Deceit technology. Who is behind embezzlement of 3.5 billion rubles from Kompas Design Bureau? 

Deceit technology. Who is behind embezzlement of 3.5 billion rubles from Kompas Design Bureau?
The investigation has rated high the organizational skills of Suleymanov and Safin and charged them, in addition to swindling, with creation of a criminal community Photo: The CrimeRussia

Rostec top managers Murad Safin and Ruslan Suleymanov had been laundering budget funds for several years via a bank belonging to the state corporation. Why in the course of the investigation, the suspects had expected to get support from Rostec CEO Sergey Chemezov?

Tearful feast 

In 2017, Rostec State Corporation has celebrated its 10th anniversary. Overall, the company’s results were pretty sad. Instead of high technologies, it was astonishing the public mostly by corruption scandals. In the jubilee year, Rostec Corporation and its perpetual CEO Sergey Chemezov have found themselves in the middle of another criminal case pertaining to embezzlements of budget funds from Kompas Moscow Design Bureau – one of the oldest in the county and subordinate to Rostec. By the way, Kompas also celebrates an anniversary this year and already received a gift from the General Administration of Criminal Investigation of the Ministry of Internal Affairs (MIA) of the Russian Federation that has submitted the indictment to the court. 

Murad Safin, General Director of Kompas Moscow Design Bureau, and Ruslan Suleymanov, Head of Prompostavka company subordinate to Rostec, are the main suspects in this criminal case. Initially they were charged with embezzlements in the amount of 800 million rubles ($14 million). However, after first searches, this sum has increased by times. Some 10 luxury cars and expensive real estate belonging to Safin and Suleymanov have been found. Over the course of the year, while the investigation was ongoing, the amount of damages sustained by the state has reached 3.5 billion rubles ($61.4 million). Surprisingly, but this huge figure hasn’t made the case a high-profile one...

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Murad Safin, ex-General Director of Kompas Moscow Design Bureau. Photo: Kommersant/Irina Buzhor

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Ruslan Suleymanov, ex-Head of Prompostavka Open Joint Stock Company. Photo: Kommersant/Irina Buzhor

The embezzlement scheme was pretty trivial – although brazen. Kompas and Prompostavka had overpriced governmental contracts by retaining some 20 dummy companies as subcontractors. These dummy companies had transferred the received funds to third parties who, in turn, had cashed those. The point is that the companies had accounts inter alia in banks controlled by Rostec – Fondservisbank and Novikombank. Novikombank belongs 100% to the state corporation.

VIDEO: Searches in the framework of the criminal case pertaining to embezzlements in Rostec

Of course, the two top managers of Rostec could not embezzle 3.5 billion rubles ($61.4 million) on their own. Many colleagues and partners of Safin and Suleymanov had assisted them, including Dmitry Manuilov, deputy of the both defendants, directors of dummy companies – recipients of the financial flows, auditor Sofia Makeeva, and even Ekaterina Khlystova, Financial Director of SAFA Fund of Afghan War Veterans sponsored by Kompas on a regular basis.

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Ekaterina Khlystova. Photo: Kommersant/Irina Buzhor

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Dmitry Manuilov. Photo: Kommersant/Irina Buzhor

The investigation has rated high the organizational skills of Suleymanov and Safin and charged them, in addition to swindling on an especially large scale, with creation of a criminal community. The high-tech organized criminal group had operated since 2008, which is indicative of poor organizational skills of the Rostec management. The Board of Directors has bothered to pay attention to the operations of Kompas and Prompostavka only in December 2015.

Apparently, Murad Safin had enjoyed everybody’s confidence in Rostec because the financial operations of Kompas Design Bureau have been audited only for the year of 2015. By the way, at the court session held to determine pretrial restrictions for Safin, he had asked to summon Sergey Chemezov to the courtroom – likely expecting the Rostec CEO to support him. Suleymanov was not so lucky – the auditors have checked the financial documents of Prompostavka for the four previous years. This entire story could be attributed to such traditional in Russia minor sins as mismanagement, slackitude, and negligence – but Novikombank is a distinguished exception from that rule.

Backbone of the Chemezov family

Novikombank presents itself as a bank for corporate clients and emphasizes its informal affiliation with the state. According to its web site, Novikombank is the backbone bank of Rostec serving over 700 enterprises of the state corporation. The web site also features a logo of Moody's Investors Service that has assigned financial strength rating B to the bank.

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However, the Moody's opinion is suspiciously different from the assessments performed by other global rating agencies. For instance, Fitch Ratings Inc. has reduced the Novikombank rating to B–. The arguments provided by Fitch effectively ruin all the efforts of the bank’s PR team. The agency refers to the growth of toxic assets in the bank’s portfolio and, most importantly, insufficient support from Rostec. Fitch analysts dispel the main advertising myth of Novikombank: only 30% of all credits granted by it have been provided to enterprises subordinate to Rostec. The other 70% of the credits have been provided to “private companies not affiliated with Rostec”. In other words, the state, in the person of Rostec Corporation, does not really care about Novikombank that grants billion-ruble loans not to domestic high-tech manufacturers, but to some mysterious business structures. 

For instance, in 2009, Rostec, being in control of AvtoVAZ, has signed a contract with Kate company to supply automatic transmissions. According to some information, the contract worth 300 million rubles ($5.3 million) was signed prior to the construction of the plant where Kate had intended to produce these transmissions. The humble name “Kate” disguises a humble business woman Ekaterina Ignatova – wife of Sergey Chemezov.

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Sergey Chemezov and Ekaterina Ignatova

Business successes of Ekaterina Ignatova can be compared only with those of Elena Baturina. Since 2009 and until 2015, Ignatova has declared a total income over 4 billion rubles ($70.2 million), while in 2016, the business lady earned some 850 million rubles ($14.9 million). The well-being of the Chemezov family seems strange amid the permanent misfortune of the companies belonging to Ekaterina Ignatova. The above mentioned contract with AvtoVAZ has ended up in nothing. In 2012, Renault-Nissan has gained control over the enterprise and, despite its determination to revive the Russian automotive industry, purchased transmissions from Japan-based JATCO Ltd. 

The accounting books of Kate are overburdened with debts, In 2015, its long-term liabilities have exceeded 610 million rubles ($10.7 million). Kate Development, a subsidiary company of Kate, has also been pursued by ill luck. Since 2008, the construction company has been extending the permit to build an auto parts plant in the Kaliningrad region on the annual basis. Today, 10 years later, the plant still remains just a project of Ekaterina Ignatova, while the indebtedness of Kate Development exceeds 250 million rubles ($4.4 million).

The bank that will never collapse 

Not only Fitch has noted the issues with Novikombank, but the Bank of Russia as well. However, Sergey Chemezov likely turns a deaf ear to the warnings. He is full of plans and prospects, including the amalgamation of all banks controlled by Rostec into one huge Prombank. 

Another suspicious story involving Novikombank occurred shortly before the New Year – although its roots go several years back. On December 14, 2017, the Arbitration Court of the Samara Region has blocked the repayment of a debt in the amount of 487.4 billion rubles ($8.6 billion) to Novikombank by AvtoVAZagregat. The funds have been returned to AvtoVAZagregat. It is necessary to note that the subsidiary company of AvtoVAZ is currently undergoing the bankruptcy procedure. Cancellation of a deal by the insolvency administrator is not something extraordinary, but the situation with AvtoVAZagregat is really special. 

Several circumstances add spice to this bankruptcy. First of all, Viktor Kozlov – brother of notorious Aleksei Kozlov mysteriously involved into the bankruptcy of several large banks and Khimprom industrial giant – was recently the Director of AvtoVAZagregat. While Viktor Kozlov was managing AvtoVAZagregat, his brother has acquired its control block of shares by purchasing Kopperberg Ltd. incorporated in the British Virgin Islands. The offshore company had bought the AvtoVAZagregat shares back in 2011. Evil tongues claim that Sergey Chemezov had personally insisted on that. 

With regards to the above mentioned sum of 487.4 billion rubles ($8.6 billion) that has nearly disappeared in Novikombank, the court has ruled that the transfer of funds to the bank by AvtoVAZagregat violates the priority of creditors. The disputed amount was received by the bank in June 2015. At that time, AvtoVAZagregat had huge salary arrears not paid out in full even a year later. The question is: why AvtoVAZagregat that belongs more than 50% to foreign owners was so eager to pay off its debt to a bank controlled by Rostec? Of course, brothers Kozlov could be flooded with patriotic feelings – but in fact, this rather looks like another fraud scheme designed to siphon off funds. 

It is hard to find another state bank in Russia marred by corruption scandals so much. All these scandals have a common feature – the name of Sergey Chemezov always pops up in relation to them. With regards to the embezzlements committed in Kompas Design Bureau, it seems really strange that the defendants managed to siphon off 3.5 billion rubles ($61.4 million) via Novikombank whose true beneficiaries are so proficient in shady financial schemes. Perhaps, the investigators should look for more suspects in that case?

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