The judgement, from Switzerland's highest court, confirms the equally unanimous ICC award that LV Finance and Alfa Group constructed an illegal scheme to transfer the MegaFon shares in full knowledge that this would breach IPOC's prior rights. It establishes the fact that Alfa Group were not "bona fide purchasers" of the MegaFon stake. In other words, Leonid Rozehtskin, LV Finance and Alfa colluded in a scheme to rob IPOC of its rightful ownership of the disputed MegaFon stake.

It is a clear and unequivocal legal and financial victory for IPOC and a damning indictment of IPOC's opponents, the Alfa Group and LV Finance. The judgement is final and fully clears the way for IPOC's immediate enforcement of its rights to 5.7% of Megafon, estimated to be worth over $150 million, and the more than $2.2million in legal costs that IPOC was awarded against LV Finance.

The ICC award that was upheld stated: "Having considered all the arguments and evidence in this case, the Arbitral Tribunal concludes that Mr. Rozhetskin and Respondent [LV Finance] did negotiate and agree directly with the Alfa group the latter's purchase of Respondent and the way in which the purchase was structured; the Alfa group conducted due diligence and purchased Respondent with knowledge of Claimant's rights under the option agreements; the present holders of the relevant shares [three Alfa Group companies based in the British Virgin Islands] are not bona fide purchasers for value without notice; and the Arbitral Tribunal rejects the contrary evidence of Mr. Maevsky and Mr. Moskalev [on behalf of LV Finance]."

The ICC considered detailed evidence from both sides in the dispute. It branded IPOC's opponents as purveyors of "unreliable testimony". It rejected their allegations concerning money laundering and IPOC's beneficial ownership. It declared itself satisfied that their 'evidence' fell "far short of establishing money laundering or any other impropriety" and accepted that Mr Galmond was, indeed, the beneficial owner of IPOC and related companies.

The ICC considered detailed evidence submitted by LV Finance despite the fact that LV Finance walked out of the Tribunal and their lawyers, Weil Gotshal, withdrew from the case following revelations that a criminal investigation was underway into Kroll's surveillance of the Tribunal Chairman.

LV Finance appealed to the Swiss Federal Courts on grounds of money laundering and allegations that the Chairman of the Tribunal was biased as well as other grounds. Their appeal was rejected on all grounds with costs awarded to IPOC.

Furthermore, contrary to press statements made by LV Finance about the Federal Tribunal's decision, LV Finance did indeed submit substantial further documentation to the Federal Tribunal in an attempt to convince them not to uphold the award. LV Finance's submissions included its own expert's 'money laundering' report which it had submitted in Zurich and the Zurich partial award itself. The allegations against the Chairman related to a criminal complaint he had made to the Swiss Police concerning the activities of investigators, employed by Kroll Associates, who had been watching his house, tailing him, searching through his rubbish, photographing visitors to his house and seeking to get access to his bank accounts. Kroll is widely believed to be employed by the Alfa Group.

The Swiss Federal Tribunal's decision has exposed the baseless nature of the allegations made by IPOC's opponents. In the absence of a coherent defence for the fraudulent scheme, involving a complex web of offshore companies, Alfa and LV Finance have sought to paint IPOC as money launderers and ultimately owned by the Russian Telecoms Minister, Leonid Reiman. Alfa is pursuing this desperate legal strategy, for the simple reason that if it can convince the courts of these allegations against IPOC, it could render null and void IPOC's option agreements.

The two main witnesses making the allegations about IPOC's beneficial ownership, Mr Vidya Sharma, whose allegations were rejected by the ICC, and Mr Anthony Georgiou, have been exposed in the British Virgin Island's Courts as having million dollar plus deals with our opponents to support the provision of their testimony in this case. Mr Sharma has been previously exposed in the German Courts for having been prepared to sell testimony to the highest bidder and has a fraud conviction to his name. Mr Georgiou is currently being sued in a multi-million dollar fraud claim by Whale Telecom, a US telecoms operator.

Commenting on the decision, Roland Bopp, General Manager of IPOC Capital Partners, said:

"The Swiss Federal Court has again confirmed what IPOC has argued all along, Alfa and LV Finance colluded in an illegal scheme to transfer the MegaFon stake in violation of IPOC's prior ownership rights.

"It is a major victory which exposes Alfa and LV Finance's illegal and disreputable business practices. It underlines the baseless nature of the allegations Alfa and LV Finance have recently been making against IPOC as an increasingly desperate move to come up with a defence for their illegal conduct. We fully expect that IPOC will continue to be vindicated in the courts and that Alfa's shameful legal strategy will fail.

"We said from the outset of our legal actions that the integrity of contracts for investment in Russia is at stake. The principle we are seeking to uphold is a simple one - no matter where you are in the world you can't sell the same stake twice.

Notes

1. In accordance with its usual practice the Swiss Supreme Court issued a one page judgement with the result of its decision, the reasoning underlying that judgement will be communicated separately at some point early next year, and IPOC will comment on it at that time.

2. The ICC tribunal considered the validity of the second of two option agreements which LV Finance signed with IPOC in April and December 2001 to sell IPOC the 25.1% stake in MegaFon it held through CT Mobile (CTM).

3. The second option agreement is covered by the ICC Arbitration. A Zurich arbitral forum is provided for the first option agreement.

4. IPOC International Growth Fund Ltd. is an investor operating worldwide and investing in high technologies, telecommunications, media in emerging markets. The investment manager of the Fund is IPOC Capital Partners Ltd.

5. IPOC International Growth Fund Ltd. is a longstanding investor in MegaFon and currently already holds an 8% stake in the company in addition to the disputed 25.1% stake. IPOC's primary beneficial owner is Jeffrey Galmond, a Danish lawyer and longstanding investor in the Russian telecoms sector.

© MForum.ru, based on IPOC's information