CL-2022-000456 - [2025] EWHC 1938 (Comm)

I have already noted that, in March 2022, Mr Fokin was involved in dealings with bank balances and trust assets that appeared on their face to belong to Mrs Melnichenko, but which he and Mr Melnichenko disposed of as if they were Mr Melnichenko’s. I have also noted Mr Noble’s evidence that Mrs Melnichenko told him that she had no interest or involvement in the business, and left such matters in the hands of Mr Fokin.

On 17 April 2023, Mrs Melnichenko wrote to Mr Noble stating that she wanted to relinquish her status as beneficiary of the Firstline Trust and to reverse the status quo as of 7 March 2022 – in other words, to give up her rights and to formally restore Mr Melnichenko. (Footnote: ³) In fact, this never happened. However, the only credible explanation for the fact that the letter was sent at all is that Mr Melnichenko’s resignation in March 2022, in favour of his wife, was a manoeuvre that he and his advisers hoped would enable both the EuroChem group and the Melnichenko family to evade sanctions. After it became clear that this would not work (not least because sanctions were then imposed on Mrs Melnichenko), the switch to Mrs Melnichenko seemed pointless; hence Mrs Melnichenko’s letter.

I can only assume that those involved then realised that to re-instate Mr Melnichenko as discretionary beneficiary would make it obvious that the switch to Mrs Melnichenko had been a mere stratagem, and that Mr Melnichenko had, throughout, remained the real power behind the Firstline Trust. The letter therefore was not actioned. However, its significance is very substantial.

It seems clear that, in March 2022, Mr Melnichenko gave up his rights as discretionary beneficiary under the Firstline Trust in the knowledge that Mrs Melnichenko would automatically replace him. He intended her to act as his proxy; which is what, in reality, she is.

It is striking that no protector was considered necessary for the Firstline Trust while Mr Melnichenko was the discretionary beneficiary, but a protector was considered necessary after he resigned and Mrs Melnichenko became discretionary beneficiary. It is also striking that the person appointed was Mr Fokin; who had been working for Mr Melnichenko for some years and must have been highly regarded since he was trusted to run Mr Melnichenko’s family office.

When Mr Melnichenko had needed someone to act briefly as protector of the Lineboro Trust, in June 2020, he appointed Mr Fokin. I have no doubt that Mr Melnichenko was also behind the appointment of Mr Fokin as protector of the Firstline Trust, on 17 March 2022. Furthermore, I have no doubt that, despite his denials, Mr Fokin remains in close contact with Mr Melnichenko. As protector, he is able to ensure that the Firstline Trust is managed by the Trustee (i.e., in reality, by Ms Skittides and Mr Lillikas) in accordance with Mr Melnichenko’s wishes.

The Claimants acknowledged that the Banks’ case was that Mrs Melnichenko was Mr Melnichenko’s proxy, but made no attempt to persuade me to the contrary. All they said in closing was:

“The Claimants are not in a position to assess the nature of the relationship between Mr and Mrs Melnichenko. In any case, the allegation goes nowhere…”

The assertion that the Claimants were not in a position to make any assessment of this is remarkable, given that they called evidence from two witnesses, Mr Fokin and Mr Noble, who saw this relationship first-hand, but whose evidence ultimately supported the Banks on this point. Furthermore, it is not right that the allegation was of no importance.

First, it follows that the fact that Mr Melnichenko ceased to be the discretionary beneficiary of the Firstline Trust, whether on 8 or 10 March 2022, made no real difference to the ownership structure. Matters have to be looked at as if Mr Melnichenko always remained the discretionary beneficiary.

Second, the fact that Mrs Melnichenko was Mr Melnichenko’s proxy must have been evident to Linetrust PTC, in the person of Ms Skittides and Mr Constantinides, and to Mr Fokin as protector, when shares in Linea and AIM Capital were transferred to Mrs Melnichenko on 7 May 2022. The fact that Linetrust PTC and these individuals felt able to transfer such valuable shareholdings to the proxy of someone who was subject to EU sanctions is extremely disturbing.