Former Director of Lenenergo does not know where the billions have gone
The Moskovsky District Court of St. Petersburg continues hearing the case of Andrey Sorochinsky, the former General Director of Lenenergo Open Joint Stock Company, and his accomplice Denis Slepov, the Financial Director of Lenenergo. Since September 12, 2016 the hearings are being held almost every day, and chances are high that by the New Year, the court would be able to decide whether the suspects are guilty of the loss of 13 billion rubles sustained by the company and loss of 32 billion rubles sustained by the state budget.
As it is known, no good deed goes unpunished. This is what Andrey Sorochinsky, the former Director of Lenenergo Open Joint Stock Company, is currently thinking. According to him, the company has sustained such a huge loss accidentally, due to an unexpected devaluation of the ruble and issues experienced by Tavrichesky Bank.
The investigation and State Prosecution, however, think differently. Denis Slepov, the Financial Director of Lenenergo Open Joint Stock Company, and Andrei Sorochinsky, its former General Director, are charged under part 2 of Article 201 of the Criminal Code of the Russian Federation (abuse of authority, which has involved grave consequences). According to the investigation, Sorochinsky, being the direct superior of Slepov, in the period since April 2013 and until January 2015, had instructed him to enter into bank deposit contracts with Tavrichesky Commercial Joint-Stock Bank then and sign additional agreements with it. The point is that they both knew that the money deposited in the bank were reserve funds of Lenenergo Open Joint Stock Company allocated to pay out arrears to suppliers.
As a result, the arrears of Lenenergo haven’t been paid out in time, and the Arbitration Court of Moscow had to intervene. The court decision was not in favor of Lenenergo: in addition to the principal debt and legal costs (200 thousand rubles), Lenenergo Open Joint Stock Company had to pay over 228 million rubles in penalties.
Photo: Denis Slepov
In August 2014 Sorochinsky had also instructed Slepov – contrary to the Regulation Use of temporary available funds of Lenenergo Open Joint Stock Company of 2014 – to sign additional agreements to the earlier bank deposit contracts to extend the repayment date for the bank. According to the indictment, “the legitimate interests and rights of Lenenergo Open Joint Stock Company have been compromised by the impossibility to operate funds in the amount over 10 billion rubles in the period of 2015–2035”. The banking activities of Sorochinsky could likely result in a bankruptcy of such an energy giant as Lenenergo. This bankruptcy could leave to even more serious consequences – an interruption of power supply to users in St. Petersburg and the Leningrad region. The government had to provide 32 billion rubles (!) on the urgent basis for “financial recovery of Lenenergo Open Joint Stock Company”.
Andrey Sorochinsky was born on February 8, 1975. In 1997 graduated from the St. Petersburg State University with a major in Theoretical Economy; a certified Economist and Teacher of Economic Sciences. In 1998 started working in the Government of St. Petersburg; has climbed the career ladder from a Leading Specialist to the Deputy Head of a Department in the Committee for Municipal Property Management of St. Petersburg. In 2002–2004 was the Head of Secretariat and Deputy Director for Trades of the Investments Management St. Petersburg State Enterprise. In 2004 became the Deputy General Director for Trades of the Investments Management St. Petersburg State Enterprise. In 2004–2010 was the Deputy Chairman of the Committee for Energy and Engineering of the Government of St. Petersburg. In 2010 became the General Director of Lenenergo Open Joint Stock Company.
The judicial investigation has started in 2016 and found that the suspects deny any guilt. Furthermore, Andrey Sorochinsky stated that his intention was to gain profit by depositing funds in Tavrichesky Bank because its interest rate was higher in comparison with other banks. The sudden devaluation of the ruble was neither his fault, nor a fault of his former Financial Director. In addition, after the devaluation, he had taken all efforts to normalize the situation and requested the bank management to terminate the deposit contracts ahead of the schedule. But this was not done, and soon the Central Bank has intervened and announced a resolution of Tavrichesky Bank.
A story of larceny
All these events have led to searches and visits of law enforcement authorities to the bank. In February 2016, a criminal case has been initiated due to transfers of money from Tavrichesky Bank abroad. Aleksander Sabadash, the former king of vodka, the ex-Senator, and businessman, was a suspect in this high-profile case. According to the investigation, machinations with currency performed by the merchant were the true reasons behind the financial distress of Lenenergo and troubles of Tavrichesky Bank. The operatives believe that the money received from the energy giant have been used to provide loans to companies controlled by Aleksander Sabadash. The loans were allegedly secured by valuable equipment – that did not exist in reality. In fact, the funds had been dispersed among dummy companies and transferred abroad – to companies also controlled by Sabadash. The disappearance of funds attracted attention of the General Administration for Economic Security and Combatting the Corruption of the Ministry of Internal Affairs (MIA) of the Russian Federation and the Federal Security Service (FSB) of the Russian Federation. According to the law enforcement authorities, Sabadash has stolen money belonging to Lenenergo, Tavrichesky Bank, and other financial companies.
A criminal case has been initiated under a rarely-used Article 193.1 (performing foreign currency transactions involving the transfer of funds in a foreign currency or in the currency of the Russian Federation to a non-resident or to a non-residents' bank account, using documents containing deliberately incorrect information about the grounds and the purposes for the transfer).
This is not the first criminal episode involving Aleksander Sabadash. He had already been detained in 2014. According to the law enforcement, in 2010 the merchant organized a criminal group to embezzle budget funds. ES-Kontraktstroy, an Archangelsk-based company, has signed a contract with Vyborgskaya Tselluloza (Vyborg Cellulose) company belonging to Sabadash to perform construction works for the total amount of 12 billion rubles and submitted fake documents to tax authorities to claim 1.87 billion rubles from the budget in value added tax refunds.
While the law enforcement authorities are looking for billions that have disappeared from the bank, defense lawyers are trying to challenge the calculated amount of financial damages inflicted by the suspects. As usually, in the beginning of the trial, the attorneys asked to return the case to the prosecution to rectify deficiencies. According to the lawyers, some parts in the indictment did not comply with the Criminal Procedure Code of the Russian Federation, thus, compromising rights of their clients. However, presiding judge Anton Kryukov has found the complaints of the defense insignificant and rejected the motion.
Photo: Aleksander Sabadash, the ex-Senator and businessman
But the main objection of the defense was related to the calculation of damages sustained by Lenenergo. The investigation believes that the company management has not taken into consideration the condition of the bank, it was impossible to recover the invested funds, and then Tavrichesky Bank became a subject to resolution by the Central Bank and, in fact, ceased its activities. The state budget has sustained damages, and Lenenergo has sustained damages as well – but no financial-economic expert assessment was performed. The court agreed with the defense lawyers and stated that such an expert assessment could be performed in the framework of the judicial investigation. The defense is ready to submit this motion.
The defense attorneys and defendants also claim that the government had to spend 32 billion rubles to save Lenenergo not because of their actions, but because of the state tariff policy.
The law enforcement authorities, however, think otherwise. They believe that close connections between Sorochinsky and Sabadash are directly related to the collapse of Tavrichesky Bank and attempted bankruptcy of Lenenergo.
This is not the end of the twisted criminal story around Lenenergo Open Joint Stock Company. In August 2016 officers of the Investigative Committee of the Russian Federation (ICR) had to visit the company offices again. This time they were looking for Aleksander Nikonov, the Deputy Director for Security. Searches have also been performed in the country residence of the official. Surprisingly, Aleksander Nikonov, a former officer of the USSR Committee for State Security (KGB) and FSB, has been charged with obstruction of justice and hindering the investigation.
Photo: Aleksander Nikonov, the Deputy Director for Security
After the high-profile scandal with Tavrichesky Bank and dismissal of Andrei Sorochinsky, Lenenergo has started an internal audit. It turned out that several electrical substations supplying hydro to major St. Petersburg facilities (including the Legislative Assembly, Mariinsky Theatre, and TV tower) have been renovated only on paper. To trace the money allocated for these works, the new company management addressed the Administration for Economic Security and Combatting the Corruption of the Russian MIA General Administration for St. Petersburg and the Leningrad Region. A criminal case has been initiated due to the fact of paper renovations of important substations under Article 159 of the Criminal Code of the Russian Federation (swindling). It is necessary to note that it was Andrey Sorochinsky who had signed documents for these ‘renovations’. The operatives have started the investigation with zeal. However, while the investigators were reviewing huge piles of documents, the company management has changed several times. Then Roman Berdnikov, a new acting Director of Lenenergo, submitted a letter to Sergey Umnov, the Head of the Russian MIA General Administration for St. Petersburg and the Leningrad Region, stating that the criminal case should be closed. At the same time, the investigators have come up against outright resistance from the company security service.
The operatives have transferred the case to the ICR, which initiated in September 2016 a criminal case against Aleksander Nikonov, the Deputy Director for Security. He was the mastermind behind the resistance against the investigators of the Administration for Economic Security and Combatting the Corruption of the Russian MIA General Administration for St. Petersburg and the Leningrad Region.
Overall, the investigation believes that the episodes with the collapsed bank, transfer of the funds abroad, and swindling with the renovation of strategically important substations are links of the same criminal chain. The main objective now is to identify all the accomplices to it. It can not be ruled out that, in addition to the ex-General Director of the company and the ex-Senator, more high-ranked personalities could be charged in the framework of this case.
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