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Report casts doubt over effectiveness of Confiscation Orders

Jan 2014
Fraud updates
The National Audit Office published earlier this week their report identifying numerous failings in the current use of Confiscation Orders, the primary instrument of the criminal justice system to deprive criminals of the proceeds of crime. The report covers many aspects of the confiscation regime, including a review of the efficacy of the multi-body structure that controls and executes the regime, and an evaluation of the entire process, from identification of suitable cases to the enforcement of Orders. The report approximated (using National Fraud Office figures) that for every £100 of criminal proceeds, only 26 pence was successfully confiscated in 2012-2013, and this figure rose to only 35 pence when all other asset recovery measures available to the criminal justice system, e.g. restraint orders, were included. Further, the report identified that the current regime is ill equipped to confiscate assets located abroad, and that no government organisation involved in the confiscation regime demonstrated market-leading practices with respect to financial management and debt collection. Against this, there is a strong record of success in recovering assets through the civil litigation process, both domestically and overseas by formulating cogent strategies and working closely with trusted local experts. Read More

November 2013

Nov 2013
PCB news
PCB Litigation and its partners have again been recognised in Chambers 2014 as leaders in the field of fraud its quality of work being described as “extraordinarily good.”
PCB Litigation has advised in relation to a claim arising from an alleged banking fraud in excess of US$250 million.
International Company and Commercial Law Review has published an article by Trevor Mascarenhas which analyses recent controversial English case law relating to remedies in bribery cases. Read the article here. Read More

October 2013

Oct 2013
PCB news
On behalf of a major European Bank, PCB Litigation obtained a World Wide Freezing Order for $100m as well as Orders that the Defendant be restrained from leaving England and that he surrenders his passports.
PCB Litigation has been instructed on a multi-jurisdictional investment dispute.
PCB Litigation has been retained to advise on alleged tax fraud involving 3 jurisdictions. Read More

September 2013

Sep 2013
PCB news
PCB are delighted to announce that in the Legal 500 Awards announced today that PCB is ranked in the top tier of civil fraud firms and as well as a leading firm in commercial litigation and banking litigation. The Legal 500 describes PCB as a firm which ‘punches well above its weight’; Steven Philippsohn as a ‘formidable litigator’; Anthony Riem as ‘tenacious’ whose ‘sharp mind and pragmatic approach ensure success’ and Trevor Mascarenhas as an experienced adviser who ‘thinks outside the box’. These rankings are dependent upon references provided by our clients and fellow professionals, and we are very grateful to you for your continued support.
In the September issue of Acquisition International, Nick Ractliff had an article published on the subject of recovering assets from corporate structures. Click here to read the article.
PCB Litigation has been retained in connection with a multinational shareholders dispute relating to minority shareholders rights.
PCB Litigation has been instructed in a shareholder dispute involving the purchase of a multi-million pound development property in London. Read More

August 2013

Aug 2013
PCB news
PCB Litigation has been retained by a shipping company to act in a US$30m+ claim involving allegations of conspiracy to injure and procuring breach of contract.
We are pleased to announce that PCB Litigation has won 2 awards, having been voted the “Mid-Market – Fraud Law Firm of the Year in England” and “Niche – Commercial Litigation Law Firm of the Year in England,” by Corporate INTL in its 2013 Legal Awards.
Steven Philippsohn has been named as one of the “most highly regarded individuals,” and “commands a great deal of respect” and in “very high demand” in the 2013 edition of The International Who’s Who of Asset Recovery Lawyers. Anthony Riem is also described as being a “leading authority” in international asset recovery. Read More

July 2013

Jul 2013
Latest news
PCB Litigation has been retained by an overseas state authority to challenge a contract tainted with corruption and avoided by governmental sanctions.
PCB Litigation successfully obtained an order from the BVI Court for the appointment of receivers over a judgment debtor’s interest in various BVI companies, which in turn have rights that can be exercised to control a Jersey foundation holding many millions of dollars worth of real estate assets.
PCB Litigation are acting to bring proceedings in 3 jurisdictions to recover payments made for multi million dollar property investments.
PCB Litigation have been retained by a European Bank to bring proceedings in several jurisdictions to recover debts in excess of $100m. Read More

BVI Court Appoints Receivers on PCB Application

Jul 2013
Fraud updates
On 5 July 2013, the BVI Court handed down judgment in the case of Dalemont v Senatorov. The judgment is the latest in a series of worldwide steps that PCB is coordinating to recover Russian judgments against Mr Senataorov, based on his guarantees of many millions of dollars of bad loans. Mr Senatorov’s assets were put into a Jersey foundation, Dalemont says in order to defeat the Russian judgments. The holding structure is complex, involving layers of companies in Russia, Cyprus and BVI and actions have been taken in all of those jurisdictions and Jersey in order to enforce the judgments. The case has already generated the first judicial decisions about the nature and operation of Jersey foundations. In the most recent judgment, the BVI Court has appointed receivers over Mr Senatorov’s beneficial interests in shares of BVI companies. Those BVI companies are able to exercise certain rights over the foundation which may lead to the successful enforcement of some of the Russian judgments. The Court rejected Mr Senatorov’s argument that this was not appropriate property over which to appoint receivers. It also rejected his argument that he should not have to be faced with the costs of defending numerous enforcement proceedings, saying that this was an illusion of hardship as there is no inherent right to thwart enforcement of judgments. Read More

Supreme Court Win for PCB on Serving Foreign Defendants

Jun 2013
Fraud updates
The Supreme Court has today unanimously reversed the judgment of the Court of Appeal in Abela v Baadarani [2011] EWCA Civ 1571. In finding in favour of PCB clients Mr Abela and others, the Court recognised that litigation between residents in different states is a routine incident of modern life and the traditional characterisation of service of proceedings abroad being an interference with the sovereignty of the state in which process is served is no longer a realistic view of the situation. In his speech, Lord Sumption stated that the “characterisation of the service of process abroad as an assertion of sovereignty may have been superficially plausible under the old form of writ (“We command you ...”). But it is, and probably always was, in reality no more than notice of the commencement of proceedings which was necessary to enable the Defendant to decide whether and if so how to respond in his own interest. It should no longer be necessary to resort to the kind of muscular presumptions against service out which are implicit in adjectives like “exorbitant”.” Lord Clarke identified 5 matters on which he considered the Court of Appeal had erred. Importantly for Claimants seeking to serve proceedings out of the jurisdiction, particularly in cases where there may be difficulties in service by methods permitted by local law:
  • At least as regards cases not involving the Hague Service Convention or a bilateral service treaty, the Court only needs to be satisfied that there is a good reason for alternative service, and not exceptional reasons.
  • It was wrong for the Court of Appeal to hold that a claimant who wishes the court retrospectively to validate alternative service abroad needs to show that the method used was good service under local law.
More generally for service cases, Lord Clarke accepted the submissions of PCB’s counsel, Clive Freedman QC and Tim Penny, that, save perhaps in exceptional circumstances, events before the issue of the Claim Form are not relevant and the focus of the inquiry is upon the reason why the claim form cannot or could not be served within the period of its validity. The case is important in multi-jurisdictional cases, marking a shift away from the view that serving English proceedings on a foreign national is interfering with the sovereignty of a foreign state, a view that often adds to the burden on the Claimant seeking to serve foreign defendants. It is also important for the many commercial cases where the process of service on foreign defendants can be fraught with practical difficulties. Read More

June 2013

Jun 2013
PCB news
PCB Litigation has succeeded in an appeal to the Supreme Court in an important case for service of English proceedings on a foreign nationals. No longer should such cases be considered as the exercise of an exorbitant jurisdiction and the Courts should be more willing to assist Claimants encountering practical difficulties in service.
Judgment has been handed down by the Court of Appeal of the Cayman Islands in VTB v Universal Telecom, in which the Court held that it does have jurisdiction to grant a freezing order in aid of foreign proceedings even where the defendant to the cause of action is not present in Cayman. PCB Litigation instructed Clive Freedman QC and Cayman Islands lawyer Nigel Meeson QC of Conyers Dill & Pearman on behalf of VTB in successfully arguing this issue before the Court of Appeal.
On 6 June 2013, Anthony Riem was a presenter at the LexisNexis Conference in Moscow on Best Practice: Corporate and Commercial Fraud. Anthony presented on asset recovery outside Russia. If you would be interested in PCB Litigation presenting to your organisation, please contact Steven Philippsohn or Anthony Riem.
PCB Litigation have been retained on a multimillion dollar procurement fraud case in the resources sector involving parties in the Middle East, Africa and Eastern Europe.
PCB Litigation have been retained to act in the enforcement of multi million dollar judgment debt against assets located in numerous jurisdictions.
PCB Litigation have been retained to advise on a shareholders action seeking to recover monies misappropriated by the Company's Directors. Read More

May 2013

May 2013
PCB news
We are delighted to announce that on 21 May, Anthony Riem was elected Chairman of the Commercial Fraud Lawyers Association.
PCB Litigation has been retained in relation to a multi-billion dollar claim against a major bank.
Steven Philippsohn was quoted in Bloomberg News in an article titled, “Russia’s 20 Biggest Billionaires Keep Riches From Putin”. According to Mr Philippsohn, Russian billionaires create companies in the British Virgin Islands because they find its legal system, which is based on English law, more attractive than their own. Read More

Fraud Advisory Panel releases recommendations for victims of fraud

May 2013
Fraud updates
The Fraud Advisory Panel has, in a publication issued yesterday, identified the problem facing victims of fraud in choosing the right specialist advisors. According to the Fraud Advisory Panel: “A widespread lack of experience and self-confidence extends even to those marketing themselves as fraud experts. Many such self-proclaimed ‘experts’ refused to be interviewed for this project, admitting that their experience is in fact minimal’.” It is often the case that lawyers who are inexperienced in fraud cases will not have sufficient regard to the particular needs of a fraud case, especially the ultimate enforceability of any judgment that is obtained. In particularly cases where assets are held through complex structures, in multiple jurisdictions, it is very important to be able to identify what orders are required to provide effective protection from dissipation of assets. Thus the strategy for a victim of fraud may involve co-ordinating lawyers in multiple jurisdictions to obtain freezing, disclosure and search orders to locate and freeze assets. Moreover the process is ongoing with analysis of the defendant’s asset disclosure, the seeking of further disclosure orders, cross-examination as to assets and committal orders for breach of the disclosure obligations. As well as identifying the appropriate lawyers in each jurisdiction, there is often a need to work with specialist investigators, forensic accountants and computer forensic experts. Of course, each case depends on its own facts and the commercial considerations for the victim. It may for example be appropriate to target third parties who may be accountable and who may have assets or insurance to satisfy any judgment. It may also be the case that the victim should be advised that it is not commercial to pursue a particular case. Knowing which options are best for a victim comes with experience built up in conducting fraud cases worldwide over many years. Read More

Court of Appeal set aside major UK bank’s summary judgment on liability on the basis of fraudulent evidence given at the hearing

May 2013
Fraud updates
The Royal Bank of Scotland –v- Highland Financial Partners LP & others In a recent case before the Court of Appeal concerning the recovery of loan advances made under collateralised debt obligations, the claimant bank was found to have obtained summary judgment by giving fraudulent evidence. As such, all prior judgments of the High Court and Court of Appeal on liability and quantum had to be set aside. Further, the trial judge had been right to refuse the bank an anti-suit injunction against the defendants preventing them from pursuing proceedings in the USA as the bank had behaved inequitably. Background The defendants had arranged a collateralised debt obligation (CDO) involving the acquisition of a portfolio of loans and the issuance of securities by a special purpose vehicle. The claimant bank financed the purchase of the loans. When the financial markets collapsed in 2007, the securities were never issued and the transaction failed. The interim servicing deed provided for the sale of the loans by the bank, which instigated a market auction process, but purchased all the loans itself. It then sought to recover the shortfall from the defendants and obtained summary judgment on liability. In the subsequent proceedings to determine the quantum of credit due to the defendants as a result of the auction by the bank, it became evident the bank had kept the loans and transferred them from its trading book to its banking book before the auction process, and as such the process was a sham, putting the bank squarely in breach of contract and its duties as mortgagee. It was further claimed no shortfall would have arisen if the loans had been properly auctioned. The judge at the quantum hearing while acknowledging the bank’s misconduct, held that the defendants nevertheless owed some amount to the bank. Following that judgment the defendants commenced proceedings in Texas alleging fraud. The bank applied for an anti-suit injunction, and the defendants cross-applied for the original judgment on liability to be set aside. The defendant’s application was dismissed and the judge held that the Texan claim was within an exclusive English jurisdiction clause but the bank had “unclean hands” and so was not entitled to an anti-suit injunction. Both parties appealed. Court of Appeal Decision The Court of Appeal dismissed the bank’s appeal and unanimously allowed the cross-appeal allowed. Their lordships noted that there had been more than mere concealment of the transfer of the loans before auction; it was clear that the bank’s witness intentionally misled the court as to the providence of the loans at the liability hearing. As such, had it not been for the dishonest concealment of the true position, summary judgment would not have been granted on liability. The liability judgment was to be set aside as being obtained by fraud. The quantum trial, conducted on proper evidence, was therefore no longer relevant. Further, in view of the bank’s witness’ position within the bank, the trial judge had been entitled to conclude that the claim by the bank for an anti-suit injunction was sufficiently tainted as to be denied under the "unclean hands" doctrine. Comment This case illustrates the need for a party seeking equitable relief to come with “clean hands” or face having that relief denied. More importantly this case is believed to be the first in which a UK bank has had a judgment set aside on the basis of fraud, and provides a strong precedent setting out when a summary judgment may be set aside on the basis of fraud. The decision also underlines the absolute requirement of making truthful disclosure to the court. Where a party that fails to disclose relevant facts which may be of central importance to the claim, it does so at great risk. Read More