The Latvian banker Valeri Belokon has been fighting one of the poorest nations on earth for 11 years. His dispute with Kyrgyzstan began in 2011 when bank regulators raided his personally owned Manas Bank in Bishkek, capital of the remote and landlocked central Asian state. The costly feud ended on December 12, 2022, when special forces broke through the front door of the Baltic International Bank in Riga, Latvia.
The legal battleground has stretched from the Kumtor gold mine, 13,000 feet up in the Tien Shan mountains of heaven to proceedings heard under the inherent jurisidiction of the Magna Carta Libertatum of 1215, in the Superior Court of Justice in Toronto, Canada.
Money laundering is the crime of moving money that has been obtained illegally through banks and other businesses to make it seem as if the money has been obtained legally. Cambridge Dictionary
The fall of the Bakyiev family
In Kyrgyzstan, on the last night of the corrupt régime of President Kurmanbek Bakiyev, rogue bankers wired $170mn – 10% of Kyrgyzstan’s banking assets – out of the country. The president arrived in Belarus on 19 April 2010. His son Maksim turned up in a private plane as business partner of Valeri Belokon in Latvia.
Government inspectors soon discovered that the ‘dazzling success’ of Belokon’s Manas Bank in Bishkek had been founded on false passports, fake clients and stolen cash. The bank had laundered $534mn through a New Zealand company whose sole signatory was a taxi driver in Belarus. Some $24mn went through the BMD Commerce account, where the sole signatory was a 20-year-old who been in prison in Latvia when someone made million dollar cash deposits in his name.
In 2014, when a Kyrgyz court sentenced Maksim Bakyiev to life imprisonment in his absence for ordering the murder of a British businessman, Bakyiev was faraway, living in a house in Surrey owned by an offshore company in Belize. Belokon, the newly creted president of Blackpool Football Club, was living nearby on a leafy road between three classic golf courses at Wentworth, near Virginia Water.
The business mediator Sean Daley, from Bicester in Oxfordshire, had been shot in the back in front of his two-year-old son during 2006 negotiations in Bishkek about a British investment in the future of the country’s second largest gold mine. Daley barely survived the air lift to surgeons in Turkey and returned to England with a bullet lodged in his liver.
It would be 2021 before the Jerooy goldfield eventually went into production, and then only with backing from Vladimir Putin and $600mn from a company controlled by Musa Bazhayev, a Russian oligarch sanctioned by the EU, UK, Canada and Switzerland after the Russian invasion of Ukraine.
Another Kyrgyz court found that Bakiyev, as head of the Central Agency for Development, Innovations and Investments, had been raiding the social fund of Kyrgyzstan with his financial advisor, Yevgeny Gurevich, and the chairman of the Asia Universal Bank, Mikhail Nadel. Bakyiev was sentenced to life imprisonment in his absence for the theft of £35mn of state funds missing from the Asia Universal Bank.
The Russian laundromat
American regulators cracking down on this $200bn money laundering scheme ordered JP Morgan Chase & Co in January 2014 to cut all correspondent banking ties with Latvia, and the international credit rating agency Moody’s withdrew Baltic International Bank’s standalone bank financial strength rating, despite BIB’s reported assets of €266.4mn.
In October 2014, Belokon decided to back the angry Blackpool FC football fans protesting that under the chairmanship of Karl Oyston, son of the estate agent Owen Oyston, the club had dropped to the bottom of the Football League Championship while refunding majority owner Owen Oyston £11mn in the year after the club had ‘parachuted’ from the Premiership.
Belokon invited Jack Gaughan of the Daily Mail to his office at the Baltic International Bank, where a carved wooden panel showed a legendary white horse (belokon in Russian) stepping forward to decide the fate of the 13th century missionary bishop who converted the Livs, the last pagans of Europe, to Christianity.
Belokon talks to the Daily Mail
Gaughan, a former moderator on the Vital Football fans forum, reported that:
“Belokon – speaking in Russian so as to not mix his words – backed supporters protesting against the ownership at Bloomfield Road. Talking at his Baltic International Bank headquarters in Riga, with a Havana cigar nestled between index and middle fingers, he left little unturned.
“Belokon, 54, announced he has opened legal proceedings against owner Owen Oyston and his son, chairman Karl, over unpaid loans and could lodge a bid to buy the club. He has sounded out a wealthy local investor who wants to partner him if, crucially, the Oystons included the stadium and properties in any deal.
“‘I wouldn’t be able to do it alone but I’m ready to be a partner. They need to be local. I have to be able to believe in them now I’ve had this experience with the Oyston family,’ he said. ‘Given Karl’s addictiveness to money, it won’t be easy in the short term.
He added: “Soon it will be a point of no return. We asked our lawyers to start requesting a breakdown of the financial information not shown in the accounts over the last five years we are entitled to. It’s a letter before action. They have basically ignored us before now.”
Belokon in court in Paris, Manchester, London and Toronto
By 2015, Belokon was both pursuing the Oystons in courts in Manchester and London for unfair prejudice at Blackpool Football Club and simultaneously pursuing the Kyrgyz government in a Paris arbitration court with a £100mn claim for the nationalisation of the Manas Bank.
In Toronto, he pursued Kyrgyzstan with two Turkish companies in freezing shares worth $30mn in Centerra Gold Inc, the Canadian operators of the Kumtor gold mine in the Tien Shan mountains. Kumtor, the world’s second-highest gold mine, produces about 16 tonnes of gold every year, 12.5% of Kyrgyzstan’s GDP in 2020. Belokon’s Centerra Gold action failed in 2016 when the Ontario Superior Court of Justice ruled that the shares belonged to a commercial company and not to the Kyrgyz Republic.
In Paris, appealing to France’s highest civil court in March 2022, Belokon lost again, this time on the grounds that awarding him $15mn for the seizure of his Manas Bank would “result in Mr Belokon benefitting from the proceeds of criminal activities, violating international public policy in a manifest, effective and concrete manner”.
Belokon wins in London
Yet Belokon won his legal claim against the Oystons in London. After a 17-day hearing in the high court, Mr Justice Marcus Smith ordered Owen Oyston to buy for £31.7mn all the VB Football Assets interests in Blackpool FC, including an investment in the new South Stand at Bloomfield Road owned by the Baltic International Bank.
The court order triggered a forced sale of the club to Simon Sadler, the Blackpool-born founder of a hedge fund based in Hong Kong. In evidence, Oyston had accused Belokon of laundering stolen funds from Kyrgyzstan but his words ended as a footnote in the final judgment:
“Can I tell you the evidential basis is that the Courts of Appeal of Paris, the French Republic, handed down a judgment on Mr. Belokon that he is a money launderer and should not benefit from the proceeds of crime, that he is avoiding – evading taxes to the tune of £5.9 billion, huge sums of money…”( EWHC 2767 (Ch) Case No: CR-2015-006989 Page 12)
The High Court in London did not concern itself with money laundering. The original 2011 letter in which Global Witness warned Blackpool FC about Belokon’s football investment merited six lines in Mr Justice Marcus Smith’s final judgment:
“On 21 September 2011, Mr. Karl Oyston received a letter from “Global Witness”, a non-governmental organisation based in London that campaigns for greater transparency in the natural resource and banking sectors. This letter raised a number of questions regarding Mr. Belokon’s relations with Blackpool FC. Mr. Karl Oyston forwarded the letter to Mr. Owen Oyston and to Mr. Belokon, but otherwise determined to ignore it.”
Belokon disqualified from holding high office by the English Football League
The judgment in VB Football Assets v. Blackpool Football Club (Properties) Ltd was revised at a late stage, not because the judge had learned that the Paris Appeal Court had refused to reward money laundering, but because the English Football League had learned of the Kyrgyz prison sentence imposed on Belokon for laundering the proceeds of crime.
Mr Justice Marcus Smith revised his proposed settlement of the case:
“Of course, I know nothing about the events that have brought this exclusion of Mr. Belokon about, and it does seem extraordinary that a conviction not on the merits but based on non-attendance by Mr. Belokon should have this effect. But, as I say, I know nothing of the background.”
The judge knew nothing of the background because both sides in VB Football Assets SIA v. Blackpool Football Club (Properties) Ltd, a case argued for 17 days in the Royal Courts of Justice, had neither presented nor contested the evidence of money laundering through Blackpool FC.
US Justice Department repatriates forfeited funds to Kyrgyzstan
Money laundering had been the elephant in the English courtrooms, but on 26 February 2019, just as a British court-appointed receiver was starting to compel Owen Oyston to pay £31.7mn to Belokon or surrender ownership of the football club, the US Department of Justice announced they were repatriating to Kyrgyzstan $6mn in state assets stolen by Bakyiev and invested in the USA.
“Following the conviction in the prosecution led by the U.S. Attorney’s Office for the Eastern District of New York, the Kyrgyz Government filed a Petition for Remission with the U.S. Department of Justice, Money Laundering and Asset Recovery Section, claiming that the funds subject to the forfeiture order traced back to monies stolen by Maxim Bakiyev from Kyrgyz state authorities and other banking institutions. On Oct. 4, 2018, the Department of Justice granted the Remission Petition.”
Wealth stolen from some of the poorest people of the world could be intercepted by judges in Paris, in the name of the people of France, and seized in New York by the US Attorney’s Office for the Eastern District, but not in London, where the judge said, “I know nothing of the background”.