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Boat of the Week: How an Iconic 171-Foot Superyacht Got New Life After Being Unused for a Decade
Commissioned by a russian oligarch, then acquired by a turkish owner, "db9" sat idle for years. then its us owner brought it back to life., howard walker, howard walker's most recent stories.
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It’s just a tad more powerful than the Aston Martin it’s named after. With a staggering 9,200-turbocharged horsepower, this 171-foot speed machine can reach a highly impressive 37 mph, two or three times faster than other yachts its size. Breakfast in Monaco, lunch in Porto Cervo and back in time for dinner? No problem.
Launched back in 2010 and christened DB9 after the classic V12-engined British sports car, it was the first of Palmer Johnson ’s iconic PJ 170 Sport Yacht range, and the only one built in England.
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Eleven years later, DB9 still spins heads from St. Tropez to St. Barts—two of its favorite ports of call—like few other superyachts. Those razor-edged lines are from designers Carlo Nuvolari and Dan Lenard of Venice-based Nuvolari Lenard.
The champagne-colored hull, red boot stripe and sculpted superstructure immediately identify DB9 , wherever it goes on either side of the Atlantic. Courtesy YPI
Today, DB9 is the pride and joy of American businessman and boat lover, John Rosatti. Maybe you’ve bought a new car from one of his many Plaza Auto Mall dealerships. Or fine-dined at his Vic & Angelo’s Italian eatery in South Florida. Or grabbed a burger at one of his successful BurgerFi joints.
Rosatti bought DB9 back in 2019 a year after selling his much-loved 214-foot Codecasa superyacht Double Down . Before that, he owned the 160-foot Christensen Nice ’n Easy and, before that, the 127-foot Crescent Take it Easy.
At the time, the yacht was languishing unloved in an Istanbul shipyard, a for-sale sign in its window and an €18 million asking price. Rosatti’s car dealer instincts weighed the pros and cons. The cons included pricy overhauls for the yacht’s entire mechanical and electronic systems, plus a re-spray of the hull. The single, but eventually deciding, pro: an iconic boat at a great price.
The 171-footer has three onboard swimming pools, not to mention a small navy of water toys. Courtesy YPI
Rosatti is currently off-the-grid aboard DB9 , cruising around the Italian island of Sardinia, so wasn’t available for comment. But Peter Thompson, managing director of Monaco-based Yachting Partners International, and Rosatti’s longtime friend and boat-buying advisor, gave Robb Report a history of the boat.
“ DB9 had pretty much been in mothballs her entire life,” he says. “Shortly after launch, she was hauled out of the water and parked on the hard. When we tracked her down in Istanbul years later, she had less than 1,200 hours on the engines.”
The Palmer Johnson was originally built for the Russian oligarch Sergei Pugachev. He was the founder of the MezhPrombank, and a close friend and advisor to Russian President Vladimir Putin. According to published reports, in 2011, a year after he took delivery of DB9 , Pugachev was accused by the Russian government of running off with a $1 billion bailout loan given to his bank. His considerable assets were reportedly seized, including DB9 , and he fled to England. He’s now living in exile in the South of France.
After sitting idle for years, the yacht went through a refit in 2019. Courtesy YPI
“A Turkish buyer bought the boat out of receivership in 2016, managed to get it to Istanbul and renamed it Aura ,” says Thompson. “But it just sat there and, as we know, boats like these hate not being used. When we found her in 2019, she needed work.”
After the purchase, the boat went into the Dunya Yachts yard in Istanbul for a comprehensive refit. All the systems were upgraded, those mighty MAN diesels were overhauled and the yacht was given a complete re-paint in that polarizing Champagne-with-red-bootstripe color scheme. And the original DB9 name was resurrected.
“Today she’s in absolutely pristine condition,” says Thompson. ”Inside and out, she looks brand new and still turns heads like no other boat I know.”
The interior also received a facelift. Courtesy YPI
Some of DB9’s coolest features include not one, but three pools, including a huge 26-foot saltwater pool on the foredeck that, when empty, holds the yacht’s RIB tender. Emptying it takes less than 10 minutes. For alfresco entertainment, the yacht comes with a state-of-the-art outdoor cinema on the sundeck. Belowdecks are five spacious staterooms for up to 12 guests, including a full-beam master.
According to Thompson, the “owner recently decided that he wants to replace DB9 with a larger yacht more suited to world-girding.” So, when the Rosattis are done cruising the Med this fall, it’ll be displayed at the Monaco Yacht Show in September, with a €25 million, or $29.4 million, asking price.
Maybe Rosatti should consider throwing in a champagne-colored Aston Martin DB9 to sweeten the deal.
Courtesy YPI
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'Putin's banker' who fell out with the Russian president and went on the run is spotted boarding a yacht in Kent
- Banker was once a trusted friend of the Russian president Vladimir Putin
- But he is wanted by Russian authorities over alleged £655million theft
- Court documents reveal he was spotted boarding a yacht in Kent in June
- He has now gone on the run in France, where he could be arrested
By Hannah Parry For Mailonline
Published: 13:20 EDT, 21 August 2015 | Updated: 03:52 EDT, 22 August 2015
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A banker who went on the run after falling out with Russian president has been spotted boarding a yacht in Kent.
Once one of Valadmir Putin 's closest friends, Sergey Pugachev fled to London in 2011 amidst accusations he had stolen more than £655 million from Russia.
The controversial oligarch's faces extradition by the Kremlin's prosecutors and his assets were last year frozen by a London court. But 'Putin's Banker' went on the run after he warned that he could be the next target of Moscow assassins.
Sergey Pugachev was once dubbed 'Putin's banker' but is now on the run over claims he stole millions
'He keeps receiving straightforward life threats against him and for his family,' said a spokesman explaining his disappearance abroad.'
Now new court records revealed this week show the Russian billionaire was sighted boarding the boat moored at a marina in Chatham, Kent.
Despite an order to stay in the UK under investigation, Pugachev boarded the MV Victoria on June 1 this year.
The finance tycoon was quickly ordered off the yacht by UK judiciary and refrained from boarding any other boats.
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But, defying the British courts, Pugachev fled to France where he is now living with his family.
Pugachev faces up to ten years in jail if he is convicted after being sent back to Moscow.
But he insists the claims made against him are false and are politically motivated.
The financier has lived in London since he was accused of embezzling millions into bank Mezhprom, which he co-founded.
Once a close friend of the Russian president, the pair's ambitions began to drift apart as Putin gained more and more power.
In 2014 the Kremlin was able to use UK courts to freeze the vast majority of Pugachev's $15 billion fortune and seize both his French and Russian passports.
The 52-year-old was left to live on £10,000-a-week allowed by the court which his partner, the glamorous former BBC presenter and socialite Alexandra Tolstoy, complained it was too hard to live.
Mr Pugachev and his wife Alexandra Tolstoy moved to London after relations with the Russian leader soured
Mr Pugachev, the former billionaire business partner of the Queen's nephew Viscount Linley, said: 'I can be called a poor man. I do not have money to support my family and my property, and this is more important than paying the lawyers.'
Russian government body - Deposit Insurance Agency (DIA) - is seeking to recoup a total of almost £2billion in alleged stolen assets from Mr Pugachev who dismisses the claim as political intimidation.
Once dubbed the Kremlin's 'cashier', he denies siphoning money from Mezhprombank, arguing he was no long associated with the bank.
He is instead demanding £9.6 billion from the Russian government as compensation for the alleged expropriation of his huge business empire, action he will take in France.
Mr Pugachev claims that in London he and his family have been 'watched and followed'.
Mr Pugachev, the former billionaire business partner of the Queen's nephew Viscount Linley, is pictured with Ms Tolstoy
'The anti-terror department of Scotland Yard SO15 has found in the cars of Sergei Pugachev and his family members, supposedly, explosive bombs,' according to his representative.
His spokesman Dmitry Morochenko said Pugachev 'has no doubt that these events are linked to the fact that he sued Russia in the International Tribunal for the expropriation of his assets and demanded a compensation of $15 billion.'
Earlier this year Pugachev was ordered to surrender his passports - including one from France - by a London judge who said he was barred form leaving the country.
It has emerged that the DIA's lawyers Hogan Lovells raided two Pugachev homes in London and a luxury yacht, taking away computer equipment. An email from him was sourced to Paris, it is claimed.
Pugachev is now likely to face an arrest bid in France on an Interpol alert.
He recently claimed that he was one of a small group of kingmakers who brought Putin to the presidency when Boris Yeltsin quit in 1999.
He had introduced the former KGB spy to Yeltsin's daughter Tatyana, the key meeting in him becoming Yeltsin's successor, he said.
He also accused Putin of going back on a promise at a secret meeting between the two men in Amsterdam in 2013 to resolve Pugachev's dispute.
'About a year and a half ago Putin and I met in Amsterdam,' Pugachev told Russian opposition channel TV Rain. 'He said: 'I'll definitely work on it, write me the details, I'll sort it out'.'
Instead, a criminal case was launched against him in Russia.
Before going on the run, he said he was 'afraid' of being extradited to Russia.
Claiming explosive devices had been detected on his car, he said: 'Those responsible are spiralling backwards, using KGB-style methods that were better left in the past.
'If this is what happens to me outside of Russia, one can only imagine what could happen in Russia.
'These intimidation tactics further support the fabricated nature of the allegations against me.'
Mr Pugachev was last year made the subject of a strict High Court order which capped his and his partner, Alexandra Tolstoy's, spending at £10,000-a-week.
The freeze prevented the couple - who have three children - from selling their two London homes or their villa in the south of France or doing anything to diminish their value.
Ms Tolstoy complained the order prevented them from maintaining their historic chateau in the hills overlooking Nice which is set in 15 acres and whose neighbours include Elton John.
She said: 'The budget for that house alone is £1.2 million a year (£23,000 a week), hence the legal appeal. It's like maintaining a stately home.'
She added: 'Apart from the five of us, we have live-in nannies and a live-in Bulgarian doctor, because Sergei has a heart problem.'
Share or comment on this article: 'Vladimir Putin’s banker’ Sergey Pugachev is spotted boarding a yacht in Kent
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Tycoon on the Run Hopes Russia’s Reach Stops at the French Riviera’s Edge
By Andrew Higgins
- May 20, 2016
NICE, France — When his bodyguards found a small brown package with protruding wires taped to the undercarriage of his Rolls-Royce in London, Sergei Pugachev decided it was time to take cover. Already on the run from Russia, he fled Britain last year for what he now hopes will be a less stressful refuge on the French Riviera.
“London is a dangerous place,” said the 53-year-old Russian tycoon and bitterly estranged former friend of the Russian president, Vladimir V. Putin, noting that at least three Russian exiles at odds with the Kremlin had died under mysterious circumstances in or near the British capital over the last decade.
“I felt the noose tightening,” Mr. Pugachev added. “Here I can live in peace, and the weather is better, too,” he said, standing on a tiger-skin rug in the study of his Nice villa overlooking the Mediterranean.
His departure, however, did not go down well with the High Court in London, which, at the behest of an arm of Russia’s Central Bank, had earlier ordered that the magnate — a French citizen since 2009 — surrender his passports, disclose all his assets and stay put in Britain pending the outcome of a lengthy legal wrangle over money that Russia says he stole .
Unmoved by Mr. Pugachev’s claims that his life could be in danger, a High Court judge, Vivien Rose, in February sentenced him in absentia to two years in prison for contempt of court and ordered him to pay 375,000 pounds, or about $548,000, in costs.
As it turns out, the device hidden under his Rolls-Royce and similarly mysterious objects found under three other family cars contained no explosives or poison but were only tracking devices put there by a private British security company acting for the Russians.
THE contempt of court verdict was the latest in a long series of setbacks for a man who just a few years ago ranked as one of Russia’s richest, best connected and most secretive tycoons: a friend of Mr. Putin; a patron of the Russian Orthodox Church; and the head of a business empire that included a bank, two shipyards making vessels for the Russian Navy, a huge coal deposit in Siberia and a prestige real estate project right on Red Square.
Unlike Boris A. Berezovsky, a self-exiled Russian tycoon who was found dead at his home west of London in 2013; Alexander V. Litvinenko , a former K.G.B. officer who died in London in 2006 after being poisoned by a rare radioactive isotope; and Mikhail B. Khodorkovsky , a former oil magnate who spent a decade in a Russian jail before fleeing to Switzerland and then London, Mr. Pugachev has not used his time abroad to dabble in Russian politics or sought to rally opposition to Mr. Putin.
Nor has he joined forces with Kremlin foes, as did Alexander Perepilichnyy , an émigré Russian banker, who, after providing information about Russian corruption to the London-based financier Bill Browder , unexpectedly dropped dead while jogging near his English mansion in 2012. Traces of a rare poison were later found in his stomach.
All the same, Mr. Pugachev has found it difficult to extricate himself from his Russian past and what he described as mafialike codes of conduct that are expected to bind current and former members of the Kremlin inner circle. His many critics in Russia view him as a crook who simply tried to grab too much money for himself, but Mr. Pugachev insists he fell prey to a system that rewards absolute loyalty and punishes those who break ranks by asserting their own business interests against the demands of the state.
At one point, he was as deep into that inner circle as anyone. His family photograph albums contain pictures of his two sons, now adults, playing as teenagers with Mr. Putin’s daughters in the Kremlin and at Mr. Pugachev’s country house outside Moscow. Other photographs record long-ago dinner parties attended by powerful Kremlin insiders like Igor Sechin, a former K.G.B. officer whose portfolio now includes the United Shipbuilding Corporation, a state-owned ship maker that now controls Mr. Pugachev’s ship yards.
The famous photographs of a shirtless Mr. Putin fishing, hunting and riding horses were taken at Mr. Pugachev’s estate in the Siberian region of Tuva, which the businessman represented from 2001 to 2011 as an elected senator in the upper house of Parliament.
LIKE many of Russia’s wealthy elite, Mr. Pugachev got his start amid the chaos of the 1990s, when he set up a bank, Mezhprombank, and used it to finance other business ventures and cement relations with state and church hierarchies. The son of a Soviet military officer, he now has five children, two sons by a Russian wife, from whom he is now divorced, and three more children with Alexandra Tolstoy, an English equestrian, socialite and distant relative of the Russian novelist Leo Tolstoy. She now lives mostly in London, where their three young children attend a French school.
The couple used to appear regularly in British and Russian gossip columns, particularly when both were still married to other people. The British news media named him “the Kremlin’s banker,” a role he denies having played. Though he says he is no longer a billionaire and deeply out of favor in Moscow, Mr. Pugachev is far from down-and-out in Nice, where he keeps a full-time staff of cooks, servants and bodyguards.
A 2014 court order issued in London at Russia’s request froze his assets worldwide but still granted him weekly living expenses of £50,000 and left him with a string of properties, including homes in Chelsea, one of London’s most expensive areas, and Nice, as well as a yacht with an onboard swimming pool moored in nearby Monaco.
But perhaps his most valuable remaining asset is a cache of documents and other evidence assembled in preparation for a showdown with Russia in an arbitration process in The Hague. There, he hopes to demonstrate that Russia violated an investment treaty with France by expropriating properties he owned worth at least $12 billion, and to win compensation for his alleged losses.
Among his documents are the minutes of a 2011 inter-ministerial meeting in Moscow that laid out a plan to force Mr. Pugachev to hand over control of his St. Petersburg shipyards to Mr. Sechin’s state-owned United Shipbuilding Corporation. The meeting recommended, among other steps, that the Federal Security Service, the post-Soviet version of the K.G.B. known as the F.S.B., “initiate checks” and find “signs of crimes” so as to force a transfer of ownership.
The entry of the F.S.B. into what had previously been normal business negotiations, Mr. Pugachev said, showed that “discussions moved very quickly onto a noncommercial track.” He said he was always ready to give up the shipyards, but only if the state paid a proper market price. It paid nothing in the end, seizing the property after declaring his bank, which had pledged the shipyards as collateral for loans, bankrupt.
Like most of the Russian feuds over money that have ended up in British and other European courts over the years, Mr. Pugachev’s struggle has so far yielded millions of dollars in income for lawyers but little clarity. Bewildered judges have been left struggling to reconcile flamboyantly contradictory accounts of the truth.
THE British judge who sentenced Mr. Pugachev to jail over his flight to France, Ms. Rose, questioned the businessman’s trustworthiness but also acknowledged that he had “faced very considerable pressure.” Referring to “the realities of political power in the Russian Federation,” she noted that Mr. Pugachev’s evasiveness was in part understandable.
“I hope this will be over by end of the year. I am confident of a positive outcome,” said Mr. Pugachev of the arbitration process in The Hague. He added that he does not “really need” the billions of dollars he is seeking in compensation but does want vindication against a Russian system that he helped put in place by promoting Mr. Putin as a successor to President Boris N. Yeltsin.
“I took part in bringing him to power,” he said, recalling how at the end of Mr. Yeltsin’s tenure in 1999 he had sung Mr. Putin’s praises to Mr. Yeltsin’s daughter, Tatyana Dyachenko, and her partner Valentin Yumashev, an influential Kremlin insider.
“I now see this was a mistake,” he added.
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Is it a sham? Ask Mr Pugachev
The decision in Mezhprom v Pugachev, which was handed down on 11 October 2017, has potentially wide-ranging ramifications for trustees and the private client industry more generally.
Although the judgment is a first instance decision and may be appealed, the approach taken by the judge in this case to the analysis of powers conferred on protectors is an important development.
In particular, the decision makes it clear that, as a matter of construction, the same powers may be considered personal in the hands of one protector but become fiduciary in the hands of another protector. The case may also be said to pave a smoother path for claimants to challenge the validity of a trust on the basis that the settlor retains so much control that the true beneficial ownership of assets has not transferred to the trustees, even in circumstances where a sham cannot be proven.
Brief background
Sergei Pugachev is a Russian entrepreneur, and the founder of what was once Russia’s leading private bank (Mezhprom). During the global financial crisis, Mezhprom received emergency assistance from the Russian Central Bank. The claimants (including the Russian deposit insurance agency (DIA), an arm of the Russian State) asserted that a significant proportion of the funding provided was misappropriated by Mr Pugachev, and could be traced to trusts settled by him. Mr Pugachev claimed that the Russian State’s pursuit of him was politically motivated, and resisted the claims.
The claimants brought three alternative claims:
- the trusts were “illusory” and Mr Pugachev had not therefore successfully divested himself of beneficial ownership of the assets (in fact the judge did not favour the term “illusory” and dealt with this claim as a matter of construction); or
- the trusts were shams and Mr Pugachev remained the beneficial owner of the assets; or
- in the event that the first two claims failed and Mr Pugachev was not the beneficial owner of the assets, s.423 of Insolvency Act 1986 (transactions defrauding creditors) should be applied to set aside their transfer to the trustees, thereby returning the assets to Mr Pugachev’s estate for the benefit of his creditors.
The judge found for the claimants in respect of all three claims. The decision in respect of the illusory trusts / construction claim is undoubtedly the most interesting element of the decision, but the court also provided some useful clarification of the circumstances in which a sham may be established.
Although all of the trusts were declared under self-standing trust instruments, the judge found that they were identical in all substantive respects, and any differences (for example relating to a power held by the protector of the trust owning an indirect interest in a London property to direct the sale of that property) did not affect the analysis. He further found that, although the majority of the assets had notionally been settled on trust by Mr Pugachev’s son, Viktor, Mr Pugachev should be treated as the settlor of the trusts as the assets emanated from him and Viktor was in effect acting as Mr Pugachev’s nominee.
The trusts, which were expressed to be discretionary, held assets largely for the benefit of Mr Pugachev, his partner and their minor children.
The trusts were governed by New Zealand law and set up with the assistance of a New Zealand solicitor, Mr Patterson. Mr Patterson and his wife were directors of the companies that acted as trustees. These were private trust companies and, before the trial in this action, the trustees had been removed with the agreement of the New Zealand court. The approach that had been taken by the New Zealand court suggested that it considered the trusts to be neither illusory nor shams, but the judge in England dealt with this inconsistency with his own findings by pointing out that the facts given to the New Zealand court were deficient (and in some cases wrong).
Mr Pugachev was the protector of each of the trusts, with Viktor named as successor protector. The trust deeds provided that Mr Pugachev’s protectorship would automatically terminate in circumstances where he was “under a disability”, a term which included when Mr Pugachev was subject to the claims of creditors. The protector’s powers were unusually extensive (although not uniquely so) and included powers to:
- veto the distribution of income or capital from the trusts;
- veto the investment of the trust funds;
- veto the removal of beneficiaries;
- veto any variation to the trust deeds;
- veto the release or revocation of any power granted to the trustees;
- veto the early termination of the trust period;
- appoint and remove trustees, with or without cause;
- add further beneficiaries; and
- veto an amendment to the trusts by the trustees.
In light of these extensive powers it is difficult to see how the trustees could act without the consent of the protector on any matter likely to affect the trusts in an important way. That being said, save in the case of the powers to appoint and remove trustees and to add further beneficiaries, the powers were principally negative. The trustees initiate, the protector approves – that is the theory.
The “illusory” trust claim
A critical issue analysed in detail in relation to this claim was whether or not the powers held by the protector were fiduciary or personal. If fiduciary, Mr Pugachev would be under a legal obligation to exercise them in the best interests of the beneficial class as a whole and not for his own selfish purposes. As such, in settling the trusts, Mr Pugachev may be said to have divested himself successfully of his beneficial ownership in the trust assets.
The judge found that, on the basis of the facts of this particular case, the powers were personal and not fiduciary. As such, Mr Pugachev was not bound to consider the interests of other beneficiaries in exercising his powers and he could act selfishly in his own interests. Given the extensive nature of his powers as protector, he could in practice block any action he did not like and remove any trustee who refused to do his bidding. As he was also a beneficiary, he could therefore ensure that the trust assets were held for his benefit alone.
Under those circumstances the judge held that Mr Pugachev had not divested himself of beneficial ownership of the assets when settling the trusts. The proper construction of each trust instrument was therefore that the assets were, in effect, held by the trustees on bare trusts for Mr Pugachev, offering him and the assets no protection from his creditors.
In classifying the protector’s powers, the extensive and wide-ranging nature of the powers conferred on the protector were clearly highly relevant. However, of equal relevance was the fact that Mr Pugachev was not only the settlor, but also the protector and a beneficiary of the trusts. Mr Pugachev, as settlor, had vested in himself the protector powers and, as a beneficiary, he could be expected to act in his own best interests in exercising those powers.
The decision makes it clear that whether or not a power is personal or fiduciary is not simply a question of the nature of the power or of the breadth of the powers conferred. In theory then, the same powers may be considered fiduciary in one case and personal in another, or may be considered personal in the hands of one (self-interested) protector but become fiduciary in the hands of another protector, who has no beneficial interest in the trust assets.
In reaching his decision, the judge noted that he considered the term “illusory” to be somewhat misleading and unhelpful. It was clear that Mr Pugachev wanted to create a trust and he did, in fact, create a trust; he just did not succeed in creating it on what, on the face of it, appeared to be the express terms of the trust deeds. It has been rare for trusts to be construed as illusory by the courts. There have been findings in certain cases as to illusory trusts, but in circumstances where the settlor was also the trustee.
In this case the judge, marking somewhat of a departure from past authorities, was clear that his conclusion on this claim was not the same thing as a finding of sham: In his view, on a true construction of the trust deeds, the powers conferred on Mr Pugachev as protector were personal and the trusts (albeit not shams) did not successfully divest Mr Pugachev of the beneficial ownership he had in the assets transferred into them.
The "sham" claim
In order for a trust deed to be a sham, it must be created with an intention to mislead. The judge did not consider the trust deeds in this case to be shams because they fulfilled Mr Pugachev’s true intention as settlor not to divest himself of control of the assets. There was therefore no difference between the trust documentation and Mr Pugachev’s intentions.
However the judge stated that, if he was wrong as to the construction claim and the proper approach to construction of the trust deeds was that the protector’s powers were fiduciary (with that, in turn, leading to a conclusion that Mr Pugachev did divest himself of control of the assets), then the trust deeds were alternatively a sham. This is because, in this scenario, there would have been a difference between the trust documentation (which successfully divested control) and Mr Pugachev’s intentions (which were to keep it).
A potential difficulty the claimants faced in the sham claim was demonstrating that the trustees had an intention common with Mr Pugachev to mislead (since in order for a sham to exist, both parties to a deed must intend to create a sham). In considering what constituted a common intention, the court held, applying family cases such as A v A , that reckless indifference as to what is being agreed is enough to constitute common intention. On this basis he found that Mr Pugachev intended to use the trust deeds to create a false impression as to his true intentions and the trustees went along with that intention recklessly and thus could be said to have a common intention.
This case may well be one which in time is seen to be restricted to its own facts, which are on any view quite unusual and fairly stark. In particular, this case was one of many involving Mr Pugachev and the Russian State in various jurisdictions. In other such proceedings, Mr Pugachev had been handed down a sentence of 2 years’ imprisonment for contempt of court, a sentence he had not served by virtue of being resident outside of the jurisdiction.
Nonetheless, the approach to the construction of the trust instruments and the sham doctrine in this instance is interesting and will carry lessons for the future. Perhaps the most important lesson is that settlors must be alive to the risk that the retention of excessive control over a trust arrangement (whether through the use of a protectorship regime, which on its face appears to create a fiduciary office, or in some other way) may lead to successful claims by third parties that the settlor has never successfully alienated the relevant assets.
Such risk is not limited to the finding of a sham: A third party may now be able to attack a trust on the basis that, on an objective interpretation of the trust deed, the settlor retains the beneficial interest (and without needing to prove a common intention to deceive). Such third parties could include the tax authorities of a relevant jurisdiction, meaning that the trust loses its advantages from a fiscal perspective. That point may be critical in circumstances where the new post-6 April 2017 trust protections regime for non-domiciliaries who are deemed domiciled in the UK is in place.
An interesting question will be the interaction of this decision with the reserved powers laws which many non-UK jurisdictions have introduced into their trust legislation. These explicitly permit the reservation of extensive powers to the settlor, and it is unclear whether an English court would respect those powers in a case similar to this. The fact that the powers were permitted under local law was not the issue in this case. However, the interplay between local law, and the attitude of an English court, particularly to reserved powers, remains an open question. The safest approach must be to limit reserved powers where possible.
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Sebastian Prichard Jones
Charles Lloyd
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News | London
Ex-wife of ‘Putin’s banker’ Sergei Pugachev loses bid for share of his £9m Chelsea home
The ex-wife of a Russian oligarch once dubbed Vladimir Putin ’s favourite banker has lost her bid to win a share of his former £9 million Chelsea home.
Galina Arkhipova had claimed that she was entitled to some of the proceeds from the pending sale of the property in Glebe Place where her former spouse Sergei Pugachev lived with his mistress.
The home is on sale after an earlier court ruling that it and other of Mr Pugachev’s assets, including another London mansion worth nearly £10 million, should be returned to state creditors in Russia who had accused him of buying them with plundered money.
Ms Arkhipova had mounted an attempt to claim a share in the Chelsea home on the grounds that Mr Pugachev had “withheld material information” about their “matrimonial assets”, including Glebe Place, at the time of their divorce in 2014.
Lawyers representing Russia’s state-owned Deposit Insurance Agency, which has accused Mr Pugachev of stealing £655 million from a bank bailout, had already branded that as a device to delay the return of stolen assets and have now succeeded in having Ms Arkhipova’s claim dismissed after a hearing at London’s Rolls Building before judge Chief Master Marsh.
He ruled that Ms Arkhipova’s claim should be thrown out because of her “casual approach” to complying with a court order requiring her to make full disclosure of her bank statements and access to legal documents, as well as her “unexplained failure” to attend the latest hearing or instruct lawyers.
His judgment came after barrister Tim Akkouh, representing the Deposit Insurance Agency, told the court that Ms Arkhipova had provided statements from only one bank account despite being ordered to provide statements covering all her transactions over 20 years.
Mr Akkouh said the details provided by Ms Arkhipova gave no indication of how she had funded her life in Russia, where she lives, or how she paid for 10 trips to the Côte d’Azur in France. He said this made it “inherently incredible” that she had provided full details of her bank accounts, as ordered by the court.
He said she had also failed to comply with the court’s demand relating to obtaining legal documents from her former Russian lawyers. Chief Master Marsh accepted his argument.
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The new developments are the latest in a saga that began after Mr Pugachev, who was once dubbed “Putin’s banker”, was sued by the Deposit Insurance Agency over claims that he stole a fortune from a bank he founded after it was bailed out in the financial crisis.
A freezing order covering his assets was issued with further High Court litigation finding that Mr Pugachev had used sham trusts to conceal his ownership of about £100 million of wealth.
Mr Pugachev, who lived in London before the litigation began, has since fled to the south of France. He has claimed that he is a target for the Kremlin, which he says is persecuting him because of his knowledge of secrets, and that the legal allegations against him are absurd.
Mr Pugachev’s former lover Alexandra Tolstoy, who has worked as a London banker, has said her life has been ruined by the legal action which has forced her to leave the Glebe Place home.
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