CL-2020-000117 - [2025] EWHC 1620 (Comm)

On 3 February 2016, Falcon acquired 51 units of Nordic Power ETI for €5.1m. The structure of this product was similar to the other ETIs considered already. The collateral obligor was Nordic Power Inc (“NPI”), a company registered in St. Vincent and the Grenadines, consisting of performance linked bonds issued by NPI linked to the performance of: (i) a managed account held at Sparkasse Bank Malta plc; and (ii) registered, non-listed securities held directly by NPI. In contemplation of the issue of the Nordic Power ETI, by an agreement dated 21 January 2016, made between (i) NPI, (ii) the issuer of the Nordic Power ETI and (iii) the 10^th defendant (an English registered company beneficially owned by Mr Bishop), the issuer agreed to procure that its wholly owned subsidiary NPI would utilise all the proceeds to purchase bonds to be issued by the 10^th defendant. Pursuant to these arrangements, NPI transferred €5m to the 10^th defendant. In March 2016, the 10^th defendant paid €4.4m to SVC ostensibly for 1000 shares in Werel. However, SVC did not own the shares, which were owned by the 12^th defendant. These arrangements are opaque but Mr Holt’s evidence (which I accept in the absence of any contradiction) is that the 10^th defendant appears to have made this payment in order to give effect to a loan agreement between SVC and the 12^th defendant by which the latter agreed to lend €4.4m to the former. If this transaction was a real one that would have left SVC indebted to the 12^th defendant in that sum together with such interest as might have been payable under the loan agreement. However, on 4 March 2017, that loan was waived by a written agreement that purports to have that effect. In April 2017, the 1000 shares in Werel were transferred by the 10^th defendant as settlement of its debt to NPI under the bond agreement referred to earlier apparently pursuant to a settlement deed dated 13 April 2017 signed (amongst others) by Mr Bishop on behalf of the 10^th defendant and Mr. Wölfl on behalf of NPI. The disclosure position is highly unsatisfactory because the claimant has been dependent largely on documentation that was seized as part of the Swedish criminal investigation. There is a document which purports to be a “Fair Value Calculation” of the Nordic Power ETI as at 31 December 2016. Who prepared this document and why is unknown as is the source of the information contained within it. On its face however it values the ETI at €4,997,344.09. However, a similar document dated 6 January 2017 purports to value the ETI at minus €2,902.49. Ms Hall has attempted to rationalise this without success – as she put it at paragraph 5.2.12 of her report, this “… represents a strong indication that the value of the collateral bonds (and therefore the shares in Werel) at previous dates may not have been reliable valuations. Given the above, it is not clear whether Werel, and consequently the collateral bonds issued by Energy Everything Investments PLC, were valued accurately at any date.”

There was no appraisal of this investment by TAM although Mr. Wölfl (who apparently acted on behalf of NPI and the 10^th defendant) attributed it to a desire by TAM to invest Falcon funds in Werel shares. Since those were not listed, TAM asked Argentarius to create the ETI structure that would enable Falcon acting by TAM to acquire Werel shares indirectly at prices to be determined by TAM in its capacity as investment manager for Falcon. What is clear is that the acquisition of the ETI by Falcon was executed on its behalf by TAM as is apparent from the security dealing forms dated 22 January 2016 each of which were signed by Mr Farrell. Mr Farrell occupied a senior position in TAM, akin to Director and was TAM’s ultimate owner.

In light of the material I have summarised above, I accept the claimant’s submission that the Nordic Power ETI is impossible to justify commercially and that the (or the probable) purpose of the arrangement was to transfer money ultimately to Mr Serwin and those associated with him. That this was the probable purpose of the investment derives significant support from Mr Holt’s analysis of what became of the sums received by SVC at para. 10.26 and following of his report and in particular the payments referred to in Tables 10.2 and 10.3, which summarise the documentary material as showing that the payment to SVC financed amongst other payments, £600,000 to SVC’s Metro bank account, a payment of US$107,000 to a Croatian entity for unspecified “consultancy services”, a payment of £250,000 to Union Investment Management Ltd for unspecified purposes, and a payment of £100,000 to Hipgnosis Music for unspecified purposes amongst others. Table 10.3 records payments to HM Revenue and Customs of £400,000, a payment of £100,000 to Hipgnosis Music for unspecified purposes and multiple transfers to third parties for purposes that are unclear.