In order to file further claims related to the fact of damage caused by the theft of Togliattiazot profits through a fraudulent scheme involving the Swiss offshore company Nitrochem Distribution AG, URALCHEM JSC has initiated a disclosure procedure in the US courts under Section 1782 of Title 28 of the US Code, which allows to obtain evidence in support of lawsuits outside the United States.
On November 22, 2019, the Connecticut District Court found URALCHEM's arguments justified and upheld the application for receipt of information on Nitrochem’s Distribution AG historical transactions through UBS Stamford. The court further granted the disclosure motion from two related entities – UBS Financial Services and UBS Group AG. The information obtained from UBS has led to the identification of a number of highly suspicious money transfers between Nitrochem Distribution AG and foreign offshore companies with no apparent links to the chemical industry.
Since the transfers were carried out through six banks in New York, URALCHEM JSC also requested disclosure of information about those transactions from the New York banks. The Southern District Court of New York granted this motion on May 18, 2020.
The information disclosed by UBS shows that only in 2009-2013 Nitrochem Distribution AG (a company which, allegedly, according to the defense in the case of fraud in Russia, is not affiliated in any way with Togliattiazot and the Makhlais family) transferred large sums of money (more than $ 12 million) through a New Jersey bank to Lawton Lane Chemical associated with S. Makhlai, one of the persons controlling Togliattiazot. Lawton Lane Chemical does not disclose the grounds for receiving the funds. In the opinion of URALCHEM, JSC, these circumstances may indicate that Nitrochem Distribution AG shared the profit (obtained from the resale of Togliattiazot products) with persons controlling Togliattiazot, to the detriment of Togliattiazot and its minority shareholders.
In order to identify the actual beneficiaries of these payments, URALCHEM, JSC filed a corresponding request to disclose information on transactions with Lawton Lane Chemical accounts that have been completed to date. However, the Justice of the Peace in New Jersey denied the disclosure, considering that the requested evidence was not necessary for the Russian proceedings. At the same time, the court made its ruling through a simplified procedure, refusing to hold hearings, which made it impossible for our company to rebut Lawton Lane Chemical's objections in an adversarial process. URALCHEM, JSC believes that the Justice of the Peace made a number of factual errors in his decision, went beyond his discretion and incorrectly applied the norms of established practice for applications under Section 1782. An appeal has been filed and will be considered in the near future.
The information collected as part of the disclosure procedure in the United States is additional evidence that the persons controlling Togliattiazot used to divert profit to the detriment of the company and its minority shareholders, and it can be used in further legal proceedings for reimbursement of damage.