The High Court has set a trial date of July 5 for a case involving two Virgin Islands-registered companies that are attempting to block their records from being transferred to the Investigative Committee of the Russian Federation — the country’s main investigative authority — on the grounds that the companies are connected to a chemical firm that’s the target of alleged “corporate raiding” by a Russian oligarch.
The case stems from a search warrant Magistrate Ayanna Baptiste-DaBreo granted in January 2016 for the VI Financial Investigation Agency to obtain all records for the companies Magnum Investment Trading Corporation and Niteroi Limited, and to transfer them to the ICRF.
The search warrant was granted because Russian authorities claimed that the records could contain information about the activities of three individuals under investigation for allegedly stealing $3 billion from the Russian chemical company TogliattiAzot between January 2008 and December 2011, court documents state.
The three individuals under investigation allegedly transferred TogliattiAzot shares to Magnum and Niteroi in December 2012, which makes the records of those companies “very important to the case,” Russian authorities claim.
However, the lawsuit filed on behalf of Magnum and Niteroi strongly denies any connection to criminal activity, making its own allegations that corrupt Russian officials have targeted TogliattiAzot with bogus legal proceedings in other courts around the world for years, all in an attempted hostile takeover of the company.
As such, the lawsuit seeks a court order prohibiting the VI government from transferring the companies’ records to Russia, as well as an order to have the records — which the FIA obtained when it executed the search warrant in January 2016 — returned.
According to Magnum and Niteroi, TogliattiAzot has since 2005 been the target of “corporate raids,” which entail a raider obtaining a minority shareholding in the victim company and using abusive legal proceedings to devalue the company and put pressure on its shareholders and officers in order to obtain their shares.
Most recently, TogliattiAzot has been targeted by minority shareholder Dmitry Mazepin, who has ties to the Kremlin and owns a rival company, the United Chemical Company UralChem, the companies state in their claim.
The lawsuit doesn’t specifically allege that Russian authorities are seeking records on Magnum and Niteroi for nefarious purposes. Nevertheless, it does argue that the search warrant granted against the companies was not issued in accordance with VI law.
Attorney General Baba Aziz, who received the records request from the ICRF and ordered the FIA to obtain a warrant, was obligated to investigate whether Russia’s allegations against the VI companies had merit, but he did not do so, according to the companies’ lawsuit.
“The AG was clearly required, as a matter of fairness and in the proper exercise of his discretionary powers, to undertake his own investigations prior to directing that a warrant be sought, and erred in law for failing to do so,” the claim states. “That is all the more important in a case where the request originates from a country such as Russia, which has a known track record of disregard for the rule of law.”
Likewise, the claim argues that Ms. Baptiste-DaBreo was obligated to establish reasonable grounds that the two companies were connected to criminal activity before issuing the warrant, but she did not do so.
The attorney also argued that Magnum and Niteroi complied in November 2015 with an FIA request for the same records that were the subject of the search warrant, which he said further calls into question Mr. Aziz’s decision to order the FIA to request a warrant, as well as Ms. Baptiste-DaBreo’s decision to grant the warrant.
The claim form does not specify whether the FIA transferred those records to Russia when it received them from the companies in November 2015, but the companies’ VI attorney, Paul Dennis QC, told the Beacon last September that there was an injunction in place preventing those documents from being delivered pending the outcome of the case.