The Power of Money: How Autocrats Use London to Strike Foes Worldwide

English court­rooms have become a bat­tle­ground — and a source of pow­er­ful weapons — in fierce dis­putes between the tycoons and the politi­cians of the post-Soviet world

The Royal Courts of Justice in London. The bru­tal pol­i­tics of author­i­tar­i­an coun­tries like Russia and Kazakhstan have spilled into England’s legal system.Ben Stansall/Agence France-Presse — Getty Images

LONDON — Olena Tyshchenko, a lawyer based in Britain, was fac­ing years in a crowd­ed Russian prison cell, when a chance at free­dom came via an unex­pect­ed source.

An English lawyer named Chris Hardman, a part­ner at Hogan Lovells, one of the biggest law firms in the world, flew into Moscow while his firm helped draft a tan­ta­liz­ing offer: Ms. Tyshchenko could be freed if she pro­vid­ed infor­ma­tion that could be used to help his client in a sprawl­ing web of lit­i­ga­tion in London.

The twist is that Ms. Tyshchenko was one of the lawyers on the oth­er side. To win her free­dom, she would have to turn on her client. It was a ruth­less exchange. But the Moscow prison had been ruth­less, too, and she reluc­tant­ly agreed. In a lat­er inter­view, she said what seemed “most abnor­mal” was that lawyers oppos­ing her in a tri­al in London could play a role in her fate in Russia.

They are extreme­ly aggres­sive,” she added.

A Moscow prison. A London court­room. One is part of a Russian legal sys­tem wide­ly con­sid­ered cor­rupt and sub­or­di­nate to the Kremlin. The oth­er is a sym­bol of an English legal sys­tem respect­ed around the world. Yet after Mr. Hardman returned to London, an English judge would accept into the case the evi­dence obtained from the Moscow prison.

The episode is a vivid illus­tra­tion of how the bru­tal pol­i­tics of author­i­tar­i­an coun­tries like Russia and Kazakhstan have spilled into England’s legal sys­tem, with lawyers and pri­vate inves­ti­ga­tors in London rak­ing in huge fees and engag­ing in ques­tion­able tac­tics in the ser­vice of auto­crat­ic for­eign governments.

An inves­ti­ga­tion by The New York Times and the Bureau of Investigative Journalism — involv­ing a review of hun­dreds of pages of case doc­u­ments, leaked records and more than 80 inter­views with insid­ers, experts and wit­ness­es — reveals how London’s courts are being used by auto­crats to wage legal war­fare against peo­ple who have fled their coun­tries after falling out of favor over pol­i­tics or money.

The lawyer Olena Tyshchenko, cen­ter, in 2014.Mikhail Markiv/UNIAN

Four out of the past six years, lit­i­gants from Russia and Kazakhstan have been involved in more civ­il cas­es in England than have any oth­er for­eign­ers. Authoritarian gov­ern­ments, or relat­ed state enti­ties, are often pit­ted against wealthy tycoons who have fall­en from favor and fled. Neither side elic­its much pity — but both pay gen­er­ous legal fees.

Filing lit­i­ga­tion in London can bring legit­i­ma­cy for claims by auto­crat­ic gov­ern­ments, whose own legal sys­tems are so taint­ed that their deci­sions car­ry lit­tle weight out­side their bor­ders. England also offers advan­tages: Judges have broad lat­i­tude to exam­ine evi­dence, even if it is pro­duced by cor­rupt secu­ri­ty ser­vices or com­pro­mised for­eign legal sys­tems. London’s own pri­vate intel­li­gence firms are unreg­u­lat­ed, large­ly unre­strained and some­times will­ing to use bor­der­line meth­ods for deep-pock­et­ed clients.

In one exam­ple, our inves­ti­ga­tion found that pri­vate detec­tives work­ing on a case with Mr. Hardman’s firm, Hogan Lovells, trav­eled to France to try to pay a poten­tial wit­ness to tes­ti­fy against an ene­my of President Vladimir V. Putin of Russia.

But per­haps the biggest advan­tage is how lawyers like Mr. Hardman enabled their clients to pur­sue their foes by win­ning what one judge called a legal “nuclear weapon” — court orders freez­ing a defendant’s assets world­wide. These orders are sim­i­lar to the ones the U.S. gov­ern­ment uses against ter­ror­ists or arms deal­ers, except they emerge from civ­il proceedings.

Much of this is ini­tial­ly secret, with orders in many cas­es issued before the tar­get is aware or has been found liable in a tri­al. Even lawyers spe­cial­iz­ing in the freez­ing orders are uncer­tain how many are issued. But the fact that London lawyers, judges and pri­vate inves­ti­ga­tors are now deeply immersed in the sav­age polit­i­cal bat­tles of the post-Soviet world is elic­it­ing concern.

We’re being asked in the U.K. to adju­di­cate on polit­i­cal dynam­ics that English courts don’t ful­ly under­stand,” said Tom Mayne, a researcher at Exeter University, who focus­es on how English courts han­dle cor­rup­tion cas­es relat­ed to the for­mer Soviet Union. “It seems like an abuse of English law courts, because we’re basi­cal­ly rein­forc­ing the sta­tus quo of the regimes in these klep­to­crat­ic countries.”

Lawmakers in Britain are increas­ing­ly express­ing alarm over Russian influ­ence, warn­ing in a par­lia­men­tary report last year that a grow­ing indus­try of London pro­fes­sion­als, includ­ing lawyers and pri­vate inves­ti­ga­tors, has emerged “to ser­vice the needs” of the Russian elite.

As the Russia Report laid bare, an indus­try of enablers has grown up in our cap­i­tal city to pro­tect and sus­tain the inter­ests of cor­rupt elites,” said Lisa Nandy, who leads on for­eign affairs for the oppo­si­tion Labour Party. “The court sys­tem has now become the lat­est bat­tle­ground as they seek to use the insti­tu­tions of an open soci­ety to defend ill-got­ten gains.”

Mr. Hardman and his pro­tégés at Hogan Lovells have been indus­try lead­ers in rep­re­sent­ing pow­er­ful clients from the for­mer Soviet Union, rou­tine­ly work­ing with Diligence, a London pri­vate intel­li­gence firm with a rep­u­ta­tion for aggres­sive sur­veil­lance. The firms are teamed up on behalf of Russia’s Deposit Insurance Agency in pur­suit of Sergei Pugachev, a one­time con­fi­dant of Mr. Putin now accused by the state of steal­ing more than $1 bil­lion from a Russian bank, which he denies.

Another exam­ple is a bit­ter and sen­sa­tion­al legal bat­tle that orig­i­nat­ed in the bru­tal, auto­crat­ic pol­i­tics of Kazakhstan and involves a state-owned bank, a fugi­tive tycoon and alle­ga­tions of stolen bil­lions. The much-pub­li­cized dis­pute began 12 years ago in London, involves numer­ous lawyers on both sides and is focused on Mukhtar Ablyazov, a for­mer insid­er in Kazakhstan’s klep­to­crat­ic elites who said he was sin­gled out for pros­e­cu­tion after he fell out of favor for polit­i­cal reasons.

Ms. Tyshchenko was a lawyer for a com­pa­ny relat­ed to Mr. Ablyazov. She had gone to Moscow in August 2013 but was grabbed from her lux­u­ry hotel near the Kremlin, tossed in prison and accused of help­ing Mr. Ablyazov hide assets. Russian author­i­ties blessed the deal with Mr. Hardman’s client that set her free. She denied any wrong­do­ing, but the affi­davit that she lat­er pro­vid­ed to Mr. Hardman became evi­dence in a case that saw an English judge issue a freez­ing order against Mr. Ablyazov’s son-in-law.

In a state­ment, Hogan Lovells denied all alle­ga­tions of act­ing inap­pro­pri­ate­ly, adding that Mr. Ablyazov and Mr. Pugachev had “com­mit­ted some of the largest frauds that the world has ever seen,” and that “giv­en its well jus­ti­fied rep­u­ta­tion for fair and open jus­tice, it should be no sur­prise that such claims are test­ed in London where the result can be trust­ed around the world.”

An Unusual Menu

To under­stand the lengths to which Diligence, the pri­vate intel­li­gence firm, has gone to pro­duce evi­dence in these cas­es, con­sid­er the exam­ple of Natalia Y. Dozortseva, a Russian lawyer.

Sitting in a hotel in Nice, France, in 2017, Ms. Dozortseva was joined at the bar by Trefor T. Williams, the head of Diligence in London. Speaking over the tin­kling of a piano, Mr. Williams mixed flat­tery with offers of mon­ey if she would turn on her client, Mr. Pugachev, the for­mer Putin con­fi­dant who was resid­ing in France to avoid a prison sen­tence for breach­ing a 2014 freez­ing order issued in London.

Mr. Williams described a menu of options: gold, sil­ver or bronze. Each band, he said, rep­re­sent­ed a lev­el of coop­er­a­tion, and compensation.

Telling him every­thing she knew about her client would earn bronze. Silver would require a sworn state­ment. Gold would entail her tes­ti­fy­ing in court against her client.

I always want to get gold,” Mr. Williams said. He said Ms. Dozortseva’s knowl­edge could help end what he described as a legal “stale­mate” and promised her “finan­cial inde­pen­dence” and, through his con­tacts in Moscow, the pos­si­bil­i­ty of trav­el­ing freely to and from Russia.

For that,” Mr. Williams said, “we want some­thing, we want some sort of cooperation.”

In the com­pet­i­tive world of pri­vate intel­li­gence, Diligence has built a rep­u­ta­tion for decep­tive tac­tics and intru­sive sur­veil­lance that gets results, while often work­ing on cas­es, such as this one, for Hogan Lovells.

Unlike many European coun­tries — and U.S. states — Britain has no statu­to­ry reg­u­la­tion of pri­vate inves­ti­ga­tors, even after the 2011 tabloid phone-hack­ing affair, arguably the most infa­mous pri­vate inves­ti­ga­tion scan­dal in mod­ern his­to­ry. Investigators are bound by pri­va­cy and oth­er laws and legal pro­ce­dures in local juris­dic­tions, but even those are some­times loos­er in civ­il cas­es brought by pri­vate parties.

The Times and the Bureau of Investigative Journalism learned about Diligence’s approach to Ms. Dozortseva after lis­ten­ing to a secret record­ing of her con­ver­sa­tion with Mr. Williams. In the end, she nev­er betrayed Mr. Pugachev, but instead told him in advance of the meet­ing, and record­ed it.

Sergei Pugachev, a one­time con­fi­dant of President Vladimir V.  Putin of Russia, is now accused by the state of steal­ing more than $1 bil­lion from a Russian bank, which he denies.Adam Ferguson for The New York Times

Lawyers for Diligence admit­ted that Mr. Williams had attend­ed an “explorato­ry” meet­ing with Ms. Dozortseva but not­ed that “it is not ille­gal to offer pay­ments to wit­ness­es” and said no agree­ment on pay­ment was reached.

The offer to Ms. Dozortseva would run afoul of England’s strict rules gov­ern­ing pub­lic pros­e­cu­tions, but noth­ing would explic­it­ly ban it in pri­vate-par­ty civ­il pro­ceed­ings. In France, offer­ing to pay wit­ness­es is ille­gal only if the intent is to induce false tes­ti­mo­ny. Some legal experts believe, how­ev­er, that a sub­stan­tial pay­ment could be evi­dence of such intent, a point Diligence strong­ly rejected.

Lawyers have been able to ben­e­fit from these gaps in the law to obtain evi­dence and tac­ti­cal advan­tages while dis­tanc­ing them­selves from the tech­niques of firms like Diligence. It would, for exam­ple, be against indus­try reg­u­la­tions for a lawyer to pay any wit­ness except for “spe­cif­ic and rea­son­able” expens­es, such as trav­el or accommodation.

Hogan Lovells refused to answer ques­tions about its rela­tion­ship with Diligence or its knowl­edge of the firm’s tac­tics, includ­ing the offer to Ms. Dozortseva. The law firm not­ed that its use of “enquiry agents” had not been crit­i­cized by the English courts and said it would always “expect such firms to ensure that they oper­ate with­in the law.”

Established in 2000, Diligence took its cor­po­rate DNA from Nick Day, its found­ing chief exec­u­tive, who, accord­ing to for­mer col­leagues, rev­eled in the thrill of under­cov­er oper­a­tions. A big break­through came in 2005, while the firm was assist­ing a Russian con­glom­er­ate in a mul­ti­mil­lion-dol­lar com­mer­cial dis­pute in the British Virgin Islands.

Mr. Day was accused of bam­boo­zling an accoun­tant with KPMG into hand­ing over some con­fi­den­tial doc­u­ments. He imper­son­at­ed a British intel­li­gence offi­cer while an American work­ing for the com­pa­ny pre­tend­ed to be from the C.I.A., claim­ing to be “Liz from Langley.”

When KPMG was tipped off about the decep­tion, Diligence paid $1.7 mil­lion to the account­ing firm to set­tle a fraud claim, Bloomberg reported.

Mr. Hardman worked on the case along­side Diligence at the time and has since con­tin­ued to put work the firm’s way. Hogan Lovells paid Diligence near­ly $2.3 mil­lion for work car­ried out in 2012 alone, doc­u­ments show, around half of the London head­quar­ters’ total income for the year.

In a state­ment, Mr. Day said that both he and Diligence’s Swiss spin­off, which he now runs, denied “all alle­ga­tions of wrong­do­ing.” Mr. Day — who did not deny imper­son­at­ing an intel­li­gence offi­cer to obtain doc­u­ments — stat­ed that the com­pa­ny had strin­gent pro­to­cols to “ensure that its tech­niques are law­ful, nec­es­sary and pro­por­tion­ate.” It uses “cre­ative and cut­ting edge inves­tiga­tive tech­niques” to obtain infor­ma­tion that is “admis­si­ble in court and meets all applic­a­ble rules of evi­dence,” he added.

For the Pugachev case, Diligence’s approach to Ms. Dozortseva was arranged by Mr. Pugachev’s but­ler and dri­ver, a keen ama­teur pianist and an admir­er of Russia and its culture.

In return for spy­ing on Mr. Pugachev and copy­ing some doc­u­ments, the but­ler, Jim Perrichon, said in an inter­view that Diligence had promised him a month­ly retain­er. Mr. Perrichon said he deliv­ered on the bar­gain by set­ting up the hotel meet­ing with Ms. Dozortseva. “I real­ized that if we could recruit Natalia we could crush Pugachev,” Mr. Perrichon recalled.

But Mr. Perrichon, while still a believ­er in Russia, said he now no longer trust­ed Diligence, which he said failed to ful­ly pay him. In a March 2020 email, the firm also offered him a one-off “36k” set­tle­ment and promised to increase its pay­ments if he pre­pared a report on what he knew about Mr. Pugachev and stat­ed his will­ing­ness to tes­ti­fy in court. He reject­ed the deal.

Diligence admit­ted to pay­ing Mr. Perrichon for infor­ma­tion on Mr. Pugachev but said it did not recruit him as an infor­mant. The com­pa­ny said it was Mr. Williams who sought to end the rela­tion­ship, after Mr. Perrichon did not deliv­er the promised intel­li­gence. It denied owing him money.

A Legal Weapon

Like a mil­i­tary drone, a glob­al freez­ing order can strike its tar­get with­out warning.

Mr. Pugachev, for exam­ple, learned that his assets had been frozen only when a Diligence agent and a Hogan Lovells lawyer tried to hand him the order on a London street. After Mr. Pugachev refused to take the papers, the lawyer dropped them at his house.

England intro­duced the freez­ing orders in 1981, and by 1998 a judge had ruled that they had glob­al reach. The tim­ing was pro­pi­tious. Money and busi­ness­men from Russia and oth­er post-Soviet states had poured into London, sup­pos­ed­ly a safe haven.

Mr. Ablyazov fled Kazakhstan in 2009 after the Central Asian state accused him of embez­zling bil­lions from BTA Bank, of which he was chair­man. Mr. Ablyazov denies wrong­do­ing, and main­tains that the gov­ern­ment only pur­sued him because he posed a polit­i­cal threat.

An English judge has declared Mr. Ablyazov untrust­wor­thy, but France’s high­est admin­is­tra­tive court in 2016 over­turned a gov­ern­ment deci­sion to extra­dite him on the grounds that the case against him had a “polit­i­cal motive.”

Mukhtar Ablyazov, cen­ter, on his release from a prison near Paris in 2016. France detained him after a Russian extra­di­tion request, which it lat­er ruled to have been polit­i­cal­ly motivated.Martin Bureau/Agence France-Presse — Getty Images

Mr. Hardman’s legal team won the freez­ing order against Mr. Ablyazov in 2009 and has since filed scores of court appli­ca­tions, win­ning judg­ments that have grad­u­al­ly widened the order’s scope and expand­ed the list of defen­dants to asso­ciates and mem­bers of his family.

The civ­il rul­ings ulti­mate­ly turned into a 22-month prison sen­tence in 2012 for con­tempt of court for Mr. Ablyazov, after he was found to have breached an order to dis­close assets. He fled to France, which even­tu­al­ly grant­ed him refugee status.

Since then, English freez­ing orders, backed by inter­na­tion­al respect for England’s courts and London’s cen­tral­i­ty as a finan­cial hub, have become unpar­al­leled in pow­er and reach, experts say. The orders can be applied to an indi­vid­ual tar­get with even a loose link to Britain, and courts have ruled they can also apply to con­nect­ed com­pa­nies, trusts and asso­ciates any­where in the world.

A world­wide freez­ing order is an incred­i­bly dra­con­ian mea­sure,” said Lloydette Bai-Marrow, a for­mer senior pros­e­cu­tor for Britain’s Serious Fraud Office who now runs a white-col­lar inves­ti­ga­tions con­sul­tan­cy. “There is a trend toward them being used poten­tial­ly in a very harm­ful way and weaponized against indi­vid­u­als, and that should be a cause for con­cern for all of us.

We can’t allow our­selves to be used as a pawn in a big­ger game.”

Hogan Lovells said English law places a “very heavy bur­den” on any par­ty apply­ing for a freez­ing order to do so fair­ly. The law firm added that the defen­dant had the right to apply imme­di­ate­ly on being served to have an order lift­ed if the injunc­tion has been obtained using “improp­er or false” evi­dence, and not­ed that the lit­i­gant must put for­ward any argu­ments to the judge that the defen­dant might make if they were present.

Many English lawyers and judges main­tain that freez­ing orders are essen­tial to restrict fraud­sters, and defend the open­ness of their courts to law­suits and evi­dence orig­i­nat­ing in coun­tries with com­pro­mised legal sys­tems. Assessing all the evi­dence, they con­tend, regard­less of where it came from or how it got there, bet­ter serves justice.

Admissibility of evi­dence makes U.K. courts more attrac­tive for this kind of lit­i­ga­tion than coun­tries like the U.S.,” said Pavel Tokarev, a for­mer Diligence inves­ti­ga­tor who left in 2019 to start his own agency. “The rules of accept­ing evi­dence, it’s very flex­i­ble in the U.K.”

The jail­house evi­dence from Ms. Tyshchenko is a case in point.

To acquire it, Mr. Hardman worked with Andrei A. Pavlov, a Russian lawyer hired by BTA Bank. The United States and Britain would lat­er place sanc­tions on Mr. Pavlov for his alleged role in a crim­i­nal con­spir­a­cy that led to the 2009 death in a Moscow prison of the whis­tle-blow­er Sergei Magnitsky. Mr. Pavlov, in an inter­view in Moscow, said he had been unfair­ly smeared and had done noth­ing wrong. He said he was proud to have worked with Mr. Hardman because of his London partner’s rep­u­ta­tion as an out­stand­ing lawyer.

Faced with com­plaints that Hogan Lovells had not ful­ly informed the court that Ms. Tyshchenko pro­vid­ed her evi­dence under duress, an English judge ruled they had fol­lowed dis­clo­sure rules by stat­ing that she was incar­cer­at­ed when she first pro­vid­ed the infor­ma­tion. But the judge was not asked to rule on whether the cir­cum­stances of her incar­cer­a­tion — the fact that she was in a Russian prison — should also be con­sid­ered, as well as the involve­ment of Mr. Pavlov and ques­tions about whether Ms. Tyshchenko had been mistreated.

Moreover, while Ms. Tyshchenko remained in prison, anoth­er Hogan Lovells attor­ney con­vinced an English judge to grant an order that required her hus­band in Britain to hand over records and oth­er infor­ma­tion. Among the sup­port­ing evi­dence the law firm sub­mit­ted were “press reports” from compromat.ru, a Russian web­site noto­ri­ous as a clear­ing house for unver­i­fied and some­times fab­ri­cat­ed information.

Hogan Lovells said that London’s High Court had already reject­ed com­plaints of the firm “behav­ing improp­er­ly” in Ms. Tyshchenko’s case, and stat­ed that it “com­plies ful­ly” with the rules of evi­dence. The infor­ma­tion from compromat.ru was “one small part of a much larg­er col­lec­tion of evi­dence that the court accept­ed jus­ti­fied the grant­i­ng of the order” in the case against Ms. Tyshchenko, the firm said.

Ms. Tyshchenko was less san­guine. “There are no good guys in this affair,” she said.

A Case That Never Ends

If some of London’s law firms have reaped rich rewards by defend­ing oli­garchs and for­mer Soviet coun­tries, they have some­times been less suc­cess­ful at recov­er­ing funds for those clients. As of November 2020, BTA Bank had recov­ered just $45 mil­lion of the more than $6 bil­lion it claims Mr. Ablyazov stole, its chair­man said in a recent affidavit.

An inter­nal report pre­pared by the bank in 2014 said that 89 per­cent of the $470 mil­lion it had spent world­wide on lawyers and oth­er “con­sul­tants” was dis­bursed in London.

Legal bat­tles root­ed in for­mer Soviet states are often “pret­ty lucra­tive just con­sid­er­ing the rates of U.K. lawyers or inves­tiga­tive firms,” said Mr. Tokarev, the for­mer Diligence inves­ti­ga­tor. “The U.K. is a prag­mat­ic coun­try and gov­ern­ment, and they don’t have any inter­est in chas­ing any mon­ey out of the country.”

Hogan Lovells’ office in London.Jane Stockdale for The New York Times

Indeed. The BTA case, for one, shows no sign of slow­ing down.

In November, for exam­ple, a London judge reviewed a request by the state-owned bank to freeze the assets of a Kazakh bil­lion­aire, Bulat Utemuratov, whom a British lawyer work­ing for BTA Bank alleged in court was Mr. Ablyazov’s “mon­ey-laun­der­er in chief.” The judge, pre­sent­ed with evi­dence part­ly gen­er­at­ed by Kazakhstan’s secu­ri­ty appa­ra­tus, issued the freez­ing order.

The fol­low­ing month, how­ev­er, anoth­er London judge abrupt­ly lift­ed the order after the bank reached a con­fi­den­tial set­tle­ment and dropped its case against Mr. Utemuratov, who denied the alle­ga­tions. The law firm that intro­duced the evi­dence to an English court, Greenberg Traurig, declined to comment.

It was anoth­er reminder that the polit­i­cal fights of Kazakhstan, and oth­er auto­crat­ic states, often end up in London.

Andrew Higgins is the bureau chief for East and Central Europe based in Warsaw. Previously a cor­re­spon­dent and bureau chief in Moscow for The Times, he was on the team award­ed the 2017 Pulitzer Prize in International Reporting, and led a team that won the same prize in 1999 while he was Moscow bureau chief for The Wall Street Journal. 

Jane Bradley is the U.K. Investigative Correspondent for The New York Times. She is based in London, where she focus­es on uncov­er­ing abus­es of pow­er, finan­cial crime and cor­rup­tion, and social injus­tices. @jane__bradley

MyTimes.Com By Andrew HigginsJane Bradley, Isobel Koshiw and Franz Wild

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