The Russian aluminium tycoon Oleg Deripaska dramatically settled his long-running feud with the billionaire businessman Michael Cherney on Thursday when Deripaska announced both parties had reached an out of court settlement.
In a brief statement aides to Deripaska said: “Mr Deripaska announces that Mr Cherney’s litigation in London against him has been terminated.
Neither party will be making any further comment in relation to the litigation or matters raised therein.”
The enigmatic settlement came just days before the Uzbek-born Cherney was due to give video evidence from Israel next Tuesday. The £1bn private litigation case was due to resume in the high court’s new Rolls building. It was scheduled to be one of the biggest battles in British legal history, with more than 70 witnesses – some of whom were to give evidence anonymously for their own protection.
Deripaska was scheduled to go into the witness box in November. His fellow oligarch Roman Abramovich, the owner of Chelsea FC, had agreed to give evidence in support of Deripaska, one of Russia‘s richest men and the owner of Rusal, the world’s largest aluminium producer. The case would have shed light on one of the murkiest episodes in Russia’s bloody post-Soviet history, when rival groups and organised crime bosses fought for control of the country’s lucrative aluminium industry. The so-called “aluminium wars” were characterised by a series of gangland-style murders, political skulduggery and extortion claimed at the highest levels.
Cherney claimed that during this period under President Boris Yeltsin in the 1990s he was Deripaska’s business partner. Cherney alleged that he had a beneficial interest in the Sibal aluminium company, which later merged with Sibneft to form Rusal. Deripaska vehemently denied the claim as part of his legal battle.
According to Deripaska, the arrangement between the two men was simply one of “krysha” — the Russian word for “roof” — with Deripaska paying Cherney and his mafia partners huge sums of money in return for physical and political protection. Cherney denied this and said that without his help Deripaska – now a close ally of Russia’s President Vladimir Putin – would never have become a major player in the industry.
Abramovich successfully used a similar krysha defence in his recent high court battle against the long-term Kremlin critic Boris Berezovsky. The case ended in humiliation for Berezovsky, the plaintiff, who announced this week he would not be appealing against a crushing judgement against him by Lady Justice Gloster.
Aides to Deripaska suggested that Gloster’s ruling – acknowledging the existence of krysha arrangements – had clearly strengthened the Rusal owner’s case. But they refused to comment on the nature of the settlement or answer whether one party had paid money to the other.
Cherney had claimed that in March 2001 he and Deripaska reached an agreement in a London hotel. In it, Cherney said, Deripaska agreed to pay him $250m (£154m) for his share of Sibal, together with 20% per cent of the shares, to be transferred at a later stage. Cherney complained that he never got the shares.
The case began in July. Cherney was unable to travel to London to attend it since authorities in Spain had issued an EU-wide arrest warrant for him. They want to question him in connection with allegations of money-laundering. Cherney left Russia in 1991 and is resident in Israel.
Deripaska is known in the UK having been a long-time friend of Peter Mandelson and financier Nat Rothschild. He achieved notoriety in 2008 after entertaining George Osborne on his luxury yacht, thereby creating a scandal about an alleged request for a political donation to the Conservative party before the last general election.