Arcadi Gaydamak transfered $365 million of the Angolan government's money to his private bank accounts, according to a civil suit filed last Thursday against Gaydamak in the Jerusalem District Court as reported by Channel 10 News. The suit claims the money was earmarked to pay back the country's debts to the former Soviet Union
The plaintiffs in the suit are two management companies registered in the Virgin Islands, Premium Investment Management and Global Alpha Star. The two firms claim that during the 2001-2005 period they managed two offshore investment funds established by Gaydamak "so no one would know the money belonged to him." They further claim Gaydamak, or his funds, did not pay them their management and other fees for part of the period.
The two firms have asked the court to declare these debts Gaydamak's personal responsibility.
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The background for the claim is that in 1995 Gaydamak wove a deal to reduce Angola's debt to the U.S.S.R., from $6.4 billion to only $1.5 billion. The repayments were divided into 31 installments of $48 million, each represented by a debt obligation note. According to the suit, Gaydamak then set up a company which bought the notes from the Russian government at a 50% discount. The debt payments were supposed to be made into an escrow account at the UBS bank in Geneva, and the notes would be redeemed in return for cash payments only.
The claim is Gaydamak paid off 15 of the notes with funds raised from investors. To pay off the rest of the notes, Gaydamak asked the president of Angola to transfer $618 million to a bank account in Cyprus. The president transfered the money, but Gaydamak redeemed only eight of the notes and kept half the money for himself. This is why Angola has refused to renew Gaydamak's diplomatic passport, the suit states.
Gaydamak then transfered the money to various accounts around the world, including funds sent to his lawyer in Tel Aviv, Amnon Zichroni, says the suit. The claim is that the $365 million grew to $1.25 billion in four years, including funds deposited in Luxembourg in the name of the two funds, Premium and Global.
The next stage, according to the suit, was a February 2004 request by Gaydamak's representatives to liquidate all his assets in the funds and transfer the money to a trust company of Bank Hapoalim, which - according to the suit - provides services to those who want to anonymously hold their assets in the name of the bank's trust company.
The suit claims that the trust company helped Gaydamak hide his ownership of the money from Luxembourg authorities and that the trust company knew the real owner was Gaydamak. In November 2004, as part of a police investigation against Gaydamak, the Justice Ministry sent requests to the Luxembourg bank to seize the funds - and the suit claims the Bank of Israel reported that Bank Hapoalim officials helped Gaydamak hide his assets and send them overseas out of the reach of Israeli authorities. At the time, Gaydamak was one of the bank's largest customers, claim the plaintiffs.
Gaydamak responded: "I was a central partner in arranging the Angolan debt to Russia to both sides' satisfaction." According to Gaydamak, the source of the money was the profits he made from the deal, and the Luxembourg bank agreed to release the money three years ago. He added it is incorrect that Angola refuses to renew his passport. He explained the story involves a deceitful banker who had been harassing him for years.
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