Bloomberg News

BTA Bank Seeks Jail Term for Ex-Chairman Ablyazov at U.K. Trial

November 30, 2011

Nov. 30 (Bloomberg) -- BTA Bank, the Kazakh lender that defaulted on $12 billion of debt before restructuring last year, asked a U.K. judge to jail its former chairman, Mukhtar Ablyazov, for contempt of court in a fraud lawsuit.

Ablyazov, who fled Kazakhstan to escape prosecution and lives in the U.K., violated a court order freezing his assets by failing to reveal ownership in a Moscow skyscraper project and hiding more than 600 shell companies used to conceal his wealth, BTA’s lawyer said today at the start of a two-week trial in London. Ablyazov attended the hearing with an interpreter.

“There hasn’t quite been a case like this before,” BTA’s lawyer, Stephen Smith of New Square Chambers, said at the hearing. “The bank’s primary purpose is to coerce Ablyazov into complying with the court order.”

BTA, based in Almaty, filed a series of U.K. lawsuits against Ablyazov and Roman Solodchenko, its former chief executive officer, claiming they took more than $5 billion from the bank using fake loans. The men have denied the claims, while BTA has said its forensic accountants are still unwinding the transactions behind the alleged theft.

BTA said litigation against the men will benefit Royal Bank of Scotland Group Plc, Barclays Plc, Commerzbank AG and other creditors that financed it to become the biggest Kazakh lender before its nationalization in 2009.

Ablyazov’s attempt to delay the contempt trial was denied by Judge Nigel Teare in October after the court was shown evidence that land “indirectly owned” by the defendant was pledged to the Central Bank of Russia in violation of the freeze. The bank wants Ablyazov in prison until the case runs its course, saying he can’t be trusted.

Receivership

The dispute over asset disclosure has already resulted in a court order placing an estimated $5 billion of Ablyazov’s assets into receivership under the control of KPMG LLP during the case.

BTA won a 21-month jail sentence last month against Paul Kythreotis, a British man in Cyprus who’s accused of helping Ablyazov. Syrym Shalabayev, Ablyazov’s brother-in-law, was separately sentenced in June to 18 months in a U.K. jail for failing to reveal his assets or cooperate in the case.

--Editors: Christopher Scinta, Anthony Aarons

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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