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Gibson Dunn lobs accusations at King & Spalding in Mongolian corruption cases www.reuters.com
(Reuters) - Gibson, Dunn & Crutcher contends that something is rotten in the state of Mongolia – and that King & Spalding is in the middle of it.
In a court filing on Friday, Gibson Dunn claimed that King & Spalding has “fundamentally misrepresented” its relationship with Mongolian prosecutors in a series of cases in venues around the world to recover allegedly misappropriated Mongolian assets.
King & Spalding spent nearly two years litigating the cases under the auspices of a November 2020 contract with a Mongolian prosecutor’s office. But Gibson Dunn asserts K&S was never actually authorized to litigate on behalf of Mongolian government agencies and is instead engaged in “an “unauthorized, illegitimate political attack” on Gibson Dunn’s client, onetime Mongolian prime minister Sukhbaatar Batbold.
King & Spalding declined to provide a statement in response to the Gibson Dunn filing but cited a recent court filing that said no foreign tribunal overseeing a case to freeze Mongolian assets has endorsed Batbold’s assertion that K&S lacks authority to litigate.
Friday’s filing by Gibson Dunn was in a special proceeding, known as a 1782 action, that Batbold brought in Manhattan federal court to obtain discovery from investigative firm K2 Integrity Holdings Inc, which conducted a years-long probe of the alleged misappropriation of Mongolian mining assets. The K2 investigation was the basis of King & Spalding’s far-flung litigation to recover assets from Batbold and other defendants.
U.S. Magistrate Judge Ona Wang of Manhattan ordered K2 in October to produce discovery. Since then, Gibson Dunn and K2’s lawyers at Kobre & Kim have been battling over K2’s claims that almost all of its documents are privileged because it worked hand-in-glove with Mongolia’s litigators from King & Spalding.
Friday’s brief argued that K2 can’t legitimately claim privilege because King & Spalding does not actually represent Mongolian government prosecutors.
Citing two letters from Mongolia’s deputy prosecutor general – a November 2020 letter casting doubt on King & Spalding’s authorization to bring the suits and a March 2022 letter demanding that King & Spalding terminate the actions – Gibson Dunn asserts that King & Spalding and K2 are not working for the Mongolian government but for Batbold’s political rivals.
“K2 and K&S’s privilege arguments are rotten to their core,” the July 15 brief said. “K&S, a major global law firm has purported to represent a foreign government agency, [the Mongolian Office of the Prosecutor General], in this court and others. But this appears to have been an outright misrepresentation. K&S does not now have, and has never had, any attorney-client relationship with OPG.”
King & Spalding is not a party to the K2 1782 action so has not countered the allegations there. But in a separate 1782 action to obtain Batbold’s banking records (more on that below), K&S filed an assignment letter from a Mongolian prosecutor that appears to authorize the firm to “seek in all relevant courts orders to freeze” Batbold assets. King & Spalding and K2 have also filed declarations from Mongolian agency heads that appear to empower the U.S. firms to act on their behalf.
K2 spokeswoman Joan Vollero refuted Gibson Dunn's accusation that K2 and K&S are acting without appropriate authority. In a July 11 letter to the Manhattan magistrate that anticipated Gibson Dunn’s arguments in the July 15 brief, K2’s counsel asserted that it was Batbold — not K2 and K&S — who was engaged in “politically motivated attacks.” Batbold's assertion, K2 said, disregarded the record not only on King & Spalding’s engagement but also of the successful litigation in four different courts to freeze allegedly misappropriated assets worth about $70 million.
“The attorney-client relationship in this matter has been extensively documented through engagement agreements and sworn declarations in public filings,” K2 spokeswoman Vollero said in an email statement. “A recent change in power in Mongolia is the political backdrop to this matter.”
King & Spalding has raised its own questions about undue political influence in the Mongolian litigation. In November 2012, the law firm brought a 1782 action in Manhattan federal court on behalf of Mongolian entities seeking discovery from JP Morgan Chase Bank NA about Batbold's wire transfers. (That 1782 action is entirely distinct from Batbold’s discovery proceeding for evidence from K2.) In early 2022, Gibson Dunn, in King & Spalding's 1782 action, informed U.S. District Judge Vernon Broderick that Mongolian authorities said King & Spalding had been terminated.
King & Spalding responded in a March 16 filing, arguing that the letter ending its authority to represent the Mongolian government arose “out of troubling circumstances.” The firm said it had been authorized to bring cases by Mongolia’s top prosecutor and had engaged in no previous contact with the deputy who had apparently withdrawn that authorization. Moreover, K&S said, it appeared that Gibson Dunn had been exchanging ex parte letters with the deputy prosecutor.
“If taken at face value, the letters would appear to signal that the [prosecutor’s office] has abruptly shifted its priorities — from years of diligently rooting out corruption among public officials, to now urgently seeking to discharge approximately $70 million in assets that it had frozen for the benefit of the Mongolian people,” King & Spalding said. “Needless to say, we cannot take such letters at face value, particularly when they appear to have been prompted by the very person whose assets are frozen.”
Nevertheless, King & Spalding voluntarily dismissed the 1782 proceeding before Broderick in April. And according to Gibson Dunn’s filing on Friday in the K2 case, King & Spalding has subsequently withdrawn from several other cases it brought on behalf of Mongolian agencies, including litigation in London and Singapore. Gibson Dunn cast those withdrawals as an acknowledgment by the firm that it does not represent the Mongolian officials empowered to sue on behalf of the government.
Batbold lead counsel Orin Snyder of Gibson Dunn told me King & Spalding’s suggestion of a pressure campaign to persuade Mongolian prosecutors to cut off K&S is “misinformation.”
“Shadowy figures are behind these abusive foreign lawsuits against our clients,” Snyder added in an email statement. “We are pursuing the truth in the U.S. courts and all wrongdoers will be held fully accountable."
By Alison Frankel
Thomson Reuters
Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.
Published Date:2022-07-20
