Friday Jun 11, 2021
LONDON: A district court in the United States has closed a claim against Broadsheet LLC by a hedge fund that sought to take control of the $29- million award that Broadsheet had won from the Government of Pakistan.
The News had exclusively reported that a Cayman Island hedge fund - VR Global Partners – had filed a case in Isle of Man and a petition at the US District Court for the District of Columbia against the Broadsheet’s UK and US lawyers at Crowell & Moring, seeking attendance in court of Washington DC-based Crowell partner Stuart Newberger to answer issues related to the disbursement of nearly $29 that Pakistan paid to Broadsheet in awards proceeds.
VR Global Partners had claimed it provided funds to Broadsheet’s lawyers to finance arbitration proceedings against Pakistan at London High Court’s Financial Division. After the application was made, a court in the Isle of Man prevented the Broadsheet liquidator from distributing monies to Broadsheet’s creditors unless a decision is made on the application by the funder.
In the latest development, G Michael Harvey, the US Magistrate Judge for the District of Columbia, has Ordered that VR Global Partners’ application has been dismissed. The VR Global’s application was about an order to conduct discovery for use in a foreign proceeding.
A copy of the Order available with Geo News reads: “In light of the parties’ submission dated June 9, 2021 (ECF No. 23) informing the Court that Petitioner seeks to dismiss its application without prejudice and that Respondent “does not intend to press the suggestion for sanctions,” it is hereby Ordered that the application is Dismissed Without Prejudice. The Clerk of Court is respectfully directed to close this case.”
VR had claimed in its US filing that it gave Broadsheet US$6 million in 2017 through a legal contract in exchange for a “priority lien” over the proceeds of the arbitration against Pakistan. According to VR’s claim, it was entitled to US$27.8 million – almost the entire award amount that Pakistan paid to Broadsheet.
The writ at the US District Court had sought full disclosure from Stuart Newberger relating to the proceeds of a claim by Newberger’s client - asset recovery firm Broadsheet LLC — against Pakistan so that the evidence could be used in the Isle of Man court proceedings. The case between Broadsheet LLC and VR Global continues in the Isle of Man.
Broadsheet was hired by Pakistan more than two decades ago to trace assets belonging to former prime minister Nawaz Sharif and his family members, as well as several other politicians and businessmen.
Pakistan broke the contract in violation of the agreement it had signed and the case has so far cost Pakistan close to $65 million in legal fees and awards after Kaveh Moussavi, who beneficially owns Broadsheet, brought the case before sole arbitrator Sir Anthony Evans QC under the rules of the Chartered Institute of Arbitrators. The arbitration judge found that Pakistan had conspired to criminally defraud Broadsheet Isle of Man. The Broadsheet LLC’s lawyers convinced London High Court to seize Pakistan’s assets at United Bank Limited (UBL) in December 2020.
The UBL then transferred US$28.7 million to an escrow account controlled by Broadsheet’s court-appointed liquidator Roger Harper in the Isle of Man.
VR Global claimed that Broadsheet should have kept the award money into a designated account but it breached a guarantee by not placing the money in the designated account.
VR claims that Newberger, on behalf of Crowell & Moring, had signed a “priorities agreement” between Broadsheet and VR Global establishing entitlement to the award proceeds and that Crowell & Moring undertook a “clear duty” to hold the award proceeds on trust in an account held by the firm to be distributed under the priorities agreement in favour of VR Global.
According to VR Global’s claim, it should have received the return on its US$7 million investment by January 8 but didn’t hear anything from Crowell & Moring for nearly four months and failed to obtain any information.
VR Global is part of the VR Capital Group founded by US millionaire investor Richard Deitz. The hedge fund also owns a stake in Process & Industrial Developments (P&ID), a British Virgin Islands entity that is trying to enforce a US$10 billion award against Nigeria.