“Without limiting the foregoing, all transactions, negotiations, discussions or dealings with any U.S., Azerbaijani or other person must be made in full compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, as well as any other applicable U.S., Azerbaijani or other anti-corruption law.”
“It soon became known to me, Victor (sic) Kozeny and others involved that continued participation in the privatization program, through the purchase of voucher and options, required the payment of bribes to various senior members of the Azeri government. … Over the course of various meetings with [a SOCAR official and SPC officials] Kozeny agreed to give a senior Azeri official two-thirds of the profits arising from the privatisation of SOCAR, in return for the Azeri officials permitting Kozeny, Oily Rock, and their consortium of shareholders and investors to purchase sufficient privatization vouchers to acquire control of SOCAR at auction. … On various occasions in 1997 and 1998, at the discretion of Kozeny, I and others caused payments to be wire transferred to bank accounts by one of the SPC officials. And for the benefit of the senior officials. Including to bank accounts in Switzerland, the Netherlands, and United Arab Emirates” [sic] Transcript pp.31-32 … “In or about May 1998, I, at Kozeny’s direction, delivered several million dollars in cash to one of the SPC officials at his office at the SPC in Baku. … I gave this money as bribes to the Azeri officials, bribes that will enable Victor Kozeny and his group of investors to give them the opportunity to actually participate in purchasing vouchers and options …. It was a fraction of the money went actually to actually pay the officials”
“…it was of great importance to us that we were not being drawn into a deal which was in any way tainted by corrupt payments. We would not have entered into the deal had we had any belief that there were corrupt payments” “There was no suggestion at any time, nor did we believe, that there was any corrupt relationship between Mr Kozeny and any Government officials or the President …” “Paragraphs 22ff of the Defence set out a detailed history of Mr Kozeny’s alleged corrupt dealings with President Aliyev and his associates. If this history is true, I had no knowledge of it.” “I was not aware that the additional shares [in Oily Rock] were for the benefit of “the Azeri interests” as Mr Kozeny now alleges in his defence (if in fact it was the case)”
“While I represented American concerns, I assisted with Viktor Kozeny and other to provide incentives to certain high-level Azeri Government officials so that those officials would help make sure that the privatisation happened. These benefits included transferring two-thirds of the vouchers and options of one of my clients, Oily Rock, to trusts which I ordered through Liechtenstein counsel for the personal benefit of the Azeri officials. This transfer of vouchers and options was made without any risk for the Azeri officials and was done only because these officials could help make the privatization happen. The effect of the agreement was to bribe the Azeri government officials and to corrupt their decision making into supporting the privatization. I knew this bribery was wrong. … I also travelled by airplane from Switzerland to New York City to help my American client, Omega Advisors, transfer its funds into this collective investment which I knew was corrupt. Afterwards, these funds were wired from the United States into my firm’s client account which I made available to Omega and their clients”
“31. In the course of our several meetings with Nuriyev, VIKTOR KOZENY, the defendant, negotiated and agreed to transfer to the Azeri official two-thirds of Oily Rock’s vouchers and options and to give the Azeri officials two-thirds of the profits arising from KOZENY’s investment in privatization. In return, Nuriyev, who made clear that he was acting on behalf of Azeri President Heydar Aliyev, granted KOZENY permission to participate in privatization and to acquire a controlling interest in SOCAR. The Azeri officials never paid anything for their two-thirds share in KOZENY’s investment in privatization. Rather, this “two-thirds transfer” arrangement was another in what became a series of bribes KOZENY paid or directed to be paid to the Azeri officials. 32. In our meetings with Nuriyev, VIKTOR KOZENY, the defendant, further agreed to pay an up-front “entry fee” specified by Nuriyev that totalled in the millions of dollars. Nuriyev also explained to KOZENY that Oily Rock would need to acquire approximately one million voucher booklets and four million corresponding options in order to bid successfully for SOCAR. Voucher Purchases Through Nuriyev 33. In the course of our meetings with Nuriyev in or about August 1997, Nuriyev further instructed VIKTOR KOZENY, the defendant, and I that, in the future, we would purchase vouchers either from people whom Nuriyev identified or from other people with Nuriyev’s knowledge. Nuriyev also assured us that we would no longer have to worry about paying the Chechens a fee for every voucher we purchased. 34. Thereafter, whenever I needed to buy vouchers, I usually would contact Nuriyev. He subsequently would telephone me to tell me about a block of vouchers that were available at a given price. Nuriyev often obtained his vouchers from a voucher trader named “Khan”
“Initial Trips to Azerbaijan In the middle of March 1998, I travelled with VIKTOR KOZENY, the defendant, John Pulley (KOZENY’s security chief), Swigart, and Catherine Fleck (Aaron Fleck’s daughter) to Baku on KOZENY’s private jet in order to perform due diligence in connection with the investment. During the flight, which lasted more than 15 hours, I spent much of my time in direct conversation with KOZENY, including detailed discussions of the proposed privatization investment. Based on these and other discussions with VIKTOR KOZENY, the defendant, I understood that he had entered into pre-existing arrangements with some senior officials of the Azeri Government, including President Heydar Aliyev and his family, which gave those officials a financial interest in the privatization of the better Azeri industries. KOZENY made it clear to me that this financial arrangement provided an incentive for the Azeri government officials to go forward with the privatization of key state assets, including SOCAR. I later became aware that this arrangement involved KOZENY’s transfer of two-third’s interest in his privatization investment to the senior Azeri government officials. In Baku, I met with a number of employees of VIKTOR KOZENY, the defendant. I also visited the offices of The Minaret Group Ltd (“Minaret”), an investment bank that KOZENY established, and I saw the vaults where the vouchers he had purchased to date were maintained. During this visit, I also met with KOZENY, Thomas Farrell (KOZENY’s operations management in Baku with primary responsibility for the purchase and safeguarding of vouchers), and the two principals of the State Property Committee (“SPC”), Nadir Nasibov and Barat Nuriyev, at the SPC’s offices. It was apparent from the interaction of KOZENY and Nuriyev, in particular, that KOZENY enjoyed a close relationship with Nuriyev.”
“In approximately September 1997, I travelled to Baku, Azerbaijan on two occasions in order to meet with Barat Nuriyev in connection with my work establishing these trusts and corporate structures. During the first trip, in a meeting among me, Barat Nuriyev, and Thomas Farrell, I explained the trust arrangement as previously outlined by VIKTOR KOZENY, the defendant, and we openly discussed the one-thirds/two-thirds split between KOZENY and the Azeri officials. I advised Nuriyev that I needed information regarding the beneficiaries, including dates of birth, addresses, and passport information, in order to carry out KOZENY’s instructions. Nuriyev identified the beneficiaries of the trusts as his family members, the family members of Nadir Nasibov, Ilham Aliyev, and Sevil Aliyeva, the daughter of then-President Heydar Aliyev. During the meeting, Nuriyev also inquired about Swiss bank accounts. The purpose of my subsequent trip to Baku was to review with Nuriyev draft trust documents that had been prepared. Consistent with Nuriyev’s instructions to me, the draft documents provided that the beneficiaries would be as provided in the following chart: Trust Name First Beneficiary Second Beneficiary Stinson Ilham Aliyev Heydar Aliyev Weston Nadir Nasibov Nadir Nasibov’s wife Kingsway Barat Nuriyev Barat Nuriyev’s family Broadbent Nadir Nasibov Barat Nuriyev Belham Ilham Aliyev Sevil Aliyeva The Stinson and Belham trusts were never finalized because we never received the necessary information to do so. The other three trusts were finalized under my supervision, with the beneficiaries as identified in the above chart. Following the request of Barat Nuriyev, and with the knowledge and permission of VIKTOR KOZENY, the defendant, five bank accounts in company names on behalf of the Azeri officials were opened at my direction. Each account was associated with one of the trusts. These accounts were opened at banks in Switzerland and Jersey, Channel Islands.”
“Hans Bodmer discussed with Eric Vincent the various agreements that were to be concluded with Oily Rock and Minaret. Hans Bodmer told Eric Vincent that he could not advise on US law and only comment in general terms. During the discussion he asked Eric Vincent whether the involvement of the Azeri Interests [and the planned merger] was in compliance with the US Foreign Corrupt Practices Act referred to in the agreements. Eric Vincent replied that in his opinion the involvement of the Azeri Interests was not an issue under the US Foreign Corrupt Practices Act.”
“Alief is in on this → Pledge the 5th” and listing under “pros” “Kozeny’s relationship with Alief & Deputy”. (3) A note by Mr Pinkerton which included the following: “How did Oily Rock get the “personal invitation” from the President … sounds a little shady. Is the President a beneficiary in Oily Rocks?”
“It is important that a Judge in appropriate cases should make use of the powers contained in Pt 24. In doing so he or she gives effect to the overriding objectives contained in Pt 1. It saves expense; it achieves expedition; it avoids the court's resources being used up on cases where this serves no purpose, and, I would add, generally, that it is in the interests of justice. If a claimant has a case which is bound to fail, then it is in the claimant's interests to know as soon as possible that that is the position. Likewise, if a claim is bound to succeed, a claimant should know this as soon as possible . . . Useful though the power is under Pt 24, it is important that it is kept to its proper role. It is not meant to dispense with the need for a trial where there are issues which should be investigated at the trial. As [counsel] put it in his submissions, the proper disposal of an issue under Pt 24 does not involve the judge conducting a mini-trial, that is not the object of the provisions; it is to enable cases, where there is no real prospect of success either way, to be disposed of summarily.”
“The beneficiary’s claim is not “to be recouped part of the price as price”, nor is it “an attempt in any way to vary the contract”
“The law in this area is constituted by a plethora of cases which are extremely difficult to reduce to any order.”
“But when a question of notice, or knowledge, arises, we find ourselves overwhelmed in a sea of authorities, not altogether reconcilable with each other . . . .”
“My Lords, there can obviously be no acquiescence without knowledge of the fact as to which acquiescence is said to have taken place. The person who is sought to be estopped is here a company, an abstract conception, not a being who has eyes and ears. The knowledge of the company can only be the knowledge of persons who are entitled to represent the company. It may be assumed that the knowledge of directors is in ordinary circumstances the knowledge of the company. The knowledge of a mere official like the secretary would only be the knowledge of the company if the thing of which knowledge is predicated was a thing within the ordinary domain of the secretary’s duties. But what if the knowledge of the director is the knowledge of a director who is himself particeps criminis, that is, if the knowledge of an infringement of the right of the company is only brought home to the man who himself was the artificer of such infringement? Common sense suggests the answer, but authority is not wanting. In In re Hampshire Land Co Vaughan Williams LJ expresses himself thus: ‘If Wills had been guilty of a fraud, the personal knowledge of Wills of the fraud that he had committed upon the company would not have been knowledge of the society of the facts constituting that fraud; because common sense at once leads one to the conclusion that it would be impossible to infer that the duty, either of giving or receiving notice, will be fulfilled where the common agent is himself guilty of fraud. It seems to me that if you assume here that Wills was guilty of irregularity—a breach of duty in respect of these transactions—the same inference is to be drawn as if he had been guilty of fraud. I do not know, I am sure, whether he was guilty of actual fraud; but whether his conduct amounted to fraud or breach of duty, I decline to hold that his knowledge of his own fraud or of his own breach of duty is, under the circumstances, the knowledge of the company.’”
“I would hold that the Hampshire Land principle is not confined to cases where the agent's knowledge is by law to be imputed or attributed to the principal, or deemed to be the knowledge of the principal. The doctrine should extend to any case where the principal's rights are affected if the agent does not make disclosure to a third party.”
“in the insurance context, as outside it, a director’s knowledge is not to be attributed to his company, whether as the knowledge of the company itself, or as knowledge which in the ordinary course of business that company is to be inferred or deemed to know, to the extent that his knowledge of his own dishonesty is of his own acting in fraud of his company.”
“Ex turpi causâ non oritur actio. This old and well-known legal maxim is founded in good sense, and expresses a clear and well-recognised legal principle, which is not confined to indictable offences. No Court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the Court, and if the person invoking the aid of the Court is himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality the Court ought not to assist him. If authority is wanted for this proposition, it will be found in the well-known judgment of Lord Mansfield in Holman v. Johnson Cowp. 343”
“The plaintiff, when suing the defendants for breach of contract, as he does, has to prove the whole contract, and it was not competent for him to put in evidence only half of the contract, and he did not do so … . Immediately the whole contract upon which the plaintiff sues is put in, the illegality of the conduct of the plaintiff and of McNab at once becomes apparent. In my opinion, the maxim “In pari delicto potior est conditio possidentis” applies, and this Court ought not to assist the plaintiff when he seeks to recover the 632l. 3s. 5d. back from the defendants. Upon these grounds, and without going further into the case, this appeal must be dismissed”
“In this case the plaintiff in the first place has been convicted of no offence, and in the second place is not seeking to recover an indemnity for damages recovered against him, but is seeking to recover damages for a wrong done to him and in which he did not participate except as a sufferer, and in which it cannot be said that he was a particeps criminis. When the false and fraudulent representation was made which was the causa causans of this action no crime had been committed by the defendants, much less by the plaintiff, and, as far as the plaintiff knew, no crime had been committed by the defendants at any time up to the happening of the events which caused the damage to the plaintiff, for if the invasion had the authority and sanction of Her Majesty or Her Majesty's Government, as the defendants alleged, there was no breach of any statute for which the plaintiff or the defendants could be made liable.”
“Although the deliberate overstatement of the price being paid for the chattels, and hence the deliberate understatement of the consideration being paid for the flat, have not affected the outcome of the plaintiffs' claim in this action, it should not be assumed that this will always be so in other cases where such deliberate misstatements are present. In particular, it may not be sufficiently appreciated that where a party to a contract containing deliberate misstatements in the apportionment of the overall purchase price, made to facilitate the fraudulent evasion of stamp duty on the subsequent transfer or conveyance, seeks to enforce that contract, he may (depending upon the circumstances) find that the court will decline to assist him because of the unlawful purpose sought to be achieved by the deliberate understatement, perhaps by only a modest sum, of the price being paid for the property as distinct from the chattels”
“Where issues of illegality are raised, the courts have (as it seems to me) to steer a middle course between two unacceptable positions. On the one hand it is unacceptable that any court of law should aid or lend its authority to a party seeking to pursue or enforce an object or agreement which the law prohibits. On the other hand, it is unacceptable that the court should, on the first indication of unlawfulness affecting any aspect of a transaction, draw up its skirts and refuse all assistance to the plaintiff, no matter how serious his loss nor how disproportionate his loss to the unlawfulness of his conduct. The cases to which Kerr and Nicholls LJJ have referred are valuable, both for the statements of principle which they contain and for the illustrations which they give of the courses which courts have in fact steered in different factual situations. But I think that on the whole the courts have tended to adopt a pragmatic approach to these problems, seeking where possible to see that genuine wrongs are righted so long as the court does not thereby promote or countenance a nefarious object or bargain which it is bound to condemn. Where the plaintiff's action in truth arises directly ex turpi causa, he is likely to fail ...”
“Illegality may affect a tort claim in many ways ranging from an essential part of the story giving rise to liability to some remote aspect of quantum. For this reason I favour a broad test of the kind proposed by Clarke L.J. viz: is the claim or the relevant part of it based substantially (and not therefore collaterally or insignificantly) on an unlawful act? Such a broad test has the merit of simplicity. It does not involve the judge having to make very specific and difficult value judgments about precisely how serious the misconduct is or whether it would result in imprisonment or whether the claimant's loss is disproportionate to his misconduct.”
“I agree with the speech of my noble and learned friend, Lord Goff of Chieveley, that the consequences of being a party to an illegal transaction cannot depend, as the majority in the Court of Appeal held, on such an imponderable factor as the extent to which the public conscience would be affronted by recognising rights created by illegal transactions. However, I have the misfortune to disagree with him as to the correct principle to be applied in a case where equitable property rights are acquired as a result of an illegal transaction. Neither at law nor in equity will the court enforce an illegal contract which has been partially, but not fully, performed. However, it does not follow that all acts done under a partially performed contract are of no effect. In particular it is now clearly established that at law (as opposed to in equity), property in goods or land can pass under, or pursuant to, such a contract. If so, the rights of the owner of the legal title thereby acquired will be enforced, provided that the plaintiff can establish such title without pleading or leading evidence of the illegality. It is said that the property lies where it falls, even though legal title to the property was acquired as a result of the property passing under the illegal contract itself. … In my judgment the time has come to decide clearly that the rule is the same whether a plaintiff founds himself on a legal or equitable title: he is entitled to recover if he is not forced to plead or rely on the illegality, even if it emerges that the title on which he relied was acquired in the course of carrying through an illegal transaction.”
“There is in my view but one principle that is applicable to actions based upon contract, tort or recovery of property. It is, that public policy requires that the Courts will not lend their aid to a man who founds his action upon an immoral or illegal act. The action will not be founded upon an immoral or illegal act, if it can be pleaded and proved without reliance upon such an act.The immoral or illegal act relied upon by PNSC was the attempted deception of Incombank. No doubt it is unethical for one bank to attempt to deceive another bank, but I doubt whether an unsuccessful attempt amounts to an act which would prevent a good cause of action in deceit being enforced. Certainly in equity there is authority for the proposition that where the unlawful act has not been carried into effect, the Court is able to uphold, despite the attempted illegality, an equitable interest. (See Tinsley v Milligan sup. at p. 257.) In any case SCB's cause of action in deceit against PNSC does not require the attempted deceit to be pleaded nor does it involve any reliance upon it. Their case as pleaded and proved was that PNSC made false statements in the bill of lading that the goods had been shipped by Oct 25, 1993. That statement was made knowing it to be false. SCB relied on it and therefore suffered loss because it paid out over US$1m to Oakprime.”
“. . . the nature of the [R v Kensington Income Tax Commissioners] principle, as I see it, is essentially penal and in its application the practical realities of any case before the court cannot be overlooked. By their very nature, ex parte applications usually necessitate the giving and taking of instructions and the preparation of the requisite drafts in some haste. Particularly, in heavy commercial cases, the borderline between material facts and non-material facts may be a somewhat uncertain one. While in no way discounting the heavy duty of candour and care which falls on persons making ex parte applications, I do not think the application of the principle should be carried to extreme lengths.”