Arkhangelsky case in France and in Bulgaria

Екип на Биволъ

The Kremlin leaders do not like criticism and get particularly nervous when people of substantial wealth diverge from it.  Inconvenient oligarchs are being chased through the state prosecution mechanism (in Russia, it is still militarized and prosecutors wear uniforms) and through banks close to the government. Thus, Mikhail Khodorkovsky is serving his multi-year prison sentence in a camp, and, recently, Alexander Lebedev has been accused of hooliganism, for which he may be sentenced to up to 5-years in prison. Lebedev is famous for his critical remarks of the Kremlin’s autocrat policy and he was unwise enough to finance one of the few opposition media outlets, the “Novaya Gazeta”.

However, sympathies for the opposition are not the only reason for the Kremlin authorities to chase rich Russians. The motivation may be simply lucrative or, to put it simple, expropriation of property. That is the case of the businessman Vitaly Arkhangelsky from St Petersburg, who received political asylum in France. He has been chased for three years now by a bank closely tied to the government, including in Bulgaria, where he has some property.

Who is Vitaly  Arkhangelsky?

It is difficult to imagine that right in the depth of the Brezhnev’s stagnation, a soviet scientist received a Nobel Award for not other subject than economics.  In 1975, the mathematician from St Petersburg Leonid Kantorovich and his American colleague Tjalling Koopmans were awarded for their contribution to the theory of optimal distribution of resources. 15 years later, the Soviet economy collapsed as an illustration of the difference between theory and practice. Kantorovich and Koopmans’ contribution, however, was not questioned, because their linear mathematical model is applicable to the conditions of a free market, which did not exist in the Soviet reality.

The same year of receiving the Nobel  Award, Kantorovich’s grandson, Vitaly, was born. In the late 1990’s, after having graduated from the Department of Economics in St Petersburg and continued his education in Germany and Norway, Vitaly Arkhangelsky decided to apply his theoretical knowledge to the wild economic conditions in post-soviet Russia. He obtained large loans and bought shares of the two biggest Baltic sea ports: St Petersburg and Vyborg, which were in disarray at the time. The results of his management may be seen in the following comparisons:  in 1997, the port of Vyborg had 8 berths and processed 100,000 tons of freight turnover per annum,  and in 2012, with 5 functioning berths, it has processed 1,000,000 tons in 9 months. The assets of Arkhangelsky’s Oslo Marin Group which, along with ports, had insurance and transport activities were growing rapidly. In 2009, Arkhangelsky was already considered a billionaire, but soon, the specific features of Russian reality reminded him that in Russia, it is not easy to be a billionaire, independent from the government.

Crossing the psychological limit of one billion appears to activate other processes which have nothing to do with the conditions of the free market. The government toot a look at the successful business of the young entrepreneur and stopped the progressive growth of the group. One of the big creditors, the Bank “Saint-Petersburg”, performed a classic raiders attack against Oslo Marin Group in order to take possession of its business.

In 2010, Oslo Marin Group owed RUR 2.5 billion to the Bank “Saint-Petersburg”.  The bank suddenly decided to terminate the loan contract and to request a full payment on the loan, while the interest was regularly paid and the loan was secured by assets worth hundreds of millions of dollars.  Arkhangelsky was threatened personally by the Bank’s President and one of the major shareholders, Alexander  Savelyev.  He was forced to transfer huge assets for peanuts.  After this raid, the businessman decided that he was not safe and moved with his family to France, where he has a flat.

The expropriation of the business, however, was not enough for the bank which counts among its shareholders Putin personally (with 230 shares). Another major shareholder is Sergei Matvienko, the son of the ex-governor of St Petersburg and the Chairwoman of the Council of the Federation Valentina Matvienko, particularly faithful to the Russian President’s clan. The bank provides the authorities with a document with Arkhangelsky’s signature, according to which he had secured corporate loan with his personal assets. The Bank claims that the entrepreneur spent the money to purchase real estate abroad. The civil-law case turned immediately into a public-law case, and in July 2010, Arkhangelsky was accused of misuse of loan and fraud (159-article of the Criminal Code of the Russian Federation), and then of money laundering.

The Russian prosecution insisted that the French authorities should extradite Arkhangelsky, who was registered on the international “wanted” list. On November 15, 2010 he was arrested and got familiar with life conditions in a French prison where he shared a cell with a Bulgarian pimp. ”I know everything about recruiting Bulgarian prostitutes and their exploitation in France”, – jokes now the ex-Russian billionaire and French prisoner.

On December 1st, 2010 the Court of Appeal of  Aix-en-Provence decided that Arkhangelsky was a victim of “politically motivated accusations of the criminalized Russian legal system”, cancelled the 300 000 bond and refused to extradite him to Russia.

The quality and reliability of the Russian indictment bill may be appreciated from the conclusions of the French court which defined the Russian prosecutor’s submissions as “confused and unclear”. The claims of Putin’s prosecution were rejected with the following motivation: ”serious doubts about the fairness of the judicial procedure and the effective realization of the right of defence”.

After that, Arkhangelsky applied for a political asylum and created a precedent. He became the first important Russian entrepreneur to receive protection as a political refugee in France.

Simultaneously, the French experts proved that Arkhangelsky’s signature on the loan guarantee contract was counterfeited. In the beginning of 2011, in France, he filed a counterclaim for fraud and forgery.

As for the Bank, in addition to punitive extradition mechanisms, it also filed a civil claim to confiscate the Russian refugee’s real estate via so-called exequatur (enforcement of a foreign judgement based on a bilateral agreement for legal co-operation). The court examined carefully all the facts of the case and decided not to proceed with exequatur until Akhangelsky’s complaint for counterfeiting his signature on the loan guarantee contract is examined. The French public prosecutor had already officially requested Russia to question the board of Bank of St Petersburg.

“Even if Russia declines to cooperate with the French authorities, which is highly likely, France will start a civil-law court case against the people responsible ant to pay serious compensation to my client”, – considers William Bourdon, the lawyer that defends Arkhangelsky’s interests in France, where he is also initiated judicial proceedings.

“Despite the fact that the bank has tried to mislead the French judicial authorities and to get Arkhangelsky, who has received asylum in France, extradited, the attempts to persecute him and his family continue.  This reminds David and Goliath battle:  aiming to deprive Mr Arkhangelsky from all his properties. He is fighting bare hands against an adversary with endless resource, supported administratively by the Russian government,”-comments specially to for Bivola the French lawyer François Ameli.

The Bivola emailed its questions to the management of the Bank Saint-Petersburg, in order to clarify what part of the bank’s claims have been already satisfied and to receive comments on the French expert report which proved the forgery. No response has been received up to the publishing of this article.

Is Arkhangeslky persecuted  by the Russian government? – we asked the famous Russian dissident Vladimir Bukovsky, who was kept in psychiatric clinics under Brezhnev and was exchanged for the Chilean communist Luis Korvalan in 1976. He responded swiftly:

“The West has to understand one simple thing: there is no legal order in today’s Russia, and what is called a legal system in Russia is exactly the opposite: corruption, abuse of power, tyranny, which are eroding Russia like cancer, and like cancer have tendency to spread. In order to preserve its integrity, the western legal system has to stop co-operating with the Russian authorities and adopt a zero tolerance approach towards any of its requests. Otherwise, the Kremlin will continue misusing the instruments of international legal co-operation, like Interpol and extradition agreements, and also civil-law proceedings to chase its political opponents or simply to rob people. The case of Vitaly Arkhangelsky is only the most recent example of this’”- was Bukovsky’s detailed response.

The latest news from France say that Arkhangelsky and his family are subjected not only to judicial means.  On October 21st this year, unknown people assaulted his wife and children in front of their apartment in Nice and tried to enter the flat. The French authorities are investigating this assault.

Russian recognition and enforcement procedure and Bulgarian justice

Before he purchased real estate in France, Vitaly Arkhangelsky often came to Bulgaria. He bought 30 flats in the luxury complex Emerald Resort next to Ravda. This is the same complex that attracted investment from Russian pop stars like Philip Kirkorov, Lolita Miliavskaya and other pop-stars.  In the summer of 2011, the celebrities appeared on one of Russia’s most popular TV channels and complained together about problems with the management of Emerald Resort and threatened going to court because of the high real estate maintenance fees.

An investigation carried out by Bivola showed that the complex was built by Ognian Bozarov, a nephew of Todor Zhivkov and ex- agent of scientific and technical intelligence services, and active participant in the Neva project, through which millions of public dollars disappeared. His Russian partner Alexey Chepa is a member of the State Douma and is also connected to special services, in particular to the military intelligence service of the State Intelligence Department.

The sales of the Emerald apartments to Russian citizens were carried out in Latvia against cash payment, – claim Russian owners in their complaint to the Bulgarian law-enforcement authorities. However, in the ownership document, the real price was not shown, just a half of it, and so Bozarov and Co have partially avoided taxes and charges in Bulgaria. Arkhangelsky confirmed these practices to the Bivola. But why does he need 30 apartments? “To obtain benefits from seasonal rent and also from the sale when the price goes up”, – explained the entrepreneur. ” It was peanuts at the time; I had a billion after all.”

However, today, the ex-billionaire is far from laughing, not only because the crisis made real estate value fall.  The major part of Arkhangelsky’s empire is already in the hands of the Bank St Petersburg , which, as mentioned above, has a court decision to freeze his properties wherever they are. In Bulgaria, the bank has also filed a request to acknowledge the decision of the Russian court, or exequatur, which will make it possible to take over these 30 apartments.

In Bulgaria, the only court having jurisdiction to examine the exequatur  procedure is the Sofia City Court. There, Arkhangelsky case was attributed to the Judge Bojana Zheliazkova, who is famous due to her ridiculous order for Manol Velev to  be brought to the court room to provide witness evidence, while he was wounded and in a coma, in the case about custody initiated by his wife Vesela Lecheva. The case lasted for years, until in 2009, the Supreme Judicial Council initiated a disciplinary procedure for Zheliazkova.  Besides the Manol Velev case, the investigation revealed serious breaches in the work of the judge in other cases. Her principal faults are unexplained excessively long delays in various cases; and, in addition, she was the only judge to receive cases of property seizure, though they should be distributed randomly”,- wrote the “Praven Sviat” magazine.

In the case of the Bank St Petersburg, however, she was surprisingly swift to decide, in two months only, to satisfy the claim for exequatur.

In contrast to the French court, the Bulgarian court did not pay any attention to the expert report that confirms that Arkhangelsky’s signature is counterfeited. The judge Zheliazkova did not seem to be impressed by the fact that, the same day when the forged document was signed, Arkhangelsky was in Bulgaria, and he proves this by the border control stamps in his international passport.

Formal grounds for such a decision may be found in the law, and they provide certain legitimacy to it. In the exequatur proceedings, one does not have to examine the merits of the Russian, ex-Soviet, judgement. According to the Bulgarian court, it is enough that the foreign court is competent and that the defendant has been served with a copy of the claim and has been properly summoned. In this case, the requirement of our national law according to which the exequatur shall not contradict the Bulgarian public order, does not matter.  “Because of formalities, basic legal principles that guarantee a fair trial and respect for the human rights can be ignored,” – commented for the Bivola Arkhangelsky’s Bulgarian lawyers.

“Chicken is not a Bird”* – The European border does not exist for the Bulgarian court

The difference between the French and the Bulgarian courts in their approach to the Arkhangelsky case is also a political problem, according to Bukovsky. The exequatur procedure can be a dangerous instrument in the hands of the Russian authorities that control the “criminalized judicial system”. Via this mechanism, persecution against unwanted people spreads to the EU territory.  This is exactly what was noticed and taken into account by the French court. The Bulgarian court, however, acted with their eyes closed, as a Trojan horse for Russia in the EU, at least in the first instance.

The result of the differences between the European and the Bulgarian legal practices is most clearly seen in the statistics of verdicts against Bulgaria in Strasbourg.  It has a clear monetary equivalent: the compensations paid by the State to people who win cases in the European Court of Human Rights. And if, after all, the Russian bank wins the case in Bulgaria, and Arkhangelsky and his lawyers win the trial in France, it is quite probable that, one day, Bulgarian tax payer will have to pay a compensation for 30 apartments in Emerald complex, where he will never live. It will be the price to pay for Bulgaria becoming EU’s 27th member with a justice system inherited from the never-implemented 16th Soviet Union Republic, since the claims of the Bank against Arkhangelsky are based on the Agreement for legal co-operation between the People’s Republic of Bulgaria and the USSR dated 1975.

* Communist era russian joke, saying “Chicken is not a bird, Bulgaria is not abroad” underlines the close relations between the Bulgarian communist government and the USSR

***

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