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UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ______________________________________ BASE METAL TRADING SA et al Plaintiffs v. RUSSIAN ALUMINUM et al. Defendants. ______________________________________ Docket No. 00 Civ. 9627

DECLARATION OF NIKITA ILLYICH CHERVINSKY I, Nikita Illyich Chervinsky, pursuant to the provisions of 28 U.S.C. §1746, herby declare as follows: BACKGROUND 1. I am a citizen of the Russian Federation. From December 1, 1998 until

January 29, 2000, I was an Assistant General Director of Open Joint Stock Company Kachkanarskii GOK "Vanadii" ("GOK"). Additionally, from February 11, 1999 until January 29, 2000, I was the General Director of the Limited Liability Company Trading House OJSC "Vanadii" ("GOK Trading House"), all shares of which were owned by GOK. THE SALE OF SHARES TO HOLDEX 2. On January 18, 2000, Limited Liability Company Polyprom ("Polyprom")

and GOK Trading House signed Contract # 3 for the sale of 2,307,984 shares of GOK to Polyprom. The purchase price for these shares was 5,558,847 rubles. (See Exhibit 1). I

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signed the contract for GOK Trading House, and G. M. Bukharin signed the contract on behalf of Polyprom. 3. Contrary to assertions made by Samir Kapoura, both Bukharin and I had

the power to sign that agreement based on the by-laws of our respective companies -Bukharin as the General Director of Polyprom, and I as the General Director of GOK Trading House. 4. Polyprom paid for the shares by transferring twelve promissory notes of

the Savings Bank of the Russian Federation ("Sberbank"), ## 1054314, 1054323, 1054333, 1054334, 1077333, 1077321, 1054565, 0458145, 0458192, 1936588, 1936535, 1936536, in the amount of 5,558,847 rubles -- $194,569.37 according to the official rate of the Central Bank of the Russian Federation on January 18, 2000 -- to GOK Trading House. Sberbank is the largest bank in Russia. 5. On January 20, 2000, GOK Trading House and GOK signed a loan

agreement. (See Exhibit 2). According to that loan agreement, GOK Trading House loaned to GOK 5,558,847 rubles in the form of the 12 Sberbank promissory notes identified above, which had been received by GOK Trading House from Polyprom as payment for the GOK shares sold to Polyprom by GOK Trading House. 6. It is my understanding that these promissory notes were never recorded in

the accounting books of GOK, and were subsequently stolen. It is also my understanding that, on January 20, 2000, Polyprom sold the 2,307,984 shares it had bought from GOK Trading House to Holdex, LLC. (See Exhibit 3).

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THE RUSSIAN LITIGATION 7. After the Illegal Takeover of GOK, GOK filed a suit in the Kalmykia

Arbitrazh Court (KaAC) against Polyprom and GOK Trading House to invalidate the sale of shares from GOK to Polyprom, as well as the subsequent sale to Holdex, LLC. GOK's apparent purpose in filing this suit was to receive double profits by (a) obtaining the return of the shares, and (b) retaining the benefit of the promissory notes. GOK also sought the return of the shares to permit certain persons, such as Chernoi, Makhmudov, and others, to take over control of GOK. 8. To procure a favorable ruling from the Court, GOK presented a document

dated January 18, 1999, which was identified as "Contract # 3." (See Exhibit 4). This document bore a signature which purported to be my signature. However, I never signed the Contract #3 that was presented to KaAC by GOK; the signature contained on the document is a forgery. 9. As of January 1999, I was not an officer or employee of GOK Trading

House and thus could not have signed the contract on its behalf. Further, as an Assistant General Director of GOK in January 1999, I have personal knowledge that there was no such contract between GOK Trading House or GOK, on the one hand, and Polyprom on the other hand. Further, according to its organizational documents, Polyprom did not even exist as of the purported date of the falsified contract. (See Exhibit 5). 10. Based on this falsified contract, by order dated November 22, 2000, KaAC

ruled in favor of GOK. Specifically, the Court found that the fraudulent January 18, 1999 Agreement was invalid and reversed the share transfer, even though the shares sold by GOK Trading House were actually sold pursuant to an agreement dated January 18, 2000. (See Exhibit 6). 3

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11.

Polyprom filed a cassation appeal on January 22, 2001, and by Order

dated April 17, 2001, the Federal Arbitrazh Court for the North Caucasus Circuit reversed the November 22, 2000 decision and remanded the case to KaAC. (See Exhibit 7). The April 17, 2001 order was based, among other things, on the fact that there was a dispute concerning the date when the sale of shares took place, and that GOK had failed to present the KaAC with an authenticated copy of the purported agreement. 12. Thereafter, Polyprom filed a petition with the KaAC on June 18, 2001,

and the KaAC ordered me to present a witness statement on the authenticity of the contract presented by GOK. In compliance with that Order, I submitted in writing my witness statement that the contract submitted by GOK was a forgery. (See Exhibit 8). 13. Inexplicably, at a hearing that took place on July 5, 2001, the KaAC

refused to consider my witness statement. Further, GOK presented to the KaAC a purportedly notarized copy of the false Contract # 3 dated January 18, 1999. The contract was purportedly notarized by Elena Aleksandrovna Kostikova, who dated the notarized copy January 22, 1999. (See Exhibit 4). But I never appeared before Ms. Kostikova and never signed any agreement in her presence. She simply produced a notarized copy of a fake document. The notarization was yet another fraud, aimed at giving the appearance of legitimacy to a forged document. Notwithstanding this fact, the KaAC ordered the reversal of the sale of stock to Polyprom by order dated July 5, 2001. (See Exhibit 9). 14. Subsequently, Polyprom filed an appeal with the appellate instance of

KaAC. This appeal was accompanied by a motion to join Holdex, LLC, the good faith purchaser of the shares. By order dated September 10, 2001, the appellate instance of

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KaAC granted Polyprom's motion to join Holdex, LLC, and postponed the hearing of the appeal. (See Exhibit 10). 15. On November 9, 2001, Holdex, LLC appeared as a third party at the

hearing at the appellate instance of KaAC. By order of the same date, the appellate instance upheld the lower court's decision dated July 5, 2001. It found that the January 18, 1999 contract presented by GOK was the true one, and that the signatories to the contract did not have the authority to sign it. (See Exhibit 11). 16. On January 21, 2002, the Federal Arbitrazh Court for the Northern District

of Caucasus reversed and remanded the November 9, 2001 decision because KaAC failed to follow the instructions of the Federal Arbitrazh Court contained in its decision dated April 17, 2001, ordering KaAC to properly review the circumstances of the case, and because KaAC failed to provide any reasoning why it preferred one contract over the other or to give any consideration to Holdex's right of ownership of the shares in question. The Federal Arbitrazh Court remanded the case for a de novo review of all circumstances of the case at the court of the first instance. (See Exhibit 12). 17. On March 12, 2002, in the absence of Polyprom and Holdex, KaAC issued

another decision in favor of GOK, invalidating the sale and ordering to return the shares to GOK. (See Exhibit 13). Polyprom and Holdex did not attend because the conspirators had submitted forged telegrams to the Court, which falsely indicated that Polyprom and Holdex had consented to a March 12, 2002 court date and to have a hearing conducted in their absence. 18. Polyprom filed a cassation appeal with the Federal Arbitrazh Court for the

North Caucasus Circuit. On April 23, 2002 the cassation appeal was dismissed for procedural reasons. (See Exhibit 14). 5

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The text of the affidavit in Russian and English I am informed that the contents of the Affidavit in English corresponds to that in Russian. I have executed this affidavit outside the of the United States of America and declare under the penalty of perjury pursuant to the laws of the United States that the foregoing is true to the best of my knowledge and belief.

______________________ N.I. Chervinsky Dated: ____________

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EXHIBIT "1"

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EXHIBIT "2"

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EXHIBIT "3"

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EXHIBIT "4"

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