Michael Cherney

Michael Cherney
Michael Cherney
Born January 16, 1952 (1952-01-16) (age 59)
Tashkent, Uzbek SSR
Nationality Israeli
Occupation Businessman

Michael Cherney (Hebrew: מיכאל צ'רנוי‎, also Mikhail Chernoy, Mikhail Chorny or Mikhail Chernoi; born January 16, 1952) is a Uzbekistan-born Israeli entrepreneur and industrialist. He is known for his significant role in the 1990s Aluminium in Russia, and his business ventures in Israel. He is also the founder of the Michael Cherney Foundation and main sponsor of The Intelligence Summit.[1]

Contents

Biography

Cherney grew up in Tashkent Uzbek SSR in a family whose father was a book-keeper and an engineer, the oldest of three sons. At the age of fourteen, Cherney started working, as he joined his father on moonlighting jobs. After high school, he was drafted into the Soviet Army and attended a technical college. Later, his athletic pursuits – boxing and football – led to employment in sports administration.[citation needed]

In the early 1990s Cherney immigrated to Israel but kept close ties to Bulgaria, where he had bought a leading newspaper, a top soccer team, and Bulgaria's only mobile phone company Mobiltel. In August 2000 Bulgarian authorities denounced what they said were his ties to foreign criminal rackets and expelled him, saying he could not return to Bulgaria for 10 years.[2]

Furthermore, the United States have "denied Cherney a visa since 1999 because of alleged ties to the Russian mafia, according to the St. Petersburg Times."[1].

Cherney is wanted on an Interpol international arrest warrant on allegations of money laundering and organised crime, but in June 2010 the Jerusalem Post reported that Cherney is preparing an application to contest it before the European Union Court of Human Rights.[3][4]

Business interests

TWG and founding of Russian Aluminum Industry

Cherney, together with his brother Lev Cherney and UK metals traders David and Simon Reuben, founded Trans-World Group (TWG) – the first and largest private company in Russia which produced aluminum and sold it on Western markets.[5] Business weel reports that the brothers "were known for their rough style of doing business".[6]

In 1994, TWG was drawn into a government inquiry into the theft of more than $100 million from Russia's central bank by a number of separate criminal groups during the early 1990s. In an article on TWG, Fortune Magazine reported: “That a theft occurred is not in dispute, nor is the fact that the Cherneys ended up with a piece of the stolen money and used it to partially fund Trans World's startup phase in 1992… The inquiry's objective was to determine whether the Cherneys knew the funds were indeed stolen”.[7]

In an attempt to clean up its reputation and refute allegations of questionable business practices, the Reuben brothers hired Mayer Brown & Platt, a US based law firm. Terrence Burke, an investigator employed by the law firm and former acting head of the DEA, recommended that the Reubens sever their ties with Cherney after the FBI told him that “it believed Michael himself was an organised crime figure”. As a result Michael was paid $400m “just to go away” whilst his brother Lev remained with the company.[7]

In August 2001 a Fortune Article notes that "the prosecutor's office in Düsseldorf notified the Reuben brothers that it had terminated its probe into alleged money laundering, saying "I hereby confirm expressly that there is no remaining suspicion of money laundering or any other criminal actions." However, the same article states that the Kroll report "doesn't discuss an essential part of the story", nor does it "explore the complex business and financial relationships in Russia between the Reubens and Lev and Michael Chernoy."[8]

SuAl and Partnership with Oleg Deripaska

According to the Financial Times, in 1994, Oleg Deripaska, then an independent metals trader, won the backing of Cherney and TWG to become general manager of Sayansk aluminium plant in Siberia, which lead to formation of SibAl and a partnership between Cherney and Oleg Deripaska in this company.[9][10]

BulgarTabac

In 2002, 80% of the capital in the Bulgarian State-owned tobacco company, Bulgartabac, was placed on the market. Cherney put together a three-partner consortium to bid for Bulgartabac. He planned to purchase Bulgartabac by establishing the Metatabac Consortium, which was created in April 2002. Ownership was structured between three groups: the Russian firm Soyuzcontracttabac, which owned 35%, MCG Holdings, a firm owned by Cherney, which owned 35%, and another 30% held by a Cypriot company named Metacontact Ltd.[citation needed]

Mobiltel

In 2002 Cherney was involved in the selling-on of the Bulgarian mobile provider Mobiltel. Cherney bought the company together with Austrian business men Martin Schlaff, former minster of the Austrian People's Party Josef Taus, and financial expert Herbert Cordt. The 768 million Euro deal was financed by BAWAG P.S.K.. In 2005 Mobiltel was sold for 1,6 billion Euros to Mobilkom Austria Group with a huge profit of 830 million Euros.[11] Critics found it hard to understand "why the state bought an asset for such a high price from someone who was effectively a go-between who stood to pocket a fat profit, rather than directly from the original owner of the company".[12]

The Intelligence Summit

Cherney is the founder and primary sponsor of the Intelligence Summit[1]. In February 2006, The New York Sun reported that John Deutch and James Woolsey had resigned from the Intelligence Summit's board of advisers after receiving information that the conference's primary sponsor, Cherney, had "alleged ties to the Russian mafia".[13][14]

Legal investigations

Invalid passport

On 21st May 1994 Mr Cherney and his future wife were detained by immigration officers on arrival in Heathrow from Geneva. It was discovered that they had attempted to enter the UK on false Polish passports and they were deported back to Switzerland.[15]

The following day they were arrested by the Swiss police on the grounds that they had made use of false identities. Both were searched and found to be in possession of two allegedly invalid Polish driving licences. Mr Cherney gave a statement to the police in which he admitted using a Polish passport in an attempt to enter the UK (which had been successful previously).[15] On 25th October 1994 the Swiss authorities confirmed that they would not be pressing any charges against Mr. Cherney. On 20th November 1996 the Swiss Federal Aliens Office confirmed that he was no longer subject to a prohibition order and that there was nothing to prevent his coming into Switzerland.[15]

Alleged illegal payments to Avigdor Lieberman

Cherney is a close friend of Avigdor Lieberman who allegedly received millions of shekels from various entrepreneurs, including Mr Cherney, while serving as member of Knesset; under Israeli law, MKs are not allowed to receive any payment beyond their salary. One claim is that Cherney paid a company called Path to the East large amounts of money between the years 1999 and 2006, and that these sums were then allegedly passed on to Lieberman as a bribe. Other allegations concern a company called M.L.1, founded by Lieberman's daughter Michal when she was 21.[16] These allegations concern money transferred to M.L.1 from unknown sources outside Israel; the money was later allegedly used for paying salaries to Avigdor and Michal Lieberman.[17]

In April 2007, Israeli police questioned Avigdor Lieberman, Israel’s Deputy Prime Minister, on suspicions of illegally financing his 2001 electoral campaign. According to the police, in May 2001, three months after Lieberman was appointed Minister of Infrastructure in Ariel Sharon's Cabinet, approximately $500,000 was transferred to the bank accounts of Lieberman associates through Cyprus. This money could be traced back to Cherney. Cherney's attorney, Yaakov Weinroth, said the money was transferred by his client “for a totally transparent, legal wine deal”.[18]

In May 2011, Haaretz reported that the Israeli Attorney General had issued a draft indictment against Avigdor Lieberman for fraud and money laundering, including allegations against Cherny.[19] A second Haaretz article detailing the draft indictment reported that a company owned by Cherney had paid $500,000 to a company owned by Avigdor Lieberman in May 2001.[20] It added that: "Prosecutors say Lieberman then used his government posts to try to restore Chernoy's Israeli passport, which he had been stripped of in 1999, and to assist him in other personal matters."[21]

Bezeq affair

In 2001 Cherney was accused of concealing an attempt to purchase the Israeli state-owned telecom company Bezeq, a charge he denies. Cherney allegedly arranged to have Israeli businessman Gad Zeevi purchase 20% of the Israeli telecom in December 1999 from Cable and Wireless for 630 million dollar, of which 500 million came from new bank loans backed by Cherney.[2] The court case dragged on for nine years and finally in 2009 the Tel-Aviv District Judge Oded Mudrik suggested to the Prosecution to settle with Cherney since the Judge did not see any criminal intent or wrongdoing in Cherney's loan to Zeevi.[22][23]

Spanish allegations and attempted arrest in the United Kingdom

According to sources cited in the Spanish daily El Mundo, Spanish authorities sought Cherney in connection to ‘Operation Avispa’, a 2005 investigation that had resulted in the arrest of several prominent Russian mafia figures. The investigators believe that Cherney managed several Spanish businesses, registered in Alicante and Levante, used by the mafia for money laundering of 4 million euros.[24][25]

In May 2009, Spain's Supreme Court issued a detention order against Cherney. Along with his business partners Oleg Deripaska (head of RusAl) and Iskander Makhmudov (head of UGMK), Cherney is suspected of laundering money.[26] The Spanish authorities claim they succeeded in tracing the organization's complicated money laundering track, including Deripaska's, Makhmudov's and Cherney's alleged participation. As a result, Interpol issued an international arrest warrant against Cherney.[27][3][28]

Yaakov Weinroth

In December 2009 an indictment was issued by prosecutors in Tel Aviv against Yehoshua Vita, a former senior Tax Authority official, and Yaakov Weinroth, Mr. Cherney’s attorney.[29][30]

According to the indictment Weinroth made a number of payments to Vita, and in exchange Vita provided favours for Weinroth’s clients, including Cherney and Arkady Gaydamak. Vita was charged with accepting bribes from Weinroth, who in turn was charged with money laundering and making illegal payments to Vita. During a hearing at the Tel Aviv District Court in January 2010, it was alleged that Vita allowed tax breaks on $2 billion for Cherney, and $1 billion for Arkady Gaydamak.[31]

English High Court judgment

On May 1st, 2008 Mr Justice Christopher Clarke in the English High Court defended Mr Cherney's reputation in a judgment.[15]

Clarke J wrote: "Mr Cherney has produced a substantial body of evidence in support of his innocence consisting of an affidavit from Dr Vladimir Ovchnisky, who was assistant to the First Deputy of the Minister of the Interior between 1992 and 1995; assistant to the Minister of the Interior of Russia from 1995 to October 1997; and from October 1997 to July 1999 Chief of the National Central Bureau of Interpol of the Russian Federation, and an author of books on organised crime, two of which are used as textbooks for schools of enforcement agencies. In it he states “with absolute certainty” that Mr Cherney has no criminal record, has never been declared as wanted in or out of Russia, and that law enforcement agencies “do not have any legally valid information proving his implication in organized crime”.

Mr Justice Clarke referred to an affidavit from Colonel Glushenkov, who was from 1992 to 2000 the Senior Investigator for Cases of Extraordinary Importance for the Office of Investigating Organised Criminal Activities. In the course of an investigation into alleged fraud he examined Mr Cherney’s business activities and confirmed the legitimacy of Mr Cherney’s business with aluminium companies and found no indication of the commission of any crime. An affidavit of Mr Yuri Skuratov, who was between October 1995 and April 1999 the Attorney General of the Russian Federation. He states that throughout that period he did not receive any information to the effect that Mr Cherney had been convicted for crimes committed in the USSR or the Russian Federation nor were there any criminal proceedings instituted against him by law enforcement agencies in Russia. Several letters between 2000 and 2004 from relevant authorities attesting to the absence of any criminal cases against him.

Swiss Compensation for Baseless Allegations

On May 13, 2010 the Swiss Court awarded Cherney a compensation of 30,000 Swiss francs for unfounded suspicions of his links to the "Russian Mafia". The Swiss court ruled that Cherney be financially compensated for moral damages to him and his family caused by the investigation which dragged from 1996 till 2007. After the Swiss court's 2008 ruling that Cherney was not linked to organized crime, he decided to sue for moral damages. According to a Swiss law, this compensation could not exceed the amount of 10,000 francs. Exceptions are made in cases where courts discern "special circumstances". According to the court's latest verdict, this was the case with Cherney, especially since the investigation had unduly dragged out for eleven years. [32]

Attempted murder

In 1995 two purported Israeli hit men were prosecuted for what the police said was a $100,000 contract for Cherney's murder. According to the New York Times, "The apparent murder plot was linked at the time to a wave of killings in the aluminum industry in the former Soviet Union, the center of a complex web of global dealings by Mr. Chernoy and his younger brother". The Times also quoted anonymous Israeli police sources linking Cherney to the Russian underworld and international money-laundering schemes, which was not a crime in Israel until 2000. Cherney denied the charges.[2]

Lawsuit against Oleg Deripaska

On November 24, 2006, Cherney filed a suit against Oleg Deripaska, a Russian billionaire who owns the huge Russian aluminum company, RusAl, in the Commercial Court of London's High Court. Cherney sought a Court declaration affirming that Deripaska holds 20% of the RusAl shares on behalf of Cherney or damages for breach of Deripaska's agreement to dispose of the shares and to account to Cherney for the proceeds. The claims are based on a written agreement between the two businessmen that was signed in a London hotel room in March 2001. Deripaska denies that Cherney owns shares and said in an affidavit that his relationship with Cherney was one of a businessman being extorted by a crime boss. After the 2001 meeting, Deripaska paid Cherney $250 million.[33]

As of December 2006 RusAl was in the final stages of negotiating a takeover of domestic rival SuAl and the aluminum assets of Glencore, a major Swiss commodities trader, which could create a new company valued at up to $30 billion. According to this estimate, Cherney's 20 percent stake in RusAl could be worth as much as $3 billion.[34] On July 3, 2008, a British judge ruled that Cherney had the right to sue Deripaska for $4 billion (£2 billion). High Court Justice Christopher Clarke ruled that Cherney might be assassinated or held on trumped-up charges if he tried to bring the case in Russia.[35]

At a June 2011 case management conference, the judge deferred a decision on whether Cherney would be allowed to give evidence by video link from Israel rather than appear in person as an outstanding Interpol arrest warrant means he would be detained if he traveled to the UK.[36][3] In late July 2011, the High Court ruled that Cherney may give evidence at the trial by video link from Israel and set trial for April 2012.[37]

Illegal wiretaps

On January 13, 2010 a Tel Aviv Court handed down its first verdict in the case of illegal eavesdropping on Cherney. Aviv Mor, a private investigator was found guilty of illegally gathering information of personal nature - in particular, tapping the phones of Cherney and sentenced to a plea bargained result which handed down a 14-month sentence to Mor. Part of the sentence will be in the form of community service and the rest will be a suspended sentence. The District attorney's office stated in court that the cases of other suspects in the illegal data collection case "are at an advanced stage and close to indictment ." In February 2008 Cheney filed a suit in a Tel Aviv court that alleged the illegal spying was commissioned by a Russian citizen, Alexei Drobashenko who at the time was the head of the External Relations department at Basic Element, a financial and industrial group that belongs to Oleg Deripaska. Cherney claimed that it was this Russian oligarch , acting through Drobashenko, who had hired Eskin, Pridan and Mor. In his claim Mr. Cherney accused a group of 10 plotters, including Oleg Deripaska, Alexei Drobashenko and the already sentenced Aviv Mor, of illegal wiretapping, hacking the computers of his charity fund, publishing slanderous articles, and harassing him with insulting graffities and leaflets.[38]

Personal life

Cherney owned 20 percent of the Bulgarian football club PFC Levski Sofia until he sold his shares in June 2009 following a Managing Board decision to raise capitalization.[39]

References

  1. ^ a b c Meg Laughlin, "Intelligence conference draws criticism," St. Petersburg Times (6 March 2007) p. 1A.
  2. ^ a b c Intrigue Derails A Public Offering; Israel Halts Sale of Phone Company - William A. Orme Jr., New York Times, 3 April, 2001
  3. ^ a b c Wanted: CHERNEY, Michael Interpol
  4. ^ British High Court to decide: Can Cherney testify by video?, Jerusalem Post, 23 June 2011
  5. ^ Bell, Simon (3 June 2007). "First oligarch claims his due". The Guardian (London). http://www.guardian.co.uk/business/2007/jun/03/russia. Retrieved 12 May 2010. 
  6. ^ "Grabbing a corner on Russian aluminum," Julia Flynn and Patricia Kranz, Business Week (16 September 1996)
  7. ^ a b Capitalism In A Cold Climate - Richard Behar, Fortune Magazine, 12 June, 2000
  8. ^ David and Simon Reuben: Update and Clarification Fortune Magazine (12 July 2004)
  9. ^ Rusal: A lingering heat Financial Times
  10. ^ Russian tycoon loses legal fight over Rusal Financial Times
  11. ^ Schlaff, Elsner, Birdie und Telekom
  12. ^ The Schlaff Saga / A witness, but not a suspect, Haaretz (7 September 2010)
  13. ^ Furor Erupts Over Recordings of Saddam Eli Lake, New York Sun (16 February 2006).
  14. ^ Outside View: Fearing oligarchs -- Part 2 Sergei Markov, UPI (3 May 2007).
  15. ^ a b c d Cherney v Deripaska, 2008 EWHC 1530 (Comm), BAILII (3 July 2008)
  16. ^ Who's the boss? Haaretz Uri Blau, 7 April 2007
  17. ^ The Small Fund and the Screenplay Written by Israel Beitenu Leader Avigdor Lieberman Haaretz, 6 March 2009 (in Hebrew)
  18. ^ $500,000 funneled to Lieberman associates - Gidi Weitz and Uri Blau, Haaretz, 25 April, 2007
  19. ^ AG plans to charge Lieberman with fraud and money laundering Haaretz, 14 May, 2011
  20. ^ Draft charges: Lieberman made millions in illegal business deals Haaretz, 31 May, 2011
  21. ^ Draft charges: Lieberman made millions in illegal business deals Haaretz, 31 May, 2011
  22. ^ Intrigue Derails A Public Offering; Israel Halts Sale of Phone Company - William A. Orme Jr., New York Times, 3 April, 2001
  23. ^ http://cursorinfo.co.il/news/pressa/2009/11/22/interw]
  24. ^ Cherney Faces Travel Problems St. Petersburg Times, (19. January 2010)
  25. ^ Reino Unido elude detener a un mafioso ruso reclamado por España - Fernando Lázaro, El Mundo, 6 July, 2009
  26. ^ El pulso de los oligarcas rusos en la Audiencia Nacional Carlos Segovia, El Mundo, 21 March 2010
  27. ^ Michael Cherney wanted by Interpol Ynetnews, (18 January 2010)
  28. ^ 09MADRID869 - WikiLeaks US diplomatic cable from US Embassy in Madrid (31 August 2009), released 7 December 2010
  29. ^ Indictments Filed Against Senior Attorney, Tax Official - Israel National News, 31 December, 2009
  30. ^ Top lawyer charged with accepting bribe, money laundering - Jerusalem Post, 31 December, 2009
  31. ^ Yaakov Weinroth, Ex-top tax official deny graft charges - Haaretz, 22 January, 2010
  32. ^ Cherney open to compromise in Rusal, Reuters (1 June 2010)
  33. ^ Russian Oligarch’s Long Road to a Hong Kong I.P.O., The New York Times, 22 January 2010
  34. ^ MSNBC report on lawsuit against Deripaska
  35. ^ High Court allows Cherney lawsuit against Deripaska to proceed in the UK
  36. ^ British High Court to decide: Can Cherney testify by video?, Jerusalem Post, 23 June 2011
  37. ^ Cheston, Paul (July 28, 2011). "The 'gangster', a billionaire friend of Mandelson and a £2.3bn row". London Evening Standard. http://www.thisislondon.co.uk/standard/article-23973334-the-gangster-a-billionaire-friend-of-mandelson-and-a-pound-23bn-row.do. Retrieved August 8, 2011. 
  38. ^ "Detective Hired by Deripaska's Employee to Wiretap Cherney Sentenced in Tel-Aviv". Ajaz world magazine. http://ca.sys-con.com/node/1256803. Retrieved February 11th, 2010. 
  39. ^ "Batkov Buys Out Cherney’s Shares in Levski". Standartnews.com. 2009-06-22. http://paper.standartnews.com/en/article.php?d=2009-06-22&article=27882. Retrieved 2011-06-28. 

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