Mr Justice Vos:
- This action is brought by the Claimant, Mr Arkady Gaydamak ("Mr Gaydamak") to enforce an alleged written agreement dated 13th December 2001 with Mr Lev Leviev ("Mr Leviev") (which I shall call the "2001 Agreement", without there being any implication that there was such an agreement). The defences are simple: first, that the 2001 Agreement was never signed, and secondly, that the claims under it were compromised by a settlement agreement between the parties entered into on 6th August 2011 (the "Settlement Agreement").
- The claims arise out of the parties' business activities in Angola, mainly in relation to diamonds. Angola is the third largest diamond producer in Africa, and the fifth largest in the world. The legal position in Angola is (and was) that diamonds are state property and can only be exported with a licence from a state-owned company called Empresa de Diamantes de Angola ("Endiama").
- The background to the claims can be very briefly described as follows. Mr Gaydamak was involved in Angola during the 1990s and became influential with the Government and President dos Santos. In the late 1990s, he claims to have suggested to the Government that it should control the diamond industry more effectively to prevent Angolan rebels continuing to obtain funding from so called "blood diamonds". This led to the establishment of a diamond trading company called Ascorp S.a.r.l. ("Ascorp") whose shareholders were Sociedade de Comerzializacao de Diamantes de Angola Sodiam S.a.r.l. ("Sodiam"), a Government owned entity, as to 51%, the Goldberg Group Leviev Welox Ltd ("Welox") as to 24.5%, and Trans African Investment Services, T.A.I.S. Ltd ("TAIS") as to 24.5%. These shareholdings are not in doubt, but the interests lying behind Welox and TAIS are less clear. At the least, it seems now to be common ground that Mr Leviev held an indirect interest in 50% of Welox, with the other 50% being held ultimately by two businessmen, a Mr Silvain Goldberg ("Mr Goldberg") and a Mr Ehud Laniado ("Mr Laniado").
- Mr Gaydamak says that he introduced Mr Leviev, an internationally renowned diamond trader, to front for him as he (Mr Gaydamak) was experiencing reputational problems in France and elsewhere from at least December 2000, when an international arrest warrant was issued against him. Mr Gaydamak says that Mr Leviev agreed to hold half his (Mr Leviev's) interest in Ascorp for him, and that he and Mr Leviev agreed to split their interests in all their respective Angolan businesses, as to "profit and responsibility" 50/50.
- The oral agreement to split their interests 50/50 was, according to Mr Gaydamak, ultimately recorded in writing in the 2001 Agreement, and it is that agreement that Mr Gaydamak seeks to enforce in this action. The 2001 Agreement was, according to Mr Gaydamak, handed for safe-keeping to the Chief Rabbi of Russia, Rabbi Berl Lazar ("Rabbi Lazar"), since Mr Gaydamak and Mr Leviev were both leading members or sponsors of the Jewish community in Russia which Rabbi Lazar led.
- As I have said, Mr Leviev's defence is that the 2001 Agreement was never signed by him. His case is that the document that he gave to Rabbi Lazar was a manuscript agreement made in September 2000 for Mr Gaydamak to make regular charitable contributions to the Jewish communities they both supported (the "September 2000 Agreement").
- The second major issue in the case relates to the "drop hands" Settlement Agreement that was undoubtedly signed by each of Mr Gaydamak and Mr Leviev in Luanda on 6th August 2011. Mr Gaydamak contests the enforceability of the Settlement Agreement contending first that it was not intended to come into force until a date had been agreed for it to do so, and secondly that it was induced by fraudulent misrepresentations made on Mr Leviev's behalf by General Manuel Helder Viera Dias ("General Kopelipa") in the presence of Mr Antonio Carlos Sumbula ("Mr Sumbula"), to the effect that Mr Leviev would make Mr Gaydamak a proposal for compensation to be paid to him proportionate to the volume of business being transacted in Angola. Mr Gaydamak says that a sum of US$500 million was mentioned, with US$50 million being paid at once. Mr Leviev's response is to say that he did not agree to pay Mr Gaydamak a cent, and that he made that very clear to General Kopelipa and Mr Sumbula. His two conditions for entering into the Settlement Agreement were that he would pay Mr Gaydamak nothing and that he would not meet Mr Gaydamak in person (which he did not do). Not surprisingly, therefore, issues as to the authority of General Kopelipa to act for Mr Leviev and to make representations on his behalf have arisen. General Kopelipa was at the time the Minister of State in Angola. It appears that his position is akin to that of Prime Minister. Mr Sumbula was the Chief Executive Officer of Endiama. I will set out the precise issues that will need to be decided once I have dealt in a little more detail with the chronology of the extraordinary events that have led to this litigation.
- On 1st August 1998, Mr Avi Dagan ("Mr Dagan") and Mr Danny Yatom ("Mr Yatom"), set up SCG Israel Limited ("SCG"), a company owned by Mr Gaydamak, Mr Yatom, Mr Dagan and Mr Moshe Levy and financed by Mr Gaydamak, with a view to providing security services in Angola.
- On 19th September 1998, SCG entered into a Memorandum of Understanding with the Republic of Angola to establish "a security Unit for the protection of V.I.P. Institutions and Intervention". Mr Gaydamak explained this agreement in his evidence as being, in effect, a necessary cover to allow SCG to bring arms into Angola to protect the diamond industry, even though diamonds are not mentioned in the agreement itself. Mr Yatom was a previous head of Mossad, and Mr Dagan was likewise ex-Israeli security.
- At or about the end of 1998, Mr Gaydamak met Mr Leviev for the first time.
- On 7th October 1999, a Memorandum of Understanding between "RDR" and Welox was signed (the "7th October agreement"). According to Mr Gaydamak this was an understanding between two companies owned by Mr Laniado and Mr Goldberg in relation to the re-organisation that was taking place in the Angolan diamond industry. The agreement was signed by Mr Goldberg, Mr Laniado, Mr Gaydamak and Mr Leviev, amongst others. Mr Gaydamak claimed that the 2% levy on turnover of rough diamonds that the 7th October agreement provided to be paid to RDR was intended to be for him. RDR was, according to Mr Gaydamak, transformed into Ascorp, and the express terms of the 7th October agreement contemplated that it would be binding on RDR's successors and assigns, even if RDR were re-organised. Mr Leviev said that Mr Gaydamak signed the 7th October agreement on behalf of the Government of Angola, but that its terms never took effect.
- On 11th October 1999, a framework agreement was entered into between the Ministry of Geology and Mines in Angola, Welox and TAIS (the "11th October agreement"). These entities (save that the Ministry was replaced by Sodiam) were the future shareholders of Ascorp. The 11th October agreement envisaged Welox and TAIS guaranteeing to make available finance to purchase all diamonds up to a minimum of US$150 million.
- On 15th December 1999, the shareholders of Ascorp entered into a Shareholders' Agreement, showing that it was owned, as I have said, as to 51% by Sodiam, 24.5% by Welox, and 24.5% by TAIS.
- On 10th January 2000, Mr Gaydamak bought a 9.66% stake in Africa Israel Investments Limited ("Africa Israel"), an Israeli public company listed on the Israeli stock exchange, from Mr Leviev's Israeli company, Memorand Limited, giving Mr Gaydamak a total of 15% of Africa Israel. Africa Israel is one of Mr Leviev's major interests.
- On 31st January 2000, the President of Angola issued a decree paving the way for the establishment of Ascorp's exclusive right to buy Angolan diamonds. In early 2000, Ascorp began operations.
- On 17th March 2000, Mr Gaydamak was introduced publicly at a board meeting of Africa Israel as the owner of a 15% parcel of shares in that company.
- On 17th May 2000, Ascorp was incorporated.
- In September 2000, according to Mr Leviev, Mr Leviev and Mr Gaydamak entered into the September 2000 Agreement whereby Mr Gaydamak agreed to give monthly amounts to Jewish charities. The agreement was, again according to Mr Leviev, deposited in a sealed envelope with Rabbi Lazar. Mr Gaydamak denies ever having entered into any such agreement.
- In December 2000, an international arrest warrant was issued against Mr Gaydamak.
- On 6th June 2001, TAIS changed its name to Iaxonh Limited ("Iaxonh"). Tatiana Cergueevna Regan ("Tatiana Regan") is shown on the Gibraltan company search as the sole shareholder of this company. Mr Gaydamak says that the name "TAIS" is derived from the first two letters of Tatiana and Isobel, respectively the wife and daughter of President dos Santos.
- On 26th July 2001, Mr Moshe Mantel ("Mr Mantel") established Calsen Investments Limited ("Calsen"), a BVI company. He was the sole registered shareholder of Calsen, but it appears that he held that share for Mr Gaydamak.
- In July 2001, according to Mr Leviev, he met Mr Gaydamak and agreed to discontinue their joint business activities in Kazakhstan and Africa Israel.
- On 28th August 2001, a letter of understanding was signed between Mr Gaydamak and Mr Leviev whereby Mr Gaydamak's company, A.K.S., sold his holding in Africa Israel back to Mr Leviev's Memorand Limited.
- On 25th November 2001, Calsen invoiced L.L.D. Ltd. for US$2,273,385.35 for 1515.59 carats of polished diamonds. Mr Gaydamak denied that this invoice reflected a genuine sale of polished diamonds, but said that it was an invoice requested by Mr Leviev to conceal a payment to him from Mr Leviev in respect of their partnership arrangements in Angola. Mr Leviev originally denied that this invoice had been received by his company, but ultimately accepted that it represented a sale of polished diamonds to Calsen. LLD Diamonds Limited (not LLD Limited) is accepted by Mr Leviev to be his main diamond trading company. That company is hereafter referred to as "LLD Diamonds".
- On 4th December 2001, Mr Dagan's son-in-law, Mr Elad Koren, emailed Mr Mantel saying that Mr Dagan "spoke with Vered [Raz] from LLD yesterday and she said that she made the transfer before last week-end, so I guess you will see that today please inform me because [Mr Dagan] will be busy today".
- On 5th December 2001, Mr Dagan emailed Mr Mantel as follows. The email is badly spelt and hard to understand: "I forgot to cleare it on my last E mail that you should transfer from "calsen" to your privet acount. Nov. payment of $35k. Please confirm. Until now, I did not have the chance to talk to the "father" regarding the payment to Kianda, (his wife has arrived, and he did not come to the "Maoz", any way we will do it from "calsen". Do you have the bank details? On comming wednesday, 12/12/01 I plan to go to meet our Mr. futhis, do you think that it will be better that you will call him? after all, I met him only once. I want to deal with the new Co. and to make a transfer from "calsen" to the new Account. I also think it will be wise to arrange the background for the "big" transfer when it will arrive from Chepa". It was put to Mr Gaydamak that this email demonstrated that the payments to Calsen were in respect of food provided to Angola by a Mr Chepa in Russia.
- On 6th December 2001, US$2,273,354.03 was paid to Calsen by LLD Diamonds, corresponding to Calsen's invoice dated 25th November 2001. This is common ground.
- On 10th December 2001, Mr Gaydamak wrote to Mr Leviev "further to our telephone conversation" in relation to an article published (by Mr Leviev, with information from someone at Africa Israel, according to Mr Gaydamak) in the Marker Newspaper in December 2001 alleging that Mr Gaydamak was suspected of bribing French personalities including the son of President Mitterand. The letter also complained about the statement in the article that Mr Leviev had severed his connections with Mr Gaydamak as a result of the allegations, when Mr Gaydamak said that it was he that had asked Mr Leviev to buy back his shares in Africa Israel, because he was dissatisfied with the management of the company. The letter said that the article was false and libellous and said that Mr Gaydamak would be demanding an apology.
- On 13th December 2001, the office of Israeli Advocate Mr Eytan Modan ("Advocate Modan") allegedly date stamped as received a manuscript document written in Hebrew by Mr Dagan ("Mr Dagan's manuscript note") saying:-
LL ownership structure chart
1. AG 50% of LL (proceeds)
2. Confirms that the share is equal as LL.
3. Entitled to equal proceeds + 2% from gross turnover. From this amount 500K should be deducted and paid to AG, and the balance shall be divided by 2.
half of it from Catoca gross turnover going through Ascorp.
5. AG access to all accounting and records confidential.
6. First day of each month reports.
50% partnership in Zaire
50% in all future activities in Angola related to diamonds and any activities arising from the activities in Angola.
And AG reserves the right to come out officially.
He is entitled to sell his share to anyone he wants to and offer the right of first refusal to LL".
This document is said by Mr Leviev to constitute Mr Gaydamak's instructions to Advocate Modan to draft the 2001 Agreement. Mr Gaydamak denies that he instructed anyone, let alone Advocate Modan, to draft the 2001 Agreement. Mr Gaydamak's case is that the 2001 Agreement was drafted by a Mr Jacques Zimmerman ("Mr Zimmerman") on behalf of Mr Leviev.
- On 13th December 2001, a draft of the 2001 Agreement was allegedly sent by Advocate Modan to Mr Ze'ev Zakharin ("Mr Zakharin"), a business associate of Mr Gaydamak, by fax.
- The 2001 Agreement is dated the 13th December 2001. I shall set out the precise terms of the 2001 Agreement in due course, but suffice it to say for the time being that it provided for Mr Leviev to hold all his mutual business assets and interests in Angola and Zaire including his share in Ascorp and the income derived from those assets on trust in equal shares for himself and Mr Gaydamak. The 2001 Agreement was allegedly entered into at a meeting between Mr Leviev and Mr Gaydamak in a room at the Diamond Exchange, Naom Building, Ramat Gan, near Tel Aviv. Mr Dagan and Ms Hortense Borenshtein ("Ms Borenshtein") waited outside the room. Mr Gaydamak says, and Mr Leviev denies, that it was agreed that the only signed copy of the 2001 Agreement would be entrusted to Rabbi Lazar for safekeeping, and that that was done.
- On 16th December 2001, Mr Gaydamak's lawyers sent Mr Leviev a copy of the letter they had sent to the Marker Newspaper demanding an apology for the article that had allegedly libelled Mr Gaydamak.
- On 16th December 2001, a version of the 2001 Agreement was allegedly sent by fax by Advocate Modan to Mr Dagan. On 17th December 2001, Advocate Modan allegedly sent the final draft 2001 Agreement with a fax cover sheet to Mr Dagan.
- Between 5th January 2002 and 5th August 2002, Calsen allegedly issued 9 further invoices addressed to "L.L.D. Ltd." (said by Mr Gaydamak to mean "LLD Diamonds") for various amounts, also in respect of polished diamonds, but this time in respect of round numbers of carats and round sums. Mr Gaydamak denied that these invoices reflected genuine sales of polished diamonds, but said that they were requested by Mr Leviev to conceal payments to him from Mr Leviev in respect of their partnership arrangements. The payment documents emanating from Bank of Cyprus for these payments indicate that they were made by various companies including Globemax Limited, Progres Grup Ink, Wellfin Corporation, and Marshall Trading LLC. Mr Leviev denies a connection with any of these entities.
- On 2nd February 2002, Mr Dagan sent Mr Mantel another mercurial email as follows:-
"As I told yoy over the phone today we are back in Israel. I met today with the "father" [Mr Gaydamak] and he asked to give Klanda the best treatment during his visit to brazil. If you need more fianance tell me. Second point as from the 15/2 we suppose to get budget for one more round of "calsen", start to check it (around 25-30 $mil.)
As from this morning 4/02/02 LL should send $3MIL to "calsen" Please talk to Angela and let me know ASAP.
Regarding Feb. payments- for yourself, make a transfer of $36k from "calsen"/"father" Ok? (Jan. 02) Please make a transfer to "Danler" of $30k For myself (Jan. 02+exp.) do you have the details? Pls confirm.
We have to make a transfer to "Change spot" of $50k. Do you have the details? let me know. To the rest of the orders- I will send you after the $3 Mil will be in,
Please send me the actual balance after the above payment made".
- On 4th February 2002, Mr Dagan emailed Mr Mantel saying: "[t]he father is pressing on 2 subjects: $3mil from LL, and the new sum for the next round of Cada/Calsen. Please check".
- Early on 6th February 2002, Mr Dagan emailed Mr Mantel saying: "[u]ntil now I have not rcvd. From the "father" the details From LL. I hope today. If They call yoy from the bank tell them that you are on a trip and not in the office. Just to gain time".
- On 6th February 2002, Mr Dagan emailed Mr Mantel again as follows:-
"Further to our phone talk of today here is the current situation-
1- Please send to the bank an invoice made to LLD (like you did last time) as i understood, it is not sure that the money came from LLd, so if the bank will ask you should say, that you did the work for LLD, and you do not know, where from they are paying you. Please confirm to me when it is all over, and the sum of $3 mil is in.
2- according to the father, you should get any day the conifirmation for the budjet for the next round of the food, please check it and let me know".
- On 15th August 2003, Mr Gaydamak's company, Development Advisory Group Ltd ("DAG"), entered into a service contract for technical assistance in the commercialisation of diamonds with Sodiam, by which DAG agreed to organise all the administration of the commercialisation of diamonds for Sodiam.
- On 2nd October 2003, DAG wrote to Iaxonh saying that it had decided to nominate Iaxonh as a sales channel to market a part of the Angolan production of run-of-mine rough diamonds originating from formal market sources (up to US$20 million per month).
- On 3rd October 2003, DAG entered into an agreement with Iaxonh whereby they agreed to finance 50/50 the purchase of diamonds from Sodiam.
- On 18th January 2005 (E4/724), Sodiam and Sunland Mining Company Limitada ("Sunland"), a company which allegedly became 60% owned by Mr Gaydamak and 40% owned by Almazy Rossii-Sakha S.A., a Russian company ("Alrosa"), entered into a contract for the purchase and sale of a maximum of US$35 million worth of Angolan diamonds per month.
- In June 2005, a draft Memorandum of Understanding (the "June 2005 MoU") was drawn up between Sunland, the Angola Group, and Diamond Resources Trading Limited ("DRT"), a company owned by Mr Leviev, whereby it was intended that Sunland would be owned 40% by Alrosa, 40% by DRT and 20% by the Angola Group, and the parties would organise all their diamond trading through Sunland in Angola, Russia and the Democratic Republic of the Congo (the "DRC"). Mr Gaydamak claimed that he and Mr Leviev were to be 50% shareholders in DRT.
- On 11th December 2005, Mr Gaydamak entered into a settlement agreement with a Mr Dan Gertler in relation to Sunland, by which Mr Gaydamak agreed to pay Mr Gertler US$50 million.
- On 1st March 2006, Mr Gaydamak's Israeli lawyer, Advocate Ronel Fisher ("Advocate Fisher"), wrote to Mr Leviev asking Mr Leviev to provide information about their diamond partnership, and to Rabbi Lazar asking him to produce the document deposited with him.
- On 15th March 2006, Advocate Fisher wrote again to Mr Leviev asking Mr Leviev to provide information about their diamond partnership, and to Rabbi Lazar asking him to produce the document deposited with him.
- On 3rd October 2006, Advocate Fisher wrote to Mr Leviev again asking Mr Leviev to provide information about their diamond partnership, and to Rabbi Lazar asking him to produce the document deposited with him. Neither Mr Leviev nor Rabbi Lazar responded to these various requests.
- In November 2008, Mr Gaydamak stood for election as Mayor of Jerusalem, but was not elected.
- In October 2009, Mr Gaydamak was convicted in his absence by a Paris Court on numerous charges including tax evasion, money laundering and unlawful arms trading.
- In January 2010, Mr Gaydamak met Rabbi Lazar in Moscow and asked him for the 2001 Agreement, but Rabbi Lazar told him that the document given to him had been destroyed, got lost or been shredded by mistake.
- On 29th January 2010, Mr Gaydamak wrote to Mr Leviev in Russian saying: [m]ore than 10 years ago, at my initiative, and due to my capability we have jointly created the corporation "ASCORP". According to our mutual agreement we together equally own 25% of the shares, which are registered on the entity, associated and controlled by you. We have signed a partnership agreement in 1999 and have passed this agreement to Chief Rabbi of Russia, Berl Lazar, for safekeeping
[Unfortunately] I have never received any amounts of income and dividends due to me, despite my repeated requests made through my lawyers to you about the necessity to fulfil your obligations.
After years of being silent, Rabbi Lazar has informed me that he has thrown the agreement away, which is an unprecedented action and conveys the suggestion about your conspiracy. The present letter is my last attempt to contact you and try to agree
". Mr Gaydamak says that the word translated above as 'unfortunately' in fact means 'however'.
- In early 2010, Mr Gaydmak handed to Mr Leviev in Moscow a 7-page document concerning their relationship in which he said: [a]t the suggestion of Leviev, and the consent of Gaydamak, a signed copy of the [2001 Agreement] in a sealed envelope was handed over by Leviev for safe custody to the Chief Rabbi of Russia, Berel Lazar, who is known to both parties. On the part of Gaydamak, Avi Dagan, who was officially representing the interests of Gaydamak in various, joint structures with Leviev, witnessed this handing over of the envelope". Mr Gaydamak accepted in his evidence that Mr Dagan had not witnessed the handing over of the envelope to Rabbi Lazar.
- On 15th March 2010, Mr Dagan saw a television report that Mr Gaydamak was ill in hospital, and called him to enquire about his health. Mr Gaydamak asked him to look for documents concerned with his dispute with Mr Leviev. Mr Dagan says that he found an unsigned copy of the 2001 Agreement, which he sent to Mr Gaydamak. This was said by Mr Gaydamak to be the first time since December 2001 that he had any copy of the 2001 Agreement.
- On 16th March 2010, Mr Gaydamak wrote to Rabbi Lazar recording what he had told him in their January 2010 meeting.
- On 24th March 2010, Mr Dagan swore an affidavit as to the events relating to the signing of the 2001 Agreement.
- In April 2010, Mr Gaydamak brought proceedings against Rabbi Lazar in the Moscow Rabbinical Court (the "Moscow Beth Din") seeking an order that he produce the signed 2001 Agreement. Rabbi Lazar declined to participate in the proceedings.
- On 26th April 2010, Mr Gaydamak's solicitors wrote to Mr Leviev requesting under clause 4 of the 2001 Agreement that he bring the trust to an end (see the clause set out below) and convey formal title to Mr Gaydamak of his assets.
- On 26th May 2010, Rabbi Lazar was interviewed on Israeli television by Mr Ravi Drucker. Rabbi Lazar acknowledged that he received an envelope from Mr Leviev or Mr Gaydamak, but said he had lost or destroyed the document.
- On 6th January 2011, Mr Gaydamak's solicitors wrote to Mr Leviev demanding that he provide books and records and monthly reports, and pass formal title and pay all outstanding sums to Mr Gaydamak, under the 2001 Agreement.
- On 31st January 2011, Mr Gaydamak issued these proceedings against Mr Leviev.
- On 29th April 2011, the Paris Court of Appeal over-turned most of the charges against Mr Gaydamak, except those of tax fraud and money laundering, but nonetheless sentenced him to 36 months in prison, saying the following at page 73 of its judgment:-
"Notwithstanding the acquittals to be made. Arcadi Gaydamak remains the perpetrator of several offences relating to personal tax fraud and the laundering of the proceeds of crime and offences in considerable sums.
He was only interviewed once on the 26th April 2000. Since then he has been at large and has not appeared before the court or given his excuses and was represented by several lawyers.
With regard to the seriousness of the facts committed, the considerable prejudice caused and the figure which the defendant represents, demonstrating his steadfast intention to escape and defy justice, a term of imprisonment of thirty six months will be pronounced.
It should be noted that the warrant for the arrest of Arcadi Gaydamak on 4th August 2005 remains in force. Furthermore the court will sentence the defendant to a criminal fine of 375,000 Euros".
- In mid-June 2011, Mr Gaydamak went to Luanda, travelling on a French passport.
- On 3rd August 2011, Mr Leviev arrived in Luanda on a private jet.
- On 4th August 2011, the possibility of settlement of the proceedings was raised with Mr Gaydamak at a meeting in Luanda with General Kopelipa and Mr Sumbula. Also on 4th August 2011, General Kopelipa and Mr Sumbula met Mr Leviev to discuss the proposed settlement. Mr Leviev says that he told General Kopelipa and Mr Sumbula that he would settle on two conditions that (a) he did not have to pay Mr Gaydamak anything and (b) he did not have to meet Mr Gaydamak.
- On 6th August 2011, Mr Gaydamak met General Kopelipa and Mr Sumbula again, and General Kopelipa produced a draft of the Settlement Agreement drafted by Mr Leviev's lawyers. According to Mr Gaydamak, General Kopelipa informed Mr Gaydamak that the wording had been approved by the Angolan High Administration and was non-negotiable, and that he had spoken to Mr Leviev who had said he would make a proposal to pay Mr Gaydamak after he had signed, such compensation to be proportionate to the volume of business transacted by Mr Leviev in Angola. Mr Gaydamak signed the Settlement Agreement at this meeting, and placed the date alongside his signature, but not on the first page of the document.
- Later on 6th August 2011, General Kopelipa and Mr Sumbula met Mr Leviev again, and he signed the Settlement Agreement. The recitals define "Claims" as "various disputes between [Mr Gaydamak] and [Mr Leviev] including a claim brought by [Mr Gaydamak] in the High Court of Justice in England", and say that the parties have settled their differences and have agreed terms for the full and final settlement of the Claims and wish to record "those terms of settlement, on a binding basis, in this agreement". The operative terms of the Settlement Agreement provided as follows:-
"2 FULL AND FINAL SETTLEMENT AND RELEASE
In consideration of each Party agreeing to release and forever discharge all and/or any actions, claims, rights, demands and set-offs, whether in this jurisdiction or any other, whether or not presently known to the Parties or to the law, and whether in law or equity, that they, their assigns, transferees, representatives, principals, agents, or any of them ever had, may have or hereafter can, shall or may have against the other Party or any other of their assigns, transferees, representatives, principals or agents, arising out of or connected with the Claims, each Party agrees, in full and final settlement, on behalf of himself and any company under his control, and on behalf of his assigns, transferees, representatives, principals and agents, not to sue, commence, voluntary aid in any way, prosecute or cause to be commenced or prosecuted against the other Party or any company under his control or his assigns, transferees, representatives, principals and agents, any action, suit or other proceeding concerning the Claims, in this jurisdiction or any other.
The Parties shall each bear their own legal costs in relation to the Claims and this Agreement.
6 ENTIRE AGREMENT
6.1 The Agreement constitutes the entire understanding and agreement between the Parties in relation to the subject matter of this Agreement.
6.2 Each Party acknowledges that he has not entered into this Agreement in reliance wholly or partly on any representation or warranty made by or on behalf of the other Party (whether orally or in writing) other than as expressly set out in this Agreement".
Furthermore, the parties confirm and undertake to refrain from any Legal use or publication of information available to them or already in their possession regarding the Republic of Angola or the Angolan government and they also confirm they do not have any claims towards the republic of Angola and the Angola government and to keep all information in that respect strictly confidential".
- On 8th August 2011, Mr Leviev's solicitors sent Mr Gaydamak's solicitors a copy of the Settlement Agreement and invited them to sign a consent order dismissing these proceedings.
- On 10th August 2011, Mr Gaydamak's solicitors wrote to Mr Leviev's solicitors saying: "Our client does not have a copy of this agreement or the original. Please provide the original (which we will hold to your order) so that we can take instructions".
- On 11th August 2011, Mr Gaydamak left Angola.
- On 19th August 2011, Mr Gaydamak's solicitors wrote to Mr Leviev's solicitors saying that it was clear from the document (the Settlement Agreement) that it had not been entered into (apparently because of the absence of a date), and "was to form part of a suite of settlement and commercial arrangements (with third parties as well as our clients) which has not yet been finalised".
- On 22nd August 2011, Mr Leviev's solicitors wrote to Mr Gaydamak's solicitors denying that there were any other arrangements between Mr Gaydamak and Mr Leviev.
- On or about 24th August 2011, Mr Gaydamak says that he telephoned Mr Sumbula and recorded their conversation, in which Mr Sumbula said that it was very clear that they (meaning Mr Leviev) must pay for the Settlement Agreement. The translation of the transcript of the telephone call reads in part as follows, though it will be noted that it is not clear exactly who was speaking at each time:-
Well, er, what should I do? The lawyers have today sent the letter saying that they did not want to acknowledge any commercial arrangement
Saying that he had no agreement on any compensation. He does not have to pay me anything, he will pay nothing.
No, but we spoke of that just
ten minutes ago. Let me speak with Mister Kopelipa, he, he he already knows that
is looking for him. I shall speak to him. They will pay you with a
They will pay you.
They will pay me, you think?
I do think so! I think so!
Yes, but, the impression, it's been three weeks already, and yes, and then. He will not
soon, OK, I'll call you back, I'll call you back.
OK. Do you think that they'll pay me?
They'll pay you
No, no, no. No, it will not work.
Yes, so, it was very clear that they must pay in return for
in return for
Yes, it was very clear, that's true, very clear.
So, OK, I'll wait for your news
- On 5th October 2011, Mr Leviev issued a summary judgment application in these proceedings based on the Settlement Agreement.
- Some time after the summary judgment application, Mr Gaydamak recorded another conversation between himself and Mr Sumbula. The transcript is lengthy and disjointed, but seems to relate to Mr Gaydamak's allegation that he had been promised compensation in the context of the Settlement Agreement by General Kopelipa on behalf of Mr Leviev.
- On 2nd December 2011, Deputy Master Nurse dismissed the application for summary judgment, on the grounds that there was a pleaded allegation of fraudulent misrepresentation affecting the Settlement Agreement.
- On 7th December 2011, Mr Gaydamak wrote to Rabbi Lazar saying that: "[t]he [2001 Agreement] was given to you for safekeeping, in accordance with the rules of Halacha.
But in my various requests to you to provide me a copy of this signed Agreement, you always ignored my requests, or, as you did during our last meetings, declared that you "destroyed or lost" the signed copy of this Agreement".
- On 25th April 2012, Mr Leviev produced letters from Mr Zakharin and Advocate Modan, suggesting that the 2001 Agreement was drawn up in December 2001, on Mr Zakharin's instructions, by Advocate Modan.
- On 10th May 2012, Mr Leviev produced further letters from Mr Zakharin and Advocate Modan attaching versions of the 2001 Agreement allegedly sent on 13th and 16th December 2001.
The 2001 Agreement
- The 2001 Agreement provided as follows:-
"Letter of Agreement between Lev Leviev ("Leviev")
and Arkadi Gaydamak ("Gaydamak"), dated December 13, 2001"
1. This is to certify that Leviev and Gaydamak in equal parts between them own all assets and activities, including business opportunities, with regard to diamonds (mining, distribution and trade), which have been held and conducted by Leviev (either directly or indirectly, through any entity on its behalf, alone or together with others) since 2000, and which have been taken place, initiated, originated in or otherwise related to the Republic of Angola (in respect of Ascorp. Only) and Zaire.
2. The parties hereby acknowledge that the initial investment of Gaydamak in the said assets and activities amount to US$12,500,000 (twelve million five hundred thousand US Dollars).
3. The positioning of Leviev in front of the business community, as the owner and controller of those assets and activities, has been made for convenience purposes only. As long as Leviev is in front, he is regarded vis-ΰ-vis the abovementioned share of Gaydamak in the assets and activities as a trustee in favour of Gaydamak.
4. Upon the first request of Gaydamak, Leviev shall bring the trust into end and shall take all necessary actions in order to allow Gaydamak to receive the formal title of the abovementioned assets and activities directly.
5. All dispositions with regard to the above mentioned assets and activities, including sale, assignment, transfer, pledge or any other transaction of any kind, which deviate from the ordinary course of business for the benefit and interests of both parties, shall be subject to prior approval of Gaydamak in writing.
6. Gaydamak shall be entitled to a commission of 1% of all sales turnover (gross) made out of Katocka diamond mining marketed through "Ascorp" or any entity in its place. As to other commissions due from "Ascorp" (at the rate of 2% of "Ascorp" sales turnover), Gaydamak shall be entitled to the first US$500,000 of any such commission and to equal division of the remainder between the parties.
7. All dividends, profits of any kind, either in cash, stock or in kind, shall be distributed between the two parties simultaneously and in equal parts.
8. Any sale, transfer or other disposition by any of the parties with regard to the said assets and activities, wholly or partly, shall be subject to a right of first offer of the other party.
9. Gaydamak, either directly or through a representative on his behalf (e.g. CPA) shall have at all times, free and full access to all books and records relating to the assets and activities at issue, and shall be entitled to receive upon first demand full and true copies of any of them.
10. Leviev shall prepare and submit to Gaydamak on the first day of each calendar month a monthly report, which details all activities with regard to diamonds, which are held and conducted by Leviev during the preceding month
11. All parties shall treat all information related to their business relations, the assets and activities at issue as well as this Letter of Agreements as strictly confidential and shall not disclose any details related to any of them to any third party. However, Gaydamak shall be entitled at any time, to disclose his interest in the said assets and activities, and to make use of this Letter for preserving his rights herein.
Lev Leviev Arkadi Gaydamak
- At the start of the trial, I asked the parties to agree a list of the issues that the court needed to determine. I have amended their list, mainly (but not wholly) since it seems to me that the sub-issues identified by the parties are more logically dealt with before, rather than after, the main issues to which they relate. My amended list of issues is as follows:-
The 2001 Agreement
i) Issue 1: Did Mr Zimmerman or Advocate Modan prepare the 2001 Agreement?
ii) Issue 2: Was a copy of the 2001 Agreement faxed to Mr Dagan on 17th December 2001?
iii) Issue 3: Was each of the alleged 15 payments to Calsen made?
iv) Issue 4: If so, was each of those payments made, directly or indirectly, by Mr Leviev?
v) Issue 5: Were further payments made by Mr Leviev to Pusan Finance Limited ("Pusan") pursuant to the 2001 Agreement?
vi) Issue 6: Were further payments made by Mr Leviev to Antanta Capital LLC ("Antanta") pursuant to the 2001 Agreement?
vii) Issue 7: Were payments made by Mr Leviev pursuant to the 2001 Agreement?
viii) Issue 8: Did Mr Gaydamak and Mr Leviev sign the 2001 Agreement?
ix) Issue 9: Was Rabbi Lazar given for safekeeping (a) a signed copy of the 2001 Agreement or (b) a document recording Mr Gaydamak's agreement to make contributions to the Federation?
x) Issue 10: Does the 2001 Agreement represent a concluded and enforceable agreement between Mr Gaydamak and Mr Leviev?
The Settlement Agreement
xi) Issue 11: Has the Settlement Agreement come into force, or was it made on terms that it would only come into force on a date yet to be agreed?
xii) Issue 12: Did General Kopelipa represent: (a) that if Mr Gaydamak signed the Settlement Agreement, Mr Leviev would make a proposal to Mr Gaydamak for the payment of compensation to Mr Gaydamak, such compensation to be proportionate to the volume of the business being transacted by Mr Leviev in Angola; and/or (b) that Mr Leviev honestly intended to pay compensation to Mr Gaydamak in return for his giving up his rights?
xiii) Issue 13: If so, were those representations false to the knowledge of General Kopelipa?
xiv) Issue 14: Were those representations relied upon by Mr Gaydamak?
xv) Issue 15: Did those representations induce Mr Gaydamak to enter into the Settlement Agreement?
xvi) Issue 16: Did Mr Leviev appoint or constitute General Kopelipa as his agent (i) to convey his two conditions to Mr Gaydamak and/or (ii) to obtain Mr Gaydamak's signature on the Settlement Agreement?
xvii) Issue 17: Did General Kopelipa have actual authority to make the representations set out above?
xviii) Issue 18: Did Mr Leviev hold out General Kopelipa to Mr Gaydamak (and if so how) as authorised: (a) to make the representations set out above; or (b) to state that Mr Leviev intended to pay Mr Gaydamak compensation proportionate to the volume of business being transacted by Mr Leviev in Angola if he entered into the Settlement Agreement?
xix) Issue 19: Did Mr Gaydamak rely upon such holding out?
xx) Issue 20: Did General Kopelipa have apparent authority to make the representations above?
Mr Leviev's knowledge of General Kopelipa's fraud
xxi) Issue 21: If General Kopelipa made fraudulent statements to Mr Gaydamak to induce him to sign the Settlement Agreement, did Mr Leviev turn a blind eye to that fact at the time when he signed the Settlement Agreement?
xxii) Issue 22: If so, is knowledge that the Settlement Agreement had been procured by fraud to be attributed to Mr Leviev such as to preclude him from enforcing it?
xxiii) Issue 23: Is the Settlement Agreement unenforceable and/or liable to be set aside on the grounds that it was procured by the fraud of General Kopelipa for which Mr Leviev is answerable?
The Claimant's evidence
Mr Gaydamak's evidence
- Mr Gaydamak gave evidence by video link from Israel. He was unwilling to come to the UK to pursue his claim, because he feared being arrested and extradited to serve the prison term to which he has been sentenced in France. He is, therefore, to be regarded as a fugitive from justice. I mark this fact at the outset as it must have a bearing on the way his evidence is evaluated. It is, put at its lowest, undesirable that a litigant who chooses to bring his proceedings in the courts of England and Wales then deliberately abstains from attending court in person to give his evidence in support of his cause.
- Mr Gaydamak was cross-examined for 2 days on his 4 witness statements. He gave evidence in English, which he speaks reasonably well. Much of the cross-examination went to his credibility rather than to any real issue in the case. To an extent, the parties seemed to me to lose sight of what the case was really about namely whether or not Mr Leviev signed the 2001 Agreement rather than the entire history of their business relationship. This is particularly so, since it was common ground between the parties that the 2001 Agreement was indeed discussed between them at the meeting in December 2001. Thus the reasons why the document might have been put forward or desired or desirable becomes in reality part of the background, and not the central issue.
- On the first day of his evidence, Mr Gaydamak was asked about his purchases of Africa Israel shares in January 2000, and his sale of those shares back to Memorand Limited in August 2001. Mr Gaydamak's recollection of what occurred, and even of what was in his own witness statements, was more impressionistic than accurate. Moreover, he persisted in saying that he had sold the shares back to Mr Leviev at a significant undervalue (of dozens of millions of dollars), because a 15% stake was worth much more than face value, even though the documents showed that the sale had been at current market value and on the basis that Mr Leviev had taken over the loans that had been made to Mr Gaydamak to buy the shares.
- It was then put to Mr Gaydamak that he had no reason to want to keep secret his interests in Mr Leviev's Angolan businesses before the so-called "Angola-gate" investigations against Mr Gaydamak began in France with the issue of an international arrest warrant against him in December 2000. Mr Gaydamak's evidence was that he did have reasons for not wanting to be seen publicly to have such business interests even before December 2000. He gave a variety of reasons, but perhaps his most comprehensive answer was this:-
"In 2000, I had already many reasons to conceal my participation in the company with the exclusive right to trade Angolan diamonds, for the reason of my deep and big problem, links to the French internal politics, and for the reason of my position on the international raw material market and to be a target of the big company. That was the reason. And also to think about the reputation of the Angolan government that can be accused to provide a right to participate in the company with the exclusive diamond trading to somebody who is known for many years as to be close to the MPLA government".
- Ultimately I am not sure that this debate was of any great consequence, since undoubtedly Mr Gaydamak did contend in December 2001 that he had such a concealed interest, and the only question is whether Mr Leviev signed up to pay him in respect of what he alleged.
- Despite having said in his witness statement that his participation in Ascorp was half of Mr Leviev's 24.5% interest (held by Welox), Mr Gaydamak accepted in cross-examination that his participation was only 6.125%, being half of Mr Leviev's half share in Welox's 24.5% interest. The other half of Welox was, apparently, also held by Mr Laniado and Mr Goldberg.
- Mr Gaydamak was asked whether he was able to decide who received the licence to trade diamonds. His answer was as follows:-
"I had a possibility to suggest the structure, the system, to cut the revenue to the rebels, because I had the possibility to discuss trade with the President and a member of the government and security services and head of the Angolan army, and I suggest him new system how to stop the war by cutting the financing to the rebels that finance their arm buying through the illegal diamond trading. To create a control we needed one governmental system to control all the exports. That was ASCORP and that was my idea and type of proposal. Only later on professional diamantaires they went to his company, already to execute the professional work".
- Mr Gaydamak was asked about the money that Mr Leviev had paid him in respect of his alleged 50% interest in the Angolan diamond and other businesses. He accepted that payments had been made from 2001 to 2005, not 2003 as he had said in his statement. And he contended that, overall, between US$100m and US$150 million had been paid at the rate of approximately US$2-3 million per month until January or February 2005 (first to Calsen, then to Pusan, and finally to Antanta, with less being paid towards the end of the period). He said he had ultimately split these sums 50/50 with his then partner Mr Pierre Falcone ("Mr Falcone").
- Mr Gaydamak's answers in relation to monies paid before the 2001 Agreement were particularly illuminating as they demonstrated, extraordinarily candidly, the lawless and unstructured nature of the enterprise upon which he was engaged:-
"Q. It's a simple question, Mr Gaydamak. Do you say that he [Mr Leviev] paid you any money before December 2001 -- and by "money" I mean cash delivered to you or to wherever you asked it to go?
A. No. I repeat on your -- that he paid me by compensation in our interconnected businesses, not only in Angola, and often I took a cash money, few hundred thousand dollars, from Angola from the ASCORP offices that officially had a big volume of cash money to buy diamonds from the diggers, from (inaudible).
Q. You took money from the ASCORP offices. You personally or somebody on your behalf?
A. No. No, people that work with me, in particular Mr Ze'ev Zakharin and Mr Amos Ben Haim.
Q. They went into the office and took the money out of the safe or they put in a little chit and were paid? What happened?
A. No, it was like that: for example, when I needed to have cash money, I informed Mr Leviev, who informed the employee of ASCORP that he had the official authority, and then once it was fixed, people working for me, they went to the offices of ASCORP in Luanda and they collected that money.
Q. We know, do we not, that ASCORP was owned as to 51 per cent by Sodiam for the Angolan government, as to 24.5 per cent by the TAIS Group and as to 24.5 per cent by Welox, which in turn was owned in part by Mr Laniado, Mr Goldberg and Mr Leviev? So how do you suggest that you were able, through Mr Leviev, to receive cash which belonged to the company without taking into account the interests of all those other individuals?
A. Yes, you are speaking about the official splitting of the company. There the official side, it was ASCORP, it was a shareholder, but the reality is very simple. You have small offices around the country where there are the so-called buyer, and security, and the diggers. And diggers, they exchange diamonds that they are collecting in the rivers or I don't know where, again the cash money, and this cash money is going in and out, in and out, that is the reality, and believe me, in jungle, nobody asking if you have 24.5 or if you have 6.25 or if you have a document if you are shareholder or not. The cash money, millions and millions of dollars, are in the safe. Every day, they are dealing with security team to take their jeep millions of dollars, they are going to the forest, they are exchanging dollars against stones, and they bring back stones, and vice versa.
Q. Do you suggest
A. That's how it was.
Q. Are you suggesting this money wasn't accounted for because there are so many million dollars there that nobody bothered, or are you suggesting that it was accounted for and that your representative signed a piece of paper for it?
A. The reality was that when I needed cash money, money, Mr Leviev had enough authority and everybody knew who I am, and once we fixed the amount of money, my people went to the office location, noted that he engage for X amount of money for me.
Q. Did you keep a record of this money?
Q. How did you know how much money you were receiving?
A. I don't know exactly. I know it was very often $200,000, $300,000, $400,000.
Q. Once a week, every Tuesday, every second Thursday? How did it happen?
A. It could -- it could be once per week, it could be once per month. It's in accordance with my need.
Q. What were your needs for this cash?
A. Some cash we spent in place because I had an active -- a very large network of agricultural farm and orphanage. I had a school, I finance the school with many hundred orphans, that I finance to buy them food, to buy beds, to buy clothes, and to pay teacher, and to develop the activity, and everything should be paid cash".
- On the subject of the signature of the 2001 Agreement, Mr Gaydamak's evidence in chief was contained in his second witness statement at paragraphs 84-92 as follows:-
"84. However, it was not possible to make a complete separation of our Angolan interests, which still needed his professional expertise in the diamond industry. I therefore insisted that we should enter into the Agreement to protect my interests. Mr Leviev agreed because he knew that I was still a powerful figure in Angola and he could not afford a conflict with me at that time.
85. We had a number of meetings to discuss the terms of the Agreement and were able to reach agreement in a relatively short period. These meetings took place in Tel Aviv between me, Mr Leviev, and his lawyer, Jacques Zimmerman (who was also the Company Secretary of Africa Israel). One of the things we agreed was that since Mr Leviev owed me at least US$12.5 million as a result of our business dealings, we would treat this as my contribution to the working capital of Ascorp. This is recognised in paragraph 2 of the Agreement. I remember Mr Leviev saying "I said to my wife that you paid and I owe you US$12.5 million
86. The Agreement itself was drawn up by Jacques Zimmerman. It was drawn up in English as a language which all three of us could speak. I only speak basic Hebrew and Mr Leviev's lawyer, Mr Zimmerman, does not speak Russian. The file name at the bottom of the document ("F:\WORD\5020-006\012") is similar to that on other documents prepared by Mr Zimmerman (pages 100 -114).
87. During our meetings, I expressed my views on what terms the Agreement should contain. I set out what I wanted the agreement to say and Mr Zimmerman wrote it down and prepared the Agreement. I was satisfied with the final version.
88. The Agreement was signed by both of us on 13 December 2001 at Mr Leviev's office in the Noam Building in the Diamond Exchange in Ramat Gan, near Tel Aviv. I went there with Avi Dagan. In order to get through security at the Noam Building, it was necessary to show your ID to the security guard, who would then check your name against information previously supplied by the company you were visiting. You then had to exchange your ID for a badge. On leaving, you would give back the badge and get back your ID. On that day, Mr Leviev was expecting us.
89. LL Diamonds Ltd, Mr Leviev's company, occupied a whole floor in the building. Mr Leviev himself had a large office with a door giving access to a corridor leading to the sorting and polishing rooms. His secretary, Hortense, was in a room next to his office. There was also a lady called Vered I recall that we were both shown into Mr Leviev's office. He had a large desk, a TV screen and two sofas. We all sat together on the sofas for about 15 minutes at a little coffee table. Avi then went out of the room so that Mr Leviev and I could speak in private.
90. Mr Leviev produced a copy of the Agreement as drawn up by Mr Zimmerman. I read it and was happy with it. We then both signed one copy at the coffee table. We agreed that the signed copy would be held by Rabbi Berl Lazar, the so-called Chief Rabbi of Moscow, whom we both knew and (at that time) respected.
91. Mr Leviev left the room first. I followed him out. I handed Avi an unsigned copy of the Agreement, and said to him words to the effect of "it's all done, it's all signed and the signed copy is with Mr Leviev". Mr Leviev shook Avi's hand and I remember he said "mazel u'bracha" which means "good luck and blessings" (in both Hebrew and Yiddish). I understood what it meant as these are the customary words used by diamond dealers when a deal has been completed. Diamond dealers tend to conduct entire business deals without signed documents; indeed it is unusual for any signed documentation to exchange hands. When they say "mazel u'bracha" they mean that a binding deal has been done.
92. I saw Mr Leviev hand the signed copy to Hortense. In the car, I told Avi that the Agreement would be sent by Mr Leviev to Rabbi Lazar for safekeeping. A few days after the meeting, Rabbi Lazar confirmed to me that he had received the Agreement".
- In cross-examination, Mr Gaydamak said that he had not taken legal advice on the 2001 Agreement, but had been shown (but not been given) drafts by Mr Zimmerman in the course of negotiations. Perhaps surprisingly in the light of the evidence I have just set out above, Mr Gaydamak said that he was insisting on a written agreement because of Mr Leviev's fraudulent behaviour in systematically avoiding providing Mr Gaydamak with any document verifying the figures for the revenue they were earning. Nor did Mr Gaydamak see the irony in the fact that he was making a written agreement with a man he regarded as a fraudster, but he nonetheless gave him the only signed copy to lodge secretly with Rabbi Lazar for reasons of Jewish tradition.
- Mr Gaydamak vehemently denied the authenticity of the faxes of 13th, 16th and 17th December 2001. It was this part of his evidence that I found particularly hard to accept. He seemed to be smiling in a somewhat shifty way as he denied these documents. His approach was quite different from the earnest demeanour he otherwise adopted during his evidence.
- Mr Gaydamak sought to justify his lack of written complaint about Mr Leviev's conduct by saying that he could not complain as Mr Leviev was very influential with the media and with the Governments of Russia and Israel. He pointed to Mr Leviev's ongoing media campaign against him and to the fact that he (Mr Gaydamak) was "under the persecution" for many years.
- Mr Gaydamak accepted that he had frequently told newspapers that he had no interest in Mr Leviev's businesses in Angola. And he said that he had introduced competitors into the diamond market in Angola from 2003 or 2005, despite his own interest, because Ascorp's licence was only for 5 years. Mr Justin Fenwick QC, counsel for Mr Leviev, later re-examined Mr Leviev on the basis that the 11th October agreement itself showed that it was contemplated to run for much longer than 5 years.
- Mr Gaydamak was asked many questions about the Calsen invoices. He claimed they were not genuine insofar as they purported to relate to the sale of diamonds, but that Mr Leviev had asked for such invoices before he would pay Mr Gaydamak. It appears that Calsen was established to provide food to Angola. Such food was formally sold to the Angolan authorities by Mr Alexei Chepa, who was a major egg and food producer in Russia, but in fact Mr Chepa was acting, according to Mr Gaydamak, for him or Calsen.
- It was suggested to Mr Gaydamak that it was illogical that he should have tried to introduce competitors into the Angolan diamond market if, as he said, he was entitled to 50% of Mr Leviev's profits in Ascorp. His response in relation to Iaxonh was as follows:-
"Very good question, and I will reply to you. In accordance with the agreement with Mr Leviev, Mr Leviev is obliged to provide to me 50 per cent of all his revenue related to Angolan entities, but not me. I am free, if you read this agreement, to work with whomsoever and wheresoever, without Mr Leviev. But Mr Leviev, always, is obliged to provide to me 50 per cent of his revenue. Because we are speaking about the same volume of the market, it is one market, let's say $1 billion per year. If I will introduce in the same condition that I will have, as you said yourself, 50 per cent with Laxhon, I can introduce [Iaxonh], and to have 50 per cent with there, and Mr Leviev even can continue to work with ASCORP, without ASCORP. Each dollar that he is making in relation with Angola, 50 per cent is mine, and it was very clear, I did it very openly, and everybody knew it. That is the reason. It will not diminish my revenue if I have 50 per cent with Mr Leviev, in the diamond trading, or with Laxhon [Iaxonh], it will be the same. Contrary, it will put some kind of discipline on Mr Leviev's payment, because I show him that I can very well to work without him and with other partners. That's the reason.
- In relation to Sunland, the questioning included the following:
"Q. This was another attempt by you to replace ASCORP and to supplant or to destroy Mr Leviev's business in Angola, was it not?
A. Why Mr Leviev and ASCORP? It was a free market. From this date it was already, the date of this agreement, the market was absolutely free. Mr Leviev himself didn't had any position in his name and our unofficial agreement was that he should continue to pay me 50 per cent of the revenue. Mr Leviev has nothing to have with this agreement and his interests are not concerned. No doubt that Sunland, it would be a new competitor on the market, it means other participants of the market will receive less, but I will always have 50 per cent from Mr Leviev, but Sunland, in Sunland, I could have more".
- Mr Gaydamak's earlier response in relation to DAG was as follows:-
"Q. What you did from 2003 onwards was to use DAG in order to replace ASCORP in relation to the formal market. Do you agree?
A. It's not exact. I disagree. The exclusive licence that I put to give to ASCORP was for five years. In 2003, we've been on the end of this period. That's why, by -- for the reason of dishonesty of Mr Leviev. But on the same time, legally speaking, it was impossible that one company will have the monopoly, and I knew it. I already set up, with the authority of Angola, the entry of new players, and all of them who start to work in Angola -- all of them -- they were introduced exclusively by me and it is the best proof that also ASCORP I set up. No one who until today worked in Angola in the diamond sector arrived to this market without my backing. And this company, Development Advisory Group, was a vehicle to promote the interest of other companies, absolutely, and myself with the companies under it".
- Mr Gaydamak said this about his meeting with General Kopelipa concerning the proposed settlement on 4th August 2011 at paragraphs 50, 53-4 and 56 of his second statement:-
"50. General Kopelipa told me that he had just come from the President, and that the President had been informed about the legal action in London between myself and Mr Leviev by the Angolan Ambassador to the UK, and was very concerned. He said that the Ambassador had suggested that the dispute could have negative consequences for Angola's image abroad, particularly given that elections were coming up in 2012. He told me that the President wanted me to settle my dispute with Mr Leviev.
53. I also emphasized to him that in accordance with the December 2001 Agreement signed between Mr Leviev and myself on December 13, 2001 Mr Leviev was obliged to pay me 50% of the profits gained on all such transactions, but that he had not paid me anything for years. I showed the General a copy of the claim form issued in the London action, which I always carried with me in my briefcase.
54. General Kopelipa asked me what figure I thought Mr Leviev should pay me as compensation for the immediate settlement of the legal dispute. I said that I would require a minimum of US$500 million with an immediate upfront payment of US$50 million. General Kopelipa told me that he understood my position, that he would speak to Mr Leviev to discuss the matter of the settlement and that he would use his influence to persuade Mr Leviev to pay me. Mr Sumbula also said to me that General Kopelipa would take care of me and press Mr Leviev to pay me.
56. General Kopelipa made it very clear that if I did not settle with Mr Leviev, the attitude of the Angolan authorities towards me would be very negative, but that if I did sign a settlement agreement, I could expect to receive the full co-operation of the Angolan authorities and administrative protection in the form of a diplomatic passport with a Presidential Administration mandate conferring diplomatic immunity" (emphasis added).
- His statement continued at paragraphs 60-63 concerning the meeting on 6th August 2011 at which he signed the Settlement Agreement as follows:-
"60. After a short while, General Kopelipa arrived and suggested that we should go to the business centre of the hotel. He pulled out of his briefcase a document in Portuguese on the letterhead of the Angolan Presidential Administration and told me that this was a document which approved the wording of a draft Settlement Agreement with Mr Leviev which I should sign. He told me that the wording of the draft agreement had been prepared and approved by the Angolan Presidential Administration and that there was no room to negotiate its terms.
61. Then he presented two copies of the draft Settlement Agreement to me. I note that Mr Leviev says in his Witness Statement that the draft agreement was drawn up by his London solicitors and that he gave a copy to General Kopelipa on Friday 5 August. It is therefore obvious that General Kopelipa and Mr Leviev must have been having discussions about getting me to sign the agreement, even though General Kopelipa told me that the Angolan Administration had prepared the draft. Paragraph 7 of the draft Settlement Agreement contains a confirmation by the parties that they do not have any claims against the Republic of Angola and agreeing to keep all information in that respect strictly confidential. The inclusion of this paragraph suggests to me that the terms of the draft must have been discussed and agreed between Mr Leviev and General Kopelipa.
62. The draft Settlement Agreement was relatively short. I looked immediately for the term which provided for the payment of compensation, but realised that there was none. I said to General Kopelipa that I could not see any term providing for payment. He said that he had raised this issue with Mr Leviev, and that the compensation would be proposed later on by Mr Leviev, and that the compensation would be proportionate to the volume of the business activities realized by Mr Leviev in relation to Angolan entities. He said that he would use his influence to persuade Mr Leviev to pay me, and I had no doubt that he would be able to do so.
63. I made it clear that I would only accept the conditions of the draft Settlement Agreement in exchange for Mr Leviev promising to pay me compensation. I would not have signed the agreement if I had not been told that Mr Leviev would pay me compensation. At the time when I signed it, I believed that he intended to do so" (emphasis added).
- In cross-examination, he said that he understood that the President wanted him to settle with Mr Leviev. When he was asked whether Mr Sumbula and General Kopelipa made it clear to him that if he wanted the right to buy diamonds in Angola he needed to do what the President wanted, he embarked on a lengthy speech about the circumstances in which the Settlement Agreement came to be concluded. He told me about how much time Mr Sumbula had spent with him, looking for a house that he (Mr Gaydamak) could buy in the Luandan suburbs, and trying out Mr Sumbula's new Porsche. Then he told me how Mr Sumbula and General Kopelipa came to him at his hotel on the night of Saturday 6th August 2011 with the draft Settlement Agreement. This piece of evidence is of great importance so I set it out as follows:-
"So Mr Kopelipa arrived and he told me: "Let's go to the business centre." We went to the business centre, Mr Kopelipa, Mr Sumbula and myself, and then he took from his briefcase a few papers, and he told me: "That is the agreement that you should sign with Mr Leviev", and this agreement was approved by the Presidential administration. And he showed me the paper and the letterhead of the Presidential administration. Mr Kopelipa, by the way, he is the state minister supervise the security and Presidential administration and (inaudible), and de facto he is the controller of the Angolan oil. So Mr Kopelipa then show me the two documents, with four or five page each document, and he told me that was approved by the Presidential administration and he show me a letter, and the letterhead of Angolan administration, and it was written in Portuguese, but because I am fluent in French, and I have a basic knowledge of Portuguese, it was very easy to me to understand what was written, and then he gave me the document. I saw immediately that the document is not a translation, it's written in English, but it's not a translation. Myself, I was a translator for many years, and I can see immediately when the text is written straight in English or translated in English. So -- and I start to check these few pages, and I saw immediately no one word about the financial condition. Maybe I am wrong with my legal knowledge, but I know the contract without any compensation when you give something and you have nothing in exchange would be not valid contract. At the same time, I saw the last specifically indicated paragraph in this agreement said this agreement will be valid or come into force only from the date on the first page of this agreement. I checked the first page, it was no date. So I told to myself from one side I should be pleased to Kopelipa. So it is very clear it's a set-up, and he did it completely in accordance with, together with Mr Leviev. It's a malicious set-up. By the way, later on I can show some proof and some rumours that Mr Leviev planified this kind of set-up, even before to come to Angola. So for me, it was clear that it is set-up, and I told to myself: first, it is no financial conditions that we discussed; secondly, it's no date, and date, without date, this agreement is not valid, it's very clearly saying here. Secondly, I understood that it was an agreement prepared by Leviev's legal adviser, because Mr Leviev is follow or using the lawyers, and it was clear for me that it was done by Leviev's lawyer, and I wasn't assisted by the lawyer. It is also written why I can always to ask revision of this agreement. So I told to them, immediately to Mr Kopelipa: where is the financial condition? And he told me: it will be done later, I guarantee you. With my influence of Mr Kopelipa, Mr Leviev will never dare not to execute what he promised. My position is, as you know, so influential that he told me that it will be payment. So I signed as the wording of the agreement by knowing without date it will be never valid, and I gave it to Mr Kopelipa, took office. Immediately both of them, I didn't knew that Mr Leviev will leave the same night, but immediately, once they got, they went immediately to see Mr Leviev before the departure" (emphasis added).
- Mr Gaydamak was then asked about paragraph 62 of his first statement, and he said this:-
"Q. -- in paragraph 62 [you] say: he had raised it with Mr Leviev, compensation would be proposed later by Mr Leviev, and he would use his influence to persuade Mr Leviev to pay you.
A. To persuade, and also with his position, Mr Leviev cannot not to realise his promises. It is kind of guaranteed that I will be paid. That's what I understood.
Q. He never told you that Mr Leviev had promised to pay you, did he?
A. Absolutely he said that he will offer me elaborated compensation later on. He said it absolutely.
Q. You knew that
A. And Mr Sumbula confirmed me that also.
Q. You knew that General Kopelipa and Mr Sumbula were representing the Angolan government and the Angolan President, didn't you?
A. No, they've been in the middle to try to settle, in accordance with their own official interest the dispute, but also they are a long-term business partner for the very important businesses with Mr Leviev, both of them, and their main interest was to protect the interest of their business partner.
Q. The deal
A. But also, they are the employee of Angolan administration, and no doubt they prefer not to have a noise.
Q. The deal that
A. Why President never raised that in our conversation?
Q. The deal that they promised you was that if you abandoned your claim against Mr Leviev, then they would cooperate with you over your purchase of diamonds and you would have a new diplomatic passport. That was the agreement.
A. Also, but the main point was the payment of Mr Leviev of compensation. But also no doubt diplomatic passport, assistance, businesses, also, but concretely speaking, it was very clear I ask $500 million compensation, and they said he will provide to me offer".
- Mr Gaydamak was recalled on day 4 of the trial, when further documents were disclosed from December 2001 showing that he had written to Mr Leviev on 10th December 2001 complaining that he had falsely alleged bribery against him in the Marker newspaper. It was put to Mr Gaydamak that the timing of this complaint made it very unlikely that Mr Leviev would have been disposed to enter into the 2001 Agreement on 13th or 17th December 2001. His answer was not altogether clear but can be summed up in the following answer:
"No, not at all. The article, it is -- it was not nice, but it will be not one article that will bother something important. Do you think if I was not happy with the article I will refuse to protect my right on my part in the very big diamond market in Angola? I was not happy about Mr Leviev, but it was another proof of his dishonesty. It not means that I will tell: if you publish this kind of article now, keep my shares for nothing and I go away. No".
- To sum up Mr Gaydamak's evidence, I did not find him a reliable witness. He was garrulous and unstructured in his answers and keen to act as his own advocate rather than focussing on the questions. He could certainly not be relied upon as regards the details of his evidence. Since he saw things so much from his own perspective of the world, it was difficult also to rely upon his evidence in some particular respects. But I thought there were veins of truth that ran through what he said. I will return to this in due course.
Mr Avi Dagan's evidence
- Mr Dagan gave evidence in paragraphs 34-40 of his witness statement about the 2001 Agreement as follows:-
"34. I was with Mr Gaydamak in Tel Aviv in mid-December 2001 at a business meeting. We got into my car and were going back to Mr Gaydamak's house in Herzlia (on Rehov Havazelet Hasharon 39) which was being used as an office. I had been working from Mr Gaydamak's office (in his house) for about 18 months by then. I spent almost every working day there. On the way out of Tel Aviv, Mr Gaydamak said to me we needed to stop at Mr Leviev's office in order to sign the agreement and formalise their relationship and partnership with regard to the Angolan diamond business.
35. We drove straight to Mr Leviev's office in the Noam Building in the Diamond Exchange in Ramat Gan (near Tel Aviv). We had been there before together.
36. I recall that we were both shown into Mr Leviev's office. We sat together in his office for about 15 minutes on sofas near a little coffee table. I then went out of the room as it was clear that Mr Leviev and Mr Gaydamak wanted to have a private conversation. I chatted to Hortense, Mr Leviev's secretary, whom I had met several times before, and we passed about 15- 20 minutes that way.
37. Mr Leviev then came out smiling and clearly in a good mood. Mr Gaydamak followed him. Then Mr Gaydamak handed me a piece of paper (pages 38 to 39). Mr Gaydamak gave another, signed, piece of paper to Mr Leviev in front of me, and Mr Leviev gave it to Hortense and she put it in a white middle size envelope. Mr Leviev said that he would give this envelope for safe-keeping to Rabbi Lazar. The unsigned paper was in my hand.
38. When they emerged from their private meeting, both Mr Gaydamak and Mr Leviev appeared very pleased. I was left with the clear impression that they had just signed an agreement and finalised the commercial terms of their relationship with regard to the Angolan diamond business. Mr Leviev and Mr Gaydamak were both smiling. After giving the signed document to Hortense, Mr Leviev shook hands with Mr Gaydamak and said "mazel u'bracha" which means "good luck and blessings" (in both Hebrew and Yiddish).
39. I understood what it meant as these are the customary words used by diamond dealers when a deal has been completed. Diamond dealers tend to conduct entire business deals without signed documents; indeed it is unusual for any signed documentation to exchange hands. I do not have personal knowledge about the diamond brokering business but it is common knowledge, certainly in Israel, that this is how people involved in the diamond industry do business. It is known that when two diamond traders shake hands and say mazel bracha it is a contract.
40. After we left the office, Mr Gaydamak explained to me in the car that he and Mr Leviev had agreed to lodge the sole signed copy of the agreement with Rabbi Berl Lazar, the Chief Rabbi of Russia. Mr Gaydamak said it was Mr Leviev's idea. I thought it was a bit strange that there was one signed copy because in my usual experience there are two copies but Mr Gaydamak told me that in the Russian Jewish tradition this was the way things were done, and it was usual to have only one signed copy which would go to the Rabbi. The unsigned copy he gave me was his copy, I think. He said the signed copy would go to Rabbi Lazar but he said to me "Avi keep the unsigned one for our records". This was not a surprise to me because I knew that Rabbi Lazar was close to both of them, he was the moral authority for both of them, and they both respected him and had a relationship with him. I was aware that when Rabbi Lazar came to Israel he would stay with Mr Gaydamak and that they were close.
42. As is my usual custom with documents I have been given, I kept the copy of the unsigned document that Mr Gaydamak had given to me".
- Mr Dagan's perspective was that he had no knowledge of the 2001 Agreement before it was signed, that Mr Gaydamak played his cards close to his chest, but that he (Mr Dagan) had glimpsed the signed version as Mr Leviev's secretary placed it in an envelope after the meeting between Mr Gaydamak and Mr Leviev had concluded.
- Mr Dagan denied receiving any of the faxes from Mr Modan enclosing drafts of the 2001 Agreement, and said that Mr Dagan's manuscript note was written after the event when he was explaining the terms of the 2001 Agreement to someone on Mr Gaydamak's staff. I found this part of Mr Dagan's evidence impossible to believe. He was embarrassed when giving it, and I was wholly unconvinced by the story he was telling.
- Mr Dagan was asked about his affidavit sworn on 24th March 2010 shortly after he was first reminded about the events of 2001. That affidavit, as it seems to me, more accurately represented what actually happened in relation to the drafting as follows:-
"11. Subsequently, at the end of 2001, Mr Gaydamak presented me with a draft copy of the contract between him and Mr Leviev, prior to its signature, and requested that I will review the document".
- The affidavit went on to confirm that the 2001 Agreement was signed, but does not say, as Mr Dagan said in evidence to me, that he had seen the signed copy. Interestingly also, the affidavit says that it was Mr Dagan who used the expression "mazel u'bracha", not Mr Leviev or Mr Gaydamak, and that it was only later that Mr Dagan was told by Mr Gaydamak that the only signed copy of the 2001 Agreement had been placed in an envelope and sent to Rabbi Lazar.
- Mr Dagan was asked numerous questions about the payments allegedly made by Mr Leviev to Calsen and then Pusan. Mr Dagan pretended that he was not involved in the invoicing process whereby Calsen invoiced LLD Limited for "polished diamonds" in various sums. I formed the view that he was indeed involved with Mr Mantel in that process, and that he was the conduit through which information was passed as to what should be invoiced and when. I shall return to the question of whether the payments were in fact for food, as Mr Fenwick suggested in cross-examination, or in pursuance of the 2001 Agreement as Mr Gaydamak and Mr Dagan suggested.
- Mr Fenwick spent some time trying to establish that Mr Dagan's evidence that he had flown to Luanda with Mr Leviev and Mr Gaydamak on Mr Leviev's private jet after the 2001 Agreement was a fabrication. Certainly this did not occur in late December 2001 as Mr Dagan originally said (because Mr Leviev's passport showed that he did not leave Israel between 10th December 2001 and 10th January 2002), but it may have occurred later or indeed earlier I am not sure that the point, in itself, is of any real significance. What was significant was that Mr Dagan had written to Mr Gaydamak's solicitors seeking to correct paragraph 43 of his statement (where he had said that the trip to Luanda with Mr Leviev had been at the end of December 2001), but had not then made that correction when he gave evidence. Thus, he gave the continuing impression, absent cross-examination, that he had flown to Luanda with Mr Leviev in December 2001, and on that occasion Mr Gaydamak and Mr Leviev had gone together to see the President. He knew that to be false. The episode confirmed my view that Mr Dagan's evidence could not be relied upon.
- Finally, I should mention an email put to Mr Dagan at the end of his evidence in which Mr Dagan wrote to Mr Mantel about documents relevant to this case in which he concluded by saying that "perhaps we will even be able to make a few cents out of this". His explanation failed to persuade me that he had not meant what the words actually say, namely that he was hoping to be paid. Again, I was confirmed in my opinion that Mr Dagan was not a straightforward witness.
Mr Amos Ben Haim's evidence
- Mr Ben Haim was a former Israeli Brigadier General. He worked for SCG in providing security for the diamond contracts in Angola in 2000 and 2001, and later became involved in Mr Gaydamak's farming and education projects in Angola. His evidence in chief was to the effect that he observed the power and influence that Mr Gaydamak wielded in Angola at that time, and how Mr Leviev played, in effect, second fiddle to Mr Gaydamak. He also said that he had received cash sums of between US$100,000 and US$400,000 from Mr Leviev's manager, Mr Mordechai (Moti) Kramash ("Mr Kramash") and Mr Ramot on more than 5 occasions.
- I formed a favourable view of Mr Ben Haim's evidence. I thought him a truthful and careful witness. He was not deeply involved with Mr Gaydamak's business. As he told me, he was the man on the ground, but he was able to form an impression from what he saw and heard. He was heavily cross-examined about a sentence in his statement to the effect that, if Mr Leviev wanted to meet the President, he had to ask Mr Gaydamak to arrange it. I think that was true, as Mr Ben Haim confirmed, in 2000 and for much of 2001, but he was not so certain that it was true thereafter. He told me that Mr Leviev and Mr Gaydamak spoke in English 40% of the time (which he understood) and in Russian for 60% of the time (which he did not understand). He was, nonetheless absolutely sure that Mr Gaydamak and Mr Leviev were in business together. He said this:-
"I know that Mr Arkady Gaydamak/Lev Leviev was in a business connection in the diamond business in Angola. I don't know if they signed an agreement or no. I understood that they have agreement, but I didn't see the agreement, it's not my business. It for me was sure for 100 per cent -- not 99 per cent, 100 per cent -- they are together in the business of the diamonds in Angola. Very clear. Very, very clear and simple. Not complicated".
- I accept that this was true from Mr Ben Haim's perspective, and I accept that he received cash from Mr Leviev's people in Angola in the way he described.
Mr Gidon Marinovsky's evidence
- Mr Marinovsky is a financial consultant and a friend of Mr Gaydamak's, having met him at martial arts classes. He travelled once to Angola in January 2004 and says that he attended meetings concerning Mr Gaydamak's and Mr Leviev's Angolan diamond business in Israel. His main evidence was, however, about being asked by Mr Gaydamak to audit the accounts relating to the diamond partnership between Mr Gaydamak and Mr Leviev in 2003. When, however, he met Mr Leviev's accountant, Mr Nadav Grinshpon ("Mr Grinshpon"), he was told that Mr Leviev would not allow Mr Gaydamak access to any reports or accounts concerning the joint activities of Mr Gaydamak and Mr Leviev.
- Mr Marinovsky was a careful and truthful witness. He too confirmed that it was common knowledge that Mr Gaydamak and Mr Leviev were in partnership together, and that he had once been told by Mr Gaydamak that he had signed an agreement with Mr Leviev in 2001.
Advocate Ronel Fisher's evidence
- Advocate Fisher has been Mr Gaydamak's Israeli lawyer since 2006. His evidence concerned the unsuccessful efforts he made to obtain information from Mr Leviev and Rabbi Lazar in 2006. I found him a truthful witness.
Mr Sergiy Milyutin's evidence
- Mr Milyutin joined Mr Gaydamak's entourage in 2002. He gave evidence about the continuing cordial relations between Mr Leviev and Mr Gaydamak between 2002 and 2010, and about what Mr Alexei Lenetsky ("Mr Lenetsky") had told him about the period between 2003 and 2008 when he (Mr Lenetsky) had acted for Mr Gaydamak. In particular, he recorded how Mr Lenetsky had said that he did not understand how Mr Leviev could deny the 2001 Agreement, since it had been discussed in relation to the proposed June 2005 MoU.
- Mr Milyutin said that when he was together with Mr Gaydamak and Mr Leviev, they spoke Russian, and that he met Mr Gaydamak when he returned from Angola with Mr Leviev on a few occasions.
Mr Pierre Grotz's evidence
- Mr Grotz gave evidence by video link from Luxembourg, where he is a financial adviser. He has known Mr Gaydamak since 1997 and advised him for many years also.
- Mr Grotz's evidence in chief related only to a conversation he had had with Mr Zakharin in August 2011, when he told Mr Grotz that he was friendly with Mr Leviev and that he was assisting Mr Leviev in his battle with Mr Gaydamak "trying to destroy Mr Gaydamak completely and "drown him"".
- In cross-examination, Mr Grotz explained the circumstances in which he had ceased acting for Mr Gaydamak in 2005 when Mr Gaydamak moved his assets out of Luxembourg. Mr Grotz had sued Mr Gaydamak and was now continuing his litigation against the trustees for Mr Gaydamak, whom he said had defrauded both him and Mr Gaydamak. I accept Mr Grotz's evidence.
Mr Yuri Bakharev's evidence
- Mr Bakharev has known Mr Gaydamak since 2004. From 2002 to June 2011, he worked for Alrosa. His evidence concerned Mr Gaydamak's influential position in Angola, and his efforts in relation to the creation of Sunland in 2005, and Mr Leviev's attempts to obtain a share in Sunland. He also claimed to have assisted in the discussions concerning a settlement of this dispute in 2011, having met both Mr Gaydamak and Mr Sumbula at the time before he left Angola for a holiday in mid-July 2011.
- Mr Bakharev seemed to find it hard to grasp the questions that were asked of him, and I am bound to say that I did not find his evidence of any real assistance. Insofar as he confirmed Mr Gaydamak's influential position in Angola, that was something that was already clear. Mr Fenwick relied on his evidence as demonstrating that Mr Gaydamak had been discussing a settlement in late June or early July 2011.
Mr Joseph Traum's evidence
- Mr Traum's evidence was produced very late on day 8 of the trial. His statement arose because Dr Audrey Giles, Mr Leviev's expert document examiner, had said in her second report that there was impressed on the paper on which Mr Dagan's manuscript note was written a telephone number and the name "Yossi Troum". Mr Troum's evidence was that he had written his name and phone number on a pad in Mr Gaydamak's office after the middle of January 2002. This evidence was thought to be relevant, because Mr Gaydamak's case was that Mr Dagan's manuscript notes were not supplied to Advocate Modan to help him prepare a draft of the 2001 Agreement in December 2001.
- In cross-examination, Mr Traum accepted that he had been litigating with Mr Gaydamak about a factory in Kazakhstan, but had very recently (on 10th June 2012) settled that litigation. He accepted that he had had meetings in Mr Gaydamak's office before the New Year 2002. He was resolute that he recalled every aspect of the factory transaction, and that it was in late January or February 2002 that he had written his name and number on Mr Gaydamak's pad.
- I found Mr Traum's adamant certainty about this trivial event that happened more than 10 years ago when he had only been asked about the matter a few days ago - completely unpersuasive. It seemed to me from what he said that he was as likely to have written his name and number in Mr Gaydamak's office in 2001 as in 2002. His certainty may have been as much driven by a desire to help Mr Gaydamak, having just made peace with him, as by a real recollection. The evidence did not much assist in deciding whether Mr Dagan's manuscript notes were given to Advocate Modan before the 2001 Agreement was drafted.
Written evidence for Mr Gaydamak
- Mr Gaydamak relied on a witness statement from Mr Alexei Lenetsky concerning how he acted for Mr Gaydamak in the drafting of the June 2005 MoU. I cannot say that I derived much assistance from this statement.
- The next statement relied upon by Mr Gaydamak was made by Mr Danny Yatom on 27th February 2012. Mr Yatom says that, at Mr Gaydamak's request, he introduced Mr Leviev to him at the end of 1998. Mr Yatom also said that he went to Angola with Mr Gaydamak in September 1998 to meet President dos Santos to make a proposal for the provision of security services for the Presidential Guard. Mr Yatom was involved with SCG between August 1998 and April 1999, at which time he joined the Israeli Prime Minister's administration as his chief of staff.
- Finally, Mr Gaydamak relied on a statement from Mr Moshe Mantel concerning Calsen's operations. Mr Mantel gave details of how the payments from Mr Leviev to Mr Gaydamak were made by LLD Diamonds to Calsen, and how invoices were raised in respect of polished diamonds at the request of Mr Zakharin and Mr Dagan. He alleges that the persons dealing with the payments on behalf of LLD Diamonds were a lady called Vered and Mr Karmush. It appears that Mr Mantel refused to attend to give evidence unless he was paid.
- Whilst criticisms have been made of the failure of these witnesses to attend court to give their evidence, it does not seem to me that this criticism is very significant (as it is for Mr Gaydamak himself). Mr Mantel's demand to be paid was apparently beyond Mr Gaydamak's control, and Mr Yatom is not a witness of such importance that his attendance was necessary; indeed what he says does not seem to be much in dispute. As I have already said, Messrs Lenetsky and Fisher had nothing of great significance to say.
Mr Lev Leviev's evidence
- Mr Leviev gave his evidence in Hebrew, notwithstanding that he had made his first two witness statements in English, and plainly spoke English adequately.
- His third witness statement starts by setting out his overall position to the effect that: "[t]he alleged partnership [between me and Mr Gaydamak] is a figment of Mr Gaydamak's imagination", and "the [2001 Agreement] is not an agreement, but rather a sham, around which Mr Gaydamak has cunningly spun a web of false claims in an attempt to wrongfully get his hands on my property".
- Mr Leviev's interest in Angola began in 1996 when he invested, through Daumonty Financing Company B.V. ("Daumonty") in a large diamond mine there called the Catoca mine, which was owned in part by Alrosa.
- Mr Leviev gave extensive evidence in chief in 4 witness statements. I shall confine my recitation of these statements to the most crucial parts concerning the events surrounding the alleged signing of the 2001 Agreement and the conclusion of the Settlement Agreement. I have, however, considered these statements in their entirety.
- In relation to the signing and lodging of the September 2000 Agreement with Rabbi Lazar, Mr Leviev's evidence was that the document was signed some 15 months before the alleged 2001 Agreement, as follows:-
"61. In September 2000 I travelled to Moscow for the celebration of the opening of a new and very modern Jewish Community Centre, which included: a synagogue; a library; Kosher restaurants; auditorium; etc.. This was a high profile event, which
was attended, among others, by Mr Vladimir Putin, the then President of Russia.
In addition to Mr Putin, the celebration was also attended by the Chief Rabbi of Russia, Rabbi Berl Lazar, and by Rabbi Mordechai Eliyahu, the former Sephardi Chief Rabbi of Israel (1983-1993), who were both (together with Mr Putin and myself) standing on a dais.
62. Mr Gaydamak, who travelled with me as my guest to the event, was also present; however he was not standing next to us on the dais, but rather amongst the rest of the very respectable guests. I recall that following the event Mr Gaydamak was upset with me for not inviting him to stand on the dais. He reminded me that he had been making contributions to the Federation of Jewish Communities for some time and made it very clear that he expected appropriate acknowledgement in return.
63. Several days later Mr Gaydamak joined me in my private jet, together with a few other significant donors, on a tour to visit several of the Jewish communities that we were supporting in Ukraine (Zhytomyr; Kharakuv; Dnipropetrovsk). During those days, Mr Gaydamak came to my house in Moscow. We sat in the living room, together with Mr David Mondshine, the person responsible for the financial aspects of the Federation of Jewish Communities in the Commonwealth of Independent States. Mr Gaydamak, who was clearly still very upset from the lack of respect showed to him (as he understood it to be) during the celebration of the new Jewish Community Centre, told me that he felt that his contribution to the Federation of Jewish Community deserved an appropriate acknowledgement and that he was interested in being elected to the position of President of the Federation of Jewish Communities in Russia. Mr Gaydamak then requested my support.
64. I note, in this context, that being nominated for such a position carries with it a lot of responsibility towards the congregation but also involves a lot of influence both within the Jewish community as well as within the Russian authorities, mainly as a result of Rabbi Lazar's warm and fertile relationships with the Russian regime.
65. I replied that I thought Mr Gaydamak was the right kind of person to take the position of President of the Federation of Jewish Communities in Russia, but went on to mention the irregularities in Mr Gaydamak's donations. I also said that although I had been impressed by Mr Gaydamak's willingness to donate to charity, a position of that stature required a commitment on a different scale.
66. Mr Gaydamak was made very upset and reacted very irritably - leaving the room in anger. On his return a short while after, I tried to calm him down and explained to him again why I could not offer my support for his candidacy under the present condition. I then told Mr Gaydamak that if he increased significantly the amount of his monthly donation and committed himself to a two-year programme of transferring donations to the Federation of Jewish Communities in the CIS, then by the end of these two years I was prepared to support his candidacy to the position he was after.
67. Mr Gaydamak agreed to my conditions, but was keen for the above to be put into writing. We therefore moved into my study, accompanied - at Mr Gaydamak's plea - by Mr Mondshine (notwithstanding the latter's protest - it was rather late and Mr Mondshine was expected at home by his wife). Mr Gaydamak then took a blank piece of paper off the printer and handwrote (in Russian) a document stating something along the following lines (the "Document"):
a. Mr Gaydamak undertook to transfer to the Federation of Jewish Communities in the CIS significant donations amounting to 350,000 USD per month for two years (the "Commitment to Donate");
b. Subject to compliance with the Commitment to Donate, I undertook to support, by the end of the two years, the appointment of Mr Gaydamak to the position that he desired - President of the Federation of Jewish Communities in Russia.
68. We then both signed the Document and placed it in an envelope.
69. Since Rabbi Lazar would be very influential to the appointment of Mr Gaydamak to the sought-after position when the time came, Mr Gaydamak asked for the letter to be deposited for safekeeping in the hands of Rabbi Lazar and I, obviously, agreed.
70. The envelope was left in my possession. I used to hold meetings with Rabbi Lazar from time to time in order to discuss community matters. As far as I can recall, during a meeting that was scheduled in advance (prior to the signing of the Document) that took place shortly after the signing of the Document, I discussed with Rabbi Lazar the current matters of the congregation. At the end of the meeting, which lasted for about half an hour, I gave the envelope to Rabbi Lazar. As far as I recall, though I cannot recall with absolute certainty, I indicated that it concerned an obligation taken by Mr Gaydamak to transfer donations and that Mr Gaydamak expected to be appointed President of the Federation of Jewish Communities in Russia. As far as I can recall, Rabbi Lazar, who was in a hurry for another meeting, did not pay special attention to what I told him about Mr Gaydamak. I asked Rabbi Lazar to keep the envelope. To the best of my recollection, Rabbi Lazar placed the envelope in his desk's drawer and left for his next meeting".
- In relation to the alleged 2001 Agreement, Mr Leviev said this at paragraphs 88-95 of his third witness statement:-
"88. Through my various relations with Mr Gaydamak I was slowly learning more and more about his character and his nature, and by mid-2001, I had started to become concerned about Mr Gaydamak's character. Mr Gaydamak proved to be unpredictable and often irrational in his conduct. Whenever matters did not go his way, he would be offended easily and would become very emotional. He was also very capricious and turned out to have extreme mood shifts, as a result of which it was never really possible to know what to expect from him. Consequently, I started to lose my trust in him.
89. As if to make things worse, I also believed that Mr Gaydamak felt growing envy and hostility towards me, in particular after we reached a parting of ways in our business activities. From his point of view I had a strong international reputation and received favourable press for among others things, the regularisation of the diamond industry in Angola. Mr Gaydamak on the other hand was receiving negative press as a result of the "Angola-Gate" affair.
90. At the end of 2001, despite the fact that our joint business activities had ended, Mr Gaydamak asked to be my partner in ASCORP. This request came as a complete surprise to me. He came to my office in Ramat Gan, accompanied by Mr Dagan (who did not join us in the meeting itself) and told me that as he was the one who introduced me to the President of Angola, he deserved to be my partner. While reminding me that he was the one to introduce me to the President and emphasising that I must have benefited a lot from knowing him (Mr Gaydamak), he then made it very clear that if I did not agree to his request he could "take away" what he allegedly "had given" (as he saw it) by making my business activities in Angola very difficult. Although he did not specify the way in which he would make my activity in Angola difficult, his tone was aggressive and he clearly insinuated that if I did not cooperate, my business interests in Angola would suffer.
91. He then presented me with a one page document of English text, which was supposed to be a partnership agreement of some sort, which he wanted me to sign. I did not pay particular attention to this document, as I viewed the whole idea as nothing more than a ludicrous, unjustified demand, which I did not take seriously. I rejected Mr Gaydamak's request and told him that I had no interest in being his business partner. In retrospect I can only assume - based on Mr Gaydamak's claim and nothing more - that the document presented to me by Mr Gaydamak in 2001 is the same as or similar to the 2001 Document on which Mr Gaydamak's Particulars of Claim are based.
92. I did not take a copy of the 2001 Document from Mr Gaydamak and I did not even read it (and probably could not have done given the fact that I do not read English well). There was no reason to keep the document because it was irrelevant given that I had rejected any prospect of a partnership deal.
93. After rejecting the "partnership" request, Mr Gaydamak then mentioned that he had many expenses in Angola and he would appreciate receiving financial assistance for these expenses. I understood his request for money for Angola to be a request for money for him. It was obvious to me (in particular after the rejection of his "partnership demand") that Mr Gaydamak's request for money was backed by his willingness (and ability) to harm my business interests in Angola. In response I therefore said that I would be willing to consider his request for financial assistance in the future.
94. The meeting then ended and we both left my office. The meeting ended on a superficially amicable note. On my way out I saw Mr Dagan, who was waiting outside. I shook Mr Dagan's hand and, after a short courtesy exchange, left for my other daily business.
95. For the avoidance of any doubt I should note that:
a. as a rule, I do not sign contracts without first consulting my legal advisers. Needless to say, I would never even consider signing a document written in English (of which I only had a very basic command at that time) that had been drafted without my involvement and presented to me for the first time, without first having the document properly translated and discussing it with my legal advisers. Mr Gaydamak's claim that I did otherwise is in sharp contrast to common sense and in sharp contrast to my business conduct;
b. although it is correct that Mr Gaydamak arranged my first meeting with the President of Angola, through his contact with Mr Ambassador, when the meeting took place I had been operating in Angola for several years and the arrangement of such a meeting could not provide - not even remotely - justification for Mr Gaydamak expectations".
- In relation to the payments that Mr Leviev allegedly made to Calsen, he said this at paragraph 105 of his third witness statement:-
"Mr Gaydamak claims in paragraph 8 of the Particulars of Claim, that between 2000 and 2003 I made monthly payments of, on average, 3 million USD to him pursuant to the 2001 Document. This is not true. As alleged proof of these payments Mr Gaydamak has provided details of six payments allegedly made to [Calsen] during this period
and identified six credits recorded in Calsen's bank statements which apparently correspond to sums that were paid to Calsen, as indicated above
. I have no recollection of ever coming across the company Calsen before. That said, I cannot remember the name of the company/companies that Mr Gaydamak used in order to sell polished diamonds (which he did, from time to time), and in the absence of the relevant accounting books I cannot check and verify the name of these company/companies. This stems from the fact that under Israeli law there is no requirement to keep bookkeeping documents for longer than seven years and we did not For the avoidance of doubt, I own all the shares in a company named LLD Diamonds Ltd.
which is a leading diamond exporter from Israel. It is not called LLD Limited".
- Mr Leviev then gave a number of reasons why the later payments to Calsen cannot have been made by him. He did, however, countenance that he had made payments to Mr Gaydamak in paragraphs 107-108 of the same statement as follows:-
"107. I do recall however, that during the years 2001-2003, Mr Gaydamak approached me from time to time with requests for financial aid for the purpose, so he claimed, of advancing projects in Angola in which he was involved, or in order to help the country in funding various needs. I always understood perfectly well that underlying these requests was the implied threat that Mr Gaydamak could make my business life in Angola very difficult. I was concerned that Mr Gaydamak had the power to undermine my business of purchasing raw diamonds in Angola as a result of his connections to Mr Ambassador, who knew the Angolan President very well. This was a risk that I clearly wished to avoid. As far as I remember some of these requests were therefore accepted and ad hoc payments, amounting to no more than a few hundred thousand USD each, were made to Mr Gaydamak. However, because of the time that has passed and the fact that bookkeeping documents this old are not kept, I find it hard to reconstruct and verify exactly what payments were made and of what amount.
108. Whenever Mr Gaydamak's requests for financial participation were accepted, Mr Gaydamak would give me a sheet of paper with the name of a company and the relevant bank account details to which the payment should be transferred. I would then organise for the transfer of the required payment using funds that happened to be available at the relevant time in any of a number of companies that I used for the running of business activity".
- In relation to the conclusion of the Settlement Agreement, Mr Leviev said this at paragraphs 123-130 of his third witness statement:-
"123. On 3 August 2011 I travelled from London to Luanda in Angola, for business purposes. The day after my arrival, on Thursday 4 August 2011, I attended a business meeting in Luanda. While there, I received a phone call from Angola's Minister of State, General Kopelipa (General Manuel Helder Vieira Dias Jϊnior) asking whether he could come and meet me.
124. We agreed to meet up and indeed after a short while General Kopelipa arrived accompanied by Antonio Carlos Sumbula, Endiama's President. We met at offices in Luanda where I was holding other business meetings. General Kopelipa told me that he had heard from Mr Gaydamak, who happened to be in Angola, about Mr Gaydamak's legal claim against me and that he thought we should try to reach some settlement in order to end the dispute. General Kopelipa also said to me that Mr Gaydamak wanted to meet me with that goal in mind. I understood that General Kopelipa's motives in this regard were to avoid the embarrassment of a public case in England about issues relating to Angola.
125. Faithful to my decision not to hold meetings with Mr Gaydamak again, I immediately answered General Kopelipa that I had no desire to meet Mr Gaydamak. I also told him that I had no intention whatsoever of paying Mr Gaydamak as there was no partnership between us and I did not owe him anything at all. I also told General Kopelipa that Mr Gaydamak had caused me tremendous harm by initiating the present claim. First, I had wasted huge amounts of time and incurred large legal costs. Secondly, I had suffered as a result of letters that Mr Gaydamak's attorneys have sent on his behalf to third parties, untruthfully maintaining that Mr Gaydamak was my partner and that I was in breach of the partnership agreement and demanding that these third parties refrain forthwith from dealing with me. I told him that in fact, in this regard I intended to bring my own legal claim against Mr Gaydamak in due course.
126. General Kopelipa then asked me whether I would be willing to sign an agreement with Mr Gaydamak for a full and final mutual waiver of all legal claims. I replied by saying that I would indeed be willing to reach such an agreement, subject to the following conditions:
i) there would be no payment whatsoever involved; and
ii) I would not have to meet Mr Gaydamak in person.
127. General Kopelipa then left and told me that he would meet with Mr Gaydamak and present him with the terms of the proposed settlement. A few hours later, General Kopelipa phoned me and said that Mr Gaydamak gave his consent and that an appropriate agreement should be drafted.
128. A settlement agreement (the "Settlement Agreement") was therefore drafted on my instructions by my legal advisers in England and I gave it to General Kopelipa on Friday, 5 August 2011.
129. In the evening hours of the day after, Saturday, 6 August 2011, while I was already on my way to Luanda's international airport, General Kopelipa phoned me, told me that Mr Gaydamak had signed the Settlement Agreement and asked to meet me again. General Kopelipa and I therefore agreed to meet up and I therefore returned to offices in central Luanda for the meeting. General Kopelipa arrived at the meeting accompanied by Mr Sumbula and carrying three copies of the Settlement Agreement all originally signed by Mr Gaydamak and by Mr Sumbula, as a witness to Mr Gaydamak's signature.
130. I then signed all three copies of the Settlement Agreement and so did Mr Sumbula this time, as a witness to my signature. Two copies of the fully signed Settlement Agreement were left with General Kopelipa and one copy was given to me and is safely kept in my possession
- Mr Leviev was asked in cross-examination about the date of the Settlement Agreement, and the following exchange then took place:-
"Q. You saw, when you were presented with the document, signed by Mr Gaydamak, that the date had not been put on the front of the document but Mr Gaydamak had put the date by his signature.
A. Yes, I saw it.
Q. I suggest that it must have been obvious to you that Mr Gaydamak had not completed the dates at the front of the agreement because he did not intend that agreement to be immediately binding.
A. No, unless he wanted to deceive me, unless I don't know. It's clear to me that when you sign and there is a date next to the signature, then this is the date which is valid. In the meantime, there is a trial against me when there is no agreement and no signature and in this case there is an agreement and it's signed and dated.
Q. You say that General Kopelipa told you that Mr Gaydamak had no money and couldn't even pay his hotel bill.
A. Yes, that his financial condition is difficult.
Q. I suggest to you that that is absurd and General Kopelipa never said anything of the sort.
A. I say what I personally heard. It's your right to think differently".
- Mr David Wolfson Q.C., counsel for Mr Gaydamak, started his cross-examination of Mr Leviev by asking him about paragraph 126 of his 3rd statement in which he said he had told General Kopelipa on Thursday 4th August 2011 that he would be willing to sign an agreement with Mr Gaydamak for a full and final mutual waiver of all legal claims, subject to two conditions: "a. there would be no payment whatsoever involved; and b. I would not have to meet Mr Gaydamak in person". It was put to Mr Leviev that, since condition (b) meant that he would not meet Mr Gaydamak, and since he knew General Kopelipa was meeting Mr Gaydamak, he must have been content for General Kopelipa to transmit his two conditions to Mr Gaydamak on his behalf. Mr Leviev's responses were evasive and unhelpful. He said, in essence, that he did not care what General Kopelipa did and that he was not acting on his behalf. As it seemed to me, however, it was plain and obvious that Mr Leviev knew and expected that General Kopelipa would carry his two conditions to Mr Gaydamak, so that, to that extent anyway, he gave General Kopelipa some authority to represent him. I will return to the legal ramifications of this evidence, but the facts are at least clear, despite Mr Leviev's unwillingness to accept them.
- The start of Mr Leviev's cross-examination had another feature that I at first thought unfortunate. In the following exchange, Mr Leviev confirmed that he intended to sue Mr Gaydamak after these proceedings:-
"Q. When you told General Kopelipa [on 4th August 2011] that you intended to bring your own legal claim against Mr Gaydamak, the fact is that you had not started any such claim, had you?
Q. You have still not started any such claim against Mr Gaydamak, have you?
A. I intended, after the court here, to sue him.
Q. Is that still your intention?
A. Of course".
- This evidence seems to fly in the face of the substance of the Settlement Agreement that Mr Leviev is seeking to rely upon in these proceedings. If he succeeds in establishing the validity of the Settlement Agreement, all claims between him and Mr Gaydamak will be compromised yet, Mr Leviev nonetheless, said that he intended to pursue claims against Mr Gaydamak after these proceedings. I asked Mr Leviev at the end of his evidence about the apparent contradiction. He explained, and I accept, that he had meant that he would only sue Mr Gaydamak if he did not succeed in upholding the Settlement Agreement in these proceedings.
- Mr Leviev was asked many questions about the events that led up to the signing of the Settlement Agreement. The closest that he came to accepting that he had been asked to pay Mr Gaydamak was in the following passage:-
"Q. Did you ask yourself what General Kopelipa had promised Mr Gaydamak to get him to sign?
A. I didn't ask. After we signed, General Kopelipa told me that Mr Gaydamak's condition was quite difficult, he was in the hotel, a new hotel, Talatona, and that he lost his assets. We agreed that we owe him nothing, we know that we owe him nothing, but if you want to help him with something, as a human being, I said, as I said before, "I will not even give him a dime. I'm willing to donate to a charity for children who got hurt by landmines, and I'm happy to donate to this charity." And General Kopelipa smiled and that was the end of the story.
Q. Although I think, to be fair, you say you didn't actually make that donation.
A. No, they never got back to me".
- In respect of the signing of the 2001 Agreement, Mr Leviev said the following in cross-examination:-
"When Mr Gaydamak entered with me, he was very nervous, very stressed. He said that, "I introduced between you and the President of Angola. You became famous in the world and you have only good publicity on you and I suffer, and I also want to be a partner in this venture", and he gave me a paper in my hand, that I assumed it's the same -- which I assume it's the same paper that he gave me at the end when he claimed that he had found it".
- Shortly thereafter, Mr Leviev gave an important answer in a rather less arrogant and self-assured manner than he had previously spoken. He said:-
"I made huge efforts not to fight with Mr Gaydamak because in our discussion Mr Gaydamak let me understand -- more than hinting only, he let me understand that in the same way that he got me into Angola, just as quickly I can find myself out of Angola. This was the very clear hint by Mr Gaydamak. Because I didn't want my business to be affected and I knew Mr Gaydamak's abilities, that he can damage like he eventually did, I told Mr Gaydamak, "Arkady, you should not be angry, [partners] we shall not be".
Then he said that he has lots of expenses, because he is very active in Angola and he needs to do some social projects and it costs him money, and I contribute nothing to Angola. I said: if this a problem, I from time to time am willing to pay. And then he smiled, and this is why we finished it amicably in good spirit".
- Mr Leviev then strenuously denied having used the term "mazel u'brucha". I found his denial unconvincing, despite what I have said about Mr Dagan's evidence on this point. And, having seen Mr Gaydamak give evidence, I found it wholly implausible to think that Mr Gaydamak would have smiled and concluded the meeting amicably had he been lectured by Mr Leviev and had Mr Leviev refused to sign his proposed agreement. Mr Gaydamak would rather, I think, have reacted in a volatile and aggressive manner. There would, in short, have been no smiles and no shaking of hands. It was in this aspect of Mr Leviev's story that, I think, lay the key to what really happened.
- Mr Leviev denied allowing any of the partners in Ascorp to remove cash from the office in Luanda, because, he said, the cash was brought in to Angola for the sole purpose of buying diamonds on the informal market. He did not deny, however, making some payments to Mr Gaydamak's order. There was much questioning about Calsen's invoices. I was unable to accept Mr Leviev's evidence that any of them related to real sales of polished diamonds. I have little doubt that Calsen's invoices (or at least some of them) were raised by LLD Diamonds (Mr Leviev's company) with his knowledge, to conceal various large payments to Mr Gaydamak's order.
- On the last day of his cross-examination, Mr Leviev was questioned extensively about the two agreements dated the 7th and 11th October 1999. The thesis of the questioning was that the 7th October agreement was the pre-cursor to the 11th October agreement, and that Mr Gaydamak had signed the 7th October agreement, because he was to be Mr Leviev's silent partner in the arrangements that were eventually concluded for the creation of Ascorp. There are numerous discrepancies and unanswered questions in the two agreements, but, ultimately, I have come to accept that thesis. I was unable to accept his evidence in the following passage where he suggested (as he had in his statement) that Mr Gaydamak signed the 7th October agreement as a representative of the Government of Angola:-
You will see that Mr Gaydamak has signed this memorandum twice on that page, as have you. He signed this memorandum because he was integral to the setting up of ASCORP. As I have been putting to you, this document is the precursor to the setting up of ASCORP. That is correct, is it not?
A. No. Mr Gaydamak signed as a representative of the government. It is a fact that on the document that was signed with TAIS, the determined document with TAIS, Gaydamak did not sign that document.
Q. The State of Angola is not a party to this memorandum of understanding, is it?
A. That is why Mr Gaydamak signed it as a representative of the state. He wanted something to be proud of, to show that he also contributes to the state, he's not only receiving and making profits of billions, he is also contributing. He brings investors like Leviev, who will pay more tax.
Q. Everybody else who signed this document was signing because they had an economic stake in the venture which the document sets out, and that is as true for Mr Gaydamak as it was true for everybody else.
A. I repeat, when we draft an agreement, everything is clear in the agreement. Mr Gaydamak does not appear here as Welox or ASCORP or any party to this matter. He signed. I don't remember exactly why he signed, but I say that if he signed, it's only because of the matter of the tax, to show to the President of Angola that his -- allegedly his achievement, while it has already been submitted to the President, the whole reform in the market.
Q. Mr Leviev, you have just said that you don't remember why Mr Gaydamak signed, and you are offering a possibility as to why he signed.
A. I remember -- I certainly remember that Mr Gaydamak did not sign this document as a shareholder".
- Mr Leviev was not the kind of man to forget this kind of detail. I am sure he knew very well why Mr Gaydamak signed the 7th October agreement even if it did not come to fruition and that was because he (Mr Gaydamak) was, in 1999, going, in some form, to be Mr Leviev's partner.
- I did not find Mr Leviev an entirely reliable witness. He displayed an arrogance, even a contempt, for Mr Gaydamak, which ill-became him since he had been so closely involved with him in 1999 and 2000. Having admitted to paying Mr Gaydamak unspecified sums for unspecified reasons, I think his denial of any partnership arrangement of any kind was simply implausible and frankly unbelievable. Hard-nosed businessmen like Mr Leviev do not pay out sums in the hundreds of thousands of dollars for no reason, and Mr Leviev certainly did not pay Mr Gaydamak without any obligation to do so. All that said, I think Mr Leviev attempted to be truthful in relation to peripheral matters that did not, as he saw it, affect his case. This will be relevant when I have to decide the truth of what really happened in September 2000, December 2001 and August 2011.
Mr Jacques Zimmerman's evidence
- Mr Zimmerman is an Israeli lawyer who acts for Mr Leviev. He was also the Company secretary for Africa Israel, and he accompanied Mr Leviev on some trips to Angola in 1998 and 1999. He was born in Brazil so that Portuguese is his first language. He also speaks almost perfect English. In his witness statement, he denied absolutely that he had had anything to do with the drafting of the 2001 Agreement as contended for by Mr Gaydamak.
- Mr Zimmerman was cross-examined extensively about his involvement in drafting the 2001 Agreement and the June 2005 MoU and other documents. He denied drafting the 2001 Agreement, saying that he could tell by reading it that he had certainly not drafted it. This was not on the basis that it was in English, but because it was, he said, simply not his document. He also told me that he could not recall the other documents he was asked about. I thought Mr Zimmerman was a careful and broadly truthful witness, and I accept what he said. I was entirely satisfied that he had not drafted the 2001 Agreement. The other matters he was asked about were entirely peripheral.
Ms Hortense Borenshtein's evidence
- Ms Borenshtein has been Mr Leviev's personal secretary since 1997, and has worked for him since 1990. In her witness statement, she denied receiving the 2001 Agreement from Mr Leviev in December 2001 or hearing Mr Leviev say "mazel u'bracha" after the meeting with Mr Gaydamak.
- In cross-examination, Ms Borenshtein admitted that she did not recall the meeting in December 2001 at all. She said, tellingly I thought that there were meetings involving Mr Dagan, but she could not say when they were. She knew she had not chatted for 15-20 minutes with Mr Dagan, because she had never held a 15-20 minutes conversation with a person that arrived for Mr Leviev. Likewise, she said she knew that the words "mazel u'bracha" had not been used, because such a thing was not usual and she did not recall it.
- Since Ms Borenshtein did not, on her own admission, recall the meeting at all, I did not find that evidence very compelling. It seemed to me that she could add nothing very helpful to the existing accounts of what happened.
Mr David Mondshine's evidence
- Mr Mondshine is responsible for the finances of the Federation of Jewish Communities in the Commonwealth of Independent States (the "Federation").
- Mr Mondshine said in his statement that in September 1999, during a conference of the Federation in Ukraine, Mr Gaydamak accompanied Mr Leviev on a trip to the Ukraine to visit one of the Jewish communities, and that "[f]ollowing the visit, Mr Gaydamak offered to donate 100,000 USD a month. From then on, I maintained regular contact by telephone with Mr Gaydamak, asking and reminding him to pass along the donations, in order to keep up with the plan". Mr Mondshine confirmed that such donations had indeed been made.
- Mr Mondshine also explained in detail in his statement how (he said in September 2000), a few days after Mr Putin had opened a Jewish Community Centre in Moscow, Mr Gaydamak had become upset at the lack of recognition for him, and had agreed to make regular donations to the Federation. He described these events in his statement at paragraphs 16-23 as follows:-
"16. After the ceremony, Mr Gaydamak arrived at Mr Leviev's home in Moscow. The three of us sat in Mr Leviev's living room. Mr Gaydamak was extremely upset due to lack of respect shown to him (to his understanding) during the Inaugural ceremony of the new Jewish Community Centre. Mr Gaydamak told Mr Leviev he thought his contribution to the Jewish Community in Russia deserves proper acknowledgement, demanding to be elected as President of the Federation of Jewish Communities of Russia. As far I can recall, I had previously heard from Mr Gaydamak about his expectations to receive an official role that will give him more acknowledgements, though I had never previously heard such a resolute demand.
18. Mr Leviev did not reject the idea. Mr Leviev mentioned that in order to justify the appointment with other donors, there would be a need for regular donations, on a different scale.
19. Mr Gaydamak was made very upset and reacted very irritably - leaving the room in anger. I became nervous and fearful about his future donations. Moments later, Mr Gaydamak returned to the room and Mr Leviev tried to calm him down. After having exchanged some words, it was agreed between Mr Leviev and Mr Gaydamak that Mr Gaydamak would donate to the Federation a sum of 350,000 USD a month for a period of two years and Mr Leviev would back his candidacy after he would complete what he had committed to (hereinafter: "The Agreements").
20. As far as I can recall, it was already rather late and I my wife was post birth, taking care of a baby and young children. I requested Mr Leviev's permission to go home, but Mr Gaydamak held me up asking me to stay with him and Mr Leviev, as he would like to put the agreements in writing. We all moved into Mr Leviev's study (on the living room level), where Mr Gaydamak took a blank piece of paper off the printer and handwrote (in Russian) a document summarizing the "agreements" (the "Document").
21. Mr Leviev and Mr Gaydamak signed the Document which was then put in an envelope.
22. Mr Gaydamak proposed the envelope be deposited for safekeeping with Rabbi Berel Lazar, Mr Leviev agreed, and I went home.
23. Mr Gaydamak did indeed transfer the donations to the community in accordance with the agreements".
- In cross-examination, Mr Mondshine accepted that he had, in effect, worked for Mr Leviev since 1994, and that Mr Leviev's Ohr Avner charity paid his salary. He accepted that he had a close relationship with Rabbi Lazar in that he saw him every day at prayers and worked with him also. He confirmed that Rabbi Lazar was in good health (the implication being that he could, had he chosen, have given evidence).
- Mr Mondshine had failed to provide any evidence of the alleged donations that were made by Mr Gaydamak pursuant to the September 2000 Agreement, though he said that he should have such evidence in his "personal records". After he gave evidence, the IRS returns for the Federation for the 3 years from July 2000 to July 2003 were produced, but they did not show any donations by Mr Gaydamak before July 2001, demonstrating the falsity of Mr Mondshine's implied statement that Mr Gaydamak had paid the US$350,000 per month from September 2000. In any event, it appears from evidence produced after I reserved judgment that these contributions are disputed.
- Mr Mondshine was not cross-examined in detail on his evidence about the September 2000 Agreement and the proposal that it should be deposited with Rabbi Lazar. It was simply put to him that there was no September 2000 Agreement and that his whole story was incredible and untrue. Mr Mondshine was not a particularly impressive witness. He seemed most concerned to support Mr Leviev in everything he had said.
Mr Valery Morozov's evidence
- Mr Morozov is the Chief Executive Officer of Ruis Diamonds Ltd. and head of Mr Leviev's diamond related activities in Russia. His witness statement concerned his involvement of the negotiations for the June 2005 MoU; Mr Leviev had asked him to approach the "Angola Group" and Mr Gaydamak to begin negotiations for that MoU.
- In cross-examination, Mr Morozov said that, in negotiating the June 2005 MoU, he had obtained instructions from Mr Leviev. He accepted also that the term "Partner A" used to denominate the person with whom Mr Leviev would share ownership of DRT in Annex A to the draft June 2005 MoU was a different person to the "Angola Group", contrary to what Mr Leviev had said in his evidence. But Mr Morozov said that he never knew who "Partner A" was and denied that he understood that it was to be a vehicle owned by Mr Gaydamak.
- I found Mr Morozov a reasonably reliable witness, though I think, insofar as it matters, that he probably suspected that Mr Gaydamak's interests were indeed to be "Partner A". There is no other reason why he would have been negotiating with Mr Gaydamak.
Mr Mordechai (Moti) Kramash's evidence
- Mr Kramash was the financial director of Ascorp until July 2011. His witness statement explained Mr Leviev's diamond activities in Angola before he met Mr Gaydamak, denied that payments were made by Ascorp to Mr Gaydamak, and explained the competing roles of Mr Leviev and Mr Gaydamak from his own point of view.
- In cross-examination, Mr Kramash explained that he had worked for Mr Leviev since 1997, when he became director of Catoca Ltd., the Angolan company that owned the Catoca mine. Mr Kramash was asked about the 7th October agreement and 11th October agreement, but he had not been there when at least the first of them was signed.
- Mr Kramash denied that he knew at the time that TAIS was owned by Tatiana Regan, or that she was the first wife of President dos Santos.
- Mr Kramash was cross-examined about the payments that he had allegedly made to Mr Gaydamak. His denials were, however, rather monosyllabic and unconvincing. The following passage from the transcript illustrates the point:
"Q. You say in paragraph 17 that you never transferred money, in cash or any other way, to Mr Ben Haim or to any person on Mr Gaydamak's behalf. Mr Ben Haim has given evidence in this case that on at least five occasions during 2002 or 2003 he collected sums of between $100,000 and $500,000 from the ASCORP office in cash. He says that instructions to collect that cash came from you, from Mr Zacharin, from Mr Ramot and from Mr Gaydamak. I suggest to you that that is precisely what happened, and Mr Ben Haim is being truthful when he says that.
A. Not true.
Q. You called Mr Ben Haim, and he came to the ASCORP office to collect the cash which we agree was held at the office.
A. I never called Mr Ben Haim. The cash was kept in ASCORP's office, but they kept it, it was in a safe and I couldn't do with this money on my own whatever I want to do.
Q. As Mr Dagan says, you also sometimes provided details for insertion into invoices to be issued by a company called Calsen. That's also correct, is it not?
A. Never happened.
Q. Because you were Mr Leviev's man on the ground in Angola, were you not?
A. I guess I was, yes. In Angola I was.
Q. Why are you hesitant about it? I mean, you were, were you not?
A. Well, because the thing is that the invoice that you presented that was shown to me was made by LLD, and LLD is a different company in Israel and I was never part of this part of business which is in Israel. So there's no reason why I should give invoice from Angola to -- or figures to LLD to make these invoices.
Q. Unless, as Mr Dagan says, what you were talking about was payments to be made by Mr Leviev to Mr Gaydamak under their agreement?
A. Never. I was never involved with such payments".
- Mr Kramash's evidence about his involvement in the Settlement Agreement was, perhaps, more remarkable. He had received the calls for Mr Leviev from General Kopelipa's office on his mobile on 4th August 2011, but had not heard or understood the conversations they had (which was in Russian).
- At the end of his cross-examination, the following exchange occurred:-
"Q. After that, Mr Leviev drew up a proposal to compensate Mr Gaydamak for withdrawing his claims, did he not?
A. Not that I know about.
Q. He prepared a written proposal to transfer shares in ASCORP to Mr Gaydamak and gave that document to you.
A. No, he didn't.
Q. In October 2011, you were prepared to hand over that document to Mr Gaydamak, as you told Mr Sumbula.
Q. Mr Leviev decided at the last minute that that document should not be handed over. That's the truth, isn't it?
A. There was no document like this, and I never spoke with Mr Leviev about this opportunity, possibility".
Written evidence for Mr Leviev
- First and foremost amongst Mr Leviev's written evidence is the witness statement of Rabbi Lazar dated 15th April 2012. Had he attended to give evidence, a statement from such a prominent religious leader would have been formidable support for Mr Leviev's case. As it is, no satisfactory explanation has been offered for his non-attendance, nor for his unwillingness to give evidence by video link as many other witnesses did. The force of his written evidence is, therefore, I regret to say, very much depreciated.
- Rabbi Lazar's statement compliments Mr Gaydamak on his charitable donations to the Federation, and then describes him as paranoid, prone to exaggeration, and hysterical. He goes so far as to say that Mr Gaydamak "has the tendency to join together half-truths into lies, which he then ends up believing".
- In paragraphs 16-21 of his witness statement, Rabbi Lazar deals with the crucial question of the envelope as follows:-
"16. In section 92 of his Witness Statement, Mr Gaydamak claims that in December 2001, I confirmed to him that I had received some agreement between him and Mr Leviev; he claims that I was aware that this was a contract; and that Mr Gaydamak would allegedly work well with Mr Leviev, and everything would be all right. I wish to emphasize that nothing of the kind ever took place. Mr Gaydamak is proving, once again, that he has a very rich imagination.
17. I do remember that during 2000 (and most certainly not at the end of 2001, as claimed in Mr Gaydamak's Witness Statement), shortly prior to the relocation of my offices to the new community building in Moscow, I received a sealed envelope (to the best of my memory, the envelope was blank, and it was not marked with any markings). I was already running late, and I was hurrying on to the next meeting which had been scheduled for me. I was not told at that time by anyone that the envelope contained an important document of any kind. To the best of my memory, I was told that the document inside the envelope had something to do with donations and that Rabbi David Mondshine who, as aforesaid, was responsible for the financial aspects, including the matter of donations to the Federation was familiar with it and knew about it. As a result, I was not really bothered by the matter. I also remember that Mr Leviev has told me (I cannot remember precisely when) that the envelope contained a document comprising an undertaking by Mr Gaydamak for the transfer of donations. I do not remember where I put the envelope in my office, but I do remember that I have never opened it.
18. I wish to note that from an inspection of the photocopies of my Russian passport from that time, one can see that between the dates of November 15, 2001 and December 27, 2001, I was in Russia (see page 1 of the Appendix).
19. I also wish to note that I am not in the habit of keeping documents of a commercial nature, and such conduct is also neither common nor customary.
20. During 2003 or thereabouts (I cannot remember precisely when), Mr Gaydamak had words with me and asked for the envelope. I told Mr Leviev about the request and I conducted a thorough search of my office, however I was unable to find the envelope. I had to tell Mr Gaydamak that the envelope was no longer in my possession. I believe that the envelope must have gotten lost during the relocation of my office to the new community building in Moscow, in late 2000 or early 2001.
21. After I had given Mr Gaydamak my answer, Mr Gaydamak no longer requested the envelope, neither in writing nor orally, up until March 2006" (emphasis in original).
- Apart from this evidence, Rabbi Lazar deals with other contacts with Mr Gaydamak over the years, none of which is intended to redound to his credit. I have not found much assistance in the details of these allegations.
- Mr Leviev also relied upon a letter dated 3rd April 2012 from Mr Zakharin saying that he and Mr Dagan were asked by Mr Gaydamak in December 2001 to assist him in preparing the 2001 Agreement, and that he had asked his lawyer, Advocate Modan, to prepare the document, which he did. Mr Zakharin says that neither he nor Advocate Modan was in touch with Mr Leviev concerning the preparation of the 2001 Agreement. He also says that, later on, he asked Mr Gaydamak whether the document had been signed and that "it was clear from his answer that the document had not been signed".
- On 14th March 2012, Advocate Modan wrote a letter to Mr Zakharin, upon which Mr Leviev also relies, confirming that he had prepared and printed the 2001 Agreement "in my office on 17 December 2011", and sent by fax on that date to Mr Zakharin and Mr Dagan.
- Finally, Mr Leviev relies on a letter to him dated 25th April 2012 from Mr Grinshpon, in which he denies sending funds in the name of Antanta to Mr Gaydamak.
- The same point can be made about the non-attendance of these witnesses as I have already made in relation to others. Mr Fenwick did, however, submit in closing, and I accept, that the point is somewhat less powerful in relation to Mr Zakharin and Advocate Modan, who have previously acted for or worked with Mr Gaydamak. It is, perhaps, not surprising that they should wish to put their documents before the Court, but not to attend to give evidence that is in direct contradiction to their former principal or associate. Likewise, I did not think that the criticism that their documents had not all been produced at once was particularly forceful, bearing in mind their previous relationships with Mr Gaydamak.
- The parties agreed to admit the evidence of two expert document examiners without cross-examination. Mr David Browne, for Mr Gaydamak, examined Mr Dagan's copy of the 2001 Agreement and opined that it was not a copy of a received fax and had never been through a fax process. He expressed the opinion in respect of the faxes dated 13th, 16th and 17th December 2001 that they were not themselves received faxes and had not been through a fax process.
- Dr Audrey Giles, for Mr Leviev, made two reports. Her first report confirmed that Mr Dagan's copy of the 2001 Agreement was not a received fax, but was unable to say whether it was a photocopy or laser printed document, or whether it had been subsequently transmitted by fax. Her second report confirmed that the 13th, 16th and 17th December 2001 faxes were the result of fax transmissions (which is not inconsistent with what Mr Browne said). She also found that there were impressions of Mr Troum's name and number on Mr Dagan's manuscript notes.
- This is a case that is primarily factual. I have heard a great deal of conflicting evidence, much of it about events many years ago. It is useful to be reminded first of the principles that should be applied in dealing with cases where there is such a conflict. Lord Goff in Grace Shipping v. Sharp & Co  1 Lloyd's Law Rep. 207 said this at pages 215-6:
"And it is not to be forgotten that, in the present case, the Judge was faced with the task of assessing the evidence of witnesses about telephone conversations which had taken place over five years before. In such a case, memories may very well be unreliable; and it is of crucial importance for the Judge to have regard to the contemporary documents and to the overall probabilities. In this connection, their Lordships wish to endorse a passage from a judgment of one of their number in Armagas Ltd v. Mundogas S.A. (The Ocean Frost),  1 Lloyd's Rep. 1, when he said at p. 57:
"Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth."
That observation is, in their Lordships' opinion, equally apposite in a case where the evidence of the witnesses is likely to be unreliable; and it is to be remembered that in commercial cases, such as the present, there is usually a substantial body of contemporary documentary evidence".
- Mr Wolfson has contended that there are two grounds upon which the Settlement Agreement should be set aside:-
i) Because General Kopelipa was acting as agent for Mr Leviev and, therefore, Mr Leviev is fixed with responsibility for any fraudulent representations that General Kopelipa made, whether or not he (Mr Leviev) knew of that wrongful conduct (see Mullens v. Miller (1883) LR 22 Ch D 194, Goldrei, Foucard & Son v. Sinclair  1 KB 180, and BCCI v. Aboody  1 AC 923 at pages 972H-973A).
ii) Because Mr Leviev knew or turned a blind eye to the fact that General Kopelipa had made fraudulent misrepresentations to induce Mr Gaydamak to enter into the Settlement Agreement before the Settlement Agreement was concluded (see Bainbrigge v. Browne (1881) 18 Ch D 188 per Fry J at page 197, RBS v. Etridge (No 2)  2 AC 733 at paras 40, 144 and 144 (per Lord Scott), Logicrose v. Southend Football Club  1 WLR 1261 per Millett J at page 1261).
- Mr Wolfson argues then for two types of authority: actual and ostensible or apparent authority. Dealing first with actual authority, he says that General Kopelipa was given actual authority by Mr Leviev to convey Mr Leviev's two conditions to Mr Gaydamak, and (later) to obtain Mr Gaydamak's signature on the Settlement Agreement. Therefore, General Kopelipa must be regarded as having had actual authority to make representations about payment (since one of the conditions concerned payment), and to make whatever representations were necessary to achieve the mandated objective. The cases relied upon in the latter respect are not entirely straightforward, because in the common case of a bank mandating a borrower to obtain a spouse's signature on a mortgage of a matrimonial home securing business liabilities, the agency analysis that was previously prevalent has now been replaced by the application of the doctrine of notice (Barclays Bank v. O'Brien  QB 109 per Scott LJ at pages 137-139; Barclays Bank v. O'Brien  1 AC 180 per Lord Browne-Wilkinson rejecting the agency theory at pages 191 and 194). Mr Wolfson, however, contends that the agency principles applied in one of the older cases of Kings North Trust v. Bell  1 WLR 119 per Dillon LJ at pages 123-4 continues to be applicable, at least in a case of this kind (see also Coldunell v. Gallon  QB 1184 per Purchas LJ at page 1206).
- Mr Fenwick does not wholly reject these submissions, but urges caution in three respects.
i) First, as regards the authority to put forward Mr Leviev's two conditions, Mr Fenwick draws a distinction between an express authority to negotiate or agree a transaction (as was alleged in the Ocean Frost), and authority to convey take it or leave it terms (as he submits was the case here).
ii) Secondly, as regards the authority granted to get the Settlement Agreement signed, he says that the mortgage and surety cases are different, because the documents are themselves complex and require an explanation; in most cases, a guarantee or a charge document will not show the nature of the debt being guaranteed or secured, so the agent empowered to obtain the signature will be expected to have to give some explanation, and if he gives a false explanation, it is to be expected that the principal would be fixed with it. Here, however, the draft Settlement Agreement was simple and self-explanatory.
iii) Thirdly, he says that the Dubai Aluminium case infra (at paragraph 32 per Lord Nicholls and at paragraph 130 per Lord Millett) expressly referred to the relevance of the agent having his own interest or being on a frolic of his own.
- Both parties relied on Dubai Aluminium v. Salaam  2 AC 366, where the House of Lords laid down the test to ascertain whether an act was within the scope of an agent's actual authority (per Lord Nicholls at paragraph 23 and per Lord Millett at paragraph 122 and 129). The question is whether the alleged fraud was sufficiently closely connected with the agency such that it could be fairly and properly regarded as done by the agent in the ordinary course of his agency. Lord Nicholls said this in paragraph 23: "Perhaps the best general answer is that the wrongful conduct must be so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the partner while acting in the ordinary course of the firm's business or the employee's employment".
- In the alternative, Mr Wolfson argues for apparent or ostensible authority on the basis that Mr Leviev represented by his words and conduct that General Kopelipa had actual authority and Mr Gaydamak has relied on that representation. In The Ocean Frost  AC 717, Lord Keith said this at page 777: "Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it. Ostensible general authority can, however, never arise where the contractor knows that the agent's authority is limited so as to exclude entering into transactions of the type in question, and so cannot have relied on any contrary representation by the principal: see Russo-Chinese Bank v Li Yau Sam  AC 174. It is possible to envisage circumstances which might give rise to a case of ostensible specific authority to enter into a particular transaction, but such cases must be very rare and unusual. Ex hypothesi the contractor knows that the agent has no general authority to enter into the transaction, as was the position here. The principal might conceivably inform the contractor that, in relation to a transaction which to the contractor's knowledge required the specific approval of the principal, he could rely on the agent to enter into the transaction only if such approval had been given. In such a situation, if the agent entered into the transaction without approval, the principal might be estopped from denying that it had been given. But it is very difficult to envisage circumstances in which the estoppel could arise from conduct only in relation to a one-off transaction such as this one was". (See also The Raffaella  2 Lloyd's Rep. 36 per Lord Browne-Wilkinson at page 43 column 1, and First Energy (UK) Limited v. Hungarian International Bank Limited  BCLC 1409 per Steyn LJ at page 1421-3). Mr Fenwick submitted that ostensible authority was almost impossible in the case of a one-off agent, such as General Kopelipa.
- Finally, in the recent case of Thanakharn Kasikorn Thai Chamkat (Mahachon) v. Akai Holdings Limited (No 2) (2010) HKCFAR 479 in the Hong Kong Court of Final Appeal, Lord Neuberger (with the other Justices agreed) returned to both the questions of ostensible authority and reliance. His helpful judgment was cited with approval by Gross LJ in the English Court of Appeal in Paul Quinn v. CC Automotive Group Limited t/a Carecraft  EWCA Civ 1412. Lord Neuberger said this in relation to reliance:-
"52. In a commercial context, absent dishonesty or irrationality, a person should be entitled to rely on what he is told: this may occasionally produce harsh results, but it enables people engaged in business to know where they stand. As to principle, apparent authority is essentially a species of estoppel by representation (see per Diplock LJ in Freeman & Lockyer  2 QB 480, 503, cited above, and per Brennan J in the High Court of Australia in Northside Developments Pty Ltd v. Registrar-General (1989-1990) 170 CLR 146, 173-4). In the field of misrepresentation, it is clear that "it is no defence to an action for rescission that the representee might have discovered its falsity by the exercise of reasonable care" per Chitty on Contracts (30th edition) para.6-039 and the cases cited in footnote 190. Even more in point, there is this passage in Halsbury's Laws (4th edition reissue) Vol 16(2), para.1072, dealing with estoppel by representation: "If
[the party contending that he relied on the representation] really has relied upon its truth, it is no answer to say that, if he had thought about it, he must have known that it was untrue; the representation itself was what put him off his guard. If the representation is clear and unequivocal
he is under no obligation to make investigation or inquiry to ascertain whether it is true."
62. I conclude that it is open to the Bank to rely on Mr Ting's apparent authority (if he had such authority) unless the Bank's belief in that connection was dishonest or irrational (which includes turning a blind eye and being reckless)".
- Though the parties placed hugely different emphasis on the authorities, I did not divine much difference of substance between them. This was confirmed by the fact that they had broadly agreed issues 17-24 (as set out above subject to some minor changes I have made), which reflect the legal position as I have summarised it. Ultimately, as I have already said, this case turns on the facts.
The 2001 Agreement
Issue 1: Did Mr Zimmerman or Advocate Modan prepare the 2001 Agreement?
- I have considered the competing evidence on this point in some detail. Although I am not sure that the point is, in itself, determinative, I have reached the clear conclusion that the 2001 Agreement was drafted by Advocate Modan, and that Mr Zimmerman had little or nothing to do with it. One of the most important reasons for this finding is that Mr Dagan's affidavit, when he was first asked about these events, said that "at the end of 2001, Mr Gaydamak presented me with a draft copy of the contract between him and Mr Leviev, prior to its signature, and requested that I will review the document". Mr Dagan denied the truth of this statement, but I think what he said was correct, and reflected the veracity of Advocate Modan's documents.
- I also think that the suggestion that Advocate Modan, as a professional lawyer, would have conspired to manufacture 3 forged faxes and a forged date stamp is simply unthinkable and wholly implausible on the facts of this case. The exercise would have been far from straightforward so long after the event, and what I know about Advocate Modan's conduct does not suggest to me that it is something he would have done. I know that I have heard evidence that Mr Zakharin has some animus against Mr Gaydamak, but I do not think Mr Zakharin could have produced these materials without Advocate Modan's intimate involvement.
- In addition, I found Mr Zimmerman a reliable witness and I accepted, in particular, that the 2001 Agreement was simply not his document. I am not quite sure why Mr Gaydamak was so adamant that he had had nothing to do with the drafting particularly since the document is as one-sided his way as the Settlement Agreement is one sided in Mr Leviev's favour. Having seen Mr Leviev give evidence, it would be nothing short of remarkable, I think, if he had given instructions for such a document to be drafted. Ironically, however, this observation does not lead inevitably to a conclusion on whether the 2001 Agreement was signed, for reasons that I shall come to.
Issue 2: Was a copy of the 2001 Agreement faxed to Mr Dagan on 17th December 2001?
- For the reasons, I have already given, I am satisfied that a copy of the unsigned final version of the 2001 Agreement was faxed from Advocate Modan's office to Mr Dagan on 17th December 2001. This makes it most likely that, although the document is dated at the top with 13th December 2001, it was more likely signed, if it was signed, on or after 17th December 2001.
Issue 3: Was each of the 15 alleged payments to Calsen made?
- Mr Gaydamak relied on 15 payments allegedly made to Calsen at the behest of Mr Leviev between 6th December 2001 and 10th December 2002 varying in amount between US$599,649.96 and US$3 million. The early payments seem to have been the subject of the email traffic between Mr Dagan and Mr Mantel which I have set out in the chronology above. I have no doubt that some of these payments were made by LLD Diamonds, on behalf of Mr Leviev, to Mr Gaydamak in respect of their business interests in Angola. I have also no doubt that none of the payments, even the first, was in respect of a genuine sale of polished diamonds. Indeed, Mr Leviev accepted that he had made payments to Mr Gaydamak in the same period in respect of "financial aid for the purpose
of advancing projects in Angola in which he was involved" on the basis that he "understood perfectly well that underlying these requests was the implied threat that Mr Gaydamak could make my business life in Angola very difficult".
- Mr Fenwick relied on the fact that the Bank of Cyprus documentation did not prove that the Calsen payments (except the first) emanated from Mr Leviev, since the companies like Wellfin Corporation, and Marshall Trading LLC. had not been shown to be connected with Mr Leviev. This is not, in my judgment, enough to prove that the payments were not made by Mr Leviev in the face of the emails and Mr Leviev's own admission that he made payments (albeit smaller ones) to Mr Gaydamak. It may be that some of the payments were in respect of food, as Mr Fenwick sought to establish in cross-examination. But that does not mean that they all were. The evidence is relatively clear, in my judgment, that Calsen was one route through which Mr Leviev paid Mr Gaydamak.
- I do not think that I need, for the purposes of resolving the main issues in this case, decide precisely which Calsen payments were actually made at Mr Leviev's behest, and which were not. I am satisfied that some of them (including the first) were indeed made at Mr Leviev's instigation to Calsen in order to satisfy Mr Leviev's perceived obligations to Mr Gaydamak.
Issue 4: If so, was each of those payments made, directly or indirectly, by Mr Leviev?
- I have already answered this question, so far as is necessary. Mr Leviev attempted to distance himself from the Calsen payments by suggesting that he had no company called "LLD Limited", and that his company was "LLD Diamonds Limited". I am satisfied, as I have said, that some of the 15 payments to Calsen were made by entities controlled by Mr Leviev or by entities acting at his direction. I do not have enough evidence to make specific determinations in respect of each payment and each entity and there is no need for me to do so.
Issue 5: Were further payments made by Mr Leviev to Pusan pursuant to the 2001 Agreement?
- This issue disappeared during the trial, when the letter of request issued to the Spanish Court (on Mr Gaydamak's application) produced Pusan's bank statements. It was apparent from those statements that no large payments had been made by Mr Leviev to Mr Gaydamak, as Mr Gaydamak had thought.
- Mr Wolfson submitted, and I accept, that these events did not count against Mr Gaydamak, as he had obviously mistakenly thought that payments had been made to Pusan, when they had not. Otherwise, there would have been no point in his having taken pro-active steps to obtain the bank statements by obtaining a letter of request. There would have been no point in obtaining the letter of request if he had known that no payments were made.
Issue 6: Were further payments made by Mr Leviev to Antanta pursuant to the 2001 Agreement?
- There is no hard evidence that such payments were ever made. Mr Gaydamak's evidence that they were is not reliable, bearing in mind what he said about the payments to Pusan. It does not seem to me that I can find, on a balance of probabilities, that payments were made by Mr Leviev to Antanta. Mr Grinshpon denies arranging this in his written evidence.
- Again, I do not think that it matters overall whether particular payments are or are not established. For the reasons I have given, I am sure Mr Leviev made some payments he admits as much - precisely which does not, I think, matter.
Issue 7: Were payments made by Mr Leviev pursuant to the 2001 Agreement?
- I have already answered this question above. I do, however, also accept Mr Ben Haim's evidence that cash payments were made to Mr Gaydamak from the Ascorp offices in Angola. Mr Fenwick suggested that this was implausible because of the existence of the other shareholders in Ascorp. That would undoubtedly be the case in a well-regulated European business environment; but I do not think the same approach can be assumed in Angola. I accept Mr Gaydamak's evidence as to how things worked in Angola, and I am sure that he took money from Ascorp when he wished, by agreement with Mr Leviev.
Issue 8: Did Mr Gaydamak and Mr Leviev sign the 2001 Agreement?
- I should perhaps start my consideration of this issue by saying something about the specific events that are alleged to have surrounded the meeting between Mr Gaydmak and Mr Leviev in December 2001 at which the 2001 Agreement was allegedly signed.
- It is common ground that Mr Gaydamak met Mr Leviev at his office and that Mr Dagan waited outside. It is also common ground that the two men considered the 2001 Agreement document and that Mr Gaydamak sought to procure Mr Leviev's agreement to it. When they emerged from the meeting, Mr Gaydamak and Mr Dagan have made much in the evidence of the alleged exchange of the greeting "mazel u'bracha". On the evidence, I have heard, I am quite satisfied that the greeting was used. Mr Fenwick submitted, in his closing, ingeniously I thought, that if these words were said, they must have referred to an oral contract, not a written one. So, he argued, it may be that they were referring to Mr Leviev's agreement to contribute to Mr Gaydamak's projects in Angola (which was what Mr Leviev accepted he had said he would do) rather than to the signature of the 2001 Agreement. Having seen Mr Gaydamak, I do not think he would have been exchanging any kind of pleasantry with Mr Leviev if he had refused his demand to sign the 2001 Agreement. Mr Leviev's treatment of the point was half-hearted, and I equate his acceptance of the exchange of pleasantries with the use of the "mazel u'bracha" greeting. Ms Borenshtein did not add anything, and despite my scepticism about Mr Dagan's evidence and Mr Gaydamak's evidence generally, I accept what they said on this point.
- This brings me to the core reasons why I am satisfied that the 2001 Agreement was signed at the meeting between Mr Leviev and Mr Gaydamak in December 2001. They may be briefly summarised as follows:-
i) It is quite clear to me from Mr Gaydamak's evidence, and indeed from Mr Leviev's evidence, that Mr Gaydamak was more politically influential in Angola in 1998 than was Mr Leviev. Mr Gaydamak had direct access to the President and Mr Leviev did not. That was important in Angola at that time. This does not mean that Mr Leviev did not have an interest in the Catoca mine before he met Mr Gaydamak, but that interest did not put him in a position to obtain the exclusive right to buy Angolan diamonds.
ii) I am satisfied that it was indeed Mr Gaydamak who conceived and developed the idea of the establishment of Ascorp, and it being granted sole purchasing rights. This was bound up with his provision of security services through SCG, and could not have been brought to fruition without the President's say so. Thus, I am also satisfied that Mr Leviev had Mr Gaydamak to thank for his being granted an interest in Welox. It is surprising that, in taking credit for the idea and the execution of the idea, Mr Leviev omits to mention the roles of Messrs Laniado and Goldberg. This demonstrated to me that he was re-writing the history, leaving some of the crucial characters out of the story. I found that approach consistent with his arrogance, upon which I have already commented.
iii) I have already found that Mr Leviev paid Mr Gaydamak in various ways both before after the 2001 Agreement. I do not think he did so out of the goodness of his heart, nor in order to avoid trouble. I think he did so because he had some kind of loose partnership arrangement with Mr Gaydamak that probably crystallised some time around the 7th and 11th October agreements, when Mr Gaydamak decided for whatever reason that he did not wish to appear on the documents as a shareholder in Welox. Mr Gaydamak is a volatile and impulsive character and I do not think I need to speculate on his motives. I am sure they were well understood at the time by Mr Leviev.
iv) Nor do I think I need to determine precisely the nature of the partnership arrangements that the two men made in 1999. The fact is that Mr Leviev knew that he owed Mr Gaydamak money for the introduction that led to his being a party (indirectly) to the 11th October agreement. That remained the position when Mr Gaydamak presented him with the 2001 Agreement for signature.
v) I am sure that it was indeed Mr Gaydamak that presented Mr Leviev with the 2001 Agreement for signature. I am equally satisfied on the balance of probabilities that he signed it. I think he did so, because he did not expect it to be formally relied upon, but to be used rather like an insurance policy. That is why the eccentric idea of depositing it with a mutually trusted Rabbi was devised. Despite the fact that Mr Gaydamak and Mr Leviev were disassociating their business interests at that time, they had not fallen out. They were, like many businessmen, able to shout at one another one day and enjoy each other's company the next without seemingly bearing a grudge. The grudges, I suspect, arose much later for reasons that I do not think have really been mentioned in the evidence for either side. It is not clear when precisely Mr Leviev stopped paying Mr Gaydamak, but it was probably in or about 2003. They then tried to patch up their Angolan business dealings by entering into the June 2005 MoU, but that did not work, and bad feeling seems to have grown from then onwards. It may have been partially caused by the cessation of payments and the failure to agree the 2005 MoU. I know not.
vi) I am conscious that I have not accepted either side's evidence in its entirety, but I generally prefer the story told by Mr Gaydamak concerning the 2001 Agreement. It accords far more closely with those few contemporaneous documents we have: the 7th and 11th October agreements, and the Calsen payment documents, in particular.
- In reaching this conclusion, I have taken full account of the points already referred to and also to the following specific arguments advanced by Mr Fenwick in closing:-
i) It is true that, on 16th December 2001, Mr Gaydamak was instructing his lawyers to write to Mr Leviev demanding an apology for the article in the Marker newspaper. Such an action seems to be at odds with Mr Gaydamak having just entered (or being just about to enter) into an agreement with Mr Leviev to receive 50% of his Angolan business proceeds. But Mr Gaydamak is not a normal type of person and I have been left wondering if he would truly see a conflict. He would see himself, by his own lights, as simply vindicating his various rights. More significantly, perhaps, Mr Leviev must have been upset to receive Mr Gaydamak's letter of 6th December 2001. But ultimately, I do not think that the existence of this ongoing correspondence can be determinative as to whether or not the 2001 Agreement was signed between the 13th and 17th December 2001 or thereabouts.
ii) The fact that Mr Leviev said that he would not have signed any agreement in English without advice from his lawyers and that Mr Gaydamak said that he knew this to be the case. I accept that Mr Leviev is a more cautious businessman than Mr Gaydamak, but that does not mean that he would not sign anything without advice. If, as I have found, he had been paying Mr Gaydamak large sums of money in cash and had just sent a large sum to Calsen, he was fully aware of his deal with Mr Gaydamak, and the fact that their relationship had cooled and needed to be formalised. In addition, as I have also said, I do not think either side expected the 2001 agreement to be relied upon in the usual sense; it was a kind of insurance policy: I will return to the argument that it is not binding for an absence of intention to create legal relations. Moreover, as I have already indicated, I do not accept that Mr Leviev finds as much difficulty understanding English as he maintained.
iii) I do not think that there is anything surprising in Mr Gaydamak's various attempts to obtain diamond concessions through Sunland and other companies between 2003 and 2005. Mr Leviev had stopped paying him, and he wanted to get back in the action. The fact that he had the 2001 Agreement lodged with Rabbi Lazar as an insurance policy was not easily going to help him in terms of hard cash. If he could get a new deal with Mr Leviev (in the form of the 2005 MoU), that would be far better than trying to enforce the 2001 Agreement. Moreover, it is not to be forgotten that he was by this time in the thick of Angola-gate, and finding it far more difficult to operate freely as he had before December 2001.
iv) The fact that Mr Gaydamak may not have needed obscurity before the issue of the international arrest warrant against him in December 2001 is not a strong argument in Mr Leviev's favour for the reasons I have already tried to give.
v) The fact that Mr Gaydamak did not tell me the truth about the drafting of the 2001 Agreement has puzzled me. But in the end, I think it goes nowhere. It is absurd to judge the parties in this case by the same standards as one might consider the evidence of partners in a firm of City of London solicitors. One untruth says nothing about the likelihood or unlikelihood of something else being truthful as is well known in criminal proceedings.
vi) For the reasons that I will come to under issue 9, I do not accept Mr Leviev's and Mr Mondshine's evidence concerning the September 2000 Agreement. This makes it more likely, though by no means certain, that it was the signed (rather than an unsigned) version of the 2001 Agreement that was lodged with Rabbi Lazar.
- In all the circumstances, as I have said, I think that Mr Leviev did indeed sign the 2001 Agreement and lodge it with Rabbi Lazar. It was convenient for Mr Leviev, but hardly coincidental I think, that Rabbi Lazar lost or destroyed the envelope. Had he not done so, I am sure he would have been happy to provide his oral evidence to the Court. After all, he was content to discuss the matter on Israeli television.
Issue 9: Was Rabbi Lazar given for safekeeping (a) a signed copy of the 2001 Agreement or (b) a document recording Mr Gaydamak's agreement to make contributions to the Federation?
- In the light of my existing findings, I need only consider under this heading whether there ever was a September 2000 Agreement. It is to be noted that no mention was made of such an agreement until very late in the day. Advocate Fisher wrote formal letters in 2006 to Mr Leviev and Rabbi Lazar, but was not told anything, let alone that Mr Gaydamak was mistaken in thinking there was a business agreement lodged with the Rabbi, and that what had been lodged was an agreement to pay money to charity.
- In closing, Mr Fenwick relied on an email dated 22nd April 2011 from Mr Mantel to Mr Dagan in which he said that he had remembered that "every month we transferred $400,000 to a yeshiva in New York. I have a feeling that it is connected with that Rabbi with whom the contract "that has disappeared" was deposited
". Mr Fenwick says that this is close to the $350,000 that Mr Leviev says that Mr Gaydamak promised to pay to the Foundation in the September 2000 Agreement and therefore supports its existence.
- As I have said also, on the last day of the trial, Mr Leviev produced the IRS returns of the Federation, which showed (on their face) that, between August 2001 and July 2002, Calsen had contributed US$3,199,855 in that period. The accounts for the years before and after showed no donations that could be traced to Mr Gaydamak. Mr Fenwick relied on this evidence as corroborating what Mr Mantel had said, and supporting the conclusion of the September 2000 Agreement. For my part, it does not seem to me that these figures go anywhere towards supporting the conclusion of the September 2000 Agreement. Had that agreement been reached, Mr Gaydamak would, presumably (as Mr Mondshine said he did), have started donating $350,000 per month to the Federation from September or October 2000, yet the figures only show donations in the year from July 2001.
- Whilst I am sure that Mr Gaydamak wanted to achieve a higher status in the Jewish community, and that he discussed doing this with Mr Leviev and that donations (to some entities) were discussed and indeed made, I cannot accept that, in September 2000, they entered into the kind of formalistic agreement that Mr Leviev and Mr Mondshine describe. The $350,000 per month donations to the Federation do not seem to have been made immediately after September 2000 in any event. And whilst it might be marginally more likely that one would deposit an agreement to give to charity with a Rabbi than a business agreement, in the context of these parties, either seems to me to be possible. After considering all the available evidence on the point, I do not think that the September 2000 Agreement was made, nor do I think it was deposited with Rabbi Lazar. I think the whole episode is a story based on some real facts concerning charitable events and Mr Gaydamak's enthusiasm to be accepted and to gain the Presidency of the Lubavitch community in Russia. I regret to say that the story seems to me to have been manufactured to deal with the unfortunate position, from Mr Leviev's point of view, that Rabbi Lazar accepted on Israeli television that he had indeed been given an envelope for safe keeping by Mr Leviev and Mr Gaydamak.
- As I have already said, in my judgment, it was a signed copy of the 2001 Agreement that was lodged with Rabbi Lazar.
Issue 10: Does the 2001 Agreement represent a concluded and enforceable agreement between Mr Gaydamak and Mr Leviev?
- Two pleaded questions have been raised under this heading: first, whether there was any consideration on the face of the 2001 Agreement passing from the promisee Mr Gaydamak, and secondly, whether the 2001 Agreement is too uncertain to be enforced.
- As for consideration, Mr Wolfson relied on clauses 6, 7, 8 and 11. Mr Fenwick submitted that, since the 2001 Agreement was premised on Mr Gaydamak and Mr Leviev already having half shares in the businesses "held and conducted" by Mr Leviev in Angola and Zaire, clauses 6 and 7 merely confirmed Mr Gaydamak's existing half share or a greater interest (as to the first US$500,000), which cannot amount to consideration moving from Mr Gaydamak. I agree. But Mr Fenwick had less convincing arguments in relation to clauses 8 and 11. As it seems to me both those clauses do indeed provide formal consideration for the 2001 Agreement. Under clause 8, each party grants the other a right of "first offer", which even if not a formal option, at least looks like a right to be given the first opportunity to purchase the other's share. The fact that there might be argument as to the precise nature of that right does not seem to me to detract from the proposition that it constitutes consideration moving from each party. Under clause 11, both parties are enjoined to: "treat all information related to their business relations, the assets and activities at issue as well as this Letter of Agreements as strictly confidential and shall not disclose any details related to any of them to any third party", but Mr Gaydamak is given the sole liberty to "disclose his interest in the said assets and activities, and to make use of this Letter for preserving his rights herein". Whilst the second part of clause 11 certainly detracts significantly from Mr Gaydamak's obligations under the first part of clause 11, it does not seem to me to completely nullify them. The liberty allowed to Mr Gaydamak in the second part is more limited than the restriction in the first part. There is therefore some limited consideration moving from Mr Gaydamak in clause 11 of the 2001 Agreement. It is axiomatic that the court will not consider the adequacy of consideration, so if there is some sufficient consideration, that will suffice. In my judgment, sufficient consideration passing from Mr Gaydamak is to be found in the 2001 Agreement, even though that agreement is, as Mr Fenwick submitted, extremely one sided.
- The pleaded argument that the terms of the 2001 Agreement are too uncertain to be enforced seems to me to be doomed to failure. The terms may be hard to construe, and may even invite litigation, but they do clearly provide a number of intelligible mutual obligations. Difficulties of construction do not in themselves deprive an agreement of its enforceability. As Lord Wright said in Hillas & Co. Ltd. v. Arcos Ltd. (1932) 147 LT 503 at page 514: "[b]usinessmen often record the most important agreements in crude and summary fashion;
it is accordingly the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects
". In this case, I am entirely satisfied that the 2001 Agreement cannot be said to be too uncertain to be enforced.
- Mr Fenwick also sought to attack the validity and enforceability 2001 Agreement on the grounds of an unpleaded allegation that the parties had no intention to create legal relations. This contention too seems to me to be doomed to failure. In the circumstances of the conclusion of the 2001 Agreement that I have found, it seems obvious to me that the parties intended to create legal relations. It may be that they had odd ideas about what was to be done with the concluded agreement they may even have had some unorthodox notions of the circumstances in which it would actually be enforced. But those matters are quite different from saying that they did not intend to create legal relations; I am sure they did.
- In my judgment, therefore, the 2001 Agreement did indeed represent a concluded and enforceable agreement between Mr Gaydamak and Mr Leviev when it was entered into.
The Settlement Agreement
Issue 11: Has the Settlement Agreement come into force, or was it made on terms that it would only come into force on a date yet to be agreed?
- This issue was the first one to be raised by Mr Gaydamak in relation to the Settlement Agreement. According to his account of events, the absence of a date at the beginning of the Settlement Agreement was something he considered at the time, even before he signed it.
- Despite this evidence, Mr Gaydamak accepts in his first witness statement that on Monday 8th August 2011, he was told by his lawyers that they had received a signed version of the Settlement Agreement. Mr Leviev's acceptance of the Settlement Agreement was therefore communicated to Mr Gaydamak in that way. He then received a call from Mr Sumbula praising him for signing the Settlement Agreement and confirming the promise to provide him with an Angolan diplomatic passport. The very same day, Mr Gaydamak went to the Ministry of Foreign Affairs to arrange for the issue of that passport. He was, therefore, acting as if he believed that the Settlement Agreement had been concluded so that he could call upon the Angolan government for what General Kopelipa had promised on its behalf.
- On Monday 9th August 2011, Mr Gaydamak met General Kopelipa and Mr Sumbula at the Ministry of Justice in Luanda and they showed him two original copies of the Settlement Agreement signed by both parties. Mr Leviev's acceptance of the Settlement was therefore, once again, communicated to Mr Gaydamak on that occasion. Mr Gaydmak says that he queried the absence of a date at that meeting but General Kopelipa "dismissed this as a point of no importance". Despite what Mr Gaydamak says in his statement, he seems to have accepted General Kopelipa's view on that occasion, because he took his diplomatic passport and left Angola on 11th August 2011. Had Mr Gaydamak persisted in arguing with General Kopelipa that the Settlement Agreement was not binding, I find it inconceivable that the General would have allowed Mr Gaydamak to take his new passport and leave the country. After all, it was General Kopelipa who seems to have invested the most effort to see that the Settlement Agreement was concluded.
- The result seems to me to be that Mr Gaydamak was duly informed that the Settlement Agreement had been signed by Mr Leviev, and then acted in reliance on that fact. Even accepting these facts, it is still possible, as Mr Wolfson contends, that as a matter of construction, the concluded Settlement Agreement had not come into force because of the absence of a date on the front page. The argument relies primarily on the words in clause 9 that: "[t]his Agreement has been entered into on the date stated at the beginning of it". In the face of the fact that Mr Gaydamak himself dated the document directly below that clause and alongside his own signature, it does not seem to me possible sensibly to argue, as a matter of construction of the whole of the Settlement Agreement, that the parties are to be taken as having intended that it should not come into effect until a date had been inserted on the front page. For this exercise, the subjective evidence of the parties' intentions is not admissible. Looking at the document itself, it seems obvious that the date on which the Settlement Agreement is to be taken as having been entered into is the 6th August 2011. As I say, that date appears in Mr Gaydamak's own hand directly beneath the words in clause 9. Those words must be given a sensible commercial meaning, namely that the date to which they refer is the one right next door to the clause itself. There is no evidence that the Settlement Agreement was intended to be signed in escrow and completed formally between lawyers. The extrinsic evidence confirms, as I have already indicated, that by 8th August 2011 (or the 9th August 2011) at the latest, Mr Gaydamak knew (and in fact intended) that the Settlement Agreement had been signed and witnessed and had taken effect.
- It would be an inappropriately technical and un-commercial construction to determine that the terms of the Settlement Agreement are to be construed so strictly as to provide for an escrow arrangement that neither party ever discussed or mentioned before it was signed. Any objective observer with all the background information available to the parties would conclude that the Settlement Agreement was intended by the parties to be taken as having been entered into (and taken effect) on 6th August 2001, that date appearing, as I have said, in Mr Gaydamak's own hand, directly beneath the words in clause 9 upon which Mr Gaydamak relies as providing for some unspoken escrow arrangement. It is to be noted in this regard that Mr Gaydamak does not suggest in his evidence that he mentioned the absence or alleged effect of the missing date when he signed the Settlement Agreement, only that he himself noticed it.
- For these reasons, it seems to me to be clear as a matter of construction of the Settlement Agreement that it was to be taken as having been entered into on 6th August 2011, the date on which it was in fact signed by the parties. Moreover, it was also, on its proper construction, intended by the parties to take effect on that same date.
Issue 12: Did General Kopelipa represent: (a) that if Mr Gaydamak signed the Settlement Agreement, Mr Leviev would make a proposal to Mr Gaydamak for the payment of compensation to Mr Gaydamak, such compensation to be proportionate to the volume of the business being transacted by Mr Leviev in Angola; and/or (b) that Mr Leviev honestly intended to pay compensation to Mr Gaydamak in return for his giving up his rights?
- Mr Wolfson's argument in relation to these representations places reliance on the words in paragraph 62 of Mr Gaydamak's statement to the effect that General Kopelipa told him, immediately before he signed the draft Settlement Agreement, that he had raised the issue of compensation with Mr Leviev and that "the compensation would be proposed later on by Mr Leviev and that the compensation would be proportionate to the volume of the business activities realised by Mr Leviev in relation to Angolan entities".
- Mr Wolfson submits that the second representation follows inexorably from the first. As he put it in closing: "Mr Leviev told General Kopelipa: "Over my dead body is Mr Gaydamak getting any money from me. Go and get this signed. Tell him these terms effectively, and go and get this document signed". General Kopelipa comes over to us and says, "Here's the document. Mr Leviev will pay you compensation referable to the volume of business he's transacting in Angola". Well, he knows that's a fib, and we rely on that and we sign up".
- The only corroboration for Mr Gaydamak's evidence on these points is the evidence of the recording of the telephone call that took place between Mr Sumbula and Mr Gaydamak later in August 2011. But that recording reads more as if Mr Sumbula is reassuring Mr Gaydamak in his own hope that Mr Leviev will pay him something. That is so, at least, until Mr Sumbula seems to have said: "[y]es, so, it was very clear that they [Mr Leviev] must pay in return for
in return for
". Both that passage and the lengthy second telephone conversation in October 2011 are consistent with General Kopelipa having said that he would use his influence to persuade Mr Leviev to pay Mr Gaydamak.
- Mr Fenwick relies strongly on the fact that Mr Gaydamak said nothing about the alleged representations until he made his witness statement of 24th November 2011, several months later. Against that, of course, Mr Gaydamak's solicitors did quickly say that the Settlement Agreement was to "form part of a suite of settlement of commercial arrangements (with third parties as well as our clients) which has not yet been finalised". But that is hardly the same as saying that he had been expressly promised compensation from Mr Leviev. Mr Gaydamak's case is not now that the Settlement Agreement was dependent on some unspecified arrangement with third parties (even the Government of Angola) but purely on the alleged representations by General Kopelipa.
- Also relevant to Mr Gaydamak's account is the evidence given by Mr Leviev. He said in paragraphs 133 and 134 of his 3rd witness statement that at no point prior to signing did General Kopelipa try to persuade Mr Leviev to pay Mr Gaydamak, and that, after signing, General Kopelipa asked if Mr Leviev was willing to help Mr Gaydamak, and he offered to make a donation to an Angolan charity for amputees. He said something similar in the passage from his cross-examination I have set out above. Thus Mr Leviev admits that he was asked to help Mr Gaydamak, even though he says that happened only after he had signed.
- I have to take into account the fact that Mr Gaydamak is distinctly prone to exaggeration, and has not told the truth on a number of matters that I have already mentioned. I am, however, inclined to accept that Mr Gaydamak asked General Kopelipa and Mr Sumbula to ask Mr Leviev whether he would pay some compensation outside the terms of the 'drop hands' Settlement Agreement. But I cannot accept that General Kopelipa went so far as to say that Mr Leviev "would" propose compensation. That would have been directly contradictory to Mr Leviev's main condition (that he would pay nothing) and to the express terms of the Settlement Agreement and the entire agreement clause. I think it far more probable that General Kopelipa said that he would try to use his influence to persuade Mr Leviev to pay Mr Gaydamak, which is exactly what Mr Gaydamak records at the end of paragraph 62 of his first statement. I am influenced in this finding by the fact that Mr Gaydamak did not mention any categoric representation to his solicitors or anyone else until quite some time after the dispute broke out, and by the fact that Mr Gaydamak seems to have been prepared to enter into the Settlement Agreement on the faith of General Kopelipa's promises about the diplomatic passport (which he obviously needed very much) and the renewed ability to undertake diamond deals in Angola (which he obviously also wanted very much).
- In the circumstances, I cannot find that either of these two representations was actually made by General Kopelipa to Mr Gaydamak. The telephone conversations do not provide any sufficient support for the representations alleged by Mr Gaydamak. They are quite hard to understand, and do, I think, provide more compelling support for the representation that I think was in fact made, namely that General Kopelipa would try to use his influence to persuade Mr Leviev to make some payment of compensation to Mr Gaydamak.
Issue 13: If so, were those representations false to the knowledge of General Kopelipa?
- This issue does not, in the event, need to be decided. But, had the pleaded representations been made, it is quite clear that they would have been false. It is equally clear that, had they been made, they would have been made fraudulently, since I accept that Mr Leviev did indeed put forward his two conditions of settlement to General Kopelipa. In consequence, General Kopelipa could not have genuinely thought that Mr Leviev would propose any compensation to Mr Gaydamak, nor that he honestly intended to pay him. He knew he did not. Had I had to consider this issue in earnest, however, I would have taken into account the unlikelihood of such fraud, particularly from a man in such a senior position as General Kopelipa. It would, nevertheless, have been inevitable that his fraud would have to have been found. I am, therefore, pleased that the issue does not arise because I do not think the pleaded representations were made.
Issue 14: Were those representations relied upon by Mr Gaydamak?
- This issue of reliance also does not need to be decided, but had it arisen, I would have decided that Mr Gaydamak relied on the pleaded representations, despite knowing of the entire agreement clause in the draft Settlement Agreement. The more important question of reliance would have been the reliance on any ostensible authority of General Kopelipa.
Issue 15: Did those representations induce Mr Gaydamak to enter into the Settlement Agreement?
- Again this issue does not arise, but had it arisen, I would have held that the pleaded representations would have induced Mr Gaydamak to enter into the Settlement Agreement.
Issue 16: Did Mr Leviev appoint or constitute General Kopelipa as his agent (i) to convey his two conditions to Mr Gaydamak and/or (ii) to obtain Mr Gaydamak's signature on the Settlement Agreement?
- This and the following issues relating to General Kopelipa's authority do not arise. Had they arisen, they would have been points of some difficulty. I have already set out the law in relation to authority above. But since the issues do not directly arise, I will deal with the issues briefly in this section of my judgment.
- It is important at the outset to understand General Kopelipa's position, and indeed Mr Sumbula's position, in the negotiations for the Settlement Agreement.
- General Kopelipa was expressly and obviously acting in the interests of, and at the behest of the Government of Angola. This much must have been fully understood by the parties. Mr Gaydamak was promised a diplomatic passport if he settled, and he was duly provided with one. Only the Government of Angola could have promised or performed such a promise. The same goes for the promise that the Angolan Government would co-operate with Mr Gaydamak in relation to the purchase of diamonds, which Mr Gaydamak accepted was made. That must have had all the greater force when made in the presence of Mr Sumbula, who had spent many hours with Mr Gaydamak, since he was the CEO of Endiama, the Angolan state diamond company.
- Returning to the issue stated above, Mr Wolfson has relied on two specific respects in which he contends that Mr Leviev constituted General Kopelipa as his agent. At their first meeting on 4th August 2011, Mr Wolfson contends that Mr Leviev expressly authorised General Kopelipa to inform Mr Gaydamak of his two conditions for a settlement: first, that he would not meet Mr Gaydamak, and secondly that he would not pay Mr Gaydamak. The second respect was when Mr Leviev sent General Kopelipa the draft of the Settlement Agreement that his lawyers had drafted. This conduct, Mr Wolfson contends, constituted General Kopelipa as Mr Leviev's agent to obtain Mr Gaydamak's signature on the Settlement Agreement.
- Mr Wolfson says that this much is obvious on the authorities, and that it does not matter that General Kopelipa had his own agenda, and was known to be pursuing the objectives of both the President and the Government of Angola.
- Mr Fenwick submits that General Kopelipa was not expressly authorised, because Mr Gaydamak constituted the General his agent first. But that is not the way I think things happened. It seems fairly clear to me from Mr Leviev's own evidence that General Kopelipa saw Mr Leviev before he saw Mr Gaydamak. General Kopelipa, I am sure, only went to see Mr Gaydamak when he knew that Mr Leviev would deal. After all, he had waited some weeks for Mr Leviev to arrive before starting the process. That is Mr Leviev's own case. Thus, it is unlikely that Mr Gaydamak could have authorised General Kopelipa to act as his agent to procure the offer of a payment from Mr Leviev before Mr Leviev had informed General Kopelipa of his two conditions. In my judgment, Mr Wolfson is right to say that Mr Leviev must, at their first meeting on 4th August 2011, have given General Kopelipa the express authority to convey his two conditions to Mr Gaydamak. This follows inexorably, as Mr Wolfson's cross-examination showed, from Mr Leviev's point blank refusal to meet Mr Gaydamak, taken alongside his willingness to allow General Kopelipa to convey his two conditions to Mr Gaydamak.
- The second alleged authorisation is said to arise solely from the act of sending the draft to General Kopelipa. But taking all the surrounding circumstances into account, it seems to me that Mr Leviev's actions in sending the draft to General Kopelipa did expressly authorise him to procure Mr Gaydamak's signature on the document. One might ask rhetorically, why else would he have done what he did? And, of course, General Kopelipa and Mr Leviev had agreed, when General Kopelipa reported back to him later on 4th August 2011, that Mr Leviev would get his lawyers to draft up the Settlement Agreement. And, they must also, I think, have discussed the insertion of a clause (at the end of clause 7) protecting the Government of Angola. General Kopelipa must have been responsible for the insertion of that clause and can only have asked for it when he spoke to Mr Leviev later on 4th August 2011.
- So, the answer to this issue is that Mr Leviev did indeed expressly constitute General Kopelipa as his agent in the two respects mentioned.
Issue 17: Did General Kopelipa have actual authority to make the representations set out above?
- Mr Fenwick submits, whilst one might normally think that representations about what payment a principal would make would be sufficiently closely connected with the express agency (i) to inform the other party of the payment terms that the principal would agree, and (ii) to get the agreement signed, such that they could be fairly and properly regarded as done by the agent in the ordinary course of his agency, that is not so in this case because the agent here was known to have his own personal interests on behalf of the Government of Angola, and because of the nature of the agreement being proposed. Mr Fenwick points to the fact that this alleged agency is an ad hoc agency and quite unlike all the reported cases, where the agent is a partner or employee or long term agent, said to be binding his employer or partners or long term principal.
- I have no doubt on the evidence that Mr Leviev never gave General Kopelipa any actual authority to make the representations pleaded to Mr Gaydamak; quite the reverse. I accept Mr Leviev's evidence that he never changed his stance, which was that he would not make any payment to Mr Gaydamak as a quid pro quo for the dropping of Mr Gaydamak's legal proceedings.
- I would not have held, had it been relevant, that the pleaded representations were sufficiently closely connected with General Kopelipa's express agency either (i) to inform Mr Gaydamak of the payment terms that the principal would agree, or (ii) to get the Settlement Agreement signed, such that they could be fairly and properly regarded as done by General Kopelipa in the ordinary course of his agency. The reasons for this are that:-
i) The positions of General Kopelipa and Mr Sumbula were well known to Mr Gaydamak and Mr Leviev. Mr Gaydamak also knew that the Angolan Government wanted a settlement to be concluded, and was prepared to sweeten the pill.
ii) Mr Gaydamak knew that the pleaded representations were directly in conflict with the express terms of the Settlement Agreement, and that Mr Leviev would not even meet him.
iii) General Kopelipa's express authority was obviously strictly limited, as his statement to Mr Gaydamak that the terms were non-negotiable made clear.
Issue 18: Did Mr Leviev hold out General Kopelipa to Mr Gaydamak (and if so how) as authorised: (a) to make the representations set out above; or (b) to state that Mr Leviev intended to pay Mr Gaydamak compensation proportionate to the volume of business being transacted by Mr Leviev in Angola if he entered into the Settlement Agreement?
- Mr Wolfson's own case is that this question in relation to ostensible authority is much the same as it is, applying the Dubai Aluminium test, in relation to actual authority. I, therefore, reject the submission that General Kopelipa can have had ostensible authority to make the pleaded representations (had they been made) for the same reasons as I have rejected the proposition that General Kopelipa had actual authority.
- I am not, however, certain that the test is the same. In The Ocean Frost supra it was made clear that ostensible authority comes about where there is a representation of actual authority, reliance, and therefore an estoppel preventing denial that actual authority existed. But the normal case, as Lord Keith made clear, is where there is a long term agency or a course of dealing of the kinds I have mentioned above. It would be negated when the contractor (Mr Gaydmak) knows that the agent's (General Kopelipa's) authority is limited, as he must have done here from the circumstances and the express terms of the draft Settlement Agreement. Ostensible authority in a one-off agency case would, again as Lord Keith said, be rare and unusual. I do not see how Mr Gaydamak can have thought that General Kopelipa had authority to say that Mr Leviev would pay, when he was looking at the terms of the Settlement Agreement that said he would not and included an entire agreement clause, and he had been told that the terms were non-negotiable. As Lord Keith said: "
it is very difficult to envisage circumstances in which the estoppel could arise from conduct only in relation to a one-off transaction such as this one was". I do not think this could possibly have been such a case.
Issue 19: Did Mr Gaydamak rely upon such holding out?
- As I have already indicated in my treatment of the Akai case, the question here would have been whether it could be shown that Mr Gaydamak was dishonest or irrational (including turning a blind eye or being reckless) in contending that he relied or in relying on General Kopelipa's representations.
- The representations in question were, as I have indicated, allegedly made at the time that General Kopelipa returned to Mr Gaydamak with the Settlement Agreement for signature. Mr Gaydamak was fully aware of General Kopelipa's position, and at that time saw the clause in the draft Settlement Agreement protecting the Government of Angola. He must, therefore, have had General Kopelipa's role clearly in the front of his mind. He must also have known that Mr Leviev's original position was that he would pay nothing. But most importantly in my view, Mr Gaydamak knew what the draft Settlement Agreement actually said namely that he would be paid nothing. He knew also that the entire agreement clause made that clear and that, by signing, he was acknowledging that he had not entered into the Settlement Agreement in reliance on any representation or warranty made orally or in writing on behalf of the other party. It would, therefore, have been quite remarkable for Mr Gaydamak genuinely to think that he could rely on the representations of General Kopelipa when they flew in the face of the written terms he was being asked to sign and that General Kopelipa had already told him were non-negotiable.
- I do not think that Mr Gaydamak would or could genuinely have thought that he could rely on the representations (had General Kopelipa had made them). Indeed, the telephone conversations with Mr Sumbula on which he himself relies, make it clear that he did not really think he would be paid.
- If I had found that the representations were made, I would have been entirely satisfied that Mr Gaydamak did not rely on what General Kopelipa was told. He would have been wholly reckless and irrational if he had. He knew full well what Mr Leviev's position was, as reflected in the strict terms of the document he was signing. He may have hoped that General Kopelipa might persuade Mr Leviev to relent and to make some payment, but I could not have accepted on the evidence that he would or could genuinely have relied on those representations, had they been made. Mr Gaydamak signed knowing the express terms of the Settlement Agreement, because he wanted the benefits promised to him by General Kopelipa on behalf of the Angolan Government. He did not sign because he genuinely expected Mr Leviev to change his mind or to make him any payment. If he did expect such payment or rely on the truth of such representations, he was wholly reckless and irrational, as I have already indicated.
Issue 20: Did General Kopelipa have apparent authority to make the representations above?
- In the circumstances, and for the reasons I have given, even if I had held that the pleaded representations were made, I would have held that General Kopelipa did not have ostensible or apparent authority from Mr Leviev to make them.
Mr Leviev's knowledge of General Kopelipa's fraud
Issue 21: If General Kopelipa made fraudulent statements to Mr Gaydamak to induce him to sign the Settlement Agreement, did Mr Leviev turn a blind eye to that fact at the time when he signed the Settlement Agreement?
- This issue does not arise. Since I have found that General Kopelipa did not make fraudulent misrepresentations, the question of Mr Leviev turning such a blind eye does not arise. However, had I found that the alleged misrepresentations were made, I do not think I could have found on the evidence that Mr Leviev turned a blind eye to them. Mr Leviev seems to have played a fairly straight bat in the negotiations for the Settlement Agreement. Admittedly, he left it to General Kopelipa and Mr Sumbula to procure the deal, but that does not mean that he was not clear with them as to the terms on which he would deal. He never wavered from his position that he would not see Mr Gaydamak and would not pay a cent. No doubt he would have had an inkling that Mr Gaydamak would be obtaining something (though there is no evidence that he knew about the Angolan Government's promises of the diplomatic passport and the diamond contracts). But it would have been impossible for me to conclude that he turned a blind eye to General Kopelipa promising something in direct contradiction to the clear terms of his authority and of the draft Settlement Agreement his lawyers had drafted.
Issue 22: If so, is knowledge that the Settlement Agreement had been procured by fraud to be attributed to Mr Leviev such as to preclude him from enforcing it?
- This issue does not arise.
Issue 23: Is the Settlement Agreement unenforceable and/or liable to be set aside on the grounds that it was procured by the fraud of General Kopelipa for which Mr Leviev is answerable?
- This issue also does not arise.
- For the reasons I have given, I find that the 2001 Agreement was indeed signed by Mr Gaydamak and Mr Leviev, and was a valid and enforceable agreement. But, the parties entered into a valid and binding Settlement Agreement which took effect on 6th August 2011, whereby each party released all claims against the other.
- Accordingly the claim will be dismissed. I will hear counsel on the question of costs and any appropriate ancillary orders.