Roman Abramovich defeats Boris Berezovsky in court: Analysis

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As we reported earlier, Chelsea club owner/saviour Roman Abramovich today won his court case against fellow Russian tycoon Boris Berezovsky over alleged financial misdeeds involving the creation of Sibneft -- in which current club sponsor Gazprom bought a majority stake for $13.1bn in 2005 -- and other assets in the Russian aluminium industry.

Berezovsky maintained that Roman used Berezovsky's precarious political situation to buy his assets at a cut rate by threatening to have them stripped by the Russian government. Abramovich maintains that the money was not for Berezovsky's shares, but a type of political protection payment called krysha, and that Berezovsky never actually owned any of the assets in question.

Obviously, the judge found in favour of Abramovich, rather than Berezovsky, claiming:

"[Mr Berezovsky was] an unimpressive, and inherently unreliable, witness, who regarded truth as a transitory, flexible concept, which could be moulded to suit his current purposes. [Mr Abramovich was] a truthful, and on the whole reliable, witness

Ultimately, the win in court means any speculation was moot, but let's explore what a loss might have meant for Chelsea.

Had the judge ruled in favour of Berezovsky, Roman stood to lose up to £3bn, which is around half of Abramovich's massive fortune. Understandably, our owner suddenly losing half his pile of treasure, would create suspicions about our long-term viability. There are several reasons why a loss in court probably wouldn't have affected us too badly.

Firstly, the UK courts were said to be reticent to get themselves involved in the shady world of post-Soviet Russian business deals. If Berezovsky had been successful, it would have set a precedent and brought dozens, if not hundreds, of such cases. There was speculation in legal circles that even if Berezovsky had been found more reliable, he wouldn't have won anything like what he was asking for from Abramovich, so as not to set a precedent by awarding by far the biggest settlement between individuals. Every reduction in the penalty would have made Roman's, and by extension, Chelsea's financial position more stable.

Secondly, we're not that expensive for Roman any more. Sure, he's spent more than £1bn on the club since he bought us nine years ago. With the current Financial Fair Play regulations, owners are no longer allowed to throw comically-oversized bags of money at their clubs. With this in mind, even a loss of billions was unlikely to have affected the club. We more or less pay our own bills now, with minor assistance from Abramovich. Roman, according to all reports, loves football and Chelsea in particular, meaning Chelsea wouldn't be the first cut if pennies needed pinching. Which brings me to the final point.

Roman would still be a billionaire. Even if he'd be half the billionaire he was, he'd still have enough money to have every single one of us killed if he wanted. £1bn is an insane amount of money. Remember, Roman has only spent that much in nearly a decade of crazy spending at Chelsea. With at least three times that much, Chelsea wouldn't pose a financial problem for him. Plus, you don't get to be a billionaire without the knowledge and skill to make it back. No matter what happens, none of us should be worried about Roman and money. He's excellent with it.

Basically, the only reason this involved the club is that it involved our owner. The club were never at risk. If it were likely, I'd like to know where the British papers found the sheer will to avoid reporting on the impending collapse of Chelsea. To be honest, that's probably the best argument against this being a problem for us. Nobody took the time to write the appealing narrative of Roman having to sell Chelsea, and us going bust.

If you're into the legal stuff, feel free to have a look at the official finding here. If you want the quick and dirty version, I'll summarise it here.

Basically, the case comes down to a series of oral agreements involving the ownership of Sibneft and some aluminium assets. Berezovsky claims Abramovich effectively blackmailed him into selling his stake on the cheap, but Abramovich claims the payments for for protection, and that Berezovsky never actually held a significant stake in Sibneft. Since these are based on the alleged contents of oral arguments, the case became one of hearsay. There is no physical evidence of the agreements, thus the case hinges on the reliability of the parties.

An additional compounding factor is that the conversations took place more than a decade ago, which significantly limits the credibility of any oral claims. After all, can you remember the exact wording you used in conversation 16 years ago? Heck, some of you might not have been talking or even alive when these conversations took place. Because of the nature of the case, it was Berezovsky's duty to prove himself a reliable witness, able to recall the facts without issue.

If you read the quote above, or the full judgement, it becomes clear he did a very bad job of that. He changed his statements and account of what he recalled constantly, and, in the judge's view:

At times the evidence which he gave was deliberately dishonest; sometimes he was clearly making his evidence up as he went along in response to the perceived difficulty in answering the questions in a manner consistent with his case; at other times, I gained the impression that he was not necessarily being deliberately dishonest, but had deluded himself into believing his own version of events.

When pushed on the inconsistencies in his statements, Berezovsky placed the blame on his lawyers and their interpretations of his accounts. In case primarily fought through lawyers, differing statements from one phase to another is not that uncommon, however Berezovsky's were to such an extent to destroy his credibility. As the judge stated in her decision:

A particular example of his lack credibility as a witness was his initial denial in cross-examination that any of his witnesses stood to gain financially, if he were to be successful in the Commercial Court action. In fact that was untrue. Two of Mr Berezovsky's witnesses, Dr. Nosova and her husband, Mr. Lindley, a solicitor, stood to gain very substantially if Mr. Berezovsky were to win these proceedings. Mr. Berezovsky’s excuse in re-examination, when he revealed the contingency fee arrangements for the first time, for not having given a truthful answer in cross-examination, was unconvincing. In fact it appeared that, despite specific enquiries having been made earlier in the proceedings by Mr Abramovich's solicitors, these contingency agreements had previously been concealed from them, and indeed even from Mr Berezovsky's own solicitors.

In contrast to Berezovsky, Abramovich presented his case much more steadily and contemplatively, seeking to understand every facet of the questions asked of him. Because of this, the judge found him credible, and as such, there weren't many differences in his statements from one phase to another. In essence, the difference in credibility was the deciding factor in the case. Abramovich wasn't the one responsible for establishing his credibility, though he did. Berezovsky didn't present himself well, and rightly, Abramovich won the case.

Therefore, based on the available evidence, Chelsea was never in danger, and neither was Abramovich. If you're going to make a strong claim as Berezovsky did, you need to have some pretty solid proof, and you need to make sure you don't change your story several times.

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