London Calling: Georgy Bedzhamov in Exile

Having fled Russia in December of 2015, Bedzhamov spent six months in Monaco, where he was arrested and detained in accordance with the extradition request imposed by Russian authorities having charge him for playing a central role in the collapse of Vneshprombank (VBP) through highly complex embezzlements operated by him and his said, among others. Choosing London as his next stop, which at the time of writing has been his home for almost ten years, has proved a masterful move in his attempt to avoid prosecution and protect the funds and assets he is accused of acquiring illegally.

Here we continue a revision of themajorBedzhamov case towards a coherent reference and chronology complementary to the CBIA Files: Georgy Bedzhamov archive.

2017 Application for asylum

With his long-term partner and their children unable to live legally in the UK, Bedzhamov has been living in London in rented high-ticket rented accommodation and also paying for his family to live in similar properties in Monaco. Paying for such a lavish lifestyle, even before considering how to maintain control and ownership of the properties and other assets alleged to be the product of criminal activity, as a fugitive Bedzhamov chose to insert himself fully into the UK legal system as a means of avoiding extradition to Russia.

The Russian government requested Bedzhamov's extradition from the UK in May 2017, after being arrested by appointment and appearing at Westminster Magistrates' Court, he was freed on bail; one of the terms of the bail was that Bedzhamov remain in the country. As a response to the extradition process he filed a claim for asylum in the UK meaning his ongoing immunity from prosecution is largely due to the unresolved nature of the asylum application. Bedzhamov was forced to give up his passport and has been barred from leaving the UK since the international freezing order that VBP secured in March 2019.

2019–2022 Expenditure allowance appeals

Once the worldwide freezing order was imposed on him in order to target the assets worth up to £1.34 billion that were being reclaimed by VBP, Bedzhamov responded by requesting an increase in his living expenses allowance under this order. The judge partially granted his request, setting the monthly allowance at £80,000 that meant consequently Bedzhamov had to leave his rented accommodation on Park Lane and he subsequently lodged an appeal.

The question on appeal was whether the judge should evaluate what would have happened to the defendant's lifestyle in the absence of the freezing order or just ascertain, as a matter of fact, what the defendant's living expenses were prior to the freezing order. VPB contended that Bedzhamov's financial situation had drastically declined and that, had the freezing order not been issued, he would not have been able to maintain his opulent previous lifestyle. [1]

Bedzhamov's appeal was upheld by the Court of Appeal. According to the ruling, the right course of action would have been to provide Mr. Bedzhamov with a figure for regular living expenses so he could continue to live at his prior standard. Accordingly, and “ring fencing” significant items of expenditure, it amended the allowance to permit him to pay amounts on rent, school fees, private security, medical expenses and other living expenses, equivalent in total to approx. £240,000 a month. Additionally, it allowed him to pay up to £144,000 as a rental deposit for a new home in London.

On top of ordinary living expenses, Bedzhamov has also been allowed to pay £5 million to two law firms he has been retaining: one is based in London, Mishcon de Reya, which boasts a range of international clients whom they advise on situations where ‘the constraints of geography often do not apply’; while the other is the eigth-largest law firm in the United States, Greenberg Taurig, which has 51 offices across the globe.

2023–24 Intricate legal wrangling as an expert stall

Bedzhamov applied to the UK courts to ascertain whether the company funding the litigation was owned by designated persons (DPs), who would not be able to use said funds, in an apparent attempt to further delay and divert the urgent need to respond to the litigation fought against him by Vneshprombank. The three Russian oligarchs who were sanctioned on March 15, 2022, as a direct consequence of the invasion of Ukraine, are Mikhail Fridman, German Khan, and Alexey Kuzmichev.

In this long-running dispute, Bedzhamov argued that the legal action being taken against him could not proceed without first determining whether there was reasonable grounds to suspect that the VBP and the appointed bankruptcy trustee’s litigation funder was owned or controlled by designated DPs under UK sanctions. Bedzhamov’s legal team submitted that dealing with funds which one has ‘reasonable cause to suspect’ are owned or controlled by DPs is prohibited unless and until that suspicion is dispelled. [2]

Bedzhamov asserted that the sanctioned men's sale of A1 LLC, the company financing the lawsuit to one of their long-term workers at a nominal value appeared to be a means of avoiding penalties and that it also meant he should not deal with this company, specifically asking for help from the UK legal system on how to treat the issue of the associated payments and costs.

As the funds must be frozen in the intervening period, Kireeva and VPB claim that the prohibition should only be enforced if the funds are in fact proven to be owned or controlled by DPs; however, the UK court ruled that proving the actual ownership of A1 LLC was not within the remit of that case. [2]

2022–2024 Immovables rule on UK properties

In a landmark Supreme Court ruling in November 2024, the UK legal system underscored the application of the immovables rule: that English law does not permit enforcement of the Russian bankruptcy proceedings against Bedzhamov’s real estate located in England. This ruling, rooted in sovereignty and private international law, means his UK properties remain insulated from recovery efforts initiated by Russian insolvency practitioners, as the presiding judges ruled: ‘we consider that the common law does not at present enable the English courts to provide assistance to a foreign trustee in bankruptcy by appointing a receiver with a power of sale over immovable property.’

Section 426 of the Insolvency Act 1986 and the Cross-Border Insolvency Regulations 2006 do provide statutory exceptions to the immovables rule in cases of foreign insolvencies, although the Supreme Court deemed that these exceptions did not apply to the present case.

Kireeva argued that the courts were also entitled at common law to assist a foreign trustee in bankruptcy to realise a bankrupt's interests in land in England. Rejecting that argument, the Court found that it followed from the immovables rule that common law did not recognise the London property as falling within the scope of the Russian bankruptcy.

Bedzhamov, being granted the opportunity to sale the mansion, even while under the WFO, has also been given the right to keep any profits: Kireeva and VBP’s argument that it was permissible to appoint a receiver over the London property with power of sale, since the status of property as movable or immovable is decided at the time the relevant bankruptcy order is made, the argument that the proceeds of sale would then constitute movable property was also rejected.

Sources

[1]Supreme Court of the UK, Kireeva v Bedzhamov, supremecourt.uk, 20 November 2024

[2]High Court of Justice, Vneshprombank v Bedhzamov and Kireeva v Bedzhamov, judiciary.uk, 03 May 2024

[3] Colin Stevens and Philip Braund, Hundreds of billions of dollars are missing, International Foundation For Better Governance, 07 April 2021