Russian owners are suing Ireland for conspiracy to embezzle with several Russian defendants. They also sued a Dublin-registered company. The Irish High Court has asked to ignore many Russian court hearings.
Michael Collins SC represented the defendants and said that Ireland should not disregard a Russian court’s decision that Sergei Makhlai (a billionaire and former chairman Of Togliattiazot, Russia’s largest producer of ammonia) was guilty of “massive fraud” against ToAZ.
ToAZ evaded Russian taxes between 2009 and 2013, selling ammonia, which is used to make fertilizer, at a low cost to a Swiss company. The Swiss company then sold it at the market price, making a profit. These facts of tax evasion have been confirmed by seven Russian courts and 37 Russian judges.
Mr. Collins represented a minority shareholder of ToAZ, United Chemical Company Uralchem, (UCCU), who saw hundreds of millions of dollars being “syphoned off”, and was defrauded. This led to court proceedings in Russia.
ToAZ’s 70% majority shareholders have sued UCCU and four Caribbean-registered trust companies, including Eurotoaz, claiming that they were defrauded by illegal and corrupt “corporate raiding” actions by the defendants.
Collins stated that UCCU’s actions were very similar to U.S. “shareholder oppression” proceedings.
Sergei Makhlai, a Russian-born oligarch, and Dmitry Mazepin (owner of UCCU), are at the center of the litigation.
Sergei Makhlai, his father Vladimir and ToAZ Chairman were both found guilty of siphoning $1.4 billion from ToAZ using related-party transactions through Swiss firm Nitrochem Distribution AG. This was controlled by Andreas Zivy, the Makhlais’ Swiss partner. The Makhlais fled Russia before being sentenced.
Four Caribbean-registered businesses are suing Mr. Mazepin and UCCU and other individuals and entities, including Eurotoaz.
UCCU and its codefendants have had a number preliminary hearings in Ireland.
The Caribbean companies want UCCU to be found in contempt by a High Court order not to enforce a $1.2 million Russian court judgment against ToAZ plaintiff firms. This includes the sale of ToAZ shares while the main Irish proceedings are concluded.
According to Caribbean companies, UCCU failed to fulfill its promise when it attempted to bankrupt Mr. Makhlai of Russia. This led to the sale by ToAZ shares that they claim they own.
Plaintiffs claimed that UCCU had “egregiously violated” the Dublin undertaking in contempt petition.
Representative of UCCU, Mr. Collins stated that foreign legal proceedings should be respected.
Counsel argued that Mr. Makhlai’s bankruptcy is distinct from the $1.2 million judgment case. The judgment only affected assets of Caribbean companies, and not Makhlai bankruptcy.
He stated that the Russian judge was still valid despite defendants’ promises not to enforce it.
Counsel stated that this was an “entirely Russian dispute” between Russian owners of companies over a huge fraud. Ireland was “sucked into” by a Dublin-registered business that had a shareholding. It was “painted as a broad conspiracies” between UCCU, the other defendants.
These applications were made to the Irish High Court on this “very narrow level of jurisdiction”. The High Court found that the case could be continued here to avoid fragmentation. The appealed decision will be decided by the Court of Appeal.
Justice Mark Sanfey continues to hear the hybrid hearing.
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