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By John Helmer, Moscow

In the London marketplace, there are less circumspect descriptions of the way Nathaniel Rothschild (image top) behaves in the presence of Oleg Deripaska (image front right). Last week, the UK High Court Justice Sir Michael Tugendhat decided the term which applies is that Rothschild ingratiates himself with Deripaska for financial gain.

The judge also ruled that in launching a defamation case against the Daily Mail newspaper and its proprietor, Associated Newspapers Ltd., Rothschild changed his evidence, either confusing or contradicting himself, and claiming memory failure on key points. That amounts to a ruling that Rothschild has been either a fool or a liar in his attempt to punish public reporting of what he has been up to with Deripaska. “I do not accept,” wrote Justice Tugendhat, “that there is a clear line between the business and the personal sides of Mr Rothschild’s relationship with Mr Deripaska. They have very extensive business relationships.”

As for Deripaska himself, the judge opens his 116-paragraph judgement with the assessment that Deripaska is “amongst those commonly referred to as Russian oligarchs”. This is not a commendation. It’s an introduction to a process Rothschild is charged by the judge as having initiated with the outcome that “Mr Rothschild’s conduct was inappropriate in a number of respects…that conduct foreseeably brought Lord [Peter] Mandelson’s public office and personal integrity into disrepute and exposed him to accusations of conflict of interest, and it gave rise to the reasonable grounds to suspect that Lord Mandelson had engaged in improper discussions with Mr Deripaska about aluminium.”

Although Deripaska and Mandelson (image front left), the European Union’s trade commissioner at the time of the events claimed by both sides, were not parties to Rothschild’s case, and presented no evidence, their conduct shares in the obloquy that has now put Rothschild in the stocks. Obloquy, according to the ruling, is not proof of corruption.

As for lying, the judge noted: “I formed the impression that on this point Mr Rothschild had not been entirely candid throughout the different stages of the case, or in evidence.” Elsewhere, the judge refers to excerpts of Rothschild’s testimony in the witness box as “unrealistic answers”.

The evidence cited by the judge of the collapse of Rothschild’s memory under cross-examination during the 4-day trial last month is dramatic:

“[Question by Andrew Caldecott, counsel for the newspaper] Did you [Rothschild] tell him [Mandelson] that you would be visiting an aluminium plant in all likelihood with Mr Deripaska?”

“A. I don’t recall.”

“Q. Did you tell [Mandelson] that you would be flying in Mr Deripaska’s jet, or might well be?”

“A. I don’t recall….”

“Q. What I want to explore with you is it’s perfectly possible that at this stage you didn’t actually tell him [Mandelson] that he would be staying with Mr Deripaska.”

“A. I don’t recall.”

The judge also reports another instance of memory failure by Rothschild. “Similarly in relation to the organisation of Lord Mandelson’s dinner [with Russian Finance Minister Alexei Kudrin on January 30, 2005] in Moscow, when asked whether he had told Lord Mandelson that he was enlisting Mr Deripaska’s help to secure the meeting, Mr Rothschild replied that he did not remember.”

The judge’s inference is not that Rothschild is mentally handicapped. Rather: “I infer that that is why he was reluctant to accept in cross-examination that Lord Mandelson was in fact Mr Deripaska’s guest on the trip from Moscow to Abakan, and not his (Mr Rothschild’s) guest.”

Associated Newspapers and the Daily Mail gave instructions to prevent reporters from obtaining the daily transcripts of the trial, which ran in London from January 23 to January 26. However, the judge has now published excerpts from the transcripts and other details not released before.

This new evidence suggests doubt in the veracity of Rothschild’s claims about a joint venture in goldmining as the real reason he went to Abakan, with Mandelson tagging along. A full account of what business Rothschild, Deripaska, Mandelson, Alain Belda (Alcoa) and Peter Munk (Barrick Gold) were discussing in the last days of January 2005 can be found here and here.

As for Mandelson, the judge has now made public evidence that, in advance of his trips on Rothschild’s and Deripaska’s planes to Moscow and Siberia, Mandelson failed to tell the chef de cabinet of his European Union office, Simon Fraser, that he was meeting a Russian minister of state (Kudrin); that he was meeting Deripaska and Munk; that he was going to stay with Deripaska, visit his aluminium plants, and be present at business discussions. The ruling leaves little doubt that this omission was a failure of Mandelson’s duty.

There is also the disclosure that on February 1, 2005, after Mandelson had climbed on board Rothschild’s plane to fly westwards, back to his office in Brussels, Rothschild had flown eastwards with Deripaska to a banquet meeting with the President of Tajikistan, Emomali Rakhmonov (aka Rahmon). Despite Rothschild’s claims, gold was almost certainly not the topic of their conversation. Aluminium almost certainly was.

One month earlier in December 2004, Deripaska had taken over the Tajikistan Aluminium Plant (TadAZ, Talco), the principal foreign-currency earner of the country, in a scheme which four years of subsequent litigation in the UK High Court have exposed as thoroughly corrupt. Deripaska’s involvement in that case, and evidence that his subordinates had broken into the computer files of the companies he had forced out of the plant, led to his costly out of court settlement in May of 2007. As the US and Norwegian governments, the International Monetary Fund, and the World Bank pressed for anti-corruption investigations of Rakhmonov and his aluminium profit-skimming schemes, Rakhmonov withdrew his High Court case in November 2008, and opened a lawsuit against Rusal.

That Rothschild put his reputation on line to endorse Deripaska’s at the start of the Talco scandal is a startling discovery. That Rothschild and his lawyers would make his stop on the corruption road in Tajikistan his defence to the charge of improper conduct at the two stops he made up the line looks to be a colossal stupidity.

But that’s for history buffs. The outcome of the Tugendhat ruling on February 10 is more serious for Deripaska’s future than he and Rothschild appear to have calculated in advance. So serious, in fact, it has to be wondered why Deripaska’s chief lawyer Dmitry Afanasyev (rear far left image), and his two London law firms, Bryan Cave and Schillings, failed to warn him of the dangers Rothschild’s lawsuit was exposing him to; and what the consequences would be if Rothschild’s claims were defeated. Not even the purported PR skills of Philip Lader (rear far right image) appear to have alerted Deripaska to the discredit trap into which he and Rothschild have now fallen in tandem with Mandelson. Lader is a member of the Rusal board, and chairman of WPP, the public relations conglomerate which is financing Mandelson’s commercial business called Global Counsel.

For Deripaska, this has now become the second trial in the UK High Court in just five months to examine detailed evidence of his business conduct and veracity; it’s the first of them to come to a swift, negative decision. In the trial of Berezovsky v Abramovich, Deripaska’s testimony on November 18, and that of his lawyer, Paul Hauser, on November 22, revealed body language the judge, Dame Elizabeth Gloster, obliged Deripaska to correct. She is now deliberating on her judgement, and will in due course rule, among other things, on Deripaska’s memory failures regarding evidence presented by Berezovsky’s counsel of alleged conspiracy, racketeering and fraud in the formation of Rusal.

In April, less than two months away, Deripaska must face his third High Court trial – this time in the case for fraud, trust and contract violations brought against him by his onetime sponsor and partner in the aluminium business, Mikhail Chernoy (Michael Cherney). This is the most dangerous one of all for Deripaska, because his shareholding control of Rusal is at stake. He now goes into the London courtroom with the knowledge that his chances of being believed by the judge have deteriorated at every fresh appearance he makes. The string of High Court and Court of Appeal judges who have decided against Deripaska, Rusal, and his associates’ conduct now include Sir Raymond Jack (2003); Sir Stephen Tomlinson (2008); Christopher Clarke (2008); Sir Geoffrey Vos (2009); and three appellate judges, Sir Mark Waller, Sir Martin Moore-Bick and Sir John Chadwick.

With Gloster a pending possible number-9, no Russian has been disbelieved by so many justices of the High Court in so many different cases. For confirming Tugendhat at number-8, Deripaska isn’t likely to thank Rothschild.

Rothschild’s spokesman, Edward Simpkins of one of the subsidiaries of WPP, declined comment on the evidence ahead of the trial. Rothschild has now issued a statement: “I am disappointed with today’s ruling, although I do not regret bringing the action…Lord Mandelson’s trip to Russia was entirely recreational – as the court has accepted – and Lord Mandelson had obtained clearance for the trip from his office before undertaking it.”

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