A Ukrainian billionaire with lavish homes in London paid his wife £7 million to leave the capital in a failed attempt to avoid legal action against him and another oligarch over a huge alleged fraud, the High Court has been told.
Court documents state that Gennadiy Bogolyubov, who lived for years in a £62.5 mansion in Belgrave Square, made the payment to his reluctant spouse Sofia at the same time as “threatening to cut off support to his own children” if she failed to move.
The documents allege that his intention was to “sever his ties to this jurisdiction” so that he could avoid litigation in this country over his conduct running Ukraine’s Privatbank, from which he and another oligarch, Igor Kolomoisky, are accused of plundering more than £1.5 billion.
But although his wife left London, a judge later ruled that the case could be heard in London and Mr Bogolyubov, who also bought a Belgravia mews house and another home on Eaton Place, is now being sued with Mr Kolomoisky by the state owned bank in lengthy High Court proceedings that are expected to result in a judgment next year.
The case against them has involved claims that they used a secure phone system known as the “Black” to communicate while carrying out the scam with Mr Bogolyubov said to have had lines installed on his two multi-million pound yachts, as well as in two offices in London and others in Ukraine and Geneva.
Barristers for the bank have also alleged that the pair “as experienced fraudsters” adopted tactics to cover their tracks which included a “a general ‘burn after reading’ policy” to documents, “deleting the content of email accounts” and “discarding mobile phones”, as well as “feigning an inability to obtain documents from companies and individuals” as part of a “disgraceful approach to disclosure” of material sought for the court proceedings.
The alleged fraud involved a complex series of financial transactions in which loans were issued and used to make advance payments for “impossibly large” quantities of commodities — from tanker loads of apple juice to industrial cranes and diggers — that were never delivered.
Three English companies were among the hundreds used in what has been described in court as a “fraud of byzantine complexity” involving “rotten” lending and “fiendishly complicated money movements” that “had all the hallmarks of money laundering”.
The bank claims that its loss totalled $1.9 billion which is now seeking to recover via the High Court litigation, with added interest of as much as $500,000 a day.
The final sum that Mr Bogolyubov and Mr Kolomoisky will have to pay if they lose will be determined by the judge but has been estimated at as much as $4.5 billion because of the interest charges and the length of time it has taken to bring the case to a conclusion.
The pair, who opted not to give evidence in court about their activities while running the bank, have strongly denied any wrongdoing.
Mr Bogolyubov’s barrister, Clare Montgomery KC, said the bank’s own forensic accountant had found “no indication of misappropriation” of funds by either her client or Mr Kolomoisky in a “fatal flaw” in the case against them.
She said that instead there was a scheme of “loan recycling” which the bank had failed to show Mr Bogolyubov was involved in.
She added that the bank had also wrongly tried to “tar Mr Bogolyubov with the same brush” as Mr Kolomoisky when the pair’s actions should be judged separately and that the case against Mr Bogolyubov also failed as “a matter of Ukrainian law”.
“The bank has not suffered any of the loss which it claims and its action is in any event time barred,” Ms Montgomery told the court.
A closing statement by Privatbank’s barristers, who include four King’s Counsel, insists, however, that Mr Bogolyubov told “brazen lies” and accuses him of denying the court the chance to question him about his conduct by refusing to attend the proceedings to give evidence.
The court document adds that the oligarch, who had previously moved to Switzerland, had sought to prevent the litigation by paying his wife to leave London in an unsuccessful attempt to take him out of reach of the English courts.
“The lengths to which D1-2 [Mr Kolomoisky and Mr Bogolyubov] were prepared to go to prevent legal proceedings being brought against them is evident from their actions” which included “D2 [Mr Bogolyubov] paying his wife £7m in September 2017 to leave England in an attempt to sever his ties to this jurisdiction and threatening to cut off financial support to his own children if she did not,” the court document states.
“Her evidence is that ‘I felt under pressure from Gennadiy as he said that if I did not leave England he would no longer support me financially. I, therefore, reluctantly agreed to move with the children to Switzerland’..”
The closing statement by the bank’s barristers also discloses details of a secure phone system known as the “Black” which Mr Kolomoisky and Mr Bogolyubov used to communicate while carrying out their fraud, as well as sharing “often bawdy memes” and jokes.
It says that Mr Kolomoisky had 11 extensions linking him to the system, while Mr Bogolyubov had “one on his yacht Sirocco, two on this other yacht Lauren L, one in Nikolskoe, two in London offices, one in a Kyiv office and one in an office in Dnipro.”
The document adds that Mr Bogolyubov had “deliberately and tactically sought to evade his disclosure obligations in multiple ways: by giving away iPhones even during the currency of these and other proceedings; claiming to have forgotten passwords to email accounts/iCloud and deleting emails; failing to identify relevant mobile devices .. and email accounts; failing to identify relevant third-party custodians; giving false evidence to avoid a specific disclosure order; and failing to produce relevant hard copy documents promptly.”
The new court claims follow a judgment earlier this year in separate proceedings that blocked Mr Bogolyubov from giving his wife “a minimum of £95 million” in a separation deal.
The Court of Appeal ruling, which followed an earlier High Court hearing, found that it would be “illogical and wrong” for the money to be handed over to his wife until the extent of Mr Bogolyubov’s “potentially massive liability” from the Privatbank case had been established.
The judge, Lady Justice King, said that information provided to the court by the couple put Mr Bogolyubov’s wealth at £3.8 billion, but that this would not be enough to meet his liabilities if he loses the Privatbank case.
She added: “It is accepted on behalf of the wife that in the event that Privatbank succeeds substantially in its action against the husband, the resulting damages order would ‘wipe him out’.”
Mr Bogolyubov moved to London in 2009 and obtained British citizenship. He left the capital in 2017 to move to Switzerland after being sued in two other cases begun before Privatbank’s litigation started.
The claim by Privatbank, which Mr Bogolyubov and Mr Kolomoisky helped to found in 1992, was made after the bank was nationalised in 2016 and the discovery of losses put at $5.5 billion.