BTA Bank, Kazakhstan’s largest bank before defaulting on $12bn of debt in 2009, is seeking the imprisonment of its former chairman Mukhtar Ablyazov, for failing to fully disclose his assets to a UK court where he faces charges of embezzling $4bn from the bank.
Earlier this week BTA issued committal proceedings in the English High Court, citing new evidence of more than 600 previously unknown shell companies used by Ablyazov to hide his assets, in violation of a freezing order issued last year.
“The Bank's intentions in seeking to have Mr Ablyazov committed to prison are to persuade him to comply with the court's orders and unwind the improper transactions that he has carried out, as well as to ensure that all improper conduct is appropriately sanctioned,” BTA said in a statement.
Meanwhile, Ablyazov’s representatives said the application was “baseless” and that there was “absolutely no suggestion” of him breaching the court’s order.
Ablyazov’s assets were placed into receivership in August 2010 after the court judged the former chairman could “not be trusted” to comply with previous freezing orders and refrain from dissipating his assets.
At the time of the original order, Ablyazov said the elaborate offshore network by which he owns his assets was necessary to protect him from “unlawful depredations” by Kazakh President Nursultan Nazarbayev.
Ablyazov has consistently asserted that the case against him has been politically motivated, although this claim has twice been dismissed by the court, with the latest rejection coming as recent as last week. The trial is not expected to commence before December 2012 and could last at least 14 weeks.
This injunction follows less than a week after the release of the bank’s first full-year audited results since its restructuring - an event clouded by allegations circulated on an opposition website sponsored by Ablyazov, that the bank was on the verge of insolvency.
BTA timed the injunction to divert focus from its results, which showed a capital deficit of 105bn tenge ($720m), and “avoid responsibility” for its financial performance, said Ablyazov’s representatives.
Ablyazov, who presided over BTA from 2005 to 2009, is actually suspected by the bank of embezzling at least $8bn of bank funds via a myriad schemes. The allegations against him include a complex web of fraudulent loans, shell companies, high-profile real estate deals (such as a stalled skyscraper in Moscow’s business district) and non-existent oil rigs.
The case in question is said to be the biggest claim ever made in a UK court, and there is a lot at stake, and not just for BTA and its former management.
A number of international banks are creditors to the firm and stand to receive a payout when more money is recovered. They include Royal Bank of Scotland, Barclays, Morgan Stanley, Wells Fargo, Bank of America, Standard Chartered, Commerzbank, HSBC, Credit Suisse and Goldman Sachs Group.
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