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Chase the Ace

13 February 2019

April French Furnell

What do you do when you get awarded £453million in a divorce by the UK courts but your ex-spouse refuses to pay the settlement? That’s the scenario Tatiana Akhmedov, ex-spouse of Azerbaijani but often described as ‘Russian’ Oligarch Farkhad Akhmedov found herself in after being awarded one of the largest divorce settlements in history in 2016. Farkhad Akhmedov is believed to have been represented by Andy Kerman of Kerman & Co according to one news report in The Shropshire Star (see below).  A victory for Tatiana and her lawyer Fiona Shackleton of Payne Hicks Beach, who has previously represented the likes of Prince Charles. However rather than being the end of the story, it reset to the beginning, as the asset recovery story began. As Citywealth’s April French-Furnell discovered: there are many stages to a divorce pay-out.

The pot of gold

Of course, in many cases a spouse will know the extent of the available assets as part of the divorce disclosure process. However, “there are instances where a recalcitrant spouse may not reveal everything”, said Elizabeth Hicks, partner and Head of Family Asset Protection, London at Bryan Cave Leighton Paisner. It may therefore be necessary to employ a private investigator. “A good private investigator will be able to use technological advancements to see if they can establish a link between corporate entities or a company and an individual”, said Hicks. A Google web search says these options may include hidden video cameras or audio, GPS vehicle trackers, drones, social media or spyware.

Other signs to look out for are “money being transferred to an account that hasn’t been disclosed, or suspicious signs, which might include, not arguing, that suggest something is being concealed. Once you get these hints you can ask questions of the offending party who is under an obligation to answer if the court deems it a reasonable question”, said William Longrigg, a divorce lawyer and specialist in financial relief and children cases at Charles Russell Speechlys who was described by one of his clients to Citywealth Leaders List as “one of the best family lawyers of his generation”.

Phones NOT 4 u

Or you might question a client on “where they holidayed and where the other spouse went on business trips to elicit useful information. It is then a case of pulling together the different pieces of the jigsaw to see if the assets can be found”, Hicks concluded. Separately Citywealth understands from a non-UK divorce expert that phone records can be requested in some jurisdictions to corroborate or provide historical tracking of movements.

The Big Freeze

Once you’ve identified the assets, the next hurdle is obtaining an enforcement order. For those divorcing in the UK, a worldwide freezing order may be sought, but it will need to be enforced locally in each jurisdiction to give it teeth. The Akhmedov case has “reignited the debate about enforcement of orders”, said Nathaniel Groarke, a family law partner at Irwin Mitchell Private Wealth in Manchester, but also London, who is a specialist in suspicious financial cases where assets maybe hidden . “In the Akhmedov situation, the solicitors for the wife obtained a freezing order in Dubai’s International Financial Centre against the husband’s super yacht. The husband successfully appealed this order in Dubai’s Sharia court but it is understood that the wife is also appealing this decision”.

Stealth for financial health

Therefore a tactical approach is a good route to be taken from the outset, according to award winning divorce lawyer, Sandra Davis, partner and Head of the Family team at Mishcon de Reya who has represented the likes of Tamara Mellon. “In too many cases, parties obtain a favourable order, only to find that they spend years trying to get the pay-out. Lawyers need to pinpoint more easily accessible assets where enforcement is likely to be successful and to secure those assets as soon as possible, to prevent their clients ending up with an order that in practical terms, is worth little to them”, she explained. In order to achieve this, “practitioners need to forge strong relationships with lawyers in other jurisdictions, so that action can be taken with speed where assets are held abroad”, Davis added.

Mission Impossible: Cyprus

An important factor to consider is where the assets are located. “For instance, If they are in a non-friendly jurisdiction and there are firewall provisions which mean that an English order will not be enforced”, said Hicks. Among those jurisdictions, Cyprus was cited as one where it is almost impossible to get an English order enforced. 

In all scenarios, “early advice may well frame how a case proceeds.  For example, if all the available assets are held offshore in structures that are almost immune to attack, a large award may well be a Pyrrhic victory” said Groarke.

New laws aid ‘discovery’

For those struggling to track down assets, the current global stance on transparency and anti-money laundering should offer renewed hope. “The push for transparency, fuelled by anti-money-laundering efforts or “AML”, has made it easier to obtain crucial information about the ultimate beneficial owners behind trusts”, said Leonora Sagan, a disputes and investigation lawyer at Kobre & Kim based in London. “Several OECD countries, as well as offshore jurisdictions, have set up registries for beneficial owners, allowing access to data that was previously off-limits. Additionally, Suspicious Activity Reports contain information that can be used to expose certain transactions, such as an attempt to move assets beyond the reach of an ex-spouse. Local financial intelligence units, under pressure to enforce AML regulations, are increasingly willing to cooperate with private parties in their attempts to bring perpetrators of financial crimes to justice.”

Luther laws

A further route to recovery might be taking advantage of extraterritorial US criminal laws. “The US can freeze assets in US correspondent bank accounts as a result of non-US criminal acts in some cases”, said Jason Masimore, a trial and asset forfeiture lawyer, also at Kobre & Kim. “Broad US asset confiscation powers and its willingness to cause effects outside the US are often useful to build settlement pressure against an ex-spouse who has been involved in criminal or fraudulent activity, whether in the US or elsewhere,” Masimore said.  “Also, because the US has favourable tools to return seized assets to financial crime victims, a spouse may substantially increase recovery if he or she arguably is the victim of a financial crime by the ex-spouse.”

Fly me to the moon

At the end of 2018, Tatiana had claimed a sliver of the award through seizing and selling a helicopter, but her battle to recover £453million continues. “While these issues don’t crop up in most divorce cases, the English courts are always going to attract oddities of this kind as they are incredibly thorough at looking into wealth in divorce proceedings. This isn’t the case in other jurisdictions, particularly civil law jurisdictions. This has contributed to the UK’s reputation as the Divorce Capital of the World”, concludes Longrigg.

 

https://www.shropshirestar.com/news/uk-news/2018/02/27/russian-billionaire-in-divorce-battle-says-he-cannot-get-justice-in-britain/

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