| LONDON, July 6
LONDON, July 6 A battle over a $1 billion stake
in RUSAL, the world's top aluminium producer, comes to London
next week, as two billionaire magnates go head-to-head in one of
the largest ever commercial disputes to be fought in a British
The trial begins in the High Court on Monday, offering a
window into the chaotic, sometimes lawless and frequently
violent privatisation and consolidation of Russia's aluminium
sector after the collapse of the Soviet Union, a period known as
the "aluminium wars".
The case has been brought by businessman Michael Cherney,
who first filed the claim in 2006, against Oleg Deripaska,
RUSAL's chief executive and its largest shareholder.
Cherney alleges he and Deripaska were business partners,
after he met a young Deripaska in the early 1990s, spotted his
acumen and later entrusted him with business interests.
He alleges Deripaska owes him 13.2 percent of the now-listed
RUSAL, arguing the two signed a document and made a
verbal agreement when they met in a London hotel in 2001.
Deripaska denies a partnership with Cherney.
Cherney will give evidence in this months-long trial via
video-link from his home in Israel, because of an outstanding
arrest warrant relating to a money-laundering investigation in
Spain, where he is wanted for questioning. Deripaska has been
questioned as part of the same probe.
Deripaska, who hit British headlines in 2008 for
entertaining Lord Mandelson and George Osborne - then EU trade
commissioner and shadow finance minister - on his 70 million
pound ($109 million) yacht, will seek to prove he was a victim
of a protection racket, known in Russian as a "krysha", or roof.
The Russian magnate does not dispute making a $250 million
payment to Cherney at the Lanesborough Hotel in London 11 years
ago. But he alleges he was paying Cherney off to end a complex
krysha arrangement which also included Anton Malevsky, a veteran
of the Soviet war in Afghanistan who has been named in court
papers as the head of a criminal network.
Cherney was born in Ukraine and grew up in Uzbekistan,
according to court documents. The businessman, who delegated
day-to-day management of his interests to trusted partners after
he emigrated to Israel in 1994, denies links with organised
crime. Malevsky died in a parachuting accident in 2001.
The case harks back to Deripaska's early days as a general
manager of the Sayansk Aluminium Plant in Siberia, an asset that
became a starting block for his aluminium empire. Cherney said
he helped Deripaska obtain the position and provided financing
for investment in the plant, something which Deripaska denies.
BATTLES IN LONDONGRAD
The trial is the latest in a spate of high-profile disputes
brought by billionaires from Russia and the former Soviet
republics, fighting over agreements and often informal deals
struck in the murky period of 1990s privatisations - cases which
are creating a batch of millionaires among British lawyers.
However, disputes such as the $6.5 billion battle between
exiled Russian oligarch Boris Berezovsky and Chelsea football
club owner Roman Abramovich and the $5 billion fraud dispute
between Kazakh banker Mukhtar Ablyazov and his former bank BTA,
are also often labyrinthine and long-running.
The court case of Cherney against Deripaska will begin with
opening statements next week, but will then be adjourned until
September to allow the judge time to read through piles of
documentation accumulated since the claim was filed in 2006.
At the time of a ruling in 2008, which allowed the case to
proceed out of jurisdiction, evidence was estimated at 16 lever
arch files requiring more than two days of reading.
It could last well into 2013 and more than 70 witnesses are
due to be called, as well as expert witnesses. Some may well be
heard behind closed doors for their own safety.
The case will be closely watched in Russia, as it will prove
a rare opportunity to re-examine the turbulent first wave of
"It is ironic that is takes a multi-million dollar English
court case for the kind of legitimate questions the Russian
people have about the asset-stripping of their industries to be
raise and aired in public," said Hugh Barnes, a consultant and
specialist on Russia.
Damages and any sum being sought by Cherney are not being
determined in the current case, but will be the subject of a
separate case should the judge decide for Cherney.
RUSAL's listing prospectus, published ahead of its 2010
market debut, said the company was not a party to the dispute,
but listed the case among potential risks, given possible
implications for Deripaska's stake in the producer.
RUSAL's shares have fallen almost 70 percent since touching
a high in April last year, hit by the tumbling aluminium price
and debt worries among other factors - dramatically reducing the
value of the disputed stake to about $1.2 billion.