Risk Update

International Risk — Paradise Player Conflicts Allegation, SRA Pandora Papers Pursuit (AML)

Posted Dan Bressler

“Hogan Lovells Accused Of Conflict Of Interest In Tycoon’s Suit” —

  • “Lawyers for Vadim Shulman [bio, via Organized Crime and Corruption Reporting Project, noting Paradise Papers] alleged in the High Court that breaches by Hogan Lovells International LLP cost him the chance of securing a settlement against Igor Kolomoisky and Gennadiy Bogolyubov in London in connection with an allegedly fraudulent loan scheme concerning a defunct Ohio steel plant… Shulman says Hogan Lovells was actively pursuing a retainer with Ukrainian-based PrivatBank while still contracted to him.”
  • “Shulman and PrivatBank were racing for ‘the same pool of assets’ belonging to Kolomoisky and Bogolyubov, said Jonathan Marks QC, counsel for Shulman. Hogan Lovells owed Shulman a ‘duty of undivided loyalty,’ which would have been breached by the law firm’s discussion with the lender, he added.”
  • “Marks told the court that Hogan Lovells “preferred the interests” of PrivatBank, helping the bank obtain its own $2.6 billion freezing order against the two men in December 2017. Shulman wants to add claims that the law firm must have begun work on the order before their relationship ended. Hogan Lovells says it did not begin working for PrivatBank until August 2017. By this time, Shulman’s $500 million fraud suit had been dismissed. An English court ruled it did not have jurisdiction on the claims in April 2017.”
  • “But Shulman now alleges that Hogan Lovells’ discussions with PrivatBank about its much larger claim overlapped with its obligations to him. Shulman’s lawyers also want to be able to cross-examine partners at the law firm over evidence concerning the retainer date.”

“SRA wants to see evidence gathered from Pandora papers leak” —

  • “The Solicitors Regulation Authority has said it wants to see documents released as part of the Pandora papers to establish whether any law firm has breached anti-money laundering rules.”
  • “Several firms have been named this week as part of the ongoing coverage from leaked files of companies that specialise in creating offshore companies and trusts. The Guardian reports today that London firm Farrer & Co took instructions from a client called Abubakar Bagadu, a Nigerian politician accused of involvement with a corruption scheme through which billions of dollars were stolen from the state.”
  • “Farrer & Co, renowned as legal advisers to the Royal Family, told the newspaper it carried out extensive due diligence on Bagadu and there is no suggestion of wrongdoing on the firm’s part.”
  • “The SRA has specific requirements of firms to carry out proper checks on clients before taking them on, as part of regulations to prevent money laundering. Firms need to risk assess relevant clients, identify and verify their identities and identify their sources of funds and wealth. Where relevant to the size and nature of the business, firms must also undertake an independent audit, screen their staff and appoint a money laundering compliance officer.”
  • “There is no suggestion that any firm named in the Pandora papers is in breach of these rules, but the SRA wants to see details of what information has been released to check if it needs to be involved.”