Two Russian oligarchs, one of whom now lives in Montreal, are battling in New York's courts over $500-million, trading allegations of underworld links and contradictory accounts of just how much alcohol was consumed the night a business deal was done.
The fight, between Montreal-based Russian businessman Alexander Gliklad and Russian-Israeli tycoon Michael Cherney, has produced hundreds of pages of filings in New York Supreme Court that reveal some of the freewheeling business practices that reined in the economic chaos after the collapse of the Soviet Union.
It's a rich example of an increasingly common breed of courtroom clash, as some of Russia's oligarchs seek to settle feuds outside Russia, particularly in London and New York, where legal systems are seen as less corruptible and many super-wealthy Russians have significant assets.
According to his court filings, Mr. Gliklad, 65, has lived in Montreal for about a decade, but he says he was a respected business figure in post-Soviet Russia, co-founding a Moscow company with diverse holdings in oil, sugar imports, metals and entertainment. He says he was put in charge of funding Russia's 1995 commemorations of victory in the Second World War.
He denies allegations from Mr. Cherney of any underworld links. But he counts Joseph Kobzon, a Russian parliamentarian and Soviet-era singing star known as "Russia's Sinatra," who has long been denied entry to the U.S. for suspected mob links, as a former business partner and former friend. (Mr. Kobzon has always denied any criminal links.)
New York courts have so far decisively sided with Mr. Gliklad in his six-year legal battle with Mr. Cherney. At the heart of the fight is a one-page, $270-million (U.S.) promissory note that Mr. Cherney signed one night in Vienna in October, 2003, but that he has since refused to honour.
Mr. Cherney, 63, is said to have co-founded what later became UC Rusal, the world's largest aluminum company, now presided over by prominent Russian billionaire Oleg Deripaska, who helped bankroll the 2014 Sochi Winter Olympics.
But Mr. Cherney, who told The Guardian in a 2007 interview that he left Russia for Israel in 1994 due to fears for his safety from rivals, is labelled an "organized crime figure" in a leaked U.S. diplomatic cable from WikiLeaks filed with the New York court. He is also wanted by Interpol on money-laundering allegations in Spain.
In his court filings, Mr. Cherney denies all allegations that he is involved in organized crime or money laundering, calling them smears that have been spread for years by his enemies in Russia. And he insists it is Mr. Gliklad who owes him the money, not the other way around.
That night in Vienna, Mr. Cherney claims in an affidavit, the discussion was about a debt that Mr. Gliklad actually owed him. After dinner at a restaurant and "after having consumed a great deal of alcohol," he says the pair returned to their hotel lobby and Mr. Cherney mistakenly signed the note in the space marked "borrower." It was only later, he says, that he realized his "terrible error."
Mr. Gliklad, in his court filings, dismissed this version of events as a "false and fantastical story." He denies that he even dined or drank with Mr. Cherney at all that night. Mr. Cherney, Mr. Gliklad claims, had agreed to pay him $270-million – an amount that has since ballooned to more than $500-million with interest – for relinquishing his stock in a massive Siberian coal company, KuzbassRazrezUgol Coal Co., of which Mr. Gliklad was a large shareholder and chairman.
Mr. Cherney's tale of a drunken mistake did not persuade the court in New York, which also threw out his other defences without a trial for lack of "plausible evidence." He was ordered to pay up last year and now faces a worldwide freeze on his assets. Mr. Cherney was also scolded in court decisions as "contumacious" and "obstructionist" for failing to turn over required documents, and for making "unbelievable sworn statements." And in March, Mr. Cherney was held in contempt of court for failing to comply with a court order to hand over documents, meaning he could face arrest if he ever travelled to the U.S.
The two men were once clearly friendly: Before their disagreement, Mr. Gliklad says in court documents that they used to dine in Paris and even vacation together, attending Mr. Gliklad's parents' wedding anniversary in Spain.
However, fears of Mr. Cherney or his associates are the reason, according to court documents, that Mr. Gliklad was granted refugee protection in Canada in 2006. Mr. Gliklad alleges that he faced "veiled" threats while in Israel in 2005, where he had originally filed his case against Mr. Cherney, prompting him to leave. Mr. Cherney denies the allegations.
Among the assets Mr. Gliklad's lawyers have been trying to seize from Mr. Cherney are the undisclosed proceeds of a 2012 settlement deal he made with Mr. Deripaska. In a lawsuit filed in London, Mr. Cherney alleged that Mr. Deripaska owed Mr. Cherney £1-billion for his share of the aluminum giant. Mr. Deripaska had countered in court submissions that he had been forced to give Mr. Cherney payments known as krysha, literally Russian for "roof," meaning protection money. Mr. Cherney denied these allegations.
Lawyers for Mr. Cherney have filed an appeal in the New York case, but a court date has yet to be set. In their written submissions, they argue that Mr. Cherney was confused by an "unfamiliar Russian word that sounds similar to 'Creditor,' but can mean 'Borrower.'"
In their appeal submission, Mr. Gliklad's lawyers call this argument is "preposterous," questioning how a "'sophisticated' billionaire" could misunderstand such a document in his own native language. They also say the Russian word for borrower used in the note is pronounced "zay-em-schik," very different from the word "Kreditor," which is used in the note to mean "lender."
Still, Mr. Cherney remains defiant. In a statement filed with the court last December, he calls the judgment against him "unjust," and alleges that Mr. Gliklad is a "scoundrel who exploited my trust in him" and who has succeeded in "deceiving" the court with "false accusations that have been made in the press" over the past two decades.
"I am not a man without faults, but this court's decisions make clear that this court prejudged me as someone not to be trusted and as a result has rejected everything that I or my lawyers has said," his statement, translated from Russian, reads, calling the result "the complete opposite of fairness and justice."
A lawyer for Mr. Cherney did not respond to requests for comment. A lawyer for Mr. Gliklad said his client was not available.