Sberbank vs. oiler. New charges laid against former owner of Antipinsky Refinery
Dmitry Mazurov, founder of the largest private petroleum refiner in Russia, remains in custody. Gennady Lisovichenko, ex-General Director of Antipinsky Refinery, has fled Russia and was put on the international wanted list. The new owner resumed the processing of customer-owned raw materials on the enterprise. New episodes and allegations appear in the criminal case against Mazurov and Lisovichenko on a regular basis. Why are new charges laid against the businessmen who have already lost the refinery and what has Sberbank to do with this?
In 2004, Dmitry Mazurov has established New Stream Group and purchased an oil refinery not far from Tyumen auctioned off by the State Property Fund of the Russian Federation. Mazurov was the sole bidder and paid $10 million for the enterprise. After its acquisition, he has launched Antipinsky Refinery in a Tyumen suburb. Current Moscow Mayor Sergei Sobyanin, then-Governor of the Tyumen Region, had helped Mazurov to build the refinery. He ordered to allocate a lot for the construction and assisted with the connection to the main pipeline. In 2008, Mazurov engaged new partners in this business – Vladimir Kalashnikov, a close friend of Sergei Sobyanin, and Nikolai Egorov, a fellow alumnus of Vladimir Putin and cofounder of Egorov, Puginsky, Afanasiev, and Partners Law Firm.
President Vladimir Putin; Sergei Sobyanin, Governor of the Tyumen Region; and Aleksander Fillipenko, Governor of the Khanty-Mansi Autonomous District (2001)
New Stream Group created by Dmitry Mazurov was the largest Russian oil refinery independent from large vertically-integrated oil companies. In 2015, Sberbank has granted a loan of $100 million to Antipinsky Refinery; out of that amount, $29 million were never paid back. The total amount of credits provided to the enterprise was some $2.9 billion; Mazurov had acted as the guarantor – therefore, the bank "had no doubts in the successfulness of his business".
But in January 2018, Antipinsky Refinery encountered severe financial issues; the acquisitions of oil were repeatedly suspended. New Stream Group had denied the problems; however, in September 2018, Sberbank acquired the golden share in the enterprise. In November 2018, Maksim Andriasov was appointed the new General Director of Antipinsky Refinery. In April 2019, the operations were put on hold. In May, Antipinsky Refinery filed for bankruptcy. In the same month, Mazurov ceased to be the owner of the enterprise; his shares were transferred to Sberbank. As a result, the bank became the sole proprietor of Vikay Industrial Limited owning 80% of shares in Antipinsky Refinery that had belonged to Dmitry Mazurov and Vladimir Kalashnikov. 20% of shares still belonged to lawyer Nikolai Egorov. Ultimately, Sberbank has seized the refinery as the loan security.
In June, it was announced that Socar Energoresurs has become the owner of 80% of shares in Antipinsky Refinery. 40% of shares in Sokar Energoresurs belonged to Sberbank, while the remaining 60% of shares – to Cyprus-based Socar Russia Investments Ltd. belonging to a company incorporated in the British Virgin Islands and Farid Dzhafarov, head of a Russia-based subsidiary company of Socar – a state-owned Azerbaijani oil and gas producer. On July 13, Mazurov was arrested in Sheremetyevo International Airport and charged under part 4 of Article 159 of the Criminal Code of the Russian Federation (swindling). Gennady Lisovichenko, ex-General Director of Antipinsky Refinery, became the second suspect in this case. On July 15, the Tverskoi District Court of Moscow has remanded Mazurov in custody for two months – until September 12, 2019.
Three days later, Antipinsky Refinery resumed the processing of customer-owned raw materials. The Tyumen enterprise is currently refining oil purchased by Socar Energoresurs; neither the oil nor final products belong to it. In other words, the refinery is now making money only on the processing.
In late July, Maksim Andriasov, the successor to Gennady Lisovichenko, said that new episodes might appear in the criminal cases against Mazurov and Lisovichenko. "We discover more and more new facts. For instance, we have identified sales at artificially low prices. I have no doubt that the investigators have more possibilities to uncover such episodes. I expect new facts to be established soon," – Andriasov explained.
The forecasts of the General Director appointed by Sberbank are coming true – new episodes and charges have been added to the criminal case against Mazurov and Lisovichenko. On July 19, the Investigations Directorate in the Tyumen Region of the Investigative Committee of the Russian Federation (ICR) announced that a new case was instituted against Lisovichenko under part 1 of Article 201 of the Criminal Code of the Russian Federation (abuse of authority). The investigation believes that the suspect has signed a knowingly unprofitable agreement of purchase and sale of refinery equipment, thus, inflicting damages totaling over 35 million rubles ($524.7 thousand).
Later, it became known that the new criminal proceeding against Lisovichenko was launched on the basis of a complaint submitted by Andriasov. According to the new General Director, his predecessor has deliberately created a debt of Antipinsky Refinery to a commercial structure and transferred to it access route № 12 leading to the enterprise at an artificially low price in the framework of the ‘mutual settlement’. As a result, the integrated railway junction was disrupted, and the refinery had to lease railways for 3 million rubles ($45 thousand) per month.
Andriasov claims that Lisovichenko was interested in this unprofitable deal because the new owner of the railway “belongs 50% to the father-in-law of Lisovichenko and a top manager of the refinery”. The new General Director believes that the railway was sold to settle “fake” debts of Antipinsky Refinery. This was the only way used by the enterprise to transport the produced vacuum gas oil – 180 thousand tons per month (30% of its total production capacity); as a result, the refinery’s operations were put at risk.
“They could block the shipments any moment causing billion-ruble losses. We said that this won’t work. And a criminal case was instituted. I am sure that plenty of such episodes are going to pop-up, – Andriasov said. – All access points of the enterprise that could be used to block the operations of Antipinsky Refinery were transferred to companies affiliated with Mazurov and his managers”.
Sberbank has also brought new claims against Mazurov and Lisovichenko. Initially, the bank had accused them of misinforming the largest financial institution of Russia and “possibly, other banks” about the financial standing of the enterprise in order to secure loans. Allegedly, the businessmen had concealed information about “significant liabilities of Antipinsky Refinery to third parties under guarantees provided by the enterprise for companies subordinate to New Stream Group and, in fact, controlled by D.P. Mazurov”. The second claim of Sberbank pertains to deals made “on non-market terms with affiliated persons–intermediaries, including export contracts, resulting in significant damages sustained by the enterprise and siphoning off monetary funds abroad”. According to the statement published on the official website of Sberbank on July 15, these actions have driven the refinery to bankruptcy by worsening its financial standing, “caused the suspension of its operations in late April 2019, and raised the social tension in the region”. Therefore, Sberbank has addressed the law enforcement authorities asking to prosecute Mazurov and Lisovichenko under part 4 of Article 159 of the Criminal Code of the Russian Federation (swindling on an especially large scale committed by an organized group).
On July 15, a judge of the Tverskoi District Court of Moscow has announced the amount of damages sustained, according to the investigation, by the credit organization: “Sberbank Public Joint Stock Company has granted a loan in the amount of 1 billion 806 million 700 thousand rubles ($27.1 million); Mazurov and other unidentified persons distributed the funds at their discretion; the loan was never repaid to Sberbank Public Joint Stock Company”. Sberbank was recognized a victim in the case instituted, according to the court materials, with the involvement of its CEO German Gref.
On July 31, the Legal Department of Sberbank has filed another complaint with the Investigative Department of the Ministry of Internal Affairs (MIA) of the Russian Federation. The bank asked to prosecute Mazurov, Lisovichenko, and “other persons” for sales of gasoline and diesel fuel below the market rates via New Stream Trading. According to the complainant, the refinery sustained damages in the amount of some $66 million due to such operations.
The Legal Department of Sberbank claims that Ksenia, a sister of Mazurov, is the nominal owner of New Stream Trading – but, in reality, the company belongs to the businessman. For several years, a portion of the refinery’s production was sold below the market rates via this structure. The bank asked the investigators to check inter alia a sale agreement of 0.87 million tons of natural stable gas at the price of $444 per ton – while the market rate in that period was $475 per ton. Representatives of Sberbank estimate the damages sustained due to this deal at $27 million. Another suspicious contract pertains to the sale of 0.89 tons of Euro 5 diesel fuel to the same company for $450 per ton – while its weighted average price was $494 per ton. The preliminary damages from that deal are estimated at $39 million.
Dmitry Mazurov in court
The Sberbank Press Service confirmed the submission of a new complaint. According to sources in the law enforcement authorities, the MIA is currently conducting a pre-investigation check in relation to several deals dated 2017. If the above claims are correct, Mazurov and Lisovichenko may be charged not only with swindling – but also with siphoning off funds abroad and creation of a criminal community. A probe into the possible creation of an organized criminal group has already been launched.
In its first complaint, Sberbank had asked to prosecute Mazurov and Lisovichenko not only under Article 159 of the Criminal Code of the Russian Federation (swindling in the credit sphere) – but also under Article 196 (deliberate bankruptcy), Article 193 (non-return of funds in foreign currency from abroad), and Article 210 (creation of a criminal community (criminal organization) and participation therein) of the Criminal Code. It cannot be ruled out that the new complaint filed by the bank results in such charges.
Lisovichenko does not comment on the accusations. On July 22, the investigation announced that he has fled Russia. It also became known that the former General Director of Antipinsky Refinery had tried to get a ‘golden parachute’ prior to his departure. On June 14, Lisovichenko has filed a lawsuit with the Leninsky District Court of Tyumen demanding $10 million as a bonus for the successes of the enterprise achieved by November 2018 and $1.9 million in fines and penalties. However, on August 9, the court dismissed the claim of Lisovichenko.
Mazurov decided not to flee the country – or failed to do so. The businessman insists on his version of the events. On July 11, two days before his arrest, Mazurov has voluntarily come to the MIA Investigative Department and provided detailed explanations to the operatives. According to him, the enterprise was deliberately driven to bankruptcy, and Maksim Andriasov – who was appointed the new General Director of Antipinsky Refinery in November 2018, shortly after the acquisition of the golden share by Sberbank – has played the key role in this.
Mazurov claims that the new General Director “had deliberately created conditions for the bankruptcy of the refinery for six months”. Andriasov had neither prolonged credits received in other banks nor shipped prepaid oil products to the customers; this resulted “in serious uneasiness among the personnel, creditors, suppliers, and customers of the enterprise”. Ultimately, the operations of Antipinsky Refinery were suspended, and the enterprise has initiated its own bankruptcy “at the initiative of Andriasov”. Pursuant to the agreement signed with Sberbank, in such a situation, the shares belonging to Mazurov and pledged as the loan security have been transferred to the bank. This is how Sberbank became the sole proprietor of Vikay Industrial Limited – the owner of 80% of shares in Antipinsky Refinery.
The former owner of the enterprise insists that there were no real reasons for the bankruptcy, and Andriasov was fully aware of this. Prior to filing a bankruptcy notice, the new General Director had repeatedly notified auditors of the solvency of the refinery. Its accounting reports confirm this. Therefore, Mazurov believes that the sole purpose of the bankruptcy was to transfer 80% of shares in Antipinsky Refinery to Sberbank for free. To prevent Mazurov from interfering into the situation, Sberbank has initiated a criminal case against him. The main goal of his prosecution is to neutralize the former owner and deprive him of “the right to defend himself and contest unlawful actions”.
Mazurov claims that the allegations brought by Sberbank – forging documents to secure loans – and used to institute a criminal case against him are groundless. For six years, Sberbank officers had access to all credit documentation; they controlled all deals made by Antipinsky Refinery – i.e. were aware of the real situation at the enterprise and its liabilities.
Interestingly, a former top manager of Antipinsky Refinery confirmed to Forbes that Sberbank was aware of the loans allegedly concealed by Mazurov. According to the insider, these loans were essential for the refinery’s operations. Some $500 million were borrowed from Promsvyazbank and Credit Bank of Moscow.
Mazurov dismisses the claims of Sberbank that Antipinsky Refinery had shipped products to New Stream Trading AG at artificially low prices. The businessman notes that the trader was selling the oil products received from the refinery in full accordance with the credit agreement “signed, authorized, and approved by Sberbank”. Neither Antipinsky Refinery nor New Stream Trading AG had violated the provisions of this agreement. Therefore, Mazurov cannot be accused of embezzlements committed through sales at artificially low prices. The businessman insists that the new top managers were aware of the weakness of these allegations – and started spreading “rumors about embezzlements of funds” received from the creditors for the refinery construction even before the bankruptcy. Furthermore, Alvarez & Marsal independent audit company retained by Sberbank “has carried out an audit and failed to identify any embezzlements”.
At the court session held to determine pretrial restrictions for Mazurov, the suspect has pledged not guilty again. The businessman told the court about the role played by Sberbank in the bankruptcy of Antipinsky Refinery – as he had earlier explained to the investigators – and provided some new details. He emphasized that the business affairs of the enterprise were going well: "We have overcome the crisis of 2015 caused by dollar credits and resulting in sudden unprofitability of the refinery. Last year, we have launched new gasoline production facilities and became financially viable".
Manager Aleksei Grenkov appointed by Sberbank
According to the former owner, Antipinsky Refinery started experiencing serious problems only in September 2018; at that time, Mazurov, has included – “under the pressure of the Sberbank top management” – representatives of the credit organization into the board of directors: “their number reached four out of the seven”. Using their numerical superiority, Sberbank managers Aleksei Grenkov and Igor Kondrashov have appointed – “under the threat of funding termination” – Andriasov the General Director, and he drove the refinery to bankruptcy. Not only hadn’t the new head shipped oil products to customers – but also sold the same goods to two different buyers. For instance, Andriasov sold the products intended for VTB Commodities Trading twice. “The customers had a conflict and addressed the London Court – who has prohibited the refinery from exporting its products. The enterprise suspended its operations – and two weeks after the submission of a profitable accounting report, a bankruptcy notice was filed,” – Mazurov said.
Manager Igor Kondrashov appointed by Sberbank
The businessman reiterated that Andriasov had acted as per instructions from Sberbank and in its interests: “Sberbank is responsible for the double sales and prohibition to export products”. The goal of these actions was to seize the full control over the enterprise on the basis of artificially created reasons and then “engage another company in the oil processing at the enterprise”. Mazurov claims that the resumption of the oil refining operations by Sberbank indicates that the credit organization has achieved its goals.
Mazurov also told the court that the Sberbank management “puts pressure on the investigation”. Otherwise, the investigators would immediately understand that there are no reasons to institute a criminal case. “What swindling are we talking about if the enterprise has enough assets on its balance? If we resume the oil extraction on fields belonging to Antipinsky Refinery in the Orenburg region, all credits would be paid out,” – the businessman said.
New Stream Trading AG confirmed that pressure was put on the investigation. On July 15, a statement on the illegitimacy of the criminal prosecution of Mazurov was posted on the company's website. According to it, on July 5, 2019, an ICR investigator has issued a refusal to launch criminal proceedings against the businessman – "but later, this decision was annulled". On July 11, Mazurov has not only testified voluntarily – but also "provided a package of documents on all circumstances of this case". However, his willingness to collaborate was not taken into consideration. "A drastic change in the stance of the investigation and subsequent arrest of D.P. Mazurov indicate that some foes of D.P. Mazurov may put pressure on the investigative structures,” – the statement emphasizes.
After the court decision to remand Mazurov in custody, New Stream Trading AG announced that the prosecution of the businessman is an attempt “to force him to give up the struggle for Antipinsky Refinery” and deprive him “of the possibility to defend his rights and legitimate interests under the threat of criminal prosecution”. New Stream Trading reiterated the arguments presented by Mazurov”: an audit carried out by Alvarez & Marsal failed to identify any embezzlements, and oil products were sold to the trader not at artificially low prices – but in full accordance with the syndicated credit agreement “signed, authorized, and approved by Sberbank”.
On July 18, New Stream Trading AG confirmed another statement made by Mazurov in court: the enterprise was deliberately driven to bankruptcy after barring its founder from the management. “After the appointment of new managers by Sberbank Public Joint Stock Company, the revenues of Antipinsky Refinery significantly decreased – even though the enterprise has launched new Euro 5 high-octane gasoline production facilities and increased the EBITDA to $30 million per month; this enabled the refinery to discharge its obligations to Sberbank Public Joint Stock Company, other banks, and foreign customers”.
On July 29, the Moscow City Court has recognized the arrest of Mazurov legitimate and dismissed the appeal filed by the defense team. Mazurov, held in the pretrial detention facility № 5, had participated in the hearing through a video conference and affirmed his innocence again: “The Head of Sberbank wrote a letter to the minister asking to prosecute me; I saw that document. I do not understand the allegations brought against me – but will continue defending my name”.
The defense attorneys noted that issues related to business contracts should be resolved in the commercial or civil litigation field – not in the framework of a criminal case. On the same day, New Stream Trading AG made a similar statement and reminded that “the current criminal–procedural legislation prohibits the use of detention as a pretrial restriction in cases related to business activities”.
Dmitry Mazurov in court
On July 31, Sberbank accused Mazurov and Lisovichenko of selling gasoline and diesel fuel at artificially low prices – at that time, the former owner of Antipinsky Refinery was already in custody and could not provide his version of the events. However, New Stream Trading AG has stated that sale proceeds were not siphoned off abroad – but transferred to the enterprise to replenish its floating capital. In compliance with the credit agreement, proceeds received by New Stream Trading AG from sales of products of Antipinsky Refinery were deposited on escrow accounts in Sberbank and then spent on construction, acquisition of raw materials, and interest payments. According to the bankruptcy notice filed by Antipinsky Refinery, its indebtedness to New Stream Trading AG was 32.3 billion rubles ($485 million), which confirms the above statement.
New Stream Trading AG also claims that the price of $444 per ton mentioned by Sberbank contradicts the reality, while gasoline and diesel fuel sales volumes were higher than the figures presented in its complaint. But most importantly, the trading margin of New Stream Trading AG was consistent with the provisions of the credit agreement signed with Sberbank. The trader had provided to the bank information about the margin on a quarterly basis, and it had never exceeded the values stipulated in the credit agreement. This is another reason why New Stream Trading AG considers the prosecution of Mazurov and Lisovichenko ungrounded and illegitimate.
Experts suggest various versions explaining why Sberbank – that has already seized Antipinsky Refinery from Mazurov – insists on his prosecution. Such terms as “intimidation of the opponent” and “forcible raidership” are frequently used in comments. The new allegations brought by the bank against Mazurov and Lisovichenko raise even more questions. Andriasov claims that the credit organization has addressed the law enforcement authorities “to defend its rights and recover losses”. But it seems that Mazurov is right stating that the main goal of his prosecution is to neutralize the former owner and deprive him of the right to defend himself.
Konstantin Simonov, Head of the National Energy Security Fund
Konstantin Simonov, Director of the National Energy Security Fund, believes that influential lobbyist Gref may secure governmental support for the refinery. The most important for him is to prevent the former owners from interfering into this process and derailing the negotiations between the new management and the state. "It is unclear why has Socar got involved in this story. Here is a possible motive: Sberbank is not just selling a refinery to its Baku partners – but also lobbies privileges for it. I do not rule out that some political services are rendered to Azerbaijan as well. This is how lobbyism works in Russia. Schemes like this one are pulled off,” – Simonov said