National Bank Trust v Yurov & Ors

National Bank Trust v Yurov & Ors

The defendants, as directors and controlling shareholders, orchestrated and implemented a dishonest scheme of 'balance sheet management' involving the Bank making over US$1 billion in loans to shell companies they beneficially owned or controlled, with the purpose and effect of falsifying the Bank's accounts, deceiving the Central Bank of Russia, and concealing the Bank's true financial position. The defendants breached their duties under Russian law (RCC Article 53, JSCL Article 71), failed to disclose personal interests, and repeatedly acted unreasonably, dishonestly, and not in the Bank's best interests. The Bank suffered loss equal to the outstanding principal on the loans (less...

Parties
Claimant: National Bank Trust; Defendant: Ilya Yurov; Defendant: Sergey Belyaev; Defendant: Nikolay Fetisov; Defendant: Nataliya Yurova; Defendant: Irina Belyaeva; Defendant: Elena Pischulina
Jurisdiction
England and Wales
Judgment Date
23 January 2020
Procedural Posture
Civil (commercial Fraud, Breach of Duty, Company Law) / Final Judgment After Full Trial
Outcome
Judgment for the claimant. Defendants found liable for breach of duty, fraud, and required to compensate the Bank for losses. Orders for asset recovery, declarations of trust, and relief under s.423 Insolvency Act granted.
Legal Topics
Directors' Duties, Breach of Fiduciary Duty, Fraudulent Misrepresentation, Related Party Transactions, Russian Law (foreign Law), Tracing and Asset Recovery, Limitation of Liability, Insolvency Act S.423, Constructive/resulting Trusts, Disclosure and Concealment, Damages and Quantum
Company Law Banking Law Civil Fraud Trusts and Equity Insolvency Directors' Duties Breach of Fiduciary Duty Fraudulent Misrepresentation +8 more

Case Brief

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Parties

National Bank Trust

Claimant

Ilya Yurov

Defendant

Sergey Belyaev

Defendant

Nikolay Fetisov

Defendant

Nataliya Yurova

Defendant

Irina Belyaeva

Defendant

Elena Pischulina

Defendant

Procedural Posture

Civil (commercial Fraud, Breach of Duty, Company Law) / Final Judgment After Full Trial

Legal Issues

  1. 1 Were the defendants in breach of their duties under Russian law (RCC Article 53, JSCL Article 71) and/or employment contracts in relation to loans and transactions?
  2. 2 Did the defendants act dishonestly, unreasonably, or not in the best interests of the Bank?
  3. 3 Were the loans and transactions the result of a dishonest scheme for the defendants' benefit?

Ratio Decidendi

The defendants, as directors and controlling shareholders, orchestrated and implemented a dishonest scheme of 'balance sheet management' involving the Bank making over US$1 billion in loans to shell companies they beneficially owned or controlled, with the purpose and effect of falsifying the Bank's accounts, deceiving the Central Bank of Russia, and concealing the Bank's true financial position. The defendants breached their duties under Russian law (RCC Article 53, JSCL Article 71), failed to disclose personal interests, and repeatedly acted unreasonably, dishonestly, and not in the Bank's best interests. The Bank suffered loss equal to the outstanding principal on the loans (less...

Court Disposition

Judgment for the claimant. Defendants found liable for breach of duty, fraud, and required to compensate the Bank for losses. Orders for asset recovery, declarations of trust, and relief under s.423 Insolvency Act granted.

Orders

  • Defendants to pay damages equal to outstanding principal on loans (less recoveries), as set out in agreed schedules.
  • Declarations that assets held by spouses are held on resulting/constructive trust for relevant defendant, or are set aside under s.423 Insolvency Act.