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Russian-Canadian businessman Michael Shtaif leaves court in Toronto on April 2 during a break in the litigation case involving his former partner, billionaire Alex Shnaider. Mr. Shtaif told court on Wednesday he was confused when he provided inconsistent answers under oath about an episode he alleges took place in a Moscow police station in 2006.Fernando Morales/The Globe and Mail

The former Russian oil executive locked in a legal battle with Toronto billionaire Alex Shnaider told a court on Wednesday he was confused when he provided inconsistent answers under oath about an episode he alleges took place in a Moscow police station in 2006.

Michael Shtaif, who now lives in Calgary but worked for Russian oil firms TNK-BP and Yukos, is at odds with Mr. Shnaider over a joint venture the two men set up to buy undervalued Russian oil assets in 2006.

Mr. Shnaider alleges in court documents that Mr. Shtaif was part of a plot to defraud him of his $50-million investment. Mr. Shtaif denies the allegations and alleges Mr. Shnaider forced him out of the venture, bribed Russian police and prompted them to launch a "spurious" investigation of him that forced him to leave Russia. None of the allegations have been proven. Both sides have demanded hundreds of millions of dollars in damages. The trial has been under way since February.

Mr. Shtaif has previously testified that he felt forced to sign an agreement changing the structure of the oil joint venture by a lawyer for Mr. Shnaider at a July, 2006, meeting in a Moscow police station, after an officer in the room allegedly pulled out a gun and laid it on the table.

But in a Toronto courtroom on Wednesday under questioning from a lawyer for Mr. Shnaider, Kenneth Prehogan, Mr. Shtaif appeared to contradict sworn testimony about the incident that he gave before the trial, in what are called examinations for discovery. Mr. Shtaif, who has said he does not carry a smartphone, was asked how he was able to send an e-mail at 3:36 p.m. that day, when he testified he was still at the police station.

Under questioning in 2010, he said he had sent the e-mail from a police computer at the station, with the officer who allegedly pulled out his gun looking on.

On Wednesday, he said that because of the way computer prints the e-mails submitted to the court, the time stamp on the e-mail was inaccurate and that in fact it was sent much later, Moscow time. And he acknowledged under cross examination that he did not send the e-mail from the police station as he previously testified.

"I was mistaken," Mr. Shtaif told Mr. Prehogan from the witness box. "But you asked a lot of improper questions and that confused me."

Mr. Prehogan then pointed out that in the e-mail, sent to business associates, Mr. Shtaif never mentions the alleged ordeal in the police station: "You don't say anything to these gentlemen about guns or threats or being mistreated in any way in your e-mail, do you?"

Mr. Shtaif replied: "You are absolutely correct."

Mr. Shtaif was at the police station with a lawyer for Mr. Shnaider's company, Midland Resources Holding Ltd., to file a fraud complaint against another Russian man about a complex transaction to buy a Russian oil field that went awry.

Mr. Prehogan also referred to other e-mail exchanges around the time that Mr. Shtaif signed this deal with Mr. Shnaider. Mr. Shtaif has testified that he was being "extorted" by Mr. Shnaider, who was demanding that his $50-million investment be converted into a loan and that he receive a 67-per-cent interest in the company. But Mr. Prehogan said Mr. Shtaif had agreed to the arrangement a few days earlier.

"No person reading this e-mail would get the sense that you have been pressured or mistreated in any way – let alone extorted," Mr. Prehogan said, and Mr. Shtaif agreed.

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