skarga and Nikitin, forming one of the central charges of Sovcomflot’s lawsuit against them.

Dunning asked Borisenko: “You knew that it was Mr Privalov who was going to be paying the money into your account?”

“No, it’s nothing to do with Mr Privalov.”

“It was he who told you about the payment?”

“No, it was told to me by Mr Skarga.”

“You know what that $444,000 represents, don’t you, Mr Borisenko?”

“In — what do you mean?”

“It is your three eighths share of the Athenian commissions, isn’t it, Mr Borisenko?”

“I knew nothing about Athenian commissions. What is that?”

“It is exactly 37 per cent, which is very near to being three eighths of the Athenian commissions, isn’t it, Mr Borisenko?”

“No, it’s not true. It’s — there is not any connection.”

“He was giving you a share of it, wasn’t he?”

“No, he wasn’t.”

“That’s why he introduced you to Wegelin, and that’s why he helped you to set up this account.”

“It’s not true.”

Borisenko also testified in court that the initial investigation by Frank into Privalov had uncovered payments by Privalov to Borisenko. “It was mentioned to me by Mr Frank, yes,” Borisenko said. “He said that he has information that I was receiving money from Mr Privalov.” Asked if he is testifying under “the threat of disciplinary or other proceedings in relation to whatever it was that you admitted in October 2005”, Borisenko said: “Yes, I think so.”

Leave a Reply