Court documents and testimony, presented recently in the Colorado District Court in Denver, expose substantial new evidence that LUKoil has operated a significant business in the state.



The new evidence, secret until now, stretches back for ten years, and shows a flow of cash every month from an alleged front company in Colorado to a LUKoil company in Israel.



The evidence reinforces the likelihood that LUKoil and its Russian subsidiary, Arkhangelskgeoldobycha (AGD), will be ordered to face trial on charges of defrauding Archangel Diamond Corporation (ADC) of its rights to develop the Grib diamond mine project.

In addition to its stake in the future Grib diamond mine project, ADC's biggest current asset is its US lawsuit against LUKoil. This claims recovery of $30 million in investment, $400 million in ADC's share of profits, and another $800 million in potential profits.



The newly disclosed evidence appears in a transcript of court proceedings on May 12; the transcript was made available after diamond giant De Beers attempted to halt the court case, and put ADC into bankruptcy.



Jonathan Oppenheimer and Gareth Penny have been asked to explain why they appear determined to stop the legal proceedings against LUKoil and AGD, now that, according to the latest evidence, they are close to a judicial order to commence trial. They refuse to respond.



The new evidence was presented to District Judge Anne Mansfield by ADC's lawyer, Bruce Marks, a specialist on Russian racketeering. Marks presented the judge with invoices, and claimed that since 1998 until the present, LUKoil has been using a local company called DS Engineering to bill thousands of dollars every month for engineering and other services performed for LUKoil.



DS Engineering, Marks said, was "nothing more than a pass-through account." Cash was moved in both directions, he added - from Colorado to Moscow, and from Moscow to Colorado. Documents for one month, October 2001, showed $32,000 in cash invoiced and paid by LUKoil for running a variety of business operations in Colorado.



LUKoil's attorney, Frederick Baumann, told the judge in the hearing "there is no contact whatsoever between the facts of the plaintiff’s claims and the State of Colorado."



Judge Mansfield disagreed. On May 12, she overruled LUKoil's objections, and ordered that "LUKOIL shall produce all information and documents responsive to all ADC’s interrogatories and requests for production…”



If the judge had dismissed ADC's application, the court case would have had little chance of succeeding. However, the May 12 orders apply serious pressure on LUKoil either to disclose, and risk trial on the substance of ADC's charges; or else to negotiate a settlement on ADC's terms. This in turn has renewed the pressure on diamond giant De Beers to call off its attempt to liquidate ADC.