Well, here is a sight for sore eyes!
If you haven’t seen it, this is the impressive organogram (structural chart) appended to the end of Mrs Justice King’s judgment in M v M. It was created by talented barristers Nigel Dyer QC and Juliet Chapman and shows the corporate structures involved in this headline-grabbing case. The Russian wife was awarded £53 million in the High Court, an award thought to be the highest to date in a contested divorce.
In her judgment, Mrs Justice King did not hold back in her assessment of the husband’s character and behaviour:
The case has been a fantastic charade with the husband a shady puppet master in the background. At fabulous cost, (£1.4m and counting), those representing the wife have crossed and re-crossed the globe in an attempt to trace the husband’s assets, every penny of which has been acquired during the course of the marriage. Orders have been obtained in Cyprus, the BVI and Seychelles but even as those representing the wife unravelled the Pankratrov structure, (as set out later in this judgment), the husband was one step ahead, transferring those self same assets across the Caribbean Sea to Belize where, I am satisfied, that realising the danger of being identified as the beneficial owner of Pankratrov, the husband for the first time used a Panamanian intermediary specifically to ensure that the Belize structure would have no information about the beneficial interests to disclose to this or any other court.
Finally, and showing singular audacity, the husband sent his companies “in to bat” on his behalf at the trial; in that way he was able to fight the case in relation to the only assets about which I am satisfied he cared and which were within the jurisdiction without having to expose himself either to cross-examination or punishment for contempt of court. In her oral evidence the wife said The money was extremely important …for my husband. The money gave him possibilities to manipulate, to rule, to control and that is the main part of his personality. So money was important to him. The wife’s description of the husband is perfectly reflected in manner in which he has conducted this litigation.
Some commentators, such as Joseph Cotterill of the FT in an entertaining blog post, have pointed out that this was one of the first cases to apply the judgment made earlier this year in Petrodel v Prest, another case in which a wife and husband waged a battle in the courtroom over offshore structures owned by the husband’s companies.
Highly complex financial cases highlight the valuable role played by specialist forensic accountants. I have written on a number of occasions about the in-house forensic accountancy team we have here at Stowe Family Law: they can provide immediate advice about the likely scale and nature of a case, and also specialise in tracking down hidden assets.
Nick White, the Head of our Forensic Accountancy team, had the following to say about M v M:
This case demonstrates the challenge for a spouse in the situation where the other spouse has assets and complex business structures in more than one jurisdiction, in a day and age where business dealings can be swift. It doesn’t necessarily on where the asset is; it can depend more on how it is owned. As long as the asset remains in the UK, the spouse stands a chance of being able to secure it. In M v M the wife was awarded the UK assets, but the court recognised that it would be difficult for her to secure any of the foreign money.
The diagram shows an extremely complex business structure, but in fact that diagram is extremely well set out – just to get it on one page is an achievement! I would say that the husband’s set-up was not just designed to disguise the ownership of assets, but has also been structured that way for tax reasons. It just so happens for the wife, that some of the assets are here in this country.
The husband provided little by way of disclosure. In cases such as this it helps to have people involved who can assist in identifying assets and structures too. It also helps to have a wife who is aware of what her husband’s empire is made from.