Russia’s famously creaky legal system will be put to the test on July 17 with an asset recovery case – and according to A1, the specialist distressed asset firm that is part of Alfa Group, it will pass.
The case smacks of poacher turned gamekeeper: A1 is the M&A arm of Alfa Group (and as Alfa Ekho, was the first company the founders of the group, who include oligarch Mikhail Fridman, set up). Suffice to say, Alfa Group didn’t cover itself in corporate governance glory in the 1990s.
However, in April A1 went into a joint venture with the Irish Bank Resolution Corporation (IBRC), which has been trying, so far unsuccessfully, to recover 12 assets in Eastern Europe (mostly buildings and some companies) that used to belong to the bankrupt developer, Quinn Group.
Sean Quinn, the founder of the group, defaulted on loans worth €2.8bn from the Anglo Irish Bank, which went bust and its assets were taken over by IBRC, which has since been trying to convert them back into cash.
The trouble is that Quinn has not been playing ball. The ownership of most of the assets has been transferred to a number of shell companies and the IBRC has been struggling to make much headway through the Russian legal system. So earlier this year it turned to A1, which is run by one of the three original founders of Alfa Group, Alexei Kuzmichyov.
On July 17, the courts in the regional capital of Kazan will decide in a key case in A1’s campaign in a dispute involving the $60m state-of-the-art logistics park Q-Park, which the Quinn Group built in Kazan, the capital of the Republic of Tatarstan, Russia.
The problem is that the ownership of the park passed from a Quinn Group holding company called Demesne (held via a subsidiary called Logistika), which now belongs to IBRC, to several shell companies that A1 believes are still under the control of Sean Quinn, putting the park out of the reach of creditors.
A1 said in a statement: “It later turned out that on May 11, 2011 the shares of ZAO ‘Logistica’ have been sold to Sean Quinn, Jr.; on June 3, 2011 shares were resold to ZAO ‘Vneshkonsalt’ and in fall of 2011 sold to two Panama companies – Forvar Overseas S.A. and Lockerbie Investments S.A. These acts were allegedly committed in order to eliminate the [IBRC] from the corporate control of ZAO ‘Logistica’ and foreclosure on the assets of ZAO ‘Logistica’.”
Two shell companies – Vneshkonsalt and another creditor to many of the disputed assets, Stroitelnie Tekhnologii – are names that have come up again and again as the owners of almost all of the disputed assets, including Q-Park, according to A1.
A1 says that it doesn’t know who is behind them, but believes they are answering to Sean Quinn. Indeed, both Sean Quinn and his son were arrested last year in Ireland for attempts to receive rental payments for the disputed properties in Russia and Ukraine in violation of the bankruptcy proceedings. “The holdings and properties have been moving in mysterious ways,” says Andrei Polyakovsky, spokesperson for A1. “What we are certain of is that a misappropriation of funds by an unknown group is taking place”.
A1 is trying to prove that Q-Park still owes Demesne $60m from credits for construction and working capital loans, then it can take back control of the park, put its own administrator in and start preparing the company for sale.
All in all, IBRC and A1 are trying to recover 12 assets in Eastern Europe (11 in Russia and the Ukraina shopping mall in Kyiv) collectively worth some $500m. Q-Park is the second most valuable, but the most expensive is the Kutuzov Towers in central Moscow that is worth up to $200m by current estimates. Work on recovering that has already begun, but will take up some time to complete, says Polyakovsky.
And A1 is supremely confident that it will win, because it never loses a fight as a point of principle. This sounds boastful, but it is not an idle boast. Alfa Group was schooled in the ways of business during the chaos of the 1990s and emerged from that time as one of the most powerful conglomerates in the country with a reputation for playing hard and sometimes rough against its rivals. “A1 doesn’t lose in corporate standoffs,” says Polyakovsky. “It’s a principle in the company and part of our strength. Even if we end up losing money on the investment, we will fight within the legal field as long as we have to reach our goal. ”
This was why IBRC came to A1 for help in the first place. A1 contributed $18m to the joint venture as running-about money, plus it is spending about $1m a month on the work, according to Polyakovsky. IBRC contributed all the titles and deeds to all the assets. According to sources familiar with the deal, the proceeds from the recovery and sale of the initial property will be used to compensate A1 costs. After that, the proceeds will be shared with A1 one getting approximately 30% and IBRC getting the larger part.
Tuesday February 05 2013 Irish Independent
Sean Quinn Jnr
THE jailed son of businessman Sean Quinn does not know where the rents generated by assets in the family’s international property group (IPG) have gone.
Mr Quinn Jnr has told the Commercial Court that he is “110pc” sure that he does not know where the lucrative rents have gone.
“Let me be struck dead when I leave this court if I am wrong,” Mr Quinn Jnr told High Court Judge Mr Justice Peter Kelly this afternoon during cross examination by lawyers for the former Anglo Irish Bank.
Sunday Feb. 3rd Independent
Aoife Quinn has a science degree and later studied law at Blackhall Place. She worked in Quinn Insurance, as a claims handler in the ‘fast-track’ section. So shouldn’t she be familiar with the legal process that requires litigants to disclose documents to each other, Paul Gallagher wanted to know. But Aoife said she didn’t have to deal with lawyers.
She drew a €379,000 salary from Russian companies over 12 months until last year, but had no bank statements. Her contract for such a big sum was in Russian, and she signed it without having it translated or even keeping a copy.
Colette Quinn like her sisters, she said she had no statements, just a text message each time the money landed in her account. And she was “not in the habit of keeping receipts” for what she spent it on.
At one point, Mr Justice Kelly reflected back on her evidence. So she had signed a contract that she didn’t understand, received a salary of €339,000 and has no documentation as to what her task were, he said.
“So whatever work it was, it was paperless,” he asked Colette. “That’s correct,” Colette shot back with a smile.
She, too, had already disclosed all documents in her possession. Mr Justice Kelly had heard this phrase so often that at one point, he called it a “mantra” of “no documents, no documents”.
The cross-examination continues this week, when Sean Jnr and Karen Woods will take the stand.
Jan. 30th Laois Nationalist
A son in law of bankrupt businessman Sean Quinn has told the Commercial Court he doesn’t have an active policy of keeping documents.
Under cross examination by lawyers for IBRC, Stephen Kelly said he had nothing to show how he spent his €260,000 salary from Russian companies in the Quinn’s property group.
IBRC’s lawyers say it is extraordinary and unbelievable that Stephen Kelly has kept a lot of commercial documents but has nothing relating to his salary.
Tuesday 29 Jan- Independent
A DAUGHTER of bankrupt tycoon Sean Quinn withdrew more than €30,000 every month from a cash machine over nearly a year to pay for legal fees, she told a court.
Ciara Quinn said she had no records or receipts of the fees being paid, as she generally handed the cash to her brother Sean Junior or sister Aoife, who then paid the lawyers
Ms Quinn told the Commercial Court she spent €339,921 – paid to her from the Quinn family’s property empire – between July 2011 and May 2012.
She said she usually withdrew the money, over the 11-month period, from a Bank of Ireland ATM in Blanchardstown, Dublin, using a Visa card.
Thursday, January 24, 2013 – 06:14 PM – Irish Examiner
A daughter of ex-billionaire Sean Quinn opened several bank accounts in Dubai after legal action was launched to stop the family asset-stripping their global property empire.
But Aoife Quinn said no money was ever lodged in the four accounts, which were opened in four different currencies – euro, US dollars, Sterling and a local currency – a year ago.
Ms Quinn told the Commercial Court she had no documents or records from the accounts as she handed them over to the family’s former legal team.
In the first day of disclosure hearings – originally expected to last two days but which have already been extended – Ms Quinn also claimed:
:: She was not sure of the amount of her six-figure salary from three Russian companies;
:: She never got email or written bank statements from her Moscow account, but only text messages confirming transactions;
:: Her mobile phone that contained those records was stolen;
:: She had no records on the 30% income tax she was paying to Russian authorities;
:: She feared people were rummaging through the Quinn family’s bins so stored away other records she thought were not important, because she did not have a shredder.
Sean Quinn – Innocent!!!
Sean Quinn said that he did not feel he should have been in prison in the first place.
He said the view was shared by his fellow prisoners: “I think 100 per cent of them felt I shouldn’t be there.
Never in my life did I steal a penny or take a penny that didn’t belong to me,” he added….he’s right of course he owes half a billion to the state now – but that’s different!
Quinn told his local radio station, Northern Sound, “If the assets under dispute are found to belong to the Irish public and that they were taken legally by Anglo Irish Bank, and the receivership of the Quinn Group and administration of the Quinn Direct was done legally and correctly, then we will apologize to the Irish public. What arrogance.
All the above appears to be standard Quinn defence –ignorance of all facts or else just totally think.
Standard Quinn Defence No.1, previous seen as “ah sure I am only a house wife”
Asked about two bonuses of about €50,000 paid to her from the companies, she said she could not recall the exact amount.
“I’m not sure of the figure,” she said.
“I’m not great with maths, especially in my head and especially under pressure.”
Standard Quinn Defence No.2 – I know I did a bad thing last year but because I was scared I destroyed all evidence & can’t do anything now.
“I believe that this was a reaction to the bank trying to take everything off us,” she said.
“That was our reaction whether it was right or not.”
Ireland has a shocking record of not punishing white collar crime but surly this shower of Gombeens should serve have to serve lengthy prison sentences.
Doing the rounds at the minute….
(Q) What is Sean Quinn’s favorite pub?
(A) Break for the border.
eamonncork – November 4, 2012
Look, Quinn had to be taken to court in 2005 to make him grant a 39 hour working week and proper sick pay and overtime to workers in Quinn Cement. The workers were represented by SIPTU because they were afraid to reveal their identities for fear of victimisation. That’s who Sean Quinn is, that’s what he stands for and always stood for, the right of the local big man to do what he wants.
The main movers in the CIC are also representatives of this gombeen man tendency, they support Quinn for he same reason that Michael Lowry’s supporters support him, a combination of local loyalty and sycophancy. I don’t imagine those Cement workers are out marching for him so his backers are indeed ‘in ways removed from the classic working class.’
Recently a large number of people marched in Skibbereen to protest the reduction of the local ambulance service to a skeleton level. People march about issues like this all the time in Rural Ireland.
I’d have to say that the contortions engaged in by apparently sane people to try and extend some understanding to Quinn and his supporters are the most ludicrous thing I’ve ever read on the CLR, ‘it’s abour profit redistribution’ ‘socialists should support him,’ ‘it’s about bank corruption.’
In the name of Jesus, lads, if someone like Sean Quinn isn’t antithetical to everything ye stand for, who are you left with? Kevin Myers?
A CAMPAIGN group set up to support Sean Quinn and his family have warned of potential “civil unrest” if he goes to jail or falls ill as a result of ongoing legal battles.
The warning by Concerned Irish Citizens (CIC) comes as the High Court rules later today whether the 66-year-old, who has had two heart operations, should be sent to jail for breaking court orders.
“There is civil unrest, but we don’t want it exploding in the wrong way,” said Patricia Gilheany, secretary of CIC which says it condemns any acts of violence and vandalism.
Ms Gilheany said CIC has received reports from many people concerned about the “confirmed signs of trauma, exhaustion and heartbreak” experienced by Mr Quinn and his wife Patricia at a recent rally in Ballyconnell, Co Cavan.
“Many have also commented that if Sean Quinn or any of his family drop dead from the sheer pressure and stress that they are being subjected to on a daily basis, there will be very serious consequences for their perpetrators and for those who facilitated this horror,” said Ms Gilheany.
The IBRC (formerly Anglo) has a visible security detail surrounding key bank personnel during court appearances but it does not comment on such matters. Last year, a new chief executive appointed to the Quinn Group had his family car completely destroyed by an arson attack at his home in Co Meath.
Paul O’Brien‘s BMW was completely ruined in the attack, which also caused damage to the front of his home.
CIC said that it has been flooded with calls from people who are “deeply frustrated and outraged” by events surrounding the IBRC whose executives were grilled yesterday by an Oireachtas committee.
Today’s court hearing centres on orders not to interfere with the family’s €500m-strong international property group.
Earlier this month new lawyers retained by Sean Quinn Snr told the High Court that he wants to purge his contempt, and is willing to co-operate with the former Anglo Irish Bank.
Medical reports are likely to feature strongly in any plea of mitigation should Ms Justice Elizabeth Dunne direct that Mr Quinn be sent to jail. His son Sean Quinn Jnr served a three-month sentence at Dublin’s Mountjoy Prison for contempt of court.
Pictured below the Border Mafia
For all that, Quinn clan throws at Anglo bear in mind Sean Quinn worshiped at the high alter of Anglo. He owned 28% of it via CFDs. The demise of Quinn relates to his failure to unwind a 28% block of Anglo shares held in the inherently unstable CFD method. Quinn was never more than a straw man. The point is not that this man got himself into this mess due to his own arrogance and ignorance. The crux of the problem for many is that they unethically sought to stash this collateral away in a most cynical manner; resulting in the Irish taxpayers having to pick up the tab for their sins. This is simply indefensible. It was a shame yesterday to see approx 6000 people exploited by the Gombeen rhetoric of Quinn and his supporters.
Former billionaire had ‘no recollection’ of getting €1m
HM Revenue and Customs (HMRC) is investigating millions spent by former billionaire Sean Quinn Snr using his credit card, flying his company jet and helicopter, and other benefits-in-kind he may have received leading the Quinn Group.
The probe by the UK taxman is looking at Quinn’s spending over the five years 2005 to 2010 as it attempts to determine what personal perks the now bankrupt entrepreneur availed of and if tax was payable on them.
The Sunday Independent has previously revealed how Quinn paid for items from wedding cakes to premium sports TV subscription bills to the mortgage on his home by putting the bill through his company’s books. James Morrissey, a former spokesperson for Mr Quinn, previously described such payments as “commonplace in business”. The decision by HM Revenue to submit numerous questions to Mr Quinn’s official assignee in bankruptcy, Chris Lehane, suggests it may not agree.
It has already delivered a discovery assessment setting out its concerns to Mr Lehane who in turn has asked Mr Quinn for his response.
Mr Quinn has responded at length but said he was hampered in his response by both lack of professional qualifications and the fact that his former empire, the Quinn Group, now had all his records.
“Down over the years, I always concentrated on building the Quinn Group business at a high level and I never got involved in the detail of my personal tax affairs,” Mr Quinn told Mr Lehane. Mr Quinn said he relied on his group’s accounts department and his auditors/tax advisers PWC to take care of such matters.
“I invariably took it for granted that those involved would ensure that all of my tax affairs were fully in order each year and I never had any reason to doubt that the situation would be otherwise,” Mr Quinn wrote.
Mr Lehane also quizzed Mr Quinn on what his income actually was. Mr Quinn said he believed he earned £75,000 a year from 2007 and 2010, a minuscule sum relative to the size of the group. Mr Lehane said he believed from analysis of Mr Quinn’s tax returns that he was effectively earning between €142,000 and €453,000 during these years.
Mr Lehane also queried an apparent payment of €1m to Mr Quinn from Quinn Quarrying and Concrete (QQC) which he said had been made in 2004. Mr Quinn said he had “no recollection,” of being paid €1m by QQC in 2004 and that this payment “seems absolutely outrageous”.
“I have no idea as to how this amount was arrived at,” Mr Quinn said.
Mr Quinn said he had no records of his company jet and helicopter usage as these were held by the Quinn Group, which he no longer controlled.
“In general terms, I can state that my usage of the company jet and helicopter was in the course of company business,” Mr Quinn said. Mr Quinn said he took only seven to 10 days’ holiday a year and these were “always company related”, as he scoured the world for new ideas or investment opportunities.
Mr Quinn said to the best of his recollection, he only used his credit card for “company business”, so he did not believe he had to reimburse it anything from his personal funds. Mr Quinn said he was unable to comment on whether he had taken any director’s loans as he did not have access to the group’s records.
“I never took any interest in how much I was paid personally by the Quinn Group of companies, and strange as it may seem, I had little or no regard for my personal wealth as an individual down through the years,” Mr Quinn said. He said he believed claims and assessments by HMRC would be shown to have “no proper foundation and are based on information that may have been supplied to them for whatever reasons”.
AN IRISH company owned by a trust set up for the grandchildren of bankrupt businessman Seán Quinn was paid $650,000 last year by a Ukrainian company which is part of the international property group the State-owned Irish Bank Resolution Corporation wants to seize.
The money was paid into an AIB account in Blanchardstown, Dublin. The payments were made on foot of a contract agreed prior to the High Court ordering the Quinn family to stop asset-stripping the property group.
A second Irish company, owned by the wider Quinn family, was also paid substantial amounts in 2011.
The previously unreported payments are set out in an affidavit of Seán Quinn jnr, filed by him to the High Court in July when he was sent to jail for contempt.
In the document, Mr Quinn sets out certain matters concerning Cranre Property Services Ltd, with an address in Blanchardstown, Dublin.
The company was incorporated in April last year. Mr Quinn’s brothers-in-law, Niall McPartland and Stephen Kelly, are its directors, and the company’s shares are held by a Swedish entity, Irish Trust AB.
Mr Quinn jnr said in his affidavit to Ms Justice Elizabeth Dunne that the company was ultimately owned by the Cranaghan Foundation, a foundation set up for the benefit of his parents’ grandchildren.
He said that in April 2011, the company took over a services contract with Univermag, a company operating a shopping mall in Kiev. The contract was agreed at a time when IBRC was seizing the Quinn Group from the family.
Mr Quinn jnr said he was advised by Mr Kelly that the terms of the contract were agreed between Mr Kelly and Larissa Yanez Puga, who ran Univermag for the family and whom the bank has been trying to depose.
Cranre received a $350,000 signing-on fee on July 8th, 2011, two payments of $100,000 each on September 2nd, 2011, and a further payment of $100,000 on September 3rd, arising from invoices for the months of June, July and August 2011.
Mr Quinn said he was told by Mr Kelly that Michael Waechter, of Senat FZC, Dubai, sourced a company called Letynaya, to act as a property services company in relation to the Kiev mall. Letynaya is based in the United Arab Emirates.
Mr Kelly agreed a contract between Cranre and Letynaya in August 2011, according to Mr Quinn. As part of this contract, Letynaya was to be paid €320,000 by Cranre, which it was in November 2011.
Since then, he said, the family has ended its role with Univermag and has sought the return of some of the money paid to Letynaya. “Letynaya refused this request,” Mr Quinn said in his affidavit.
He said the balance of the money that remained with Cranre “was used to pay general offi