This is an application by JSC BTA Bank, a leading Kazakhstan bank now owned by the Government of that country (the “Bank”), to commit Mr Anatoly Ereshchenko (“Mr Ereshchenko”) to prison for a number of criminal contempts of court. In essence, the Bank says that Mr Ereshchenko deliberately lied when he responded to a Norwich Pharmacal order for disclosure made against him on 3^rd November 2010 (the “Disclosure Order”). The lies that Mr Ereshchenko is alleged to have told were effectively twofold: first, that so far as he could recall he knew nothing about the transactions in question (the so-called “AAA Transactions”), and secondly that he did not have access to any documents that might assist.

It may be noted by way of background that this is the 4^th committal application in the 11 sets of English proceedings that the Bank has issued against those that are said to have been involved in multiple frauds of which it has been the victim. This particular set of proceedings was issued in the Chancery Division, but the remaining 8 sets of proceedings are being litigated in the Commercial Court.

The background to the AAA Transactions is inevitably complicated. But I shall seek to set out the Bank’s basic claims and the chronology as succinctly as possible. Before doing so, it is important to understand a little of Mr Ereshchenko’s alleged role. He is a Russian national, who was one of three directors of an English corporate services company called Eastbridge Capital Limited (“Eastbridge”). Whilst he was always based in London, he travelled extensively during the relevant periods. Moreover, Eastbridge had offices in Moscow, and later in Cyprus. Mr Ereshchenko’s case is that another of Eastbridge’s directors, a Mr Aleksander Udovenko, the 15^th Defendant (“Mr Udovenko”), was primarily involved in the corporate services activities of Eastbridge, and that his own role was peripheral and limited and took up only a minimal amount of his time. In answering the extensive questions posed by the Disclosure Order, Mr Ereshchenko says now that he genuinely could not remember the entities involved or what might have occurred in relation to them. Later disclosures of documentation by the Bank have, says Mr Ereshchenko, to some extent jogged his recollection, and he has been increasingly forthcoming as matters have progressed. But ultimately, he still says that he was mostly only copied in to emails, was never in charge of Eastbridge’s activities in relation to the AAA Transactions, and was generally only involved when a proponent of the AAA Transactions, one Mr Timur Surapbergenov (“Mr Surapbergenov”) of JSC TuranAlem Securities (“TAS”) a subsidiary of the Bank, wanted to chase some specific action that Eastbridge was supposed to be undertaking.

The Bank, for its part, submits that Mr Ereshchenko’s position is wholly implausible. It points to numerous documents that were sent to or by Mr Ereshchenko, and says that he cannot possibly have forgotten the names of the BVI Defendants and the Further Recipients, nor the fact that he had been involved in numerous dealings in relation to them. It points to the fact that he, amongst others, held a Power of Attorney, to act for them (which Mr Ereshchenko denies he knew about). More importantly, perhaps, the Bank points to the events that were known to Mr Ereshchenko between the nationalisation of the Bank in February 2009 and the grant of the Disclosure Order in November 2010, and submits that it is inconceivable that he cannot have known when he was served with that order that it concerned the AAA Transactions in which he had been involved. The Bank contends that Mr Ereshchenko decided deliberately to lie about the extent of his knowledge because he feared the consequences if he told the truth.

The Bank’s claims in relation to the AAA Transactions may be summarised as follows:-

Between 21^st and 22^nd May 2008, the Bank acquired a portfolio of AAA rated investment bonds (the “AAA Investments”) with a value of some US$300 million. On or about 22^nd May 2008, the AAA Investments were transferred to an account in the Bank’s name at OJSC Alfa-Bank’s (“Alfa Bank”) affiliate in Kazakhstan, Alfa Russia (“Alfa Russia”).

Between 23^rd May and 10^th June 2008, Mr Roman Solodchenko, the 1^st Defendant, who was then a director of the Bank and Chairman of its Management Board (“Mr Solodchenko”), transferred the AAA Investments from the Bank’s account at Alfa Russia to an account in the name of the Bank at Alfa Equity Investments Limited, a BVI company (“Alfa Equity”).

Between 10^th and 17^th June 2008, 5 BVI companies (the 4^th to 8^th Defendants – referred to hereafter as the “BVI Defendants”) sold securities of the same descriptions and amounts as the AAA Investments to Alfa Equity. It appears that these were short sales, in that the BVI Defendants did not at that time own securities of the descriptions and amounts of the AAA Investments (the “short sales”).

In June 2008, the sums payable by Alfa Equity to the BVI Defendants in respect of the short sales were paid into accounts held by the BVI Defendants at Alfa Equity and were then transferred to accounts held by the BVI Defendants at Trasta Komercbanka in Riga in Latvia (“TKB” or “Trasta”).

The Bank suggests that what lies behind these arrangements in June 2008 must have been the grant by the Bank of security over the AAA Investments to Alfa Equity to secure the obligations owed by BVI Defendants to Alfa Equity under the short sales.

Some US$250 million of the proceeds of the transfers to the BVI Defendants’ accounts at TKB were then paid in mid-June 2008 to further accounts at TKB in the names of the 9^th to 12^th Defendants (known as the “Further Recipients”). The Bank says that these payments were made pursuant to sham unsecured loan agreements dated 9^th June 2008.

On 22^nd January 2009, the AAA Investments were transferred, on the instructions of Mr Solodchenko, from the Bank’s account at Alfa Equity to the BVI Defendants. The Bank alleges that it received neither payment nor other consideration for the AAA Investments.

Eastbridge allegedly gave instructions in relation to all the actions of the BVI Defendants. The directors of Eastbridge were Mr Ereshchenko, Mr Anuar Aizhulov (“Mr Aizhulov”) and Mr Udovenko, who left the UK at the end of 2009, and who has neither been traced nor served with these proceedings.

The Disclosure Order that was made by Henderson J on 3^rd November 2010, required Mr Ereshchenko within 21 days of service of it to:-

“[t]o the best of his … ability, and after making all reasonable enquiries, provide the answers in writing to the questions set out in Schedule A and C hereto; and

Supply to the [Bank’s] solicitors copies of all documents in his … control (which for these purposes shall mean documents which are or were in his … physical possession and/or to which he … has a right to possession and/or which he … has a right to inspect or take a copy) which evidence the matters set out in [(1)] above”.

The Disclosure Order also required Mr Ereshchenko to make an affidavit setting out the answers within 28 days of service of the order.

Schedules A, B and C are reproduced in Appendix 1 to this judgment. In outline, Schedule A asked a series of detailed questions concerning the transfers of money and of the AAA Investments that made up the AAA Transactions between June 2008 and January 2009, and Schedule C required Mr Ereshchenko to provide details of the ownership and management over each of the BVI Defendants and the Further Recipients and Eastbridge. At the beginning of the hearing, Mr Paul Lowenstein Q.C., counsel for Mr Ereshchenko, provided me with a list of some 199 individual questions comprised within the terms of the Disclosure Order. The exercise that Mr Lowenstein had undertaken demonstrated the level of detailed knowledge that the Disclosure Order demanded in relation to numerous transfers and transactions over the period. I was struck, in reading Mr Lowenstein’s document, and indeed the Disclosure Order itself, that nobody could reasonably be expected to hold in his head the detailed answers to many of these questions, even if that person had been intimately involved in the transactions at the time. That said, the Bank’s allegations on this application do not really turn on Mr Ereshchenko’s failure to provide the details, but more on his failure to accept at the outset that he was involved at all – or at least to any significant extent.

The Bank’s first generic allegation is that Mr Ereshchenko gave false evidence about his knowledge of and involvement in the AAA Transactions. The following statements are alleged to have been made without an honest belief in their truth:-

That Mr Ereshchenko had attempted to comply with the Disclosure Order in full and had complied with the Disclosure Order so far as he was able (paragraph 24 of Mr Ereshchenko’s 10^th December 2010 statement – the “December statement”).

That Mr Ereshchenko knew nothing about the AAA Transactions (paragraph 4 of Mr Ereshchenko’s 15^th December 2010 affidavit – the “December affidavit”).

That Mr Ereshchenko had no more information relevant to the Disclosure Order and nothing further to add to the evidence provided in his December affidavit (paragraph 61 of Mr Ereshchenko’s 1^st March 2011 second statement – the “March statement”).

That Mr Ereshchenko had limited involvement in the AAA Transactions (paragraph 10(a) of Mr Ereshchenko’s 19^th July 2011 second affidavit – the “July affidavit”).

That Mr Ereshchenko’s recollection of the AAA Transactions is and always has been very limited (paragraph 10(b) of Mr Ereshchenko’s July affidavit).

The Bank’s second generic allegation is that Mr Ereshchenko gave false evidence about the location of, and access to, relevant documents. The following statements are alleged to have been made without an honest belief in their truth:-

That Mr Ereshchenko had no access to documents that might help him respond to the Disclosure Order (paragraph 24 of Mr Ereshchenko’s December statement).

That Mr Ereshchenko did not know where the client files for Eastbridge’s corporate services business were kept (paragraph 124 of Mr Ereshchenko’s July affidavit).

That Mr Ereshchenko did not know about the location of archives of files used and generated by Eastbridge (pages 79-81 of Mr Ereshchenko’s cross-examination on 21^st November 2011).

It appears that the allegation in paragraph 10(iii) above is not now pursued, since it was not put to Mr Ereshchenko in his cross-examination, and appears anyway to be duplicative of the allegation in paragraph 10(ii) above.

At some time in 2003, Mr Mukhtar Kabulovich Ablyazov (“Mr Ablyazov”) was apparently released from prison in Kazakhstan and came to London.

On 8^th September 2003, Eastbridge was incorporated. On 9^th September 2003, Mr Ereshchenko and Mr Udovenko became directors of Eastbridge.

In May 2005, Mr Ablyazov returned to Kazakhstan to take up his position as Chairman of the Bank’s board of directors.

On 1^st June 2006, Mr Ereshchenko emailed a Mr Bernard Krebs saying that he had told him (Mr Krebs) on the telephone that Eastbridge was Mr Ablyazov’s London office.

Between 28^th December 2007 and 2^nd January 2008, the BVI Defendants were incorporated in the BVI.

On 21^st and 22^nd May 2008, the Bank acquired the AAA Investments.

Between 22^nd and 23^rd May 2008, both the Bank and the BVI Defendants entered into brokerage agreements with and opened accounts at Alfa Equity.

On 4^th June 2008, Mr Alexander Chekalin, “Head of Legal” at Eastbridge Moscow (“Mr Chekalin”) emailed Mr Paul Kythreotis, the 2^nd Defendant (“Mr Kythreotis”), copied to Mr Udovenko, but not to Mr Ereshchenko, attaching 5 draft securities’ sale and purchase agreements to sign for the 5 BVI Defendants. The agreements in question may have related to sales of the AAA Investments from the Bank to the BVI Defendants.

On 9^th June 2008, Mr Ereshchenko’s expense report shows that he incurred £234.84 in respect of accommodation at a hotel in Riga. It was suggested (though he could not recall) that Mr Ereshchenko went there to sort out the problems that had arisen in relation to the transfers of funds at TKB in relation to the AAA Transactions.

Also on 9^th June 2008, the BVI Defendants entered into loan agreements with the Further Recipients in the sum of US$250.1 million. These loans are said by the Bank to be shams.

On 10^th June 2008, the Bank transferred the AAA Investments to its account at Alfa Equity.

On 10^th and 17^th June 2008, the BVI Defendants entered into the short sales of AAA Investments to Alfa Equity. The consideration of US$294.1 million was received by the BVI Defendants from Alfa Equity on 11^th and 18^th June 2008.

Between the 12^th and 20^th June 2008, the BVI Defendants transferred monies (purportedly under the allegedly sham loan agreements) to the Further Recipients.

On 13^th June 2008, Mr Anton Rybalkin, a lawyer at Eastbridge Moscow (“Mr Rybalkin”), emailed Mr Udovenko and others saying that he was sending documents to be signed by Mr Solodchenko, and concluding: “the transaction with Alfa Bank is under the control of [Mr Ablyazov]. If necessary the explanation can be given by [Mr Udovenko], [Mr Ereshchenko] and me”.

On 16^th July 2008, Mr Surapbergenov emailed Mr Kairat Sadykov (“Mr Sadykov”), Mr Udovenko, Mr Ereshchenko, and Mr Valery Manokhin, the head of the finance team at Eastbridge (“Mr Manokhin”), copied to Mr Nurlan Mukhametzhanov, the Bank’s Head of Treasury (“Mr Mukhametzhanov”) and others under the heading “repayment of coupons under the Alfa scheme” saying that “[w]e have to remit funds to [Alfa Equity] broker accounts. Further the money will be transferred to [the Bank’s] broker accounts”, and that money should be remitted to 3 of the 5 BVI Defendants, and asking Mr Ereshchenko and Mr Manokhin to “make sure that the money has been credited to the companies’ accounts, and also to perform the transfer to Alfa Equity broker accounts, plus you should sign appropriate transaction applications from the companies”. This is the first of a number of emails concerning the payment of coupons on the AAA Investments to Alfa Equity.

On 1^st August 2008, Mr Udovenko emailed numerous people including Mr Ereshchenko thanking them for their comments on the algorithm procedure relating to documents that referred to Eastbridge’s archive of documents and the electronic register of documents.

On 15^th September 2008, Mr Udovenko emailed a Bank employee, copied to Mr Ereshchenko and others regarding the transfer of offshore companies on to Moscow. Mr Ereshchenko said that he did not think he knew about these events.

A chain of emails on 8^th October 2008 concerning a bond transaction by Bubris included an email from Mr Ereshchenko to Mr Chekalin saying that he (Mr Ereshchenko) “[a]greed” the execution of certain documents.

On 10^th October 2008, Mr Ereshchenko was sent 4 statements for 4 of the 5 BVI Defendants’ accounts at TKB.

On 15^th October 2008, Mr Manokhin sent Mr Ereshchenko and Mr Udovenko an email about the pooling of cash held in TKB.

On 23^rd October 2008, Mr Ereshchenko was sent by email a supplement to the brokerage agreement between Alfa Equity and each of the 5 BVI Defendants.

On 31^st October 2008, Mr Surapbergenov emailed Mr Sadykov, Mr Ereshchenko, Mr Rybalkin and Mr Udovenko concerning the repayment of coupons (presumably interest on the AAA Investments that had been short sold by the BVI Defendants) on 15^th November 2008 saying that Mr Ereshchenko would need to prepare the respective orders of the BVI Defendants for transfer of the money to the Bank.

On 11^th November 2008, Mr Ereshchenko sent Mr Surapbergenov an email saying that money “will clear on the companies’ brokerage accounts tomorrow” and that the originals of the supplemental agreements were already with Alfa Equity. Ms Elena Lapteva of Eastbridge responded asking Mr Surapbergenov to take the bank’s fees into account on future payments.

On 24^th November 2008, there is a challenged corrupted email relied upon by the Bank, but not copied to Mr Ereshchenko, asking whether London could be recorded as the “archive location” for Eastbridge.

Also on 24^th November 2008, Mr Surapbergenov emailed Mr Ereshchenko concerning payment for coupons saying that the “authorisation must be signed urgently”.

On 8^th December 2008, an administrative director of Eastbridge Moscow emailed Mr Manokhin, copied to Mr Ereshchenko, Mr Udovenko and others indicating that archives had been taken to London.

On 18^th December 2008, Mr Chekalin emailed Mr Kythreotis saying that Mr Ereshchenko had confirmed by telephone transfers from 2 of the BVI Defendants to Alfa Equity. The email also asked Mr Udovenko to approve the transfers.

The 5^th January 2009 is the apparent date of the 5 draft SPAs purporting to document the sale of the AAA Investments from the Bank to the BVI Defendants.

On 22^nd January 2009, the AAA Investments were transferred on Mr Solodchenko’s instructions from the Bank’s account at Alfa Equity to the BVI Defendants’ Alfa Equity accounts.

On 2^nd February 2009, the Kazakh government acquired 75.1% of the Bank, through a sovereign wealth fund, Samruk Kazyna. It appears that at or about this time, Mr Solodchenko was dismissed as Chairman of the Bank’s management board, and Mr Ablyazov was dismissed as Chairman of the Bank, fled Kazakhstan, and came to London.

On 2^nd March 2009, Ms Victoria Kolyasova of Eastbridge (“Ms Kolyasova”) emailed Mr Udovenko, Mr Ereshchenko, Mr Syrym Shalabayev the 14^th Defendant (“Mr Shalabayev”) and others saying that if they (Mr Udovenko and Mr Ereshchenko) approved the application for powers of attorney for many companies including the BVI Defendants and some of the Further Recipients “please send a request to the Registrar”. The powers of attorney were apparently granted to Mr Ereshchenko, Mr Shalabayev, Mr Udovenko and Mr Rybalkin and others on 3^rd March 2009.

On 6^th March 2009, Ms Kolyasova sent an email to Mr Udovenko and Mr Ereshchenko and others saying to Mr Udovenko that “by indication of [Mr Ereshchenko] I am … sending you the draft of letter to register for signing attached documents”.

On 9^th March 2009, Mr Ereshchenko emailed to Mr Kythreotis 5 securities sale and purchase agreements dated 5^th January 2009 between the Bank and each of the 5 BVI Defendants (the “5 SPAs”).

In March 2009, according to Mr Ereshchenko, Eastbridge closed its Moscow office. Also in that month, it appears that Mr Surapbergenov came to visit Mr Ereshchenko in London for a week and gave him the draft 5 SPAs and told him that he was very concerned about his position because of events in Kazakhstan.

On 24^th April 2009, Ms Kolyasova sent an email to Mr Udovenko and Mr Ereshchenko asking that an inquiry be sent to the registrar, Mr Kythreotis, in relation to Bubris. This was part of a series of emails, to which Mr Ereshchenko was a party, concerning bond trading at this time.

On 12^th August 2009, Mr Aizhulov ceased to be a director Eastbridge.

On 13^th August 2009, Blair J granted a without notice freezing injunction against Mr Ablyazov and others in what have become known as the “Drey proceedings”.

In August 2009, Mr Aizhulov left London.

In December 2009, Mr Udovenko left London and has not returned since then. His whereabouts are unknown.

On 12^th February 2010, Mr Udovenko resigned as a director of Eastbridge, leaving Mr Ereshchenko as the sole director of Eastbridge.

On 28^th May 2010, Mr Ereshchenko resigned as a director of Eastbridge.

On 20^th June 2010, Mr Ereshchenko says that he stopped working for Eastbridge.

On 26^th July 2010, the Bank obtained worldwide freezing orders against the first 12 Defendants in these proceedings.

On 27^th July 2010, the Bank obtained freezing orders against the Defendants to these proceedings incorporated in the BVI from the BVI court.

On 28^th July 2010, these proceedings were commenced against the first 12 Defendants.

In August 2010, Mr Ereshchenko says that he threw his laptop computer away.

On 6^th September 2010, the BVI court found the Defendants to these proceedings incorporated in the BVI to be in contempt of court in failing to comply with its disclosure orders, and ordered the sequestration of their assets.

On 30^th September 2010, a new director of Eastbridge was appointed, Mr Ramil Burganov, and it was sold to a Russian company for £2.

On 3^rd November 2010, Henderson J made the Disclosure Order against Mr Ereshchenko.

On 10^th November 2010, the Disclosure Order was personally served on Mr Ereshchenko.

On 15^th November 2010, Mr Ereshchenko instructed solicitors (Dawsons LLP) to act for him in relation to the Disclosure Order.

On 22^nd November 2010, the Bank’s solicitors provided Mr Ereshchenko’s solicitors with the bundles that had been before Henderson J on 3^rd November 2010.

On 26^th November 2010, Mr Ereshchenko’s solicitors wrote to the Bank’s solicitors saying they had only undertaken a preliminary review of the large number of documents provided, and seeking an extension of time for compliance with the Disclosure Order.

On 2^nd December 2010, Mr Ereshchenko’s solicitors and the Bank’s solicitors agreed a 7-day extension of time for compliance with the Disclosure Order.

On 8^th December 2010, the matter came before me on Mr Ereshchenko’s applications for a 14 day extension of time for compliance with the Disclosure Order. I stood over the application and extended the date for compliance with the Disclosure Order to 10^th December 2010. In the course of the hearing, I made it clear that Mr Ereshchenko needed to tell the court what he had already done to comply with the Disclosure Order and what needed to be done and how long it would take. His then counsel, Mr George Bompas Q.C., informed me on that occasion that he had not yet met Mr Ereshchenko by that time. I did not, contrary to the understanding that seems to have been gained by Mr Ereshchenko, say that I would not grant an extension when the matter returned on 10^th December 2010. Unfortunately, however, Mr Ereshchenko seems to have misunderstood that he would be obtaining no further extension and decided not to re-apply to me on the 10^th December 2010.

Instead, on 10^th December 2010, Mr Ereshchenko made his December statement in response to the Disclosure Order. I shall set out the pertinent parts of this important statement in due course, but, in outline, he said that he did not have any information about the AAA Transactions, and that the BVI Defendants and the Further Recipients had been dealt with by Mr Udovenko’s part of the Eastbridge business. On the same day, Mr Ereshchenko provided undertakings which prevented him leaving the jurisdiction.

On the evening of 10^th December 2010, Mr Ereshchenko attended at the offices of SPW (UK) LLP, a firm of chartered accountants acting for Eastbridge (“SPW”). He inspected 4 or 5 out of 20 boxes of documents that had been retrieved from the Big Yellow storage company by Mr Salim Shalabayev.

On 15^th December 2010, Mr Ereshchenko made his December affidavit verifying his December statement and saying: “I know nothing, so far as I can recall, about any of the transactions whereby US$300 million of AAA-rated investments were allegedly fraudulently transferred by the Bank to the BVI Defendants”.

On 3^rd February 2011, the Bank located 25 boxes of documents and the old Eastbridge server at the Big Yellow storage company. Apart from some relevant documents located on Eastbridge’s old server, the Bank does not suggest that the 25 boxes contained any documents that are relevant to the issues in these committal proceedings.

On 3^rd February 2011, Mr Ereshchenko was joined as the 17^th Defendant to these proceedings, restricting him from leaving the jurisdiction and making use of his passport pending an application by the Bank to cross-examine him.

On 7^th February 2011, the Bank executed a search order against the Defendants including Eastbridge.

On 10^th February 2011, the Bank issued its application to cross-examine Mr Ereshchenko.

On 11^th February 2011, the 3^rd February 2011 order was replaced by undertakings.

On 1^st March 2011, Mr Ereshchenko filed his March statement in support of his opposition to an order for cross-examination.

Half an hour after he had filed his March statement on 1st March 2011, the Bank served its re-amended Particulars of Claim on Mr Ereshchenko including the details of its claims against him.

On 5^th April 2011, the Bank was granted permission to cross-examine Mr Ereshchenko in respect of his compliance with the Disclosure Order.

In mid-April 2011, the Bank executed a search order against Euroguard, a company in Cyprus. It appears from the evidence given orally by Mr Hardman that many relevant scanned documents were recovered as a result of this search.

On 31^st May 2011, Mr Ereshchenko served his defence to the claim in these proceedings.

In June 2011, Briggs J sentenced Mr Shalabayev in his absence to 18 months imprisonment for contempt of court in these proceedings.

Between 28^th and 30^th June 2011, Mr Ereshchenko was cross-examined before Peter Smith J (the “June cross-examination”).

On 30^th June 2011, the June cross-examination was terminated when he admitted “lying” when he had said that he did not concern himself with the basis on which Mr Shalabayev was acting in connection with Eastbridge. When he gave evidence to me, Mr Ereshchenko said that he had used the wrong word when he had said he was “lying”, and I confess to finding myself in agreement with him on that point. But, be that as it may, Peter Smith J ordered, as a result, that the cross-examination be adjourned with liberty to restore on 7 days’ notice, and that Mr Ereshchenko should provide an affidavit in full compliance with the Disclosure Order and correcting previous inaccuracies, and that the passport undertakings be continued until 7 days after the conclusion of the cross-examination.

On 12^th July 2011, an interim freezing injunction was made against Mr Ereshchenko.

On 19^th July 2011, Mr Ereshchenko made his July affidavit in purported compliance with Peter Smith J’s order.

On 25^th July 2011, the freezing injunction was continued against Mr Ereshchenko until after judgment.

On 28^th October 2011, the Court of Appeal sentenced Mr Kythreotis to 21 months imprisonment for contempt of court in his absence.

Between the 17^th and 21^st November 2011, the restored cross-examination of Mr Ereshchenko took place before Henderson J.

On 22^nd November 2011, the Bank’s solicitors wrote to Mr Ereshchenko’s solicitors notifying them that they intended to apply to commit Mr Ereshchenko.

On 16^th December 2011, the Bank issued its committal application against Mr Ereshchenko.

On 17^th January 2012, Henderson J refused to adjourn the application and ordered a 4-day trial of the committal application starting on 30^th April 2012, gave permission for the Bank to pursue allegations that Mr Ereshchenko had made false statements in documents verified by a statement of truth without an honest belief in its truth under CPR 32.14(2)(b), ordered the Bank to file an affidavit explaining the categories of documents searched for the purpose of Mr Ereshchenko’s cross-examination, and saying whether it was aware of any documents which would damage its case or advance Mr Ereshchenko’s case on the committal.

On 24^th January 2012, the Bank served the affidavit of Ms Rebecca Wales in compliance with the 17^th January 2012 order.

On 16^th February 2012, Teare J decided on the Bank’s application that Mr Ablyazov had been guilty of contempt of court in responding to the disclosure he had been ordered to make pursuant to a worldwide freezing order by falsely maintaining that he was not the ultimate beneficial owner of the 4^th Defendant, Bubris Investments Limited (“Bubris”), one of the BVI Defendants, and of certain other valuable properties and companies.

Later in February 2012, Mr Ablyazov was sentenced in his absence to 22 months in prison by Teare J for contempt of court. Mr Ablyazov has not returned to England to serve his sentence, but has appealed the decision.

On 15^th March 2012, the Bank issued a summary judgment application against Mr Ablyazov and the BVI defendants.

On 19^th March 2012, the Bank served detailed particulars of Mr Ereshchenko’s alleged contempt pursuant to directions given by Peter Smith J.

On 20^th March 2012, Peter Smith J adjourned the trial to 18^th June 2012, and directed pleadings as to the alleged contempt, and limited disclosure by the Bank, and ordered that any fact found at the committal trial shall be conclusive between the parties unless fresh material becomes available and the Court concludes that that material potentially undermines the relevant findings.

On 30^th March 2012, Mr Ereshchenko served Points of Defence in relation to the allegations of contempt.

On 2^nd May 2012, Peter Smith J gave the Bank permission to amend its particulars of contempt, and required Mr Ereshchenko to amend his defence.

On 4^th May 2012, the Bank served amended particulars of the alleged contempt.

On 18^th May 2012, Mr Ereshchenko served his May affidavit in answer to the committal application.

On 24^th May 2012, Mr Ereshchenko served amended Points of Defence in relation to the allegations of contempt.

The Bank’s substantive claims against Mr Ereshchenko for dishonest assistance in breaches of fiduciary duty are contained in its re-amended Particulars of Claim. The relevant claims are set out at paragraphs 116P-Q as follows:-

It will be immediately apparent that some of these allegations are the same as those comprised in the contempt application; in particular, the allegations of dishonesty in giving false evidence as to his knowledge of the AAA Transactions and the concealment of documents. I will return to this aspect of the matter.

I will deal now with the written and oral evidence that was adduced at the hearing, before turning to deal with the applicable law, and the specific allegations of contempt.

Mr Hardman is a partner in the Bank’s solicitors. He gave evidence on days 2 and 3 of the hearing. He was heavily cross-examined on his role in the litigation as a whole, it being suggested that Hogan Lovells International LLP was running the litigation rather than the Bank. I accepted Mr Hardman’s denial of these propositions and his evidence that he took instructions from the Bank’s asset recovery sub-committee, normally represented by a Mr Prosyankin.

Mr Hardman was also attacked on the basis that the Bank had contended (in its opening skeleton argument) that its purpose in bringing the committal application was to “coerce Mr Ereshchenko to provide a full, complete and accurate account of his knowledge and involvement in the AAA Transactions, with a particular focus on the destination of the funds which were misappropriated from the Bank and the identity of those for whose benefit the fraud was orchestrated”. Mr Hardman freely admitted that the Bank was now aware of the answers to many of the questions asked in the Disclosure Order, but maintained that it did not know where some US$45 million had gone. As Mr Hardman put it:-

Mr Hardman accepted that he knew of no evidence that Mr Ereshchenko was concerned with the concealment of Mr Ablyazov’s interest in Bubris.

Mr Lowenstein cross-examined Mr Hardman about the documents that the Bank had obtained from Euroguard in Cyprus, and the relationship between Euroguard and Mr Kythreotis. His evidence was that there was no connection between Euroguard and Mr Kythreotis, though they had some business relations. Mr Hardman explained that Euroguard was a renamed Eastbridge Cyprus, which was a relocated Eastbridge Moscow, and that the same group of Russian women ran it. Mr Kythreotis, he said, was one of a number of Cypriot offshore service providers, who would have been sent instructions from Euroguard.

Mr Hardman also explained how the scanned documents taken from Euroguard were discovered, when the Bank found a receipt for some scanning by an entity called Iron Trust with Euroguard’s tea and coffee receipts which showed that one or two weeks earlier, 17,000 documents had been scanned into pdf form, and the originals shredded.

Mr Ereshchenko’s December statement (made on the 10^th December 2010) is crucial to this application. It is this statement (and the immediately subsequent December affidavit) that is said to contain deliberate lies. The December statement cannot be properly understood without reading it as a whole, because the crucial parts refer back expressly and impliedly to the rest of the document. I have therefore reproduced below greater parts of the December statement than would normally be necessary as follows:-

As I have already said, on 15^th December 2010, Mr Ereshchenko made his December affidavit verifying his December statement and saying (importantly): “I know nothing, so far as I can recall, about any of the transactions whereby US$300 million of AAA-rated investments were allegedly fraudulently transferred by the Bank to the BVI Defendants”. The Bank places great reliance on the alleged falsity of this sentence. It must be accepted, however, that when Mr Ereshchenko refers to his recollection, he is referring back to his December statement. The two documents must, therefore, in my judgment, be read together.

Mr Ereshchenko’s 2^nd witness statement was his March statement (of 1^st March 2011) in which he was opposing the Bank’s application that he be cross-examined on his written evidence. He said the following at that time:-

In response to the questions in the Order relating to the accounts, so far as I can recollect that I was not a signatory to any of the accounts detailed in Schedule B to the Order and I cannot recollect any information, sought by the Order, regarding, either the monies left in the specified accounts or the monies that had left the accounts.

In relation to the BVI Defendants, I was unaware that I had been granted any Powers of Attorney over the BVI Defendants and I did not sign those Powers of Attorney and was not told about them; as far as I knew, I never signed anything in exercise of those Powers of Attorney.

The March affidavit was, as I have said, sworn for the specific purpose of resisting the order for cross-examination. It was not, therefore, and should not be viewed as, an attempt to revisit the entirety of the evidence given in response to the Disclosure order in the December statement and the December affidavit.

After the cross-examination before Peter Smith J was abandoned in the circumstances I have described on 30^th June 2011, Mr Ereshchenko was required to revisit his response to the Disclosure Order. That gave rise to his July affidavit, which did indeed go back over Mr Ereshchenko’s response to the Disclosure Order in the light of the numerous additional documents that had been produced by the Bank since that time (many of them from the search orders that it had executed at Euroguard and elsewhere). In his oral evidence before me, Mr Ereshchenko vouched for the accuracy of his July affidavit. The July affidavit runs to 35 pages, so I have restricted my quotation to those parts that give appropriate context to the sections that are specifically said to be deliberately false, as follows:-

My impression is that, in the July affidavit and indeed in the sections of the June cross-examination that I have read, Mr Ereshchenko tried, in general terms, to give accurate answers to the questions he was asked about the documents that had, by then, become available. I will return to this impression in due course.

Mr Ereshchenko’s May affidavit was made on 18^th May 2012 in response to the Bank’s application to commit. The May affidavit runs to 98 pages and 135 paragraphs, and rehearses the material contained in previous statements and affidavits. It is a comprehensive account of Mr Ereshchenko’s case concerning the documents that had, by then, been produced, his involvement in the AAA Transactions and the evidence he has previously given. He concludes by reiterating that he has never knowingly given false evidence. In his oral evidence before me, Mr Ereshchenko vouched for the accuracy of his May affidavit. I shall not seek to set out all the details that it contains, but again I can say that I have the impression that Mr Ereshchenko tried to give accurate answers to the questions he was asked about the documents. There are, however, two paragraphs that I shall set out as I think that they go a long way towards explaining Mr Ereshchenko’s approach to providing his December Statement:-

On the first day of Mr Ereshchenko’s cross-examination before me by Mr Stephen Smith Q.C., counsel for the Bank, numerous documents were put. He answered the questions in a detailed and careful manner. Perhaps surprisingly, in the whole day of cross-examination, it was not once suggested to him that his answers were inaccurate, let alone deliberately false. In the briefest of outline, Mr Ereshchenko repeated what was contained in his July and May affidavits, which was in broad terms supported by the documents that were put to him. As it seemed to me, without lengthening this judgment by noting every document put to Mr Ereshchenko, it was clear from the documents that the Bank relies upon that Mr Ereshchenko was generally playing a secondary role to that of Mr Udovenko and Mr Shalabayev who were more intimately involved in the affairs of the BVI Defendants and the Further Recipients. This applies equally to the documents concerning the grant of a power of attorney to Mr Ereshchenko for the BVI Defendants, the coupon transactions, and the various securities transactions involving Altyn Invest. The first day of cross-examination, then, confirmed the impression that I have already mentioned in relation to the July and May affidavits to the effect that Mr Ereshchenko was trying carefully to explain all the documents that were put to him. This impression does not, however, necessarily mean that his December statement accurately recorded his independent recollections as to documents and the AAA Transactions. I shall return to those central questions in due course.

In the second day’s cross-examination, Mr Smith tried to draw the threads together by summarising the knowledge that Mr Ereshchenko must have gained between May 2008 and September 2009 as revealed by the emails and documents to which he was a party (and which had been put to him the previous day). My note of this part of Mr Ereshchenko’s evidence records the following:-

He knew that the BVI Defendants existed but did not know they had been registered by Eastbridge until after Sept 2009.

He knew the names of the BVI Defendants and that they had accounts at TKB and brokerage accounts at Alfa Equity.

He was aware that there had been short sales of securities and that the value of those sales was about US$300 million.

He did not know that that the US$300 million had been paid by Alfa Equity to the BVI Defendants’ accounts at TKB.

He knew that the sellers of the securities were the BVI Defendants, but was not clear that the sales were to Alfa Equity or Alfa Bank.

He did know that the proceeds of the sales were to go to the BVI Defendants’ accounts in Riga at TKB.

He is not sure that he knew that the BVI Defendants had channelled the proceeds to the Further Recipients, but he knew they would do so.

He did not know that the BVI Defendants entered into loan agreements with the Further Recipients.

He was told by Mr Surapbergenov that the money would be used to buy bonds in the Bank.

He is not sure that he knew that coupon payments were to be made by BVI Defendants to Alfa Equity or Alfa Bank.

He did not know by September 2009 or at any stage that the 5 SPAs were intended to be entered into between the Bank and the BVI Defendants.

He did not know that there was an intention for there to be a pledge agreement to form security for the BVI Defendants’ obligations.

He knew that Mr Shalabayev and Mr Udovenko were involved in the affairs of the BVI Defendants, but he did not know that Mr Kythreotis was a director of some of the BVI Defendants.

He knew that Eastbridge gave instructions to the directors of the BVI Defendants, not that Eastbridge controlled the directors of the BVI Defendants. Although he never gave those instructions, he knew that Mr Udovenko did.

He knew that Eastbridge had access to the BVI Defendants’ bank accounts. He did not know who at Eastbridge had that access, but he thought it was the finance team at Eastbridge headed by Mr Manokhin.

He learnt that Bubris had a bonds portfolio that engaged in about 30 transactions over 8 months in early 2009, but he did not trade in bonds for Bubris, and he did not understand why these transactions took place.

He did not ask himself who owned the BVI Defendants at the time. He did not have a belief as to ownership, but he thought that they were companies for the benefit of the Bank and continued to think that.

When Mr Ereshchenko was asked about the December statement that he had made in response to the Disclosure Order, he said that he did not think that he remembered the names of the BVI Defendants at that time, and that the lists of money transfers in Schedule B to the Disclosure Order did not jog his memory. When it was put to him that the transfers to TKB were at just the time when he had been in Riga in mid-June 2008, he said that “… this involvement with Timur Surapbergenov was just a part of the work-flow, I didn’t see it as anything extraordinary. So I just cannot imagine how I would recall -- how it even crossed my mind to cross-reference the dates of my dealing with TKB, because my dealing with TKB, I just -- when I said that I was – that I dealt with TKB in June, it’s all reconstructed on the documents which I see now. I mean, it’s too long a shot for me to make it in December 2010”. The following exchange then occurred:-

As Mr Ereshchenko said: “by this time, by December 2010, I struggled to match the names of the companies to the affairs -- to the events which Timur brought me in, among other things, he brought me in”. Shortly thereafter, Mr Ereshchenko was asked about his reaction to the Disclosure Order and he said this:-

Perhaps the greatest insight into Mr Ereshchenko’s thinking came from this answer when he was being asked about the risks for him if he complied with the Disclosure Order: “The concerns which I expressed were that I do not understand the situation I'm in, I do not understand how is it going to evolve. What I do understand is that I am now dragged into a fight between the big guys. And huge stakes, money involved, government fighting against me. I don't like the idea of it at all. I just want to quietly crawl away from the fight and not be killed in this fight”.

In relation to paragraph 15 of his December statement, Mr Ereshchenko explained why he did not know that the accounts were the ones he had dealt with as follows:-

When asked why he said he did not know who gave instructions for the BVI Defendants, Mr Ereshchenko said: “At the moment, after all the contemporaneous material has been provided, I am certain that this is factually incorrect. I am certain that I couldn’t do any better in December 2010”. He repeated similar answers in relation to the administration of the BVI Defendants and numerous other matters.

On the third day of his cross-examination, Mr Smith finally put to Mr Ereshchenko that he had deliberately lied in 7 of the 8 respects that I have set out above, in his previous evidence to the court. Mr Ereshchenko’s response was the same as it had been in his July and May affidavits, namely that he had had a limited involvement in the AAA Transactions, that he had never knowingly given false evidence, that he believed what he had said at each stage was accurate, and that, because he has been provided with more information as time has gone by, he now acknowledges that some at least of what he said was inaccurate.

Faced with this evidence, Mr Smith put to Mr Ereshchenko the facts and matters upon which the Bank relied in support of its contention that he had lied. I can summarise the 13 points that were put to him, together with his responses, as follows:-

Mr Rybalkin had said in his email dated 13^th June 2008 that Mr Ereshchenko was in a position to give an explanation about the June 2008 transaction (the AAA Transactions). Mr Ereshchenko denied either that he could or that he was the best person to do so.

Mr Ereshchenko accepted that he was involved in discussions with senior employees at the Bank and TAS in relation to the AAA Transactions in May and June 2008.

Mr Ereshchenko accepted that, as the project went forward, Mr Surapbergenov would send him emails about what had to be done and by what time, but said that he was not present for many of the telephone calls.

Mr Ereshchenko accepted that he was involved in sorting out the bottleneck concerning difficulties with the TKB accounts in June 2008, but said that it was not he who was principally involved.

He accepted also that he had been involved with the supplemental brokerage agreement in October 2008.

It was suggested that Mr Ereshchenko had sanctioned withdrawals of funds from two of the BVI Defendants to Alfa Equity on 18^th December 2008. He denied that he had sanctioned or approved the payments.

It was further suggested that Mr Ereshchenko received TKB statements of account for October 2008, which he accepted but said he only did so because Mr Surapbergenov requested it.

Mr Ereshchenko accepted that between July 2008 to Jan 2009, he was involved in the payment of coupons, and that in March 2009 he was involved in the draft pledge agreement and the draft 5 SPAs.

It was put to Mr Ereshchenko that it was he that requested closure of the Alfa Equity accounts. His response was to say that he did not do so of his own volition; he was asked to do so.

Mr Ereshchenko accepted that he was granted powers of attorney for the BVI Defendants in March 2009, but reiterated that he was not aware of them.

Mr Ereshchenko accepted that he was involved in some 30 transactions in the Bubris bonds portfolio in 2009, but explained that the involvement was limited.

Mr Smith suggested to Mr Ereshchenko that his involvement in these transactions was not limited in any way, in that nobody said whether he could do this or that. His response was that he had carefully explained the limitations of his role in his May affidavit.

It was specifically suggested that there was no limitation on Mr Ereshchenko’s role as a director of Eastbridge. His response was to complain about Mr Smith’s implication that he could voluntarily transfer money to any account he chose including his own account, that he made coupon payments to conceal a fraud, and that he was authorised to do any such actions for Eastbridge. He denied these implications, saying he was not authorised to give instructions to directors of companies, he did not act on, or know he had, the powers of attorney, and did not sign for the BVI Defendants, and that he could neither order nor compel the making of transfers.

One exchange in the middle of the third day of cross-examination highlighted for me the failure of the parties to understand each other. On the one hand the Bank has a clear belief that Mr Ereshchenko is and has been hiding information from it. On the other hand, Mr Ereshchenko simply does not understand what more he can do to comply with the Disclosure Order. The exchange was as follows:-

On the final afternoon of cross-examination, Mr Smith asked questions about the location of Eastbridge’s document archive, client files and electronic register. Mr Ereshchenko was shown a number of documents (some of which I have summarised in the chronology above) showing that documents were at various points in London. He explained clearly and carefully how he was winding down the company in the first 5 months of 2010 and how he cleared out the remaining documents that were in Eastbridge’s London offices after Mr Udovenko left in December 2009. He also explained what happened to the “old server” and the “new server”. In short the old server, unknown to Mr Ereshchenko, found its way with Mr Udovenko’s and Mr Shalabayev’s documents to the Big Yellow storage company under the auspices of Mr Salim Shalabayev, and the new server was sold to Park Hill, who took over Eastbridge’s offices. There were few remaining documents belonging to Eastbridge apart from the company and accounting records that were held by its accountants, SPW, and some documents retained by Mr Ereshchenko personally.

Mr Ereshchenko confirmed, as he had repeatedly said in writing, that he had procured the recovery of Mr Udovenko’s and Mr Shalabayev’s documents from the Big Yellow storage company, again under the auspices of Mr Salim Shalabayev, on the 9^th and 10^th December 2010, when the accountants wanted to see original bank statements, but that it had not occurred to him that the answers to the questions posed by the Disclosure Order would or might be amongst those papers. Mr Ereshchenko denied that he had made the false statements alleged. He said he did not know where the files the Bank wanted were kept. He had an idea that at some point they were in Moscow and then they went to Cyprus, but he did not know where they were on 10^th December 2010 and did not have access to them.

Ms Kabanova worked for Eastbridge Moscow from 2006 to 2009. From 2009 to April 2011, she worked, at the invitation of Mr Shalabayev for Euroguard. She made a witness statement in support of Mr Ereshchenko, but did not attend to be cross-examined. I allowed her evidence to be admitted subject to weight. But her evidence has significantly less weight as a result of her failure to attend. Nonetheless, Ms Kabanova, who was ultimately head of Eastbridge Moscow’s corporate department, was able to confirm that the corporate services side of Eastbridge was organised at the direction of Mr Udovenko, and that Mr Ereshchenko had a limited role chasing Eastbridge Moscow when there were delays or mistakes, and that Mr Ereshchenko did not have authority to instruct any agents directly.

Mr Ereshchenko sought to rely also on the evidence contained in a letter dated 18^th May 2012 from Mr Kaliappan of SPW (Eastbridge’s chartered accountants), which confirmed that he had arranged the meeting at SPW’s offices on the evening of 10^th December 2010, and that SPW had acted as accountant and book-keeper for Eastbridge for over three years. Mr Kaliappan explained that he had been asked by Eastbridge’s lawyers and Eastbridge’s new director to provide complete books and records for Eastbridge, and needed certain bank statements for that purpose. He said that he had contacted Mr Ereshchenko shortly before 10^th December to ask if he could locate the missing statements. Mr Ereshchenko subsequently confirmed on 9^th December 2010 that documents could be brought to SPW offices on 10^th December 2010 in order for him to search for the missing statements. Mr Kaliappan then said that approximately 20 boxes were delivered to SPW’s offices at around close of business 5.30pm on the 10^th December 2010, and that all the boxes were of a similar size and type; he did not recall seeing any plastic crates amongst the boxes that were delivered. Mr Ereshchenko arrived later and inspected only about 5 boxes before he found the required bank statements. The boxes were then collected at around 10pm.

It was not suggested by the Bank that Mr Kaliappan’s evidence was in any way unreliable.

Despite a great deal of material in the written submissions, there seems to be nothing between the parties as to the law that needs to be applied in this case. I can summarise it very briefly as follows:-

Burden of proof: the burden of proving the contempt that it alleges lies on the Bank. Insofar as Mr Ereshchenko raises a positive defence, he carries an evidential burden, which he must discharge before the burden is returned to the Bank.

Standard of proof: the criminal standard of proof applies, so that the Bank’s case must be proved beyond reasonable doubt – or so that the court is sure. In case the meaning of this formulation were unclear, Phipson on Evidence (17^th edition, 2009 at paragraph 6.51) cites the Privy Council in Walters v. R. [1969] 2 A.C. 26 as indicating that “[a] reasonable doubt is that quality or kind of doubt which when you are dealing with matters of importance in your own affairs you allow to influence you one way or another”.

The mens rea necessary to prove criminal contempt of the kind alleged by the Bank is accepted to be in two parts:-

First, that Mr Ereshchenko deliberately gave false evidence without any honest belief in its truth on the occasions specified.

Secondly, that Mr Ereshchenko had the intention, by giving that false evidence, to interfere with the course of justice.

Both sides accept that the court needs to exercise care when it is asked to draw inferences in order to prove criminal contempt. This is particularly relevant in this application, because the central allegation in relation to the AAA Transactions concerns Mr Ereshchenko’s recollection of events. The Bank asks the court to infer that Mr Ereshchenko cannot have been telling the truth when he said he had little or no recollection. The law in this respect is well summarised in a passage contained in the recent judgment of Teare J in the related case of JSC BTA Bank v. Ablyazov [2012] EWHC 237 (Comm) at paragraph 8:-

Some reference has been made expressly and impliedly to the other contempt applications that the Bank has made (with success) against other defendants either to these proceedings or to associated proceedings in the Commercial Court. Before turning to deal with the alleged contempts themselves, it is worth noting that, in the case against Mr Ablyazov, Teare J said this at paragraph 122 about the possibility of further evidence coming to light on the ownership issue he had to decide in order to determine the committal:-

Mr Ablyazov’s case provides a good starting point for this discussion. In Mr Ablyazov’s case, the type of contempt was the same as it is here, but Teare J thought he had all the available evidence on the point. That is not the same in this case. There is no doubt that there may be very much more evidence available concerning the AAA Transactions and Mr Ereshchenko’s involvement in them. Indeed, the Bank has not yet been ordered to give disclosure and, according to Mr Hardman, has been careful to disclose only the documents it perceives that Mr Ereshchenko is entitled to receive at this stage. This is not a criticism of the Bank’s conduct. It has behaved entirely properly. But these aspects do need to be borne in mind when the court considers the evidence as to whether or not Mr Ereshchenko has lied.

If the substantive case against Mr Ereshchenko is proved at a trial, the court would undoubtedly be in a better position at that stage to determine whether what he said about his recollection and access to documents in December 2010 was clearly false. Again I do not say this by way of criticism. The Bank is fully entitled to bring this application at this stage. But it needs to accept that, in doing so, it can only rely on the evidence available at this stage and put to Mr Ereshchenko. If there is doubt as to what may later be shown to be the case, Mr Ereshchenko will obviously have to be given the benefit of it.

This point is connected also with the inter-relation between this contempt application and the determination of the substantive issues pleaded against Mr Ereshchenko in respect of his alleged dishonest assistance in breaches of fiduciary duty. I have already set out the pleaded case. It is important to understand at the outset the consequence of deciding that Mr Ereshchenko had lied in the respects alleged in relation to the AAA Transactions. The allegation, in effect, is that Mr Ereshchenko did recall the details of the AAA Transactions, and could, therefore, have given further details about them, despite the absence of a great deal of contemporaneous documentation. Mr Smith argues, for reasons I shall come to, that it is obvious that Mr Ereshchenko must have recalled the AAA Transactions in December 2010. It is, of course, far more likely that the details of the AAA Transactions would have remained uppermost in Mr Ereshchenko’s mind if he was intimately involved with them as the Bank says he was. If I were to decide, therefore, that Mr Ereshchenko lied in saying he did not recall any details, I would be going a long way towards (if not actually) deciding that Mr Ereshchenko knew all about the AAA Transactions because he was a significant player in their creation and execution. The consequence would be that I would be taking a significant step (at least) towards deciding the issue in the action against him, namely whether he was liable for the dishonest assistance in a breach of fiduciary duty as claimed by the Bank.

It is, for this reason, important to note that Mr Ereshchenko vehemently denies his liability to the Bank. He says that he was, in effect, a bit part player, concerned only to chase up the execution of elements of the AAA Transactions, when specifically asked to do so by Mr Surapbergenev. He points to Mr Surapbergenev, Mr Udovenko and Mr Shalabayev as the main players.

Another general point concerns the evaluation that can be made at this stage of the documentary record. When witnesses are said to be lying, a court is always well advised to pay particular regard to the documents (see Lord Goff in Grace Shipping v. Sharp & Co [1987] 1 Lloyd’s Law Rep. 207 at pages 215-6). Mr Lowenstein complained that only 66 documents were put to Mr Ereshchenko. But the point is, in my judgment, a broader one. When evaluating something as nebulous as the veracity of a witness’s statement as to his recollection of past events, it is important to know precisely what he knew at the relevant time. At a trial, it will be possible to ascertain precisely, on all the available evidence after disclosure and oral evidence from witnesses on both sides, Mr Ereshchenko’s role both in Eastbridge and in the AAA Transactions. It will be possible to compare, for example, the roles of Mr Udovenko with the role of Mr Ereshchenko, and evaluate the truth of Mr Ereshchenko’s contention that he spent minimal time on the AAA Transactions and that Mr Udovenko and others were in charge of them at Eastbridge. It will also be possible to evaluate, on the basis of hard evidence, the truth of Mr Ereshchenko’s statements as to what else he was doing between June 2008 and December 2010, a period of 2½ years. At the moment, that evaluation is made more difficult by the fact that the entire documentary record is not available to the court.

I want next to consider Mr Smith’s important submission that, in the light of the events between the nationalisation of the Bank in February 2009 and December 2010, it is inconceivable that Mr Ereshchenko did not know a great deal more than he was prepared to say about the AAA Transactions. Mr Smith points to the series of events recorded in my chronology. He relies on the cataclysmic collapse of the Bank and the flight to London of Mr Ablyazov and Mr Solodchenko; on Mr Surapbergenov’s visit to London and the concerns he expressed; on the initiation of “intense” legal proceedings by the Bank about which Mr Ereshchenko admitted he knew; the fact that Mr Surapbergenov was sentenced to 7 years in prison in Kazakhstan; the closing down of Eastbridge due to these events; on the disappearance of his partner, Mr Udovenko in December 2009; and on a whole host of other catastrophic circumstances that led to the collapse of Mr Ereshchenko’s business activities as he had known them. Mr Smith then points to Mr Ereshchenko’s own evidence that he was frightened and panicked by the service of the Disclosure Order. He submitted that all this added up to an inevitability that he knew what it was all about. He must have recognised the names of the BVI Defendants and the Further Recipients, with which he had been involved, from the Disclosure Order itself, and must have known that he had dealt on their behalf with the AAA Transactions. Accordingly, when Mr Ereshchenko said he could not recall the AAA Transactions, he was, according to Mr Smith, deliberately lying.

This is a formidable case. Were it to be advanced after the court had determined at a trial that Mr Ereshchenko’s role in the AAA Transactions was pivotal or at least instrumental (as the Bank suggests) it might be conclusive. But, in my judgment, at this stage of the proceedings, it is just one element, albeit an important one, to consider when seeking to evaluate the evidence as a whole.

In concluding this general section of the judgment, I should make it clear that I have considered the documents and the evidence very carefully. I have particularly concentrated on the statements and affidavits that Mr Ereshchenko made. I have tried to see, in the case of each of the statements said to be a lie, whether there is material upon which I can be satisfied, so that I am sure, that Mr Ereshchenko’s statement was a lie. I shall deal with each specific allegation in turn.

I intend to deal with these two allegations together because they are in effect central to the Bank’s case. Moreover, as I have said, one cannot fairly read either of these statements without considering the entirety of the December statement.

One of the points with which I have found difficulty has been Mr Ereshchenko’s denial that he recognised the names of the BVI Defendants or the Further Recipients when he received the Disclosure Order. He said, as I have quoted above, that he struggled to match the names with Mr Surapbergenov’s transactions. I find it hard to accept that Mr Ereshchenko did not know what he was being asked about when he was served with the Disclosure Order. I say that because of the build up of disastrous events upon which Mr Smith relies, and because Mr Ereshchenko’s own December statement says that he has “no knowledge about the establishment of the BVI Defendants or the Further Recipients” indicating that he was familiar with those companies. Even if he did play a peripheral role in the AAA Transactions as he maintains, the documents show that he had relatively frequently seen the names of these companies in the headings to emails and in other documents. Even if he was not a central player, the Disclosure Order would surely have jogged his recollection. Moreover, the fact that Mr Ereshchenko was frightened and panicked when he got the Disclosure Order indicates to me that he knew that it signalled his involvement in the litigation that had caused his business to collapse and his colleagues to disappear.

This conclusion does not, however, lead inexorably, as Mr Smith submitted, to the conclusion that Mr Ereshchenko lied in the respects pleaded. Nor indeed that he lied about his recollection of the BVI Defendants. I rather think, as I put to the parties in closing submissions, that Mr Ereshchenko behaved like an ostrich. He knew that his worst fears had been realised when he received the Disclosure Order. He knew that he was becoming embroiled in the litigation that had engulfed his former colleagues, but he did not want to admit it, even to himself. In this context, his reaction was rather like the ostrich sticking its head in the sand – and in Mr Ereshchenko’s case, I think, not daring to look up in case his already frightening situation became worse. This was, I think, why he did not properly read the materials served by the Bank until much later, when in the lead up to the June cross-examination, he finally plucked up the courage to face his problems.

My view of events is, I think, confirmed by Mr Ereshchenko’s cultural and personal characteristics. He is undoubtedly an intelligent man. He is also very precise, even meticulous. Indeed, it seems that Mr Srapberganov used him specifically because he, unlike his colleagues, could get things done when they needed to be done. Moreover, I do not think what he says about his Soviet/Russian upbringing is to be ignored. I am sure that citizens are circumspect about dealings with courts and authorities in Russia, and I accept what Mr Ereshchenko has said repeatedly about not wishing to say anything unless he was sure it was right. This, I think, partly explains the unhelpful nature of the December statement. Mr Ereshchenko knows that he would have been better served if he had explained matters in more detail in his December statement, but he did not do so. I also think he was very ill-advised to make the December statement on 10^th December 2010 in such a rush, without coming back to the court on 10^th December 2010 (as I had specifically invited him to do) to ask for more time on the basis of a proper explanation of what had been done so far (to answer the 199 questions) and what needed to be done.

None of this, however, leads to the conclusion that the court can be satisfied beyond reasonable doubt that Mr Ereshchenko deliberately lied in saying either that he had attempted to comply with the Disclosure Order in full so far as he was able, or that he knew nothing, as far as he could recall, about the AAA Transactions. If the second statement had stood entirely alone, I would not have thought it truthful (at least on the present evidence). But it did not. It has to be read with the December statement in which Mr Ereshchenko explains why he cannot recall the necessary details of the AAA Transactions. It must be remembered that he was not being asked to give a freestyle description of all he could remember about the AAA Transactions. He was being asked to answer a series of extremely detailed questions about specific transactions that had taken place some 2 to 2½ years before, and in respect of which he had no documents to hand. Mr Ereshchenko’s meticulous approach led him to say, truthfully as he saw it: if you ask me today whether I can tell you, without documents, who instructed the payment of $x by A to B on the n^th June 2008, I simply cannot recall. I would not be surprised if he could not. And it is to be remembered that he is not charged with failure to answer the questions in the Disclosure Order, but only with falsely saying that he could recall nothing about the AAA Transactions – in the context of his December statement.

It is also to be remembered that in paragraphs 4-19 of his December statement, Mr Ereshchenko does explain the reasons why he said he could not recall the necessary details of the AAA Transactions. Of course, he would have been better to say that he would be pleased to help if the documents were provided – or even generally. But he did not, probably because of what he had seen had happened to his former colleagues and his obvious fear of what was going to happen next.

Taking all the evidence into account, I am wholly unable to conclude at this stage, beyond reasonable doubt or so that I am sure, that Mr Ereshchenko lied when he made these two statements, or that he made these statements without any belief in their truth. I think he was being careful about what he said – perhaps unduly careful – but that is a different thing. I do not rule out that, after a full trial, these statements may look different. But taking the matter today as I must, I cannot determine that Mr Ereshchenko committed a contempt of court by saying in December 2010 either that he had attempted to comply with the Disclosure Order in full so far as he was able, or that he knew nothing, as far as he could recall, about the AAA Transactions (in the context of his December statement).

Mr Smith’s point about this statement is that Mr Ereshchenko had had 2½ months since his December statement, that he had had more time to read the evidence produced by the Bank and the available contemporaneous documents and that he had had nothing much else to do. This analysis is not borne out by the evidence. Undoubtedly, the Bank had not left Mr Ereshchenko alone in the intervening period. It had restrained him from travelling, joined him in as a defendant to the action, searched Eastbridge, and applied to cross-examine him. Moreover, I think that Mr Ereshchenko was, by 1^st March 2011, still somewhat in denial. He had not yet reached the position where he decided that he needed to face the Bank head-on, which was the position he reached by the June cross-examination at the latest. I, therefore, accept his evidence that he had, by 1^st March 2011, still only read limited parts of the case against him – however stupid that was.

I can only repeat that Mr Ereshchenko is a careful man and was a careful witness. He made many mistakes, but I cannot be satisfied at this stage beyond reasonable doubt or so that I am sure that he lied when he said in his March statement that he had no more information relevant to the Disclosure Order and nothing further to add to the evidence provided in his December affidavit.

These statements are similar to what Mr Ereshchenko had previously said. It is true that by the time he made them he had been subjected to 3 days of the June cross-examination and had admitted “lying” about an entirely peripheral concern. But for the reasons I have previously given, I cannot be satisfied beyond reasonable doubt or so that I am sure that either of these statements was deliberately false.

The question of whether Mr Ereshchenko had limited involvement in the AAA Transactions is a matter for the trial. I cannot say how the evidence will then look. Whether involvement is “limited” is anyway a matter of judgment. There is a legitimate range within which different people might use the word to describe different levels of involvement. The documents I have seen do show, as I have said, that others were certainly far more intimately involved in the AAA Transactions. It will be for the Judge at trial to decide what Mr Ereshchenko did and whether that amounted to a culpable involvement or not. Once that decision is made, this question may look different.

The same comments can properly be made about the question of the truthfulness of Mr Ereshchenko’s statement in July 2011 that his recollection of the AAA Transactions is and always has been very limited. As I put to Mr Smith on the first day of the committal hearing, it is always going to be difficult, without hard evidence of what a witness recalled at a particular time, to prove beyond reasonable doubt that he lied when he claimed to have a poor recollection. There was no hard evidence that Mr Ereshchenko actually recalled more about the AAA Transactions than he was saying either in July 2011, March 2011 or indeed in December 2010.

The Bank did not highlight in its submissions the statements concerning documents, recognising that they were, as the evidence turned out, of rather lesser importance. If Mr Ereshchenko’s evidence about the documents is taken at face value, and the Bank is not able to contradict it, the only documents he could in fact have obtained were the boxes and the old server at the Big Yellow storage company. The strangest parts of Mr Ereshchenko’s story are twofold: first that he signed off the December statement hours before going to the accountants to look through the documents that Mr Salim Shalabayev had already agreed to retrieve for him; and secondly that he threw away his laptop computer in the month following the commencement of these proceedings. As for the laptop, it appears that Mr Ereshchenko said that he threw it away as it no longer worked. There is no hard evidence to contradict what he said.

As for the retrieval of the documents from the Big Yellow storage company, Mr Ereshchenko and the accountants explain how this occurred, and Mr Ereshchenko claims that he regarded the documents as belonging to Mr Udovenko and Mr Shalabayev. He says he had no right to access them – anyway for the purposes of answering the Disclosure Order. That seems strange on the very day that he had already been allowed to inspect them for another purpose. But this oddity is moderated by the fact that not even the Bank suggests that there were in fact any hard copy documents at the Big Yellow storage company that would have helped Mr Ereshchenko answer the Disclosure Order.

In these circumstances, the best that the Bank can allege is that Mr Ereshchenko must have known that Eastbridge’s old server was amongst the Big Yellow storage company’s papers, and that that server would contain relevant documentation. There is no hard evidence that Mr Ereshchenko did know as at 10^th December 2010 where the old server was. I did not form the view that Mr Ereshchenko was lying in his evidence to me in connection with the two servers and the documents.

For these reasons it does not seem to me to be possible to conclude at this stage on this evidence beyond reasonable doubt or so that I am sure that Mr Ereshchenko was lying when he said that he had no access to documents that might help him respond to the Disclosure Order.

The Bank relies under this heading on a number of documents that seem to indicate that the client files or Eastbridge’s archives were variously in London, Moscow or Cyprus. The problem is that Mr Ereshchenko’s evidence is that he did not know for sure where they were, and it was not his responsibility to keep them – or at least that has been his consistent case. It seems clear that he was correct in saying that the files were not in London. And I am not sure that the Bank has been able to say more than it beggars belief that Mr Ereshchenko did not know that the files were at Euroguard in Cyprus. Once Mr Ereshchenko’s precise involvement in the relevant clients’ affairs has been determined at trial, it may be possible to look differently at this statement. But, as things stand today, I cannot see how it is possible for the court to determine beyond reasonable doubt or so that I am sure that that Mr Ereshchenko lied when he said in his July affidavit that he did not know where the client files in relation to Eastbridge’s corporate services were kept.

Both parties to this application have treated the committal application somewhat like a state trial. I formed the view early on in the hearing that they had got it rather out of proportion. A committal of this kind needs to be clear – beyond reasonable doubt. Finely balanced judgments about a witnesses’ state of knowledge at particular times against the backdrop of years of complex documentation have no sensible place in such an application.

All that said, nothing that I have said in this judgment should be taken as determining anything finally in the action. If the Bank had left this committal application over until after the trial, things might, as I have repeatedly said, have looked different. I know not.

I am, however, quite clear that, on the present evidence, the Bank has failed to prove beyond reasonable doubt that Mr Ereshchenko lied in any of the 8 specific respects that it particularised. Put shortly, I cannot now be sure that Mr Ereshchenko knew more about the AAA Transactions than he was saying in his December statement, nor that he had not answered any of the 199 specific questions in the Disclosure Order as far as he was able at the time. Nor can I now be sure that he knew he had access to documents that might have helped him respond.

As I have tried to explain in this judgment, Mr Ereshchenko’s approach in his December statement, December affidavit and March affidavit was not helpful. He would have done much better to have explained more and to have offered to help the Bank to ascertain the answers to their questions – particularly the few that they really wanted to know the answers to, like where the US$45 million left in Bubris had ended up. Mr Ereshchenko’s fright and panic did not help the situation, and I am convinced that his ostrich-like response was itself the cause of much of what happened.

Since the July affidavit (in July 2011), Mr Ereshchenko has been rather more forthcoming, and I have seen no evidence that leads me to believe that there is presently any evidence tending to show that the recent explanations he has given have not been accurate.

If the Bank wishes to pursue its case against Mr Ereshchenko, it must prepare for trial. There is no evidence that Mr Ereshchenko obtained any money from the alleged fraud in relation to the AAA Transactions, but that does not mean that he may not be liable for dishonest assistance in breaches of fiduciary duty. Nothing I have said in this judgment based on exiguous evidence should be taken by either party as being a comment either way on the substantive issues. They are for another day.

In the light of the findings I have made, I shall dismiss the Bank’s application to commit Mr Ereshchenko for contempt of court, and will hear counsel on costs and any appropriate ancillary orders.

what moneys are left in the accounts identified in Table 2 of Schedule B below?

When did money/securities leave those accounts and in what amounts?

Who gave the instructions that money/securities should leave those accounts?

Were those instructions influenced by a suggestion or instruction made by any other individual, and if so who is that other person and what was the suggestion or instruction?

Where did the money/securities which left the accounts go to and for what purpose?

Was any and if so what consideration given and/or paid by the recipient of the money/securities?

What is the identity and address of each recipient of the money/securities?

Are the moneys/securities now in the form of cash and, if so, where is that cash?

Are the moneys/securities now standing to the credit of a bank account or accounts and, if so, which account or accounts in whose name(s) and at which bank(s)?

Were any of the moneys/securities used to purchase any asset(s) or any interest in any asset(s), if so which asset(s) were purchased, by whom, on which date(s) and what has become of them and any proceeds of sale of any of them?

Payments of sums from Alfa Equity to the BVI Defendants. All payments made at any time relating in any way to the sales by the Third to Seventh Defendants to claim no. HC10C02462 (the “BVI Defendants”) to Alfa Equity Investments Limited (“Alfa Equity”) of any or all of the securities referred to in columns A to G of Table 1 which appears at the end of this Schedule. These payments include, but are not limited to, the payments shown in columns H to J of Table 1 (“Table 1”).

Transfers of the AAA Investments from the Bank to the BVI Defendants. The transfers of the AAA-rated securities referred to in Table 3 which appears at the end of this Schedule (“Table 3”) (“the “AAA Investments”) from the Bank to the BVI Defendants.

Transfer of securities from the BVI Defendants to Alfa Equity. The transfers from the BVI Defendants to Alfa Equity of securities matching the AAA Investments in nature, between May 2008 and January 2009 inclusive. The transfers include the transfers made in order to satisfy the delivery obligations created by the transactions referred to in Table 1.

Payments of sums from the BVI Defendants to the Eighth to Eleventh Defendants to claim no. HC10C02462 (the “Further Recipients”). All payments made at any time by the BVI Defendants of any of the sums received by them as referred to in item (1) above. These payments include, but are not limited to, the payments shown in Table 2 which appears at the end of this Schedule (“Table 2”). The references in that Table to “Trasta” are to TrastaKomercbanka in Riga, Latvia.

Payments of sums from the Further Recipients. All payments made at any time by the Further Recipients of any of the sums received by them as referred to in item (4) above. These payments include, but are not limited to, payments of any sums forming part of the payment shown in Table 2.

Who is the legal owner of the shares of each of the Defendants?

Who is know to be or believed to be (stating which applies) the beneficial owner of the shares of each of the Defendants?

Who gives instructions to the director(s) or agents of each of the Defendants concerning the decisions and actions they should take and generally concerning the activities of that Defendant?

Who is known to be or believed to be (stating which applies) the person who ultimately controls each of the Defendants?

Does anyone else other than the director(s) have power to act on behalf of each of the Defendants and, if so, who and how/why?

Who had/has signatory powers over the accounts at Alfa Equity and Trasta into which the Payments were paid as referred to in Schedule C above?