Why Swiss lawyers refuse to protect Vekselberg

The Russian billionaire intends to sue the banks that have blocked several billions of dollars on his accounts and accounts of his companies.
23.08.2018
Forbes
Origin source
The spring of 2018 will be one of the most memorable for a member of the Forbes list, Viktor Vekselberg, co-owner of Renova, UC Rusal, Sulzer and several other companies in Russia and Switzerland. After entering the Sanctions list of the US State Department, Swiss banks that funded the acquisition of stakes in industrial conglomerates Sulzer, OC Oerlikon and Schmolz + Bickenbach, took interim measures against collateral. For some time, even the salary accounts of employees of the Swiss office Renova were frozen: anonymous complaints appeared in the press about the inability to receive a salary or pay by card.

The situation with one of the largest employers in Switzerland (Mr. Vekselberg permanently residing in the canton of Zug) was to be resolved at the highest political level. In May, the head of the economic department of the Federal Council of Switzerland, Johann Schneider-Ammann, met with top managers of Renova and Russian diplomats: they hoped to resolve these problems.

After some quiet, summer holidays and the completion of internal processes, the largest banks in Switzerland - UBS, Julius Bär and Credit Suisse - in addition to blocking the shares also seized Vekselberg's personal assets, which, according to conservative estimates, are about 2 billion francs.

As the well-known wisdom says, if the problem can be solved with the help of money, then the problem becomes not a problem, but an expense. It seems that for the Russian billionaire who lives in Switzerland and is under US sanctions, the blocking of accounts has remained a problem: in the past two and a half months, no law firm has agreed to represent his interests in disputes with banking institutions. This is hampered by a number of factors.

The first and biggest is the rules of lawyer ethics and conflict of interests. All eminent law firms have been serving the interests of banks for several years (and in some cases not for the first decade). Working with a client like Vekselberg, they run the risk of getting caught up in a conflict of interests on an equal footing and getting under suspicion of disclosing a lawyer's secret (which, however, is so hard to imagine in our realities).

The second, indirect, is work with a person under personal sanctions. In Switzerland, the so-called Embargo Act (EmbA) - the federal act "On the implementation of international sanctions". It refers more to banking institutions, but in some cases does not allow the provision of professional services to individuals or companies experiencing external constraints. Professional lawyer associations recommend to assess the possible risks when working with such clients and provide for potential threats. Although it is explicitly prohibited to identify a lawyer with his client, many colleagues try, as they say, to stay out of harm's way.

Thus, for Victor Vekselberg, even potential opportunities for representation of interests by law firms from the list of recommended ratings such as IFLR1000, Legal500, Chambers and Partners are immediately cut off. There are firms and lawyers with private practice of the second and third echelons, at the reference to which in a head of the client at once there is a question "and what actually guarantees?"

It must be said that the practice of law in Switzerland is well regulated, especially with regard to the relationship with customers. The fee is set by the "Ordinance of Lawyers" (Verordnung über die Anwaltsgebühren, AnwGebV), and with the so-called "business value" of two billion francs, the attorney's fee will be more than ten million francs - only in order to be able to transfer all the materials for acquaintance with business.

Thus, the situation is pathetic: law firms, whose experience can serve at least some hope of a solution to the problem, do not take action; firms of the second and third echelons do not inspire confidence and their attraction is not a guarantee of a successful outcome. And the largest banks are also clients of most large Swiss law firms.

However, it is impossible to assess the scale of the forthcoming dispute in any case - at least without acquaintance with the text of the agreement between banks and the borrower. It is necessary to understand which jurisdiction and legal system is chosen (most likely, this is Switzerland - English lawyers are engaged in even the most "toxic" clients without problems), what are the procedures for collection and obligations of the borrower. Nevertheless, a compromise solution (between the wishes of the client and the more or less predictable result) already now seems to hire an outside lawyer.

Most likely, the process of minimizing risks in case of failure has already begun. In late June, Renova Management was sold, according to Mr. Vekselberg, "one of the Russian business partners", and renamed Witel AG. It looks like the "ungrouping" of assets. In case of a loss in court and unsuccessful appeal, it gives chances to retain control over a part of the companies that are not covered by interim measures of Swiss banks that financed Vekselberg's transactions with Sulzer and other industrial companies.

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