DM Monitoring
LONDON: An Isle of Man court has dismissed a hedge fund’s attempt in taking almost the entire amount of around $29 million that Pakistan paid to Broadsheet after the UK High Court issued orders to seize Pakistan assets for failure to pay to Broadsheet — fronted by its CEO Kaveh Moussavi.
Immediately after Pakistan paid $29 million around two years ago to Broadsheet, a Cayman Island hedge VR Global Partners (VRGP) started a claim seeking control of the full amount on the basis that it provided funds to Broadsheet’s lawyers to finance arbitration proceedings against Pakistan at London High Court’s Financial Division.
The court prevented the Broadsheet liquidator from distributing monies to Broadsheet’s creditors unless a decision was made on the application.
VR had claimed in its IoM filing that it gave Broadsheet $6 million in 2017 through a legal contract in exchange for a “priority lien” over the proceeds of the arbitration against Pakistan. According to VR’s claim, it was entitled to the entire award amount that Pakistan paid to Broadsheet. VR stated that the “escalator clause” in its contract means that the sums owed it far exceed the total amounts secured by Broadsheet and continued to accumulate at a compounded interest.
Broadsheet points to this “escalator” as at the heart of what it alleged to have been the essence of the “conspiracy” between VRGP and corrupt officials at the National Accountability Bureau (NAB).
The VRGP started its claim nearly two years ago and now the Isle of Man’s High Court has dismissed the powerful hedge fund’s claim determining that the “victory” it has at the confidential arbitration is nugatory and not binding on the court.
Broadsheet has now submitted evidence to the high court that the arbitration process was fundamentally suborned by VRGP through its deliberate violation of the “confidentiality ring” ordered by the LCIA Tribunal to protect the lives of whistle-blowers in Pakistan who confidentially and under the protection of the Order provided evidence of collusion between NAB officials and VRGP.
The judgment available with this reporter shares interesting facts about the case. It shows that there are several parties laying claim on the award and VRGP wanted to get in the priority and ahead of everyone else to take all the money.
According to the judgement, the parties laying claim to the money Pakistan paid are BlackRobe, Crowell & Moring, VRGP and the Broadsheet.
They claim that BlackRobe provided midterm funding, Crowell & Moring took the case on a contingency fee basis and VRGP made an investment too.
The court has ruled that VRGP’s contract does not bind the parties if its contrary to the IoM Insolvency laws. An appeal deadline of Friday 10th February came and passed without an appeal filed by VRGP.
This is unlikely to be the end of the matter as the Liquidator of Broadsheet has, in the immediate aftermath of the judgement, decided to submit the evidence that had been withdrawn from the LCIA arbitration when witnesses to the NAB corruption had withdrawn citing security fears to witnesses.
Enquiries by this newspaper earlier last year uncovered that there were parliamentary investigations of the VRGP/NAB nexus which were later taken over by the authorities, who remain extremely tight-lipped given the criminal character of the matters at hand. Sources say that enquiries are continuing. Some officials are on the Exit Control list as part of these inquiries, say sources.
Broadsheet was hired by Pakistan more than two decades ago to trace assets belonging to former prime minister Nawaz Sharif and his family members, as well as several other politicians and businessmen.
Pakistan broke the contract in violation of the agreement it had signed and the case has so far cost Pakistan close to $65 million in legal fees and awards after Moussavi, who beneficially owns Broadsheet, brought the case before sole arbitrator Sir Anthony Evans QC under the rules of the Chartered Institute of Arbitrators.
The arbitration judge found that Pakistan had conspired to defraud Broadsheet Isle of Man. The Broadsheet LLC’s lawyers convinced London High Court to seize Pakistan’s assets at United Bank Limited (UBL) in December 2020.
When contacted by this reporter, Moussavi said: “I can’t comment on matters that are sub judice and likely to turn into a criminal investigation by the UK and US authorities under the Foreign Corrupt Practices Act and the UK Bribery Act.”
“I began this effort 23 years ago when the late General Musharraf asked us to investigate, locate, freeze and return stolen assets to Pakistan. I have every intention of seeing this investigation to its logical outcome wherever the evidence may take us. We came in to fight corruption.”
A VRGP official didn’t respond to questions on the IoM court judgment.
