Russian oligarch has until October to file defence in ‘corporate raiding’ case

A Russian oligarch and his company have until October to file their defence to a legal action here over an alleged €2 billion “corporate raiding” scheme to take over a Russian fertiliser giant.

Mr Justice Denis McDonald heard on Monday that Dmitry Mazepin may bring an application to require those suing him and his company to provide security for the substantial legal costs of the proceedings, initiated in the Commercial Court six years ago.

A billionaire businessman and former member of Russian president Vladimir Putin’s ruling party, Mr Mazepin is among those who have been made subject to European Union sanctions, including asset freezes, because of Russia’s war on Ukraine.

The core claim in the Irish proceedings, yet to go to a full hearing, is that Mr Mazepin, his United Chemical Company Uralchem (UCCU) and a number of other defendants are the central figures behind a “corporate raiding” campaign dating back some 15 years, which involved alleged intimidation, fraud and corruption aimed at getting control of fertiliser giant TogliattiAzot (ToAZ) from its majority shareholders.

Much of the ammonia produced by ToAZ is used as fertiliser to grow food in five continents and the company has been described as of strategic economic importance to Russia. If Mr Mazepin takes control of ToAZ, with an estimated value of €3 billion, he will be one of Russia’s largest players in the fertiliser industry.

He, UCCU and several parties are being sued by four Caribbean-registered companies that claim they were defrauded of their 70 per cent interest in ToAZ. The claims are denied.

The case is being heard here because one of the defendants, Eurotoaz Ltd, has registered offices in Dublin.

‘Raider attacks’

The plaintiffs – Trafalgar Developments, Instantania Holdings, Kamara and Bairiki Inc – claim they were subjected to part of an internationally recognised phenomenon known as “raider attacks”, involving a so-called raider acquiring a minority shareholding in a target company before taking allegedly illegal steps to ultimately wrest control of it.

The proceedings returned before Mr Justice McDonald on Monday following the recent delivery of a judgment by his colleague Mr Justice David Barniville rejecting a challenge to the jurisdiction of the Irish courts to deal with the case against the Mazepin/UCCU defendants. That judgment is being appealed by those defendants.

In the interim, the judge was told by Eoin McCullough SC, for the plaintiffs, there was agreement to the making of directions for an exchange of legal documents between his side and the UCCU/Mazepin defendants. Declan McGrath SC, for those defendants, confirmed that agreement as set out in a letter from William Fry, solicitors for his clients.

Directions

On that basis, the judge made directions including that the Mazepin/UCC defendants file their defence by October 3rd. He also directed any security for costs motion by those defendants should be issued by October 17th, returnable for October 24th.

The latest phase in the alleged corporate raiding scheme involved the shares of the plaintiffs being put up for sale in auctions in February in which, it is claimed, only proxies for Mr Mazepin were allowed to participate. Arising from those auctions, the plaintiffs’ claim is likely to now proceed as one for some €2 billion damages.

Prior to the auctions, UCCU had given an undertaking not to enforce a €1.2 billion judgment obtained by it in July 2019 from a Russian court against the plaintiffs and others, against the plaintiffs or their shares. The undertaking was to apply pending a judgment from the Irish court and the plaintiffs have initiated contempt proceedings against Mr Mazepin and UCCU over alleged breach of that undertaking.

The court was told last March that William Fry, for the UCCU/Mazepin side, and Arthur Cox, solicitors for Eurotoaz, may seek to stop representing their respective clients. That matter is expected to return before the court later this month.