Sergei Viktorovich Pugachev, who is currently living in France to evade a UK arrest warrant, established the trusts to hold UK, French and Swiss assets.
The wealth represents the remainder of a fortune he had amassed from banking, mining and property in post-Soviet era Russia. He subsequently lost large sums of money during and after the 2008 financial crisis.
His banking licence was later revoked and much of the wealth and assets still held by Pugachev were reportedly seized by government “rivals”. He fled Russia in 2011.
Freezing worldwide assets
The creditors pursuing Pugachev are the liquidators of his collapsed bank MezhProm, who have been seeking to freeze his worldwide assets, including those held in the five New Zealand trusts. Pugachev is the nominated ‘protector’ of the trusts, a term used in New Zealand to mean someone who has been granted certain powers over the trusts, though is not a trustee.
In 2014 the England and Wales High Court granted a worldwide freezing of Pugachev’s assets, but this has not been complied with and his creditors continue to seek to access to the assets held in the New Zealand trusts. He has since been sentenced to a two-year jail term for contempt of court in the UK for not his non-compliance with various courts orders and of lying to the court.
Trusts are a “sham”
In the latest High Court ruling – made this month – Pugachev’s creditors were able to demonstrate that the trusts are a “sham” because they remain under the former banker’s personal control as “protector”, a claim that the High Court judge making the ruling, Sir Colin Birss, said he was satisfied had been established.
The Society of Trust and Estate Planners (STEP) said: “The judgment sets important new rules to determine ‘shams’ and the extent to which a court can decide the substance of a trust over its form.”
