Privy Council puts injunction on Alfa Group stake in Megafon

MOSCOW, November 16 (RIA Novosti) - The UK Privy Council, the ultimate judiciary body for many countries that were formerly part of the British Empire and Britain's remaining overseas possessions, has put an injunction preventing Russia's Alfa Group from trading its 25.1% stake in Russian mobile operator Megafon, held by LV Finance and other Alfa subsidiaries based in the British Virgin Islands (BVI), a crown dependency.

The injunction came at a request from IPOC International Growth Fund Limited, a mutual fund based in Bermuda, which disputes Alfa's ownership of the stake.

"Today's ruling follows an injunction that was awarded by the BVI Court of Appeal in October," IPOC's news release said.

The injunction remains in place until a decision is reached by the Privy Council on IPOC's application for leave to have its appeal heard. The hearing on this application will start on 17 January 2006.

The appeal is against the decision of the BVI Court of Appeal, which rejected IPOC's claim against LV Finance and Alfa on jurisdictional grounds.

IPOC is arguing that LV Finance and Alfa Group knowingly struck a deal to try and sell the Megafon stake twice, in an international fraud with BVI companies at its heart. The sale process involved a complex web of over a dozen offshore companies, several based in the British Virgin Islands, including the three Alfa subsidiaries presently holding the stake.

"The Privy Council's decision is another setback for Alfa. This result is the last thing our opponents wanted. We believe Alfa recognizes the net is closing in on them and were concerned they might have sought to sell or squirrel away this stake to hamper IPOC's efforts to enforce its rights," an IPOC spokesperson said.

IPOC has won the only substantive final ruling in the Megafon dispute to date. The International Chamber of Commerce in Geneva, in a ruling upheld by the Swiss Federal Courts, found that Alfa and LV Finance had knowingly engaged in an illegal scheme to deprive IPOC of its rightful ownership of part of the shareholding in dispute.

IPOC is a longstanding investor in Megafon and currently already holds an 8% stake in the company in addition to the disputed 25.1% stake.

LV Finance signed two option agreements in April and December 2001 with IPOC to sell to IPOC 100% of Transcontinental Mobile Investment Limited (TMI), itself the sole owner of CT Mobile (CTM), which holds 25.1% of Megafon. However, Alfa Group later announced its purchase of LV Finance's all assets, including CTM.