“Patriotism” by Vitaly Orlov: Russian fish - English life
The head of Norebo group, Vitaly Orlov, again puts his company at risk. His conflict with former partner Alexander Tugushev, who has claims for one-third of the company, has not only reached the international level but also has managed to become engaged in criminal cases. Now, not only Norebo faces serious losses, but its related structures as well, in particular, its largest lender -Sberbank.
Having connections in the Russian courts, Vitaly Orlov, the owner of Norebo - the largest fishing holding company, decided to use the usual methods. At the end of May, Alexander Tugushev submitted an application to the Investigation Committee demanding to initiate a criminal case, on the fact that Orlov was trying to deceive the Arbitration Court of the Murmansk region. Tugushev considers himself a victim to falsification of evidence (Art. 303 of the Criminal Code of the Russian Federation), as well as to the activities of the criminal community, allegedly headed by Orlov (Art. 210 of the Criminal Code of the Russian Federation).
As follows from the documents of the High Court of London, Tugushev claims he was a co-founder of Norebo, together with Orlov and his Swedish business partner, Magnus Roth. However, as a result of the conspiracy, Orlov, Roth, and another employee of the company, Andrei Petrik, he was deprived of his share – 1/3 of the company. He estimates the total damage at $ 350 million and now demands a compensation.
Orlov has a different point of view. According to him, Tugushev sold the shares of Almor of the Atlantic (a precursor company of Norebo) in 2003, and started a civil service. A year later, Tugushev was arrested on charges of fraud and was sentenced to a six-year prison term. After being released in 2009, he wanted to re-enter the business, which, according to Orlov, made a big leap forward during this time and Tugushev has nothing to do with this.
However, after Tugushev turned to English justice last summer, Orlov's assets in the amount of $ 350 million (the total value of the company is estimated at $ 1.5 billion) were frozen.
In March this year, the High Court of England and Wales concluded that it was the most appropriate place to consider this case, and in April, Orlov was denied the right to appeal, confirming that the case falls under the jurisdiction of England.
However, as Kommersant found out, on May 20, 2019, Orlov’s statement about objections to the decision of a foreign court appeared in the Arbitration Court of the Murmansk Region. Its consideration is scheduled for June 17th. Thus, Orlov is trying to transfer the dispute to Russia, where he has more chances to win.
Arbitration Court of Moscow Region
In his statement to the Investigations Department of the Investigative Committee for the Murmansk Region, Tugushev reports on a substitution made by Orlov’s lawyers, attaching an Order of the English Court, which considered the possibility of appeal, and a notarized translation in which this document was called a “Decision”. Tugushev believes that such a translation was made intentionally, so that you can file an objection to the “Order”, which is not the “Decision”. At the same time, according to Tugushev, Orlov is silent about the fact that the issue of jurisdiction was resolved by an English Court in March 2019, when the English Court described on dozens of pages why it considers him a UK resident and accepts its jurisdiction over this dispute.
Judge Carr made a decision on the jurisdiction of the dispute, finding the arguments submitted by Tugushev that Orlov lives in England justified. In addition, consideration of the dispute in the English jurisdiction will provide an opportunity to summon Roth to court.
Orlov himself claimed that he lived in Murmansk, and he rarely came to England, for business issues only.
To make a fair decision, the court needed to study the biography of the Head of Norebo.
So, the materials of the high court say, Orlov was born in Murmansk and left Russia in 1996, having moved to work in the Scandsea office in Norway with his wife, Tatiana Orlova (married in 1988) and children, Nikita, born in 1989 and Veniamin, born in 1995. The couple had another two boys there - in 2002 and 2005. All of them received Norwegian citizenship.
At the end of 2005, Orlov and his family moved to England, where they purchased a house in Weybridge (called Waldenhurst).
In 2007, Orlovs divorced, and the wife got the house in Waldenhurst.
According to Orlov, in the period from 2007 to 2014, he spent most of his time travelling and he did not have a permanent place of residence, although he maintained a “limited but significant connection” with England. Most often, he spent time in Hong Kong (he was a tax resident there) until in 2009 he bought an apartment in Fulham to see his sons more often. Orlov says that he planned to sell this apartment, but later left it to one of his sons.
In 2012, he bought an apartment in the newly built luxury skyscraper on the bank of the Thames called St George Wharf. He bought out a whole 39th floor with a panoramic view of the city for 15 million pounds.
St George Wharf Tower
Later, Orlov told that, in spite of the fact that in July 2014 he and his new civil wife - a former nanny of his children - Larisa Shumova decided to move to Russia, he nevertheless decided to save this apartment, so he could stay there during his visits to London.
At the same time, Orlov insists that his main place of residence is Murmansk, where he has a high-rise apartment on Burkova Street (bought in 2009) and a summer cottage outside the town (bought in 2016). He says that he has been running his social, personal, cultural and family life in Russia since 2014. Shumova also lives there, although accompanies him during his foreign trips.
To challenge this statement, Alexander Tugushev hired a detective who talked with a concierge in Murmansk, visited Orlov’s dacha, and found out that the head of Norebo and his wife spend 1-2 days a month there.
However, even though for the whole 2017, Vitaly Orlov has spent only 51 days in the UK, and for the first seven months of 2018 (at the time of the court decision) - 22 days, the judge found that the main thing was not the time he spent there, but location of his life interests.
For example, most of Orlov’s real estate are located in England, which are more expensive and bigger than all his other possessions. In addition to Russia (where he owns an apartment and a summer cottage in Murmansk, as well as an apartment in St. Petersburg) and England, he also has two villas worth € 3 million each in the Canary Islands.
Orlov’s four children still live in England, as well as his ex-wife (although this is not directly related to this case). His eldest son Nikita (29 years old) lives in Maidenhead and works in the English branch of Norebo; Benjamin (23 years old) currently lives in Fulham's apartment; two younger boys live with their mother and go to school in England.
It has also been established that during his visit to the UK, Vitaly Orlov did not go to his office, but spent time with his family, as visits mainly occurred on weekends and on children's birthdays. Schedule of his visits shows that the months when he does not come to London are those when his younger sons could travel with him, for example, during school holidays.
Shumova accompanied Orlov almost every time he visited England. At the same time, in November 2015 (that is, after they allegedly moved to Russia), she received an Indefinite Leave to Remain in the UK.
The judge noted that the residence permit allows living in the UK, and not a periodic visit, so the behavior of Orlov’s civil wife can be considered as a violation of the rules for her stay in the country. Thus, the court found the defendant guilty, which, according to experts, could lead to the initiation of a separate criminal proceeding over providing false information to the court and the British authorities.
Despite the fact that Orlov insists that corporate disputes over Russian legal entities are within the exclusive competence of domestic arbitration courts, Judge Carr thinks otherwise. The Norebo Group is a multinational business associated with different countries: Norway, Russia, Hong Kong and England, the case covers the judge's words. There are Russian investments in the business, but a joint venture agreement has been concluded in Norway – the Ocean Trawlers is registered there, and the other structure of Norebo, Three Towns Capital Limited (TTC), is registered in Hong Kong. Despite the fact that Russian fishing companies have been transferred to the Norebo, part of the business is still recorded on TTC. In addition, Tugushev received dividends from Hong Kong companies, and the European division of Norebo is located in the English city of Maidenhead, the judge states.
Norebo Europe Limited шт Maidenhead
According to experts, Orlov has practically no chances to appeal against the decision on jurisdiction, since that kind of judicial acts are almost never canceled in England.
In turn, Orlov, who was unable to influence UK justice in any way, turned to standard methods. We have already mentioned them before, for example, a fictitious lawsuit - the Koptevsky District Court of the city of Moscow faces the trial, in which the interests of Tugushev were represented by a lawyer unfamiliar to him without his knowledge and under a fake power of attorney. A similar scheme was later implemented in the Loukhovsky District Court of the Republic of Karelia. As a result of fake evidence, Tugushev was accused of threatening Orlov, so he even spent several months under house arrest. So that time, the Russian law enforcement system was implemented against Tugushev.
In January 2019, the Orlov’s defense received materials over the initiation of a criminal case in Murmansk, in which Tugushev is accused of embezzling 40 million rubles ($617.400). According to lawyers, this circumstance could relief Orlov in creating a “critical quotient” to the position of his opponent in the UK court.
Alexander Sychev, the co-owner of the Voskhod LLC specializing in the fishing industry in Murmansk, appealed to the regional Ministry of Internal Affairs with a statement to launch a criminal case against Tugushev under part 4 of Art. 159 of the Criminal Code (Swindling on an especially large scale). According to Kommersant, in 2017 Sychev agreed with Tugushev on a joint business for the harvesting of shrimp in the Barents Sea. The joint project required about 40 million rubles for the purchase and repair of a vessel capable of extracting about 1.5 thousand tons of shrimp per year. It follows that the applicant transferred 10 million rubles to Tugushev and $100 thousand instead of 50% in Voskhod. The other share remained with the company's general director, Andrey Martovitsky, who actually worked for Tugushev. According to the agreement, Tugushev had to transfer money to the account of Voskhod, but did not do it. In November 2018, a criminal case was initiated by the Ministry of Internal Affairs for Murmansk.
Norebo Hong Kong Limited in Hong Kong
Partner of Rustam Kurmaev and Partners Dmitry Gorbunov believes that the documents on the criminal case are intended to form a court conviction in "Mr. Tugushev's inclination towards regular unlawful conduct." But, the lawyer emphasizes, the court may require more substantial evidence: there are no grounds for the conviction of the businessman.
Tugushev denies all the accusations and considers this part as the intent of Orlov and his associates to steal the Norebo group shares. Moreover, according to Tugushev, Orlov has already spent £4 million "on an unsuccessful attempt to withdraw the case from the UK" and "continues to use backstage tactics."
Orlov relies on the fact that the location of the dispute in the UK creates a risk to the security of the country's natural resources demanding to transfer the consideration of the case to Russia.
In his objection, the businessman notes that the Norebo fishing business, being the largest in Russia, "is of strategic importance for the defense of the country" and the decision of the British court to consider the case creates risks to the security of the state and is contrary to the state policy of the Russian Federation."
It is worth noting that 60% of the holding’s products are exported. These 60% are expensive products with a high degree of processing, while cheap fish is sold in Russia. That is, in terms of value, the share of export revenues will be more than 60%. According to customs statistics for 2013-2017, foreign trading companies Norebo Europe and Norebo Hong Kong buy almost 80% of all products that the Russian Norebo sends abroad. This figure reaches 95% for cod and haddock, which is mainly shipped to Europe,
Since 2017, Norebo has been selling its products on the domestic market under its own three trademarks: Borealis, Glacialis and Ocean Spirit. However, all of them are not even among the ten largest Russian sellers of fish and seafood.
However, the most important thing is that even in the event of his victory in Murmansk, the decision of the London court will remain valid outside of Russia. As Judge Carr correctly notes, Norebo is an international business and it’s easy to get to its assets. So, the UK court may consider a parallel investigation of abuse and apply additional sanctions.
So, according to experts, Orlov took an unjustifiably risky step, which could lead not only to the loss of Western assets, but also Orlov’s recognition as a fraudster by the UK court. Moreover, he had already been convicted of concealing a part of the assets, which is a serious offense for UK justice.
That accident can also have a negative impact on Norebo counterparties - in particular, on its main creditor, Sberbank. The tie which Orlov has been keeping at least since 2007 through his man is with bank vice-president Alexander Bazarov.
By the way, Norebo was reorganized while Tugushev was in the colony. The Hong Kong TTC was to become the best-in-class, however, five Russian holding companies were eventually created due to a change in Russian legislation regarding foreign ownership of fish assets in Russia. In the same year 2007, Orlov divorced his wife.
It is possible that Bazarov’s motivation comes from not only from considerations of corporate expediency. According to reports, Bazarov is the godfather of one of the children of Vitaly Orlov (there is also a version that Orlov’s wife was the godmother of one of Bazarov’s daughters). According to Delovoy Petersburg, one of the sons of a businessman, Veniamin Orlov, is the godson of Alexander Tugushev. So, Orlov binds families too. However, as the Tugushev's story shows, that does not redeem from risk.
The total amount of loans provided by Sberbank has not been disclosed anywhere, but only in 2019 the financial organization has allocated Norebo over 4 billion rubles for the construction of ten freezing trawlers-processors.
According to the data of the Banksta Telegram channel, now the amount of Norebo’s debt to third-party creditors exceeds $800 million, and the company is facing the loss of the European market and default if lost the trial. Then questions will appear - what did urge Bazarov to invest in the company with such risks?