‘Dishonest’ Berezovsky Loses to Abramovich
Published: September 5, 2012 (Issue # 1725)
SANG TAN / AP
Boris Berezovsky outside court Friday.
LONDON — Self-exiled tycoon Boris Berezovsky lost his multibillion-dollar legal battle against fellow Russian mogul Roman Abramovich on Friday after a British judge ruled that he didn’t tell the truth in the clash over vast oil wealth.
The case in London’s High Court sparked broad interest because of its focus on the two oligarchs’ personal and business relationship in the chaotic days of post-Soviet Russia. The months of testimony included juicy details about their rise to riches, their jet-set lifestyles on yachts and in luxury hotels, and allegations of “gangster” behavior.
The 64-year-old Berezovsky, a former Kremlin power broker who fell out with Russian President Vladimir Putin, alleged that Abramovich had betrayed and intimidated him into selling his oil stakes vastly beneath their true value, and sold his gas shares without his consent. Berezovsky had sought more than $5.6 billion in damages.
Abramovich had denied all the charges.
On Friday, Judge Elizabeth Gloster scathingly dismissed Berezovsky’s case, calling him “an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be molded to suit his current purposes.”
“I regret to say that the bottom line of my analysis of Mr. Berezovsky’s credibility is that he would have said almost anything to support his case,” Gloster said in a 38-page summary of her judgment.
In contrast, she found the 45-year-old Abramovich, the owner of Chelsea football club, to be “a truthful, and on the whole reliable, witness.”
Berezovsky, who had alleged blackmail and breach of contract, shook his head in court Friday as his defeat became clear. Abramovich did not attend.
Outside the court, Berezovsky accused Gloster of rewriting Russian history.
“I am absolutely amazed by what happened today,” he told reporters. “Sometimes I have the impression that Putin himself wrote this judgment.”
A statement issued by Abramovich’s representatives said he was “pleased and grateful” that his position had been “comprehensively vindicated by the court.”
In Moscow, Putin’s spokesman Dmitry Peskov expressed satisfaction with the decision. “It’s always pleasant when slander is called by its own name,” he was quoted as saying by the state news agency RIA Novosti.
A mathematician-turned-Mercedes dealer, Berezovsky amassed his wealth during Russia’s chaotic privatization of state assets in the early 1990s. In return for backing former Russian President Boris Yeltsin, he gained political clout and opportunities to buy state assets at knockdown prices.
Berezovsky said he mentored Abramovich, treating him like a son, and founded the oil giant Sibneft with him and a third partner. Berezovsky claimed that the friendship faltered when he fell out with Putin, at which point Abramovich “intimidated” him into selling $1.3 billion of his Sibneft shares, which he claimed were really worth almost $6 billion.
Abramovich contradicted that account, saying Berezovsky never had “a cent” of investment in Sibneft. He said he had paid more than $2.5 billion to Berezovsky for his services as his “political godfather” and reluctantly funded Berezovsky’s extravagant lifestyle of yachts and vacation homes because he feared retaliation from Berezovsky, who he alleged had connections to gangsters in Chechnya.
The judge concluded that the deal between the two men was that in return for substantial cash payments, Abramovich and Sibneft would enjoy Berezovsky’s political patronage and influence, “which was indispensable to the construction of any major business in the conditions of the 1990s.”
The judge rejected Berezovksy’s claims that he was threatened by Putin and Alexander Voloshin, a Putin ally, to coerce him to sell his Sibneft stake.
She also rejected Berezovsky’s claim that he had an agreement that gave him an interest in any aluminum holdings that Abramovich might acquire after 1999. There was never any agreement that entitled Berezovsky to shares in the aluminum company RusAl, she added.
The case hinged on four alleged oral agreements and almost every aspect of those alleged deals was in dispute, the judge said.
“Significantly there were no contemporaneous notes, memoranda or other documents recording the making of these alleged agreements or referring to their terms,” the judge said.
The burden fell on Berezovsky to convince the court that the agreements had been made, “not for Mr. Abramovich to convince the court otherwise,” the judge said.
Gloster was scathing about Berezovsky’s credibility.
“At times the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events,” she said.
Berezovsky, who has lived in Britain since he fled Russia in 2001, said he hadn’t decided whether to appeal. He declined to comment on the financial implications of losing the case.
“Life is life,” he said. “Now I know what means English court better than before.”
10 Things That We Learned at the Trial
LONDON — The $5.6 billion legal clash between Russian oligarchs Boris Berezovsky and Roman Abramovich offered a rare window into the lives of the fabulously wealthy. With judge Elizabeth Gloster ruling Friday in Abramovich’s favor, let’s look back at 10 things we learned during the testimony:
1. Oligarchs don’t put anything in writing. Gloster pointed out that almost all aspects of the alleged agreements between Berezovsky and Abramovich were in dispute, largely because many of the alleged deals were made orally. No one even took notes.
Abramovich said the cloud this created was partly intentional: He claimed that for a time, he went along with the fiction that Berezovsky owned part of Abramovich’s oil company, Sibneft, because Berezovsky’s political capital helped protect the business.
2. An office is no place to meet. Even when they were doing business, the two men rarely met in conventional places of business. Their meetings took place at all sorts of exotic and exclusive sites: Berezovsky’s club in Moscow; on the Riviera; in the French Alps; at the Dorchester Hotel in London; in private planes and super-yachts; and at various heliports and airports.
3. Oligarchs don’t need to dress up. In one of the trial’s most colorful scenes, Abramovich said Berezovsky kept his fellow tycoons waiting for an hour at a high-stakes meeting in 2000 at London’s Dorchester Hotel, and when he finally showed up he was wearing a dressing gown and looking disheveled. Berezovsky, who did not confirm his wardrobe choice, claimed that the description was an attempt to smear him and paint him as a Godfather-like mafia figure.
4. A million dollars is nothing. Abramovich said Berezovsky was down to his last $1 million when he fled from Russia in 2000.
“He would not have lived long on that,” Abramovich testified.
5. Witnesses are more effective when they have an incentive. Berezovsky admitted in court that he had promised two potential witnesses 1 percent shares of his judgment — potentially tens of millions of dollars — if he won his case.
6. An oligarch is most vulnerable when shopping. It wasn’t easy for Berezovsky to serve notice that he intended to sue Abramovich. He told The Associated Press that he carried the legal papers in his car for six months while he tried to track Abramovich down, once making a trip 320 kilometers north of London.
“I even flew to Manchester to a game between Manchester United and Chelsea, but he was with 20 bodyguards. It was impossible to give him papers,” Berezovsky said at the time.
Berezovsky finally got his chance on London’s swank Sloane Square, when he spotted Abramovich shopping in a Hermes boutique. Berezovsky walked in, to the horror of Abramovich’s security detail, and served him.
7. Every house needs a roof. The Russian word most bandied about during the trial was “krysha,” which means roof. It also means political patronage that blurred the line between business, politics and shady mafia dealings.
Abramovich testified that in the 1990s, it was impossible for anyone to build up a major business without the help of someone with business and political connections. That someone was Berezovsky, who he claimed demanded millions of dollars in return for protection.
From yachts to French vacation homes to girlfriends’ bills, Abramovich testified that there was nothing he didn’t pay for to subsidize Berezovsky’s extravagant lifestyle.
8. It started with a quack. Abramovich may be one of Russia’s wealthiest men today, but his origins are humble. He was orphaned as a child, and lived with relatives. He did not finish college and went straight into business — his first venture comprised of selling rubber ducks.
9. It pays to be honest. Gloster’s judgment did not use the “L” word, but she did not mince her words in calling Berezovsky “an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be molded to suit his current purposes. At times the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along … at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events…
“I regret to say that the bottom line of my analysis of Mr. Berezovsky’s credibility is that he would have said almost anything to support his case.”
Outside court, Berezovsky denied he was dishonest – and instead maintained that Abramovich was the liar.
10. The winner doesn’t really take it all. Sure, Abramovich won the case. But let’s not forget who’s laughing all the way to the bank: London’s lawyers. Each party shelled out untold sums to hire some of the world’s top lawyers.