Berezovsky vs Abramovich could be good news for the Exchequer

In Prohibition America, disputes between the likes of Al Capone, John Dillinger or Baby Face Nelson were settled with Tommie guns. In Putin’s Russia, squabbles involving Boris Berezovsky, Roman Abramovich or Oleg Deripaska are these days resolved by London’s High Court.

On balance, the old way is preferable for being stylistically pure. Since Al and Baby Face made their money outside the law, it would have been incongruous  for them to appeal to it when things went sour. So instead they’d slam those drum mags into their Tommies and settle it like men. The Russians, on the other hand, have decided to go legit for once in their lives.

You might say that there’s an important difference: American gangsters were universally acknowledged as such. By contrast the Russians pose as legitimate businessmen, and any speculation on their probity runs the risk of a libel suit. In Russia, of course, everybody knows what those ‘oligarchs’ really are, but in a civilised country one is innocent until proven guilty in court.

Hence the tremendous importance of the B v A trial: it proved beyond any doubt, reasonable or otherwise, that Russian oligarchs are typologically closer to Al Capone than to Bill Gates. This is one finding that has escaped the attention of our press, yet it’s the only one that makes the trial interesting.

The press got most of the facts right, even though it didn’t understand them properly. In broad strokes, Berezovsky was a major beneficiary of the Yeltsyn regime. Capitalising on his closeness to the president’s daughter, he gained access to the perpetually drunk leader and became a billionaire by buying up state assets for a derisory fraction of their value.

Abramovich was Berezovsky’s junior partner when the latter branched out into the oil business. Together they took over oil companies, refineries, gas processing plants and pipelines. In parallel, they acquired the controlling interest in the Russian government by masterminding Yeltsyn’s return for a second term. With the president dissolving the last of his marbles in booze, it was Berezovsky and Abramovich who interviewed and de facto appointed candidates for government posts. They were also the ones who chose Putin as successor to Yeltsyn, hoping the lowly KGB lieutenant-colonel would be putty in their hands.

That hope turned out to be ill-founded, and Putin outflanked the ‘oligarchs’. Abramovich, the former street guttersnipe, cottoned on quickly and kissed the new godfather’s hand, figuratively speaking. Berezovsky, the former maths professor, was slow on the uptake, overplayed his political hand and was thrown out of Russia, having been blackmailed into selling his assets for a pittance, just a few billion here or there.

The pressure on him was exerted through his former partner Abramovich, now playing ball with Putin and therefore allowed to benefit from the fire sale, provided he remembered which side his bread was buttered. Both A and B ended up in London, the former with Putin’s blessing, the latter with his anathema.

Berezovsky wouldn’t take it lying down. He’d use his remaining billions to finance anti-Putin opposition in Russia, and also try to sue Abramovich for cheating him out of more billions. The first part of the counteroffensive proved forlorn, the second difficult.

Abramovich, securely shielded from the outside world by a platoon of cutthroat bodyguards, was out of reach for any summonses or writs. But fate was on Berezovsky’s side. On a fine 2007 day, he espied Abramovich in an Hermès boutique, pounced on him and after an unseemly scuffle managed to thrust the writ into his hand. The biggest civil case in Britain’s history was under way.

It concluded last Friday, with Judge Elizabeth Gloster calling Berezovsky ‘an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes.’ In contrast, Her Honour found Abramovich to be ‘a truthful, and on the whole reliable, witness.’ Well, Dame Elizabeth was right in that commitment to truth has never been Berezovsky’s most salient trait. How she found Abramovich to be any different is a mystery, but then the law is full of them.

Yet, if you believe our newspaper accounts, Her Honour could hardly have ruled in any other way. It was the plaintiff’s word against the defendant’s, and the burden of proof was on the former. No written contract existed, and, as Samuel Goldwyn once explained, an oral contract isn’t worth the paper it’s written on. But the press got it wrong: Berezovsky’s case wasn’t entirely based on his word.

The plaintiff produced one undisputed fact: Abramovich had indeed paid Berezovsky more than a billion dollars. The latter claimed that this represented his share of the profits in the oil companies he owned jointly with Abramovich. The defendant, on the other hand, had to claim that no such partnership existed and that…

Here’s the rub: what on earth could he claim? A billion-odd is a rather large sum. Surely it wasn’t a birthday gift? Hence the strategy of Berzovsky’s case, and the man could make a hell of a poker player even though he lost this hand.

Abramovich could only win the case and save himself $5 billion by claiming that the money represented something entirely different. But if it wasn’t a partner’s share of the profits, it had to be a payment for services rendered. And the only service Berezovsky could have rendered to Abramovich was to provide what in the Russian underworld is called krysha. Literally meaning ‘roof’, the word is used to denote that cornerstone of organised crime: protection.

For Abramovich to declare that he had paid all those zeroes for protection was tantamount to admitting that he had made his money Al Capone’s way, not Bill Gates’s. The Gateses and Bransons don’t need protection: they become rich by delivering products we want to buy. The only ‘businessmen’ who need protection are gangsters. So Abramovich’s choice was stark: he either had to insist he and Berezovsky are both legitimate businessmen and pay up – or admit they are both Mafiosi.

Berezovsky was hoping his adversary would balk at declaring himself a Russian answer to Scarface Capone. This was the plaintiff’s bluff, but it was called. Rather than parting with $5 billion, Abramovich for all intents and purposes admitted he had made his money under the protection of the mafiya.

The moment the word krysha crossed Her Honour’s lips, Berezovsky’s case was lost, even though it’s likely that this once he was indeed telling the truth. But in the absence of documented proof that that billion-odd he had received from Abramovich was anything other than krysha, only one ruling was possible. Dame Elizabeth did what any other judge would have done: she found for the defendant.

Case closed? Not quite. For Abramovich’s admission effectively means that his and Berezovsky’s (and by inference other Russian oligarchs’) fortunes aren’t rewards for successful entrepreneurship, but ill-gotten gains being laundered through Western banks. The Exchequer would be justified in impounding such assets and holding them until their exact provenance is ascertained.

Since Abramovich had to own up that his money had been made in ways that are illegal in Britain, the oligarchs’ assets could eventually be confiscated and applied against our national debt. Meanwhile, Abramovich and Berezovsky deserve our gratitude: they’ve added another word, krysha, to the English legal lexicon.







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