London court considers Russian oligarch’s collection methods abnormal

London court has disapproved of Mikhail Fridman’s A1 hunt for Georgy Bedzhamov’s assets. The judge said that the campaign that included advertising in newspapers and on billboards is abnormal.

Ex-banker Georgy Bedzhamov, arrested in absentia in Russia, accuses A1 of persecution, as the company has unraveled an active and non-conventional search for his assets. The judge agreed that A1’s advertising campaign was abnormal for the process.

Former co-owner of Vneshprombank (VPB) Georgy Bedzhamov filed a lawsuit against A1 investment company (part of Russian Alfa Group) in connection with the steps they took to search for his oversees assets.  In this story, A1 represents the Russian Deposit Insurance Agency (DIA), the bankruptcy administrator of VPB that is trying to recover assets from Bedzhamov in favor of VBP’s creditors after the bank lost the license.

It is a normal practice for a company like A1 to have undertaken the search and collection of Bedzhamov’s assets in international jurisdictions for and on behalf of DIA, yet it is the methods the company employed that have raised brows and questions.

In his harassment proceeding, Bedzhamov reports about the alleged covert surveillance of him and his family in late 2018 and early 2019, as well as a press campaign in Russia in August 2019 that publicised an award that A1 offered for information on the ex-banker’s assets. Similar campaign was launched in the UK, and consisted of advertisements in the Evening Standard and City AM newspapers, as well as advertising on a car that was cruising through London center.

Fridman’s A1 launched the public hunt for Bedzhamov’s assets in the summer of 2019, announcing a reward for any relevant information (the amount was not disclosed). The ads ran on screens of Sheremetyevo Airport and the Vnukovo-3 business aviation center in Moscow. In December 2019, A1 purchased advertisements in the British media and sent a car with the reward announcement cruise through Knightsbridge, where Bedzhamov allegedly lives.

A1 explained these actions by the need to “keep control” of the freezing order for Bedzhamov’s assets, the court records say, while VPB representative said it was normal to have surveillance over ‘a known fraudster’. The judge found that wrong, as no court order has so far declared Bedzhamov guilty, and even if it did, advertising campaigns are not a normal method of litigation.

The whole role of A1’s in the process is also far from usual, the judge concluded. A1 does not only finance its clients’ proceedings, but also controls them tightly and daily, while the VPB legal team seeks instructions from A1 lawyers – the length A1 goes to to get its percentage of the recovered assets.

Extreme control, persistence and methods bordering on abuse and harassment are part of Alfa Group’s ethos (A1’s Russian mother company). In 2016, Alfa Group’s collecting agency was the first one ever warned of being expelled from the largest Russian association of collecting agencies for severe breach of ‘the requirements of the ethical code of the association’, and  ‘the increase in the number of complaints about the collection methods used by the company’,  the association declared.

Russian media reported that the main complaint against Alfa’s collectors was excessively harsh methods, in particular threats to the life and health of debtors’ and their families. RIA Novosti news agency even reported on a threat to burn the debtor’s child for a debt to Fridman’s Alfa-Bank.

The most recent and prominent object of Fridman’s debt collecting activities is none else then the richest woman of Russia, widow of Moscow’s former mayor Yuri Luzhkov. A1 acquired the right to claim an alleged GBP32 million debt of her bankrupt brother Victor Baturin, and consequently the official right to support him in his claim for 25% (worth almost GBP140mln) of Elena Baturina’s company he once co-managed.

The story repeats itself with A1’s generously financing Victor in his proceedings, and with A1’s lawyers present in every court meeting. The real percentage that A1 hopes to get from Victor in the end, remains unknown. The company prefers to see its involvement in the case as ‘helping a man in a difficult situation’.

It is worth noting though that before allying with Fridman’s A1 Victor Baturin has made multiple attempts to get money off his sister and former business partner over the past 5 years, all of which have been rejected by Russian courts. Those attempts commenced once he had done his time in prison for financial crimes and been declared bankrupt.

 

 

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