Farkhad Akhmedov: Calculating the price of impunity from the law
In insistences such as the battle over the Luna, Akhmedov has resorted to extreme legal machinations to subvert the High Court’s decision and keep his assets from being seized.Amie Smith | Updated: 16-10-2020 11:48 IST | Created: 16-10-2020 11:48 IST
The legal saga surrounding the divorce of the Azerbaijan-born Russian billionaire Farkhad Akhmedov and Tatiana Akhmedova has all the makings of a tabloid thriller. Akhmedov, who made his fortune in Russia's oil and gas sector and sold his stake in Gazprom's Nortgas unit for $1.38 billion in 2012, has spent most of the past four years fighting a historic £453 million settlement decided in favor of his ex-wife Tatiana by the High Court of Justice in London. As The Times of London recently laid out in detail, Akhmedov has pursued a strategy of attrition against his ex-wife and her legal team, waging legal battles on multiple fronts to prevent Tatiana from recouping the assets English courts have ruled she is due.
Even though most of the resulting decisions have not gone his way – most recently a ruling by the Dubai Court of Cassation throwing out a $115 million suit filed by Farkhad Akhmedov against his ex-wife over the impounding of the family yacht, the MV Luna – the approach is revealing of the sheer impunity enjoyed by the ultra-wealthy in their dealings with the law. As wealth and income inequality become an increasingly hot-button issue across much of the world, the fight over Farkhad's fortune offers a revealing look at the failures of global legal frameworks to overcome the tools of obstruction and obfuscation wealthy defendants can muster.
Sharia or chicanery?
The primary challenge facing Tatiana Akhmedova's legal team is the global span of her ex-husband's interests, with key assets like the Luna governed through complex offshore arrangements. The yacht itself is registered in the Marshall Islands, requiring legal action to enforce the English ruling there, while the family trust which owns the vessel (as well as a £100 million art collection which includes works from the likes of Yves Klein, Andy Warhol, and Mark Rothko) is based in Liechtenstein.
Akhmedov has made it clear he intends to fight attempts to make good on the English ruling in each of those jurisdictions. As such, even though Tatiana has resided in the UK in the early 1990s and Farkhad has indefinite leave to live in Britain himself, the High Court can only hold him accountable for being in clear contempt of its ruling if he re-enters the UK.
In insistences such as the battle over the Luna, Akhmedov has resorted to extreme legal machinations to subvert the High Court's decision and keep his assets from being seized. In 2018, Tatiana's camp successfully had the yacht impounded on the orders of the Dubai International Financial Center (DIFC), which enforces English common law.
That ruling was overturned, however, when Farkhad's side succeeded in having the case transferred out of the DIFC and into Dubai's local legal system, which adjudicates matrimonial cases in accordance with sharia law. As such, Dubai's courts do not recognize the separation of spousal assets in the same manner as English ones, making the High Court's decision unenforceable. Of course, even if the question of the yacht's seizure appears to have been settled in Dubai, the outstanding legal questions surrounding its ownership are still playing out in other jurisdictions.
Choice of venue
Farkhad Akhmedov's ability to skirt his obligations under English law point to the advantages afforded to those individuals wealthy enough and corporations large enough to pick and choose the jurisdictions where they will pay taxes and face legal liability – presuming courts, law enforcement, or plaintiffs can even parse through their networks of shell companies and offshore holdings at all.
The extent of the problems with the current system was highlighted last month with the release of the FinCEN leaks. The explosive reporting by BuzzFeed and the International Consortium of Investigative Journalists (ICIJ) found major international banks agreeing to process trillions of dollars in suspicious transactions between various offshore destinations and shell corporations with little in the way of oversight from the US officials responsible for gathering and utilizing the suspicious activity reports (SARs) filed by these banks.
Shell companies have played a significant role in the Akhmedov case, with the High Court "piercing the corporate veil" of company ownership after it found Farkhad Akhmedov tried to use offshore structures to hide his assets, such as by engineering the sale of the Luna between a company he owned and another in which he was the beneficial owner. As the FinCEN leaks reveal, that same infrastructure facilitates money laundering by drug traffickers, sanctioned entities, and transnational criminal organizations, with the assistance of major banks such as Standard Chartered and Deutsche Bank, who earn millions in fees from handling these funds without bothering to inquire about their provenance.
One of the other prominent tactics in the Akhmedov case – Farkhad Akhmedov's "forum shopping" for courts likely to help him foil asset seizures – is typically the province of multinational corporations seeking to avoid paying taxes or regulatory scrutiny. American tech companies like Google, for example, have attempted to use the distinctions between different jurisdictions in Europe (such as France and Ireland) to move legal proceedings from countries perceived as being more strict to those seen to be more amenable to corporate interests.
Distilled to its simplest terms, the primary lesson to be taken from the Akhmedov divorce proceedings is one that populists all over the planet have repeated for decades: fortunes of a certain size allow both individuals and companies to subvert the rule of law and any notion of economic fairness in ways the average person cannot. As initiatives to improve financial transparency, reduce the discrepancies between tax regimes, and address rampant financial inequalities gain political steam, they will have to grapple with the current reality that the wealthiest among us can thwart efforts at accountability simply by moving their money, or their yacht, a few jurisdictions away.
(Disclaimer: The opinions expressed are the personal views of the author. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)
- FIRST PUBLISHED IN: