Dead Oligarch’s Old Foes in Tussle Over French Riviera Chateau

BillionaireRoman Abramovich, Russian airline Aeroflot PJSC and the U.K. treasury are among creditors who stand to gain from a legal tussle to lift the confiscation of a French Riviera mansion valued at more than $100 million that once belonged to oligarch Boris Berezovsky.

Bankruptcy trustees argued at the Aix-en-Provence appeals court on Wednesday that the Chateau de la Garoupe in Cap d’Antibes should be used to help pay back what the creditors are owed — rather than remain in the hands of the French state following a ruling in a separate money-laundering case.

Berezovsky, who died in 2013 with a pile of unpaid bills, was one of Russia’s first and best-known oligarchs before his fortunes began to decline when he opposedVladimir Putin’s election in 2000. Once allies and friends, Abramovich and Berezovsky also fell out around that time. Their dispute over oil companySibneft culminated in one of the largest U.K. civil lawsuits ever filed, where Berezovsky unsuccessfully sought about $6.8 billion in compensation.

Once a billionaire, Berezovsky’s wealth melted along the years. He left debts worth about 296 million pounds ($406 million), according to the trustees, from accounting firm Grant Thornton. While the former businessman was found at his home near London with a noose around his neck, a coroner said there wasn’t enough proof that Berezovsky took his own life.

Aeroflot, with the biggest claim on his estate, has argued that Berezovskyembezzled huge sums when he headed the carrier. For Abramovich, the stakes are much smaller this time round — he has a claim worth less than $1 million. Baltic International Bank is trying to collect on a 66 million-pound debt. Elena Gorbunova, Berezovsky’s former girlfriend, and the U.K. tax authority say they’re owed about half that amount. 

In 2015, Chateau de la Garoupe, nestled in the so-called Bay of Billionaires, was confiscated as part of an embezzlement and money-laundering case that had initially targeted Berezovsky before his death. French judges found that Berezovsky and an estate agent had partially bought the property with funds siphoned from Abramovich, owner of London soccer club Chelsea FC. But since neither Abramovich nor any of the other creditors were party to the proceedings that led to the seizure, they didn’t get any compensation.

At Wednesday’s hearing, Stéphane Bonifassi, a lawyer for the trustees, argued that the full confiscation of the chateau was disproportionate and should be overturned. While its acquisition was funded by $5 million in misappropriated money, that corresponds only to half the property’s value when it was acquired, and just 5% of its value when it was seized, Bonifassi said in written arguments provided to judges before the hearing.

“It would be fair that this asset of considerable value were allocated to compensate creditors harmed by the fraudulent actions of Boris Berezovsky,” Bonifassi wrote. 

The chateau, with a direct access to the sea, spans more than 100,000 square meters (1,076,000 square feet) with a living area of about 1,500 square meters. In 2011, an expert valued this “exceptional” property at 93.6 million euros ($114 million) or about 60,000 euros per square meter.

Alexandra Connolly, a real-estate agent based on the French Riviera, said in an interview that, much like a rare piece of art, it’s extremely difficult to put a price tag on such a rare property.

“One thing is for sure, its worth at least 100 million euros,” she said. “A few years ago, when there was a much higher demand from eastern European buyers, the chateau would have most likely been purchased much quicker than today but we have to remember that the rarity keeps its value.” 

Public prosecutors and the French agency in charge of managing confiscated assets have both opposed the Grant Thornton request. Prosecutors declined to comment ahead of the hearing. Spokespeople for Abramovich and Aeroflot also declined to comment.
 

A ruling in the case is scheduled for April 21. In the meantime, another neighboring luxury property owned by Berezovsky is also being sought by the trustees: the Clocher de la Garoupe, which prosecutors say is valued at about 60 million euros.

It’s a place Abramovich knows well. He spent the summer of 1997 there with his family as a guest when he was still in good terms with Berezovsky. A few years later, Abramovich bought his own exclusive home on the Bay of Billionaires, the Chateau de la Croë.

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