Tycoon sues Russia for US$10b after falling out with president

[BallBreaker]

Once ‘Putin’s banker’, tycoon sues Russia for US$10b after falling out with president

PUBLISHED : Tuesday, 22 September, 2015, 9:40am
UPDATED : Tuesday, 22 September, 2015, 9:40am

Reuters in London

Exiled oligarch Sergei Pugachev, in a photo that was released by Interpol. Photo: AP

Sergei Pugachev, a tycoon once dubbed “Putin’s banker” because of his influence in the Kremlin, has filed a claim against Russia for more than US$10 billion (HK$77.5 billion) after his business empire was carved up when he fell out of favour with President Vladimir Putin.

Lawyers for Pugachev on Monday issued notice of a claim against Russia that is likely to be heard in the Permanent Court of Arbitration in The Hague, a source close to Pugachev said on condition of anonymity.

Pugachev’s lawyers will outline his claim against Russia today in Paris, the source said.

It was not immediately possible to get a response from the Russian government, which is seeking Pugachev’s arrest for embezzlement and misappropriation of assets, charges he denies.

Moscow is already fighting a separate ruling by the same court in 2014, which ordered it to pay US$50 billion for expropriating the assets of Yukos, once Russia’s biggest oil producer and run by Mikhail Khodorkovsky.

“Mr Pugachev has patiently waited for this moment to strike with this massive investment claim second only to Yukos,” said a person close to Pugachev who spoke on condition of anonymity.

“He wants to ensure that those persons responsible for the unlawful taking of his businesses, including those in the Kremlin, are named and shamed,” the source said.

Since leaving Russia in 2011, Pugachev, 52, has accused Putin’s allies of bringing his multi-billion dollar business empire to its knees before picking off some of its best assets.

Pugachev founded Mezhprombank, or International Industrial Bank, in 1992, just a year after the collapse of the Soviet Union. It grew to become one of Russia’s biggest banks, with stakes in the “Northern” and “Baltic” shipyards, the latter of which built the Tsar’s battleships and Soviet nuclear-powered icebreakers, and a giant Siberian coal deposit.

But having helped Putin ascend to Russia’s top job in 1999 during the last days of Boris Yeltsin’s presidency, Pugachev fell out with some of Putin’s most powerful allies in the years after the 2008 financial crisis.

Russian authorities say Pugachev, who once represented Siberia’s Tuva Republic in the upper house of parliament, helped himself to over US$700 million in Russian central bank bailout money intended to help Mezhprombank through the crisis.

At Russia’s request, Interpol has issued an arrest warrant for Pugachev.