Deliya Meylanova, an associate at Withers, the law firm, told Offshore Red : “In a recent judgment concerning proceedings by Russian Commercial Bank Ltd against Fedor Khoroshilov and companies controlled by him, Judge Mackie QC found that Mr Khoroshilov was in contempt of court as he had transferred his yacht for nominal consideration in breach of a freezing order.”

“RCB obtained freezing order in the context of proceedings in the Commercial Court and at the London Court of International Arbitration against Mr Khoroshilov and companies owned or controlled by him. These companies had borrowed substantial amounts from VTB Bank and RCB, its Cyprus subsidiary, in 2005-2007. Two of the loan agreements were subject to English law and jurisdiction, which led to parallel claims by RCB in the Commercial Court, a subdivision of the High Court that settles business disputes, and the London Court of International Arbitration in 2009.

“These and related proceedings are at the stage of enforcement, including through insolvency procedures in Russia. Media reports have suggested that Mr Khoroshilov may have obtained loans from VTB and RCB by exaggerating the value of oil rights held by his companies, and misappropriated the loan funds for his personal benefit . RCB eventually obtained judgments in the High Court proceedings and an award at the LCIA in the sums of $136,008,564.76, $291,360,264.11 and $291,360,264.11.

“In 2011 Mr Khoroshilov made counter-allegations of fraud against VTB and Andrey Puchkov, deputy chairman of VTB, and unsuccessfully challenged the judgments and award in the Commercial Court on that basis. He also obtained a stay of execution of enforcement, which has since been lifted. He did not attend the committal hearing on 6 September and was not represented. He is on the Interpol wanted list and his whereabouts are unknown,” the lawyer said.

The bad loans were so tortuously structured that it has taken years for their true value to emerge in the London courts. The total default is now known to be $1.5 billion. The original picture that sprang from the London proceedings was that of an oligarch who used his pre-eminent position to defraud the VTB empire of money.

Later revelations, however, suggest the truth is more complex. Khoroshilov presented evidence that challenged VTB’s argument that the oil wells in question were highly overvalued. A report submitted to the London court from a group of Texan oil-well appraisers called DeGolyer & MacNaughton valued the holdings at $4.2 billion — nearly three times the value of the loans, according to an academic paper by the Henry Jackson Society.

At the same time in another London courtroom, three “merchant princes” from the Ukraine – Victor Pinchuk, Gennadiy Bogolyubov and Igor Kolomoisky – are litigating over an alleged breach of contract and trust. Pinchuk, whose wealth is estimated at nearly $4 billion, is suing the others over the ownership of KzhRK, a state iron-ore company that the Ukraine privatised in 2004 and which he held in trust through an offshore company after buying it for a mere $17 million. The claim document states: “The trust in question is governed by English law, being the parties’ express choice of law within the meaning of the Hague Convention.”

This case is further testimony to the fact that the popularity of London as a venue for litigation is undimmed. English civil courts, unlike their American counterparts, do not employ juries and this is a big attraction for overseas litigants, as are such devices as freezing injunctions and Anton Piller orders.

To register for the recently-launched Compliance Matters publication, see here.