Rosserlane Consultants Ltd & Anor v Credit Suisse International

On 13 December 2006 Dr Leshkasheli and CEG had retained Credit Suisse Securities (Europe) Ltd (“CSS”) as an adviser in respect of the disposal of all or part of the assets or stock of CEG. Between January and May 2007 CSS identified some 45 companies to whom teasers were sent and 39 companies were approached. The process laid down contemplated indicative offers to be followed by firm offers: see [34] below. In the first phase, only 4 of those approached – (a) ONGC/OVL/OMEL; (b) Petrovietnam; (c) PCG Turicum; and (d) PKN Orlen made indicative offers. Only ONGC made a firm offer which was for $ 300 m (with a further $ 50 m on recovery of the upfront investment). The first two sought a site visit after they had made an indicative offer. PCG Turicum asked for a site visit before they made an indicative offer. No site visit was afforded to any of the three. In the event the ONGC bid, which was conditional on SOCAR’s consent, was not pursued and no offers acceptable to the Appellants materialised.

By a letter dated 14 August 2007 the bank notified CEG that it was taking over the coordination of the sale process. Thereafter, as the judge held, rejecting evidence to the contrary, it was the bank which was “in reality in control of the sales process” [172] and CSS was reporting to the bank in priority to CEG [179]. The Fixed Interest Division (“FID”) of the bank was the final determiner of who was approached and what terms were agreed and accepted [183].

The second M & A Process, with the bank in control, lasted until February 2008. Meanwhile the loan to CEG fell due on 14 December 2007. By that date no one had made a final bid for CEG. By an agreement of that date an extension of the time for repayment of the loan to 15 February 2008 was agreed in return for a further fee of $ 10 million and an increase in the 27% figure for the equity uplift to 33%.

During this period 89 potential bidders were contacted. Of these four made firm offers for between $ 230 m and $ 324 m. The $ 324 m was offered by Petrovietnam but was subject to the condition that SOCAR consented. Only 2 of the bidders – Berghoff and BSG - were prepared to pay on the basis of a forced sale (where no warranties would be available).

In the end, as I have said, CEG was sold to Berghoff for $ 245 m, the highest price on the basis of a forced sale.

The bank identified Gazprom Neft as a potential bidder as early as 14 August 2007 [194]. In September 2007, the bank’s internal documentation identified Gazprom Neft as “not interested” in the first M & A process. But the bank conceded that Gazprom Neft was not contacted [204] and the judge concluded that it did not contact any potential Russian bidders [205]. He held that, if the bank had approached them in September 2007, there was a very good prospect that Gazprom Neft might have purchased CEG within the time limit [206] – [214]. This failure to contact Gazprom Neft and seek to procure a sale would have been a breach of the duty if owed.

Accordingly, on the assumption that the duty existed, the question was what would have happened if Gazprom Neft had been approached, as they should have been, in September 2007 as part of the second process.

The judge recorded that Dr Leshkasheli’s evidence was that there was a policy of not allowing site visits until a bidder made its final offer and that offer was acceptable [218]. The reason for this was that Dr Leshkasheli did not want strangers on site so as not to alert SOCAR to the fact that he was trying to sell CEG [219]. The evidence of Mr Matlashov of Gazprom Neft, whom the judge found to be “solid and credible” [213], was that Gazprom Neft would not have made a bid without a site visit [216]. The judge was not persuaded that Dr Leshkasheli would have made an exception in the case of Gazprom Neft. Accordingly as he concluded [236] :

“…there is no evidence to show that Gazprom Neft would have been treated any differently to others namely that they would not have been granted access and would have said “Goodbye”.

For that reason he held that the Appellants had not in fact lost the chance of getting a bid from Gazprom Neft.

In my view these were conclusions to which the judge was entitled to come in the light of the totality of the evidence before him. The constituent parts of that evidence include the following:

In [216] the judge said this:

“ 216 As shall be seen below Dr L adopted a policy of not allowing site visits. Mr Matlashov was therefore cross examined over what would have happened had a site visit been refused [T14/82-83]:-

"Q: Now, would you have expected your

21 technicians to visit the field as part of their due

22 diligence process?

23 A: Definitely, absolutely.

24 Q: If Dr Leshkasheli had indicated that he

25 was not prepared to allow a site visit, so a visit

1 to the field, until Gazprom Neft had provided a firm

2 offer for CEG, what impact, what effect, would that

3 have had on Gazprom Neft?

4 A: I don't know what conditions Leshkasheli

5 should have given. Sorry, I don't know. Then that

6 would be the end of our transaction if he didn't let

7 them go.

8 MR JUSTICE PETER SMITH: I want him to

9 understand, I am not sure by that answer he has

10 necessarily understood that your question was

11 predicated by an assumption of access at

12 a later stage, not --

13 MS DAVIES: Okay. Mr Matlashov, focusing

14 on the position in the due diligence process,

15 if Dr Leshkasheli had said that there could be

16 no visit to the field before Gazprom Neft made

17 a firm offer, a priced offer for CEG, what

18 impact would that have had on Gazprom Neft?

19 A: Then we would have said goodbye to

20 Dr Leshkasheli."

The judge plainly found that Dr Leshkasheli had a policy of not allowing site visits (until after final bid) and accepted that, in the absence of a site visit, Gazprom Neft would have made no firm priced offer, and would have said “goodbye”.

The judge had made a number of unchallenged findings about the relationship between Dr Leshkasheli and SOCAR and its impact on the sale process. SOCAR believed that CEG had not provided sufficient funding to develop Kurovdag [17] [22] [265]. It had been intended that the JVA would be replaced with a Production Sharing Agreement but that never happened and the PSA was formally terminated at the start of the second M & A process in September 2007 [6] [134]. Thereafter the relationship between Dr Leshkasheli and SOCAR deteriorated.

Once SOCAR found out that Dr Leshkasheli was seeking to sell his interest in Kurovdag SOCAR was determined that he should not walk away from the JVA with a large profit [153]. To that end SOCAR allowed another bidder, BSG, to draft a letter from SOCAR dated 5 February 2008 which was designed to sabotage any possible sale other than to BSG [153]. The letter claimed that CEG had committed a number of material breaches of the JVA and required the answer to certain questions “prior to considering our rights of termination”. It was, as the judge described it [257], “clearly designed to frighten off any other bidders as they would see it was possible (to put it mildly) that any purchaser of CEG’s interest would walk into litigation with SOCAR”.

As a result, Dr Leshkasheli believed that there was a SOCAR conspiracy to deprive him of any benefit from the sale [192]. The bank and CSS regarded him as paranoid on the subject but the judge held his view to be justified [193]. This affected Dr Leshkasheli’s approach to the sale process. He had admitted to Mr Ukrasin of CSS in December 2006 that he believed that Russian companies “would conspire with SOCAR to take the ownership of CEG without paying a fair price for it” [156]. As a result, he was in reality reluctant to bring SOCAR into the sale process at all [193] although he accepted that when he had a deal in place provisionally he would have to obtain SOCAR’s agreement [153].

When in [219] the judge said that “it became clear that [Dr Leshkasheli] did not want strangers at the site because that might alert SOCAR” it is plain that what he was referring to was the matters summarised in the previous paragraph.

Dr Leshkasheli’s statement did not deal with what policy he had in relation to granting site access to Gazprom Neft. What he did say was that he did not wish SOCAR to be approached by purchasers until such purchasers had made an acceptable bid and that he preferred any site visits to be deferred until an acceptable bid had been made.

But the evidence showed that CEG/ Dr Leshkasheli did have a policy of not allowing site visits.

The M & A processes involved an approach to potentially interested parties. They were required to sign a confidentiality agreement. If they did, they were given a very short management presentation. They then had to make an indicative offer. If they did that they were invited to the second stage of the process when due diligence was undertaken. They would be given access to a data room. They then had to make a firm consensual offer. In both bid processes, the bid process letter contained no reference to the possibility of site visits.

In respect of the first bid process on 1 March 2007 Mr Joel Steinhart, an adviser to CEG, sent to Miss Pavlova of CSS his mark up of the final bid process letter. He had deleted a sentence that CSS had suggested namely “site visits are optional and are to be arranged by request via Credit Suisse”. In his evidence, Dr Leshkasheli had accepted that he was aware that as part of the due diligence phase of the first process no site visits were being offered (“Yes, I know”).

Statoil had a presence in Azerbaijan. On 3 April 2007, they asked CSS whether their people could have a quick look at the site in Baku to get a quick impression of its status and the facilities. CSS, having consulted with their client, declined the request. Mr Killingland of Statoil emailed HB Global, another broker acting for Dr Leshkasheli, which had introduced Statoil to the process, to say that the response was disappointing and that he had asked whether they would reconsider. Mr Black of HB Global emailed Mr Vugar Akhundov, the Chief Financial Officer of CEG, to say that “without some compelling reason this seems to be an unreasonable position to take. Clearly not providing such access sends a very negative response to a prospective buyer – it is reasonable for them to come to a conclusion that there is something that we do not want them to see”. He invited a prompt change of view. Mr Akhundov replied “We are going to offer site visits only to the final bidder. We discussed the confidentiality issues around this deal with Jacques before. I believe you also have some understanding of these issues”. Dr Leshkasheli confirmed that the confidentiality issue was the concern that information about the sale would become available in Baku. The judge referred to this evidence at [219] of his judgment.

In the second M&A process, carried out under the control of the bank, Mr Akhundov requested that reference to a site visit be removed from the final process letter and Mr Firmin on behalf of the bank agreed [221]. The original draft dated October 2007 (i.e. shortly after it was said that Gazprom Neft should have been contacted by the bank) of an invitation from the bank to submit a final offer (defined as a “final binding offer for the business”) for CEG contained, in a paragraph dealing with due diligence prior to final offer, the following sentence:

“There are no site visits envisaged at this stage of the process. However, on-site due diligence (including site visits) could be potentially available at a later stage of the process”.

That appears to envisage a site visit after the final offer. In an email copied to Mr Firmin of the bank Mr Akhundov said of that sentence “1. Please remove the following paragraph as we cannot offer these site visits” to which Mr Firmin, who was in charge of the process at the bank, replied “Agree with your first point”. As a result, the final bid process letter omitted the sentence. The judge referred to this exchange at [221] in which he found that in both processes site visits were not permitted. Dr Leshkasheli’s evidence was that he was not aware that this was the approach being adopted on behalf of CEG and the Appellants rely on the fact that Mr Akhundov was not the ultimate decision maker. That is no doubt so; but it would be strange if Mr Akhundov had done anything inconsistent with the policy of the beneficial owner of CEG. In any event Dr Leshkasheli had left it to him to liaise with the bank in respect of the terms of the process to be applied.

In the first M&A process run by CEG four parties, none of whom were Russian, made indicative offers as follows:

ONGC had been investigating a potential purchase of CEG since February 2006 and had been conducting technical and financial due diligence; but there had not been time to complete the purchase before the previous funding arrangements expired. However it was still hoped and anticipated that ONGC would be the purchaser. The evidence was that in late 2006 Dr Leshkasheli had been hoping that it would raise its offer to around the $ 700 – 800 million mark.

Of these four ONGC and Petrovietnam asked for site visits – in the case of ONGC in, and in the case of Petrovietnam after, its indicative bid but none were afforded. Only ONGC proceeded to a final bid and that was $ 300 million with a further $ 50 million on recovery of its upfront investment. The offer indicated that ONGC would need a number of things including a site visit. Turicum made a request for a site visit before their indicative bid. In the end this bid was not pursued. It took no part in the second process. Dr Leshkasheli’s evidence was that he believed the explanation for the reduction in price was that SOCAR had put pressure on ONGC to pay only a low price.

Petrovietnam, which in its indicative offer letter had expressed “strong interest” in the deal and said that Azerbaijan was the focus area under its international business development strategy, did take part in the second process. The requests for site visits were made to CEG to the knowledge of CSS.

In the second process 6 companies made indicative bids and 4 made firm offers including Berghoff. Of these one, Tata, asked for a site inspection shortly after its indicative offer in September 2007 of $ 300 million. By an email of 11 October 2007 Tata said, inter alia, that “we would essentially need to visit the operational area in order to have a first-hand assessment of the facilities and the working environment and also to have interaction with SOCAR”. Matters did not progress because Tata regarded the timescale for due diligence as too short. But by mid-December there had been only one firm offer from Petrovietnam in the amount of $ 324 million which Dr Leshkasheli regarded as too low. On 15 December 2007 Mr Akhundov said that they were ready to grant Tata an extension for its due diligence. That led to a request from Tata for an extension of the due diligence period until 10 March and a statement that “We require a visit to the field and also interaction with Socar before submission of the final bid”.

On 28 December Mr Akhundov said that they were ready to grant the extension and that consent for a site visit and interaction with SOCAR could be organised by Tata directly as a foreign company interested in this acquisition. That was less useful than it might appear since it is unclear whether SOCAR itself had the ability to get visitors onto the site operated by CEG. As before Mr Akhundov was being left by Dr Leshkasheli to deal with the question of site visits.

Tata replied that for a field visit it would be essential to have an invitation from and due support of CEG, being the operator in the field. A later message recorded that Tata regarded it as “very essential” that a team of between 7 and 9 individuals went there and that it would be premature to involve SOCAR to get this done. Nevertheless, on 14 January 2008 Mr Akhundov emailed Tata to say that they would not be able to organise a field visit “before we have a clear understanding of what price is offered based on all the technical information that had been provided and which we understand is complete in order to make a firm offer”. This was at a time when CEG had no bids from any party that they regarded as acceptable and when there was only a month to go before the loan was due to expire.

The bank knew of the original October request for a site visit, because it was copied in, although Ms Pavlova of CSS dealt with it. The correspondence in December and January does not appear to have been copied to the bank. But the bank was aware of the approach which was being taken to site visits because Mr Firmin agreed with the deletion of the relevant sentence from the bid process letter.

Almost all these communications are referred to in [460] of the bank’s closing submission to which the judge referred at [220]. The judge recorded the four companies whose request for a site visit had been refused [220].

Dr Leshkasheli’s evidence when cross examined was not consistent. The relevant passages extend over 30 pages of transcript. Both counsel made submissions as to what his evidence amounted to. I propose to highlight the salient passages. At the beginning of his evidence on 23 October 2014 he was asked whether he recalled that another “CEG requirement was that it was not prepared to allow site visits by any party in the due diligence phase”. After some sentences to the effect that a site visit was not difficult to realise and that organising such visits “looked like some bureau for the touristic travel” he said:

“We been ready to suggest, to support and to organise this condition to realise this site visit, once everyone been agreed that this is the critical point to complete the transaction.

Q You were not prepared to allow site visits to be made by any party in their detailed due diligence before they had provided you with a firm offer that you regarded as acceptable, were you?

A That’s correct. That’s correct.”

This evidence, given at the beginning of his cross examination on the topic, starts with his own words which are followed up by a perfectly fair and clear question to which he gives a doubly affirmative response. In that response he is talking of the position at the time at which all agree that the visit is critical if the transaction is to be completed. This is after a final bid. His evidence is consistent with the refusals of site visits which occurred at the time and the excision of reference to site visits from the final version of the bid process letter. It was evidence, which, particularly when taken with those matters, itself justified a conclusion that there was indeed a policy that no one got a site inspection until they made their final bid.

A little later Dr Leshkasheli was asked why he was not prepared to allow parties who, for example, had made indicative offers to have site visits. At this point he said that once they had received an “acceptable offer indicative offer” this kind of visit was “not problem for us. It was not impossible for us to do it”. A little later he said “once we receive indicative offer, attractive for us, we been ready to organise this kind of site visit”. He was then shown the correspondence about the bid process letter to which I have referred in [38] above. He professed to see no contradiction between this exchange and what he had been saying. He then said that he did not remove anything from the draft and did not know of the removal of the sentence. When the judge expressed the view that he wouldn’t have thought that Mr Akhundov would do things that Dr Leshkasheli did not know or approve of, he said “I don’t think so but everyone could make mistakes”.

He then said that a site visit could be organised at some proper stage of the due diligence “in case if it got the proper attractive acceptable offer for us”. Asked what was the proper stage of the due diligence he said “after I receive acceptable indicative offer” in terms of the price. A little later he accepted what was put to him by the judge that it was logical for parties who wanted to make a final bid to have access to the site in order to enable them to work out what their final bid would be. When the judge put to him that Mr Akhundov’s note said the opposite he said that he was sorry about that and that it could be the subject of a discussion with Mr Akhundov. He said he thought he was not aware of the emails from Mr Akhundov at the time. When asked to explain why there was a difference between him and Mr Akhundov he said he had “always been clear that I could organise this visit” and that he had not given him this form of instruction.

After an interruption of the session on account of some computer malfunction he was asked about the email communication between Mr Steinhart, a consultant to CEG and Ms Pavlova at CSS: see [35] above. He accepted that he was aware that as part of the first M & A process site visits were not to be offered. At first, he said that no company had requested a visit to the field. He then accepted that ONGC had requested a visit and that was one of the reasons why they could not complete the ONGC offer before 11 December 2006. He said he did not recall seeing the correspondence in which Statoil’s complaint that they had not been allowed to have a site visit had been passed to CEG. When shown an email from Mr Akhundov to the broker who had introduced Statoil to the process which said “we are only going to offer site visits to the final bidder” he said he interpreted that as being prepared to have a site visit in the final stage of due diligence. A little later he accepted what the judge was putting to him that “So this is a policy that nobody gets a site inspection until they have actually made their final bid, and that bid is acceptable to you as to price (“That’s correct”)”: see below. (That is, as it appears to me, the effect of the excision of any reference to site visits from the final bid process letter). When asked “why?” he said “Because my understanding of the sale process, M & A process, maybe it was not correct, but it was my understanding of the process”.

When asked by Counsel “one last time” to answer why CEG had not been prepared to afford a site visit to parties who had made an indicative bid he said that he had been ready to organise these things. Told that that was not an answer to the question he said that he could guess that people working on the document (the final bid process letter) did not want to create the impression that everyone could go. It was put to him that the real reason why he was not prepared to allow site visits was “because you were concerned that that would lead to information becoming available in Baku about the sale” to which he replied “That’s correct because confidentiality is a very important part of the process”. He later denied that he knew very well that Mr Akhundov and Mr Steinhart were taking the stance on his behalf that no site visits would be allowed.

In [218] and [219] of his judgment the judge said this:

“218 Dr L’s evidence started by saying that “there was a policy that nobody gets a site inspection until they have actually made their final bid and that bid is acceptable to you” [T4/21].

219 It was difficult to discern the reason for this attitude but ultimately it became clear that he did not want strangers at the site because that might alert SOCAR [T4/93. T4/26 and T7/79 (Mr Akhundov)].”

The reference in 218 was to the passage whose place in the evidence is indicated by the second italicised sentence in paragraph 52 above. The judge cannot have meant by “started” that this evidence came at the very beginning of his evidence on this topic on Day 4, although in fact his evidence at the beginning of that day was to the same effect. But it is clear from those paragraphs that, as he said in [216], the judge accepted that “Dr L adopted a policy of not allowing site visits” because he did not want to alert SOCAR to potential purchasers.

At a later stage in his evidence Dr Leshkasheli accepted that by late 2007 SOCAR was attempting to frustrate his plans to sell CEG; that his concerns about SOCAR were the real reason why he did not want any potential purchaser to have a site visit to Baku and that was why he wanted to agree a price with a purchaser before approaching SOCAR because otherwise he was concerned that a purchaser who approached SOCAR would be persuaded to offer him only a very low price: Day 4, page 93 to which the judge referred at [219].

In the light of:

Even his reference to preparedness to entertain site visits if there was an “acceptable offer, indicative offer” or if CEG “got the proper attractive acceptable offer for us” raised the question as to whether an indicative offer could be an acceptable one, given that it would be preliminary with a non-binding indication as to price without necessarily identifying the conditions of sale.

It was peculiarly a matter for the judge to decide what view to take in relation to the totality of the evidence of Dr Leshkasheli. I do not accept that he in some way misread the evidence or should have found that Dr Leshkasheli was prepared to countenance a site visit before a final offer. Mr Malek submitted that the judge did not spell out what assistance he got from the refusal of site visits. I would, however regard the significance as obvious. The refusals were the application of the policy. He also submits that the judge did not spell out, at any rate with sufficient clarity, how and why he reached his conclusions. I would accept that the judge often expressed himself concisely in single sentences, with references to pages in the transcript rather than citation, and his findings are, to some extent, scattered in the judgment. But it seems to me that what he found and the basis on which he did so is sufficiently apparent.

After the judgment was handed down in draft the Appellants sought to persuade the judge that the conclusions that he was expressing about site visits were incorrect, relying in particular on the fact that he had not referred to Dr Leshkasheli’s evidence that he had a willingness to arrange site visits for persons who had made acceptable indicative bids. Extensive reference was made to the transcript of Day 4 and it was submitted that Dr Leshkasheli’s evidence, taken overall, was that he would have arranged a site visit if there had been an acceptable indicative bid. Similar submissions were made to us.

The judge declined to reverse his finding observing, inter alia, that Dr Leshkasheli had changed his evidence to suit what he thought was the answer being sought; and that “when witnesses do that, you know witnesses are not reliable”. He observed, in my view correctly, that his oral testimony was at variance with contemporaneous documents, and that that is what destroyed the claim. By that he must have meant the documents dealing with the refusal of site inspections to which he referred in [220], and the fact that in the second process Mr Akhundov secured the removal from the final bid process letter of any reference to site visits to which he referred in [221].

The second matter relied on in relation to this issue is the contention that the judge was wrong to conclude that there was no evidence that Dr Leshkasheli would have made an exception in the case of Gazprom Neft so as to allow a site visit before final offer. The judge recorded [232] that in their closing submissions the Appellants had submitted that it was inconceivable that Dr Leshkasheli would not have granted access to Gazprom Neft even before the making of a bid. He held [234] that there was no evidence at all that Dr Leshkasheli would have allowed access to Gazprom Neft. The policy, according to the evidence which he accepted, was that there should be no access and Dr Leshkasheli had given no evidence about his policy in relation to site access re Gazprom Neft. He (and others) had given evidence in respect of all others that they would not have access [234]. The result was that the judge concluded that there was no evidence to show that Gazprom Neft would have been treated any differently to others [236].

Mr Malek accepted that Dr Leshkasheli had given no evidence in relation to access by Gazprom Neft as opposed to others. That arose, it is submitted, because Dr Leshkasheli had been cross-examined before Mr Matlashov gave his evidence. Ms Davies accepts that that was so. But Mr Matlashov was the Appellants’ witness and they could have found out what his position was in relation to a site visit. Alternatively, they could have applied to recall Dr Leshkasheli in the light of his evidence. But they did not. Accordingly, it was too late to seek to draw any assistance from the order in which the evidence was given. I agree with this submission. This was moreover an area – what would have happened if the bank had approached Gazprom Neft? – in which the Appellants bore the burden of proof: Allied Maples v Simmons and Simmons [1995] EWCA Civ 17.

In his submissions, Mr Malek relied on what he said were the commercial realities. If the choice was between allowing a site visit, with the risk that SOCAR might get the offer reduced, and refusing a site visit and losing the offer at a late stage in the process, CEG would have chosen the former. He also said that the relevant question was whether Gazprom Neft would be granted a site visit when there was no other bar to the transaction proceeding.

It is not apparent to me that the commercial realities would lead one to the conclusion that an exception would have been made. It is not clear that Dr Leshkasheli’s paranoia about being deprived of a proper price by SOCAR’s actions would have been assuaged because Gazprom Neft was the prospective buyer:. The reasons that drove his concern, namely fear as to what SOCAR would do, would seem equally applicable in the case of Gazprom Neft. As the judge found in [327] Dr Leshkasheli believed that a Russian government led company would conspire with SOCAR against him: see [30] above. In addition, so far as commercial realities are concerned, it is necessary to bear in mind that Dr Leshkasheli did not afford site visits to either ONGC or Petrovietnam despite the size of their bids, particularly the latter; or to Tata despite the fact that time was running out for repayment of the loan.

Further the most that could be assumed in the Appellants’ favour was that Gazprom Neft would have made a non-binding indicative offer. It was plain from Mr Matlashov’s evidence that after that he would want the technicians to visit the field and if there could be no visit before a firm offer then Gazprom Neft would say “goodbye”. The request would be forthcoming before Dr Leshkasheli knew what price Gazprom Neft was going to include in its firm offer (as well as a number of other things being unclear e.g. terms and conditions, warranties etc.). Thus, a site visit would have been needed in circumstances where a site visit was not the only bar to a sale. A site visit would become the only bar to the sale when Gazprom Neft had committed to a price on terms which were acceptable to Dr Leshkasheli, i.e. had made a firm offer in those terms.

The third contention is that the bank would have allowed a site visit against Dr Leshkasheli’s refusals. Mr Malek accepted that this was a point that was raised for the first time on appeal. It does not appear in the Grounds of Appeal which contend that the judge was wrong to find that the claimant would have denied Gazprom Neft a site visit. Nor does it seem to me to fall within the grant of permission to appeal.

In any event, there does not appear to me to be any evidence to show that the bank would have ensured that a site visit took place before any final offer in the case of Gazprom Neft. Indeed the evidence points the other way. Mr Firmin agreed with Mr Akhundov’s request that reference to site visits be removed from the final bid process letter because site visits could not be offered: see [38] above. It does not appear to have intervened to tell CEG that Tata should be offered a site visit. The issue was not explored with any of the witnesses from the bank or CSS. If it was to be said that the bank would have overridden Dr Leshkasheli it was for the Appellants to establish that, probably from the evidence of the bank’s witnesses. I note that the Appellants’ skeleton seeking permission to appeal pointed out that the bank would have been able to override Dr Leshkasheli – not that it would have done so.

Further the judge accepted [193] that the bank was aware of the problem with SOCAR trying to prevent a sale which would produce a large payoff for Dr Leshkasheli: reference was made to the problem in a memorandum in December 2007 seeking approval to an extension of the loan. This would be a reason why it would not wish to make an exception. The judge held that the Appellants were unable to demand that site visits should not be permitted but it is not entirely clear to me that the bank, although in control of the sale process, had any power under the participation agreement to force Dr Leshkasheli to permit a site visit.

I do not, therefore, regard it as open to the appellants to contend that the bank would have procured a site visit for Gazprom Neft at any time. Further, even if that be too severe a view, the appellants have no finding from the judge on the point and I am far from convinced that the evidence requires or justifies us in making such a finding.

In those circumstances, I find it unnecessary to address the points made in the Respondent’s notice in relation to the issues now under consideration in any detail. The first point is the contention that, as appears from the Appellants’ case on appeal, before any site visit would have been allowed there would have to have been an indicative bid and Mr Matlashov’s evidence was that no priced offer would have been put forward by Gazprom Neft before a site visit: see [26] above. As to that, it is not clear to me that Mr Matlashov was saying that not even an indicative offer could be made before a site visit.

The second point assumes that Gazprom Neft would have been prepared to make an indicative offer without a site visit. The judge proceeded on the basis that Gazprom Neft would have been willing to pay up to $ 400 million for CEG [307-9] which was less than Dr Leshkasheli’s bottom line of $ 500 million [271] and [303]. That meant that he would not have made an exception in the case of Gazprom Neft anyway. There seems to me some force in that contention. The first potential flaw in the argument is that the fact that Gazprom Neft would have paid up to $ 400 million does not necessarily mean that it would not have made a higher indicative offer, particularly when it would not have been frightened off consideration of a bid by Dr Leshkasheli’s opening pitch of $ 700 million. The second is that, although the judge found that Dr Leshkasheli’s $ 500 million bottom line “coloured his approach” [303] he found that it would not have prevented him from consenting to a sale to Gazprom Neft at $ 400 million [313].

For these reasons, I would dismiss the appeal.

I agree.

I agree.