Law firm worried about IBRC legal case over Quinn mall

The Mossack Fonseca law firm became concerned in 2012 about the possible consequences for it from a legal battle in the Ukraine involving the State-owned Irish Bank Resolution Corporation (IBRC) as it sought to get control of a shopping centre once owned by Seán Quinn's family, the leaked Panama Papers files show.

The Panamanian legal firm’s concerns centred on a shopping mall in central Kiev which at the time was worth approximately €70 million and had a multi-million dollar annual rent roll.

A British Virgin Islands company established by MF, Lyndhurst Development Trading SA, was claiming in the courts in Kiev that it had the rights to a $44 million debt linked to the mall, a debt which had formerly belonged to a Northern Ireland company which had come under the control of the IBRC.

Despite objections from lawyers representing the share receiver appointed on behalf of IBRC, the Kiev court entertained the Lyndhurst claim. At the time senior IBRC executive Peter Woodhouse said the court was acting as "a tool of legalised robbery".

Court clash

The Kiev court clash was part of a battle that took place in courts in Dublin, Belfast, Kiev, Moscow and a number of other jurisdictions as IBRC fought to assert its control over an international property portfolio worth up to €500 million seized from the family of Seán Quinn. The seizure arose as a result of the collapse of the Quinn Group and debts owed to

Anglo Irish Bank

, which had been subsumed into IBRC.

Documents from the MF files show that in January 2012 the situation with Lyndhurst was being discussed internally by MF and that it was briefing its own counsel. "If fraud is indeed proven on the part of the company, Lyndhurst, what is the risk of Mossfon BVI becoming an accused party in a criminal procedure?" counsel was asked. On November 9th, 2011, a Ukrainian firm called Daneguild Securities Ltd (Ukraine), had requested MF to reserve Lyndhurst, a shelf company incorporated in July 2011, for it, and said the ultimate beneficial owner would be a Ukrainian citizen, Oleksandr Orlov.

In December 2011 the High Court in Belfast granted an ex-parte injunction to IBRC after it told the court it had learned a $44 million debt agreement linked to the Kiev mall was being claimed by Lyndhurst.

The court was told there was an alleged agreement assigning the debt to Lyndhurst dated October 7th, 2011, as well as a further supplementary agreement dated November 4th, 2011. These alleged agreements were purportedly signed on behalf of Lyndhurst by a Ukrainian lawyer called Dmytro Zaitsev, acting under power of attorney.

The Belfast court ordered there should be no further moves to assert the Lyndhurst claim. Notice of the Belfast order was immediately advised by email to Lyndhurst at its registered address in the MF offices in the British Virgin Islands.

On the same day, according to an affidavit in the leaked files, a Ukrainian lawyer acting for the IBRC, Arsen Miliutin, approached Zaitsev in the Kiev courts to tell him about the development. However, Zaitsev refused to accept a copy of the order, according to Miliutin.

“Where is Northern Ireland and where am I?” Zaitsev said, according to Miliutin. Zaitsev subsequently made further applications to the Kiev court.

The leaked papers include a document apparently showing Zaitsev being granted power of attorney over Lyndhurst on July 11th, 2011, the date the company was incorporated as a shelf company and months prior to it being reserved by Daneguild.

Shopping mall

The document was purportedly signed by

Andreas Spyrides

, a Cypriot national who was the sole director of Lyndhurst.

IBRC eventually asserted control over the shopping mall and Lyndhurst was placed in receivership, and then into liquidation though the missing rent was never recovered.

In March 2012, Daneguild employee Olena Dyachenko emailed MF to say her client "kindly asks [MF]to issue [a] letter of confirmation that you, as registered agent, were duly and in time informed that [general power of attorney] was executed in the name of Dmytro Zaitsev" in relation to Lyndhurst.

Daphne Durand, supervisor of MF's legal department in the BVI, said in reply that Lyndhurst was in receivership, that all powers of attorney were revoked, and the receivers were now the sole agents of the company. "Please note further that the registered agent was not made aware of any general power of attorney issued by the company."

In June 2013 the liquidators, KPMG, wrote to MF to say the documents concerning the establishment of Lyndhurst, which had been sent to the liquidators by MF, included a consent from Spyrides to act as sole director and a register of directors showing him being appointed on the day the company was incorporated in July 2011.

“However, as part of the liquidators investigation, we have discovered that Mr Spyrides was not approached to be a director until November 2011.”

Likewise, they said, the record forwarded by MF to KPMG had shown Goodgate Nominees being appointed as the sole shareholder and the register of shareholders stating they were issued with the shares on the day Lyndhurst was established.

‘Liquidators’ investigations’

“However, as part of the liquidators’ investigations we have discovered that Goodgate Nominees was not approached to be a shareholder until November 2011.” The liquidators subsequently held meetings with lawyers acting for MF. The outcome of these meetings is not disclosed in the files. In a court case pending before the High Court in Dublin, IBRC is claiming the Quinn family engaged in a conspiracy to frustrate the State body asserting its security over the family’s €500 million foreign property portfolio.

The family has said it initiated a scheme to frustrate the bank, but then lost control of it. A Supreme Court judge has described its position as being that they set out to double- cross IBRC, but were themselves double-crossed. IBRC has said it does not accept the family's position. In 2012 the Mail on Sunday published a secretly filmed recording of a meeting in Kiev attended by Seán Quinn jnr, his cousin Peter Darragh Quinn, some Russian speaking businessmen, and Larissa Puga, the manager of the mall who had worked for the Quinn family and whom they alleged subsequently began working for those who were preventing IBRC taking control of the property.

The Quinns can be heard discussing a deal they had with the men, various payments, and where the Quinns might find a safety deposit box in which they might lodge $100,000.

The meeting took place in January 2012, the newspaper said. It later reported on another meeting, between one of its reporters and Orlov in Kiev, and said it was Orlov who had directed the earlier meeting with the Quinns be secretly filmed. It said Zaitsev had been at that meeting.

While the Quinn property portfolio was worth up to $500 million in 2011, it is worth substantially less now as its most valuable elements were in Kiev and Moscow, where property prices have plummeted. The IBRC, now in liquidation, is holding onto the properties in the hope they might regain some of their lost value.

Attempts to contact Orlov and Zaitsev were unsuccessful.