Sovereign Wealth Fund's $3 Billion Worldwide Freezing Order Overturned
Worldwide freezing orders are an essential means by which dissipation of wrongfully obtained money and assets can be effectively prevented. However, as an important High Court ruling showed, such orders are only worth the paper they are written on if they are obtained following full and fair disclosure of evidence.
The case concerned a foreign sovereign wealth fund that claimed to be a victim of a dishonest conspiracy and had obtained an order freezing assets up to a value of $3 billion. The order was issued against the son of a former president of the country, a man who was said to be his friend and business partner, and 18 corporate members of an investment management group allegedly controlled by the latter.
The group was accused of charging exorbitant fees for the provision of services that brought little or no benefit to the fund. Insofar as investments had been made and contracts entered into, they were said to be manifestly uncommercial from the fund's point of view and designed primarily to put money into the pockets of the defendants. The defendants, however, said that they were victims of a change in the country's political regime and that the fund's assets had been appropriately and sensibly dealt with.
In discharging the order, the Court found that the fund had in numerous respects unfairly presented the facts of the case to the judge who granted it. That unfairness went far beyond the odd accidental slip and concerned the central elements of the case against the defendants. The fund's failure to disclose relevant evidence was also serious and culpable. In the circumstances, the order would not be renewed.