Published On: Wed, Feb 5th, 2014

Len Blavatnik & Viktor Vekselberg Sued For $2 Billion In New York Court By Former Partner

It was only a matter of time. Russian billionaires Leonard Blavatnikand Viktor Vekselberg shared a US$55 billion windfall with BP in February of 2013, in the third largest oil deal in history when their joint venture TNK-BP was sold to Rusian state owned oil company giant Rosneft.
Now however a third local oligarch, Leonid Lebedev, has filed a claim in, of all places, a New York Court alleging he was a third secret partner with the two oligarchs all along, and demanding US$2 billion in damages.

The filing was first reported extensively in the Russian legal news web site Rapsi.

Lebedev asserts in the statement of claim that he entered into a JV (joint venture) agreement with the defendants, Blavatnik and Vekselberg, as far back as 1997 to gain control of TNK. The legal claim also asserts that Lebedev’s 15% share in the JV was confirmed in writing as well, referred to in a 2001 document as the, otherwise unspecified, “Oil Business”.

LEN-BLAVATNIK- Viktor-Vekselberg - leonid_lebedev (L-R)      Len Blavatnik                        Viktor Vekselberg                                                    Leonid Lebedev

Lebedev further claims to have contributed for his share, US$25 million in cash, his TNK shares, his equity in a TNK subsidiary, and his management and expertise in the oil industry to entities controlled by one or both defendants.

Finally, Lebedev asserts that when the TNK-BP joint venture itself was finally established he was not issued any stock in it as he should have been.

At a meeting called to discuss the deal in 2001, the three men met in New York, according to the complainant for the purpose of resolving disputes that had arisen from the TNK deal they had purportedly made.

Apparently, Lebedev and Vekselberg both signed a document afterwards, a so-called “Investment Agreement”, an extract from which is quoted in the complaint as follows:

the right of ownership in respect of 15% of the aggregate share of the Parties in the Oil Business, in particular, in respect of 15% of the shares in OGIP” (an offshore holding company that was to hold the Parties’ stock in TNK), and that Lebedev was entitled to a non-dilutable 15% share in the Parties’ income from the Oil Business (whether paid by dividends or otherwise).”

Notably Leonard Blavatnik did not sign the document at the time, according to the complaint, being in something of a rush to travel to another meeting in another place.

At that point the trail of the story outlined in the legal filings becomes really too complicated for any outsider to follow, and certainly too hard to even begin to figure it all out. Even the judge in the case is going to have a hard time, one suspects.

The bottom line though is that, according to the complaint, Lebedev is seeking judgment against Blavatnik and Vekselberg for breaches of the Investment Agreement, the Joint Venture Agreement, and their fiduciary duty, with actual and consequential damages amounting to no less than $2 billion, tortious damages, pre-judgment interest on all awarded sums, and any additional costs the court may deem appropriate.

Speaking to Bloomberg afterwards a spokesman for Leonard Blavatnik, who is an American citizen as well as a Russian national, stated that the complaint lacked merit, characterizing it as a “false and misleading recasting of the facts.”

Now it will be up to the New York court to decide. As Blavatnik himself is American, and the fateful 2001 meeting allegedly took place in New York, the court should at least have no difficulty in asserting jurisdiction in the case.

However, one can also say there may perhaps be an element of “poetic justice” in the case being brought at all after all this time, and certainly in it being brought in New York, which is well known for the impartial meting out of justice. Blavatnik and Vekselberg had much earlier triumphed in the Russian judicial environment when their former operating partner BP also had differences with them at one point during their association together.

The four declared Russian partners in TNK-BP joint venture all made billions when it was sold to Rosneft; Mikhail Fridman, German Khan, Viktor Vekselberg and Leonard Blavatnik – with the latter two who are now being sued each netting US$7 billion apiece from the sale to Rosneft.

About Len Blavatnik 

Lev Blavatnik has been recently defined  second in the “Sunday Times” Britain’s 100 wealthiest billionaires’ list . In 1986, ” His keen belief in online music has  Led him to invest a legendary sum of I $130 million in the online music service ‘Daisy’, through his New York-based holding company, ‘Access Industries’. Other than music, Blavatnik’s varied investments contain natural resources such as oil, chemicals internet service companies, mobile communications, TV channels and even a few holdings in the fashion business. In recent years, the Lev Blavatnik Family Foundation has been donating substantial amounts to medical and scientific research throughout the world.

 

About Victor Vekselberg

In his early thirties, and with opportunities abounding in post Communist Russia, Vekselberg took his first tentative steps into the world of free enterprise, doing sufficiently well to capture the attention of Boris Yeltsin after his re-election to President in 1996. With privatization rampant, Vekselberg he succeeded in building the Tyumen Oil (TNK), into one of Russia’s most successful oil and gas exploration and marketing concerns, eventually forming a particularly lucrative partnership with BP.

Vekselberg capitalized on his success with TNK by investing heavily in a diversified marketing company under the title of the RUSAL Company, which enjoyed particular success growing to become the largest aluminum production business in the world, which he eventually amalgamated with a number of other companies under his control to form the Renova Group, where he acts as chairman of the Board of Directors and has furthered developed the company to a status of among Russia’s largest business development companies with considerable interests around Europe. Among Vekselberg’s partners and contemporaries is well known tycoon Leonard Blavatnik.

Viktor Vekselberg stands together with Blavatnik as among Russia’s original oligarchs, with an estimated net worth of around $12 billion, placing him somewhere in the top hundred wealthiest people in the world and still moving upwards.

 

See More About Len Blavatnik :

 

See More Stories About Viktor Vekselberg 

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