Sleight of hand and no fraud. Sergei Maslov ‘develops’ Urals at public expense 

Sleight of hand and no fraud. Sergei Maslov ‘develops’ Urals at public expense
‘Unsinkable’ Sergei Maslov Photo: The CrimeRussia

In late June 2019, the management of Development Corporation Joint Stock Company established in 2012 on the basis of Industrial Urals–Polar Urals Open Joint Stock Company was changed. This infamous corporation was repeatedly involved in corruption scandals. Notorious oiler and millionaire Sergei Maslov was its General Director in 2013–2016. In fall 2016, Maslov was arrested for embezzlements – but somehow, the court acquitted him. Immediately after the acquittal, he relocated abroad. The CrimeRussia reviewed the main ‘failures’ of the ‘unsinkable’ corporation, shady schemes pulled off by Maslov and his partners, and connections of the oligarch who has made enormous money on governmental projects. Surprisingly, but the information presented below hasn’t attracted the attention of the law enforcement authorities yet.

Operation Liquidation failed

 

Evgeny Kuzaev, ex-First Head of the Construction Department of the Yamalo-Nenets Autonomous District, and Viktor Guz', ex-advisor to Igor Kholmansky, ex-Presidential Plenipotentiary Envoy to the Urals Federal District, have recently left the Supervisory Board of Development Corporation Joint Stock Company. Roman Kolupaev, Deputy Director of the Department for Economic Development of the Khanty-Mansi Autonomous District, and former police officer Vitaly Buchkov, Deputy Head of the Construction Department of the Yamalo-Nenets Autonomous District, have superseded them. These changes are not shown on the official web site of the Development Corporation yet.

A few years ago, Dmitry Kobylkin, then-Governor of Yamalo-Nenets Autonomous District, has named Development Corporation ‘a black hole’. Rumors about its forthcoming liquidation started circulating – but this did not happen.

Nikolai Tsukanov, Presidential Plenipotentiary Envoy to the Urals Federal District (his aide Aleksander Vorobiev was recently arrested by the Federal Security Service (FSB) for espionage on behalf of Poland), had also actively supported the liquidation of Development Corporation.

“I have made everything to ensure that the plenipotentiary representation has no official relationship with this structure; the Executive Director of the corporation, who used to be an aide to the Presidential Plenipotentiary Envoy, does not work here anymore. I would better never heard about this corporation because nobody can remember its creation – while we will be held responsible,” – Nikolai Tsukanov said in September 2018 and threatened Development Corporation with a large-scale audit.

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Presidential Plenipotentiary Envoy Tsukanov sharply criticizes Development Corporation

The results of the audit announced by Tsukanov remain unknown. Even it were performed indeed, its findings are likely not disclosed to the public – similarly with a number of corruption scandals involving Development Corporation.

"In total, Development Corporation has squandered some 30 billion rubles ($476.3 million); it has neither real prospects nor serious investors. As the fraction leader in the Duma, I promise that we will vote against any allocations of money for new projects. Nobody can report the spending of funds allocated earlier. Plenty of criminal cases involve Development Corporation, – Evgeny Markov, a Deputy of the Duma of the Khanty-Mansi Autonomous District from the Liberal–Democratic Party of Russia (LDPR), said. – Development Corporation is an example of inefficiency and waste of state resources; it is necessary to initiate its liquidation".

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Evgeny Markov, Deputy of the Duma of the Khanty-Mansi Autonomous District

Still, the corporation continues its operations without reporting to anyone. It is necessary to admit that the scope of these operations has decreased after the arrest and subsequent resignation of General Director Sergei Maslov. In March 2018, the Arbitration Court of the Sverdlovsk Region has founded elements of bankruptcy in Development Corporation: according to SPARK-Interfax database, its net loss for the year of 2017 was 428.5 million rubles ($6.8 million). However, the corporation was not liquidated; in November 2017, Sergei Chernyaev, a representative of the Khanty-Mansi Autonomous District, became its General Director.

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Sergei Chernyaev, new General Director of Development Corporation

High-profile arrest and quiet release

In 2016, the General Administration for the Rostov Region of the Ministry of Internal Affairs (MIA) of the Russian Federation has instituted a criminal case under part 4 of Article 160 of the Criminal Code of the Russian Federation (misappropriation or embezzlement) against Sergei Maslov, then-General Director of Development Corporation, his first deputy Vladimir Karmanov, and deputy Sergei Lukin for the embezzlement of 1 billion rubles ($15.9 million) from Narodny Kredit (People’s Credit) Bank. According to the investigation, in October 2014 – shortly before the revocation of the bank’s license, – over 1 billion rubles ($15.9 million) belonging to shareholders of Development Corporation were deposited into it, siphoned off to Cyprus-based offshore structures, and invested into private projects of corporation’s top managers. In other words, the funds were purposively deposited in a troubled bank to justify their subsequent disappearance.

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Sergei Maslov

On October 19, 2016, MIA and FSB operatives detained Sergei Maslov in Arkhangelskoe township, Moscow region. The court has frozen his assets, including 3 ha of land in Arkhangelskoe, an apartment in Moscow, and country homes. Vladimir Karmanov was arrested in a village on Novorizhskoe highway. The criminal case was widely publicized; media outlets had discussed a deluxe Bentley Continental worth 20 million rubles ($317.5 thousand) belonging to Maslov, his monthly salary of 1 million rubles ($15.9 thousand), office 1200 square meters in size on Savvinskaya quay in the center of Moscow, 71-meter-long yacht 1331 Victoria (ex-Baltika) named after his wife Viktoria Maslova, and an equestrian center in Germany owned by him.

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Estate of Sergei Maslov in the Moscow region

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Project 1331 yacht

 

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Sergei Maslov with wife Viktoria

Experts had expected that the arrest of Sergei Maslov affects many prominent figures, including Vladimir Yakushev, then-Governor of the Tyumen Region; Natalia Komarova, Head of the Khanty-Mansi Autonomous District; and Evgeny Kuivashev, Governor of the Sverdlovsk Region. Confessions of Maslov could be detrimental to a number of high-ranked officials. At the time of his arrest, the Property Departments of the Tyumen Region, Yamalo-Nenets Autonomous District, and Khanty-Mansi Autonomous District were shareholders of Development Corporation. The Governors of these regions had invested funds into it in a hope to get a railroad to rich mineral deposits of the Polar Urals – the Northern Latitudinal Railway.

Three weeks later, Maslov and Karmanov were quietly released from the Rostov pretrial detention facility under written pledges not to leave the city. In October 2017, the charges laid against Maslov were dropped: the investigation failed to obtain any evidence of his guilt. Sergei Lukin, a former deputy of Maslov, became a scapegoat in this case: according to the investigation, he was responsible for the economic security of the corporation and selection of banks for investments. "In 2015, Maslov became aware that S. Lukin had benefited from depositing funds of Development Corporation in Narodny Kredit Bank; they had a conflict; as a result, Lukin was fired from Development Corporation,” – the case file states.

In other words, the investigation concluded that Lukin had calumniated Maslov; his right to rehabilitation was recognized and assets unfrozen. The above-mentioned governmental functionaries still hold supreme posts, while Sergei Maslov and Vladimir Karmanov live in luxury abroad – they possess Swiss and Austrian citizenship respectively. According to the available information, Sergei Lukin still remains in a pretrial detention facility.

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Vladimir Karmanov, first deputy of Maslov, also escaped criminal liability

Alumnus of Lukoil

Sergei Maslov, a native of Grozny, started his career in Surgutneftegaz. Then he worked as a section supervisor in Kolymneftegazstroy and Surgutneftedorstroyremont. In the ‘turbulent 1990s’, Maslov has transferred to Lukoil. In 1992, he was appointed the General Director of Lukoil Trading, in 1996 – the President of Lukoil International in Austria.

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Sergei Maslov used to be a top manager of Lukoil

In February 2001, Sergei Maslov became the President of Transnefteprodukt Open Joint Stock Company. In 2008, he was in charge of Transnefteprodukt and the Saint-Petersburg International Mercantile Exchange Closed Joint Stock Company at once. In September 2008, Maslov quit Transnefteprodukt while remaining the head of the stock exchange. In 2006, at the age of 46, he has graduated from Kutafin Moscow State Law University by correspondence. It is necessary to note that Sergei Maslov had always worked in the interests of Lukoil. In May 2013, Lukoil has lobbied his candidacy for the General Director of Development Corporation earlier administered by Aleksander Beletsky. This appointment opened up new horizons for Maslow, while the charter capital of Development Corporation has grown to 30 billion rubles ($476.3 million) by the end of 2014. The corporation has 17 subsidiary organizations.

The primary objective of the state corporation ruled by Sergei Maslov was infrastructure development; his favorite (i.e. the most profitable) job was the construction of bridges across northern rivers. The projects supervised by him had consumed enormous amounts of money, exceeded all reasonable budgets, and pretty often failed. In addition, the corporation was involved in suspicious deals described in detail below.

Poultry plant as a ‘generator of funds’

In December 2014, Ovomir Limited Liability Company subsidiary to Development Corporation has purchased a non-core asset – Chelyabinskaya Poultry Plant Public Joint Stock Company – using the money of its another subsidiary, Construction Development Company Limited Liability Company. Construction Development Company has granted to Ovomir a loan in the amount of 1.4 billion rubles ($22.2 million) secured on its shares. At the time of the deal, the declared balance value of net assets of the poultry plant almost was 2 billion rubles ($31.8 million) – although their real value, according to experts, hadn’t exceeded 700 million rubles ($11.1 million). The poultry plant was supposed to become a ‘generator of funds’ for Development Corporation and cover a portion of its costs. It is known that this deal was made as per instruction of the authorities of the Khanty-Mansi Autonomous District.

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Subsidiary companies of Development Corporation purchased a poultry plant in Kopeisk

Upon becoming the owner of an illiquid asset purchased at the public expense at an inflated price, in early 2016, Sergei Maslov has sold 100% of Ovomir shares to Yugra Industrial Corporation for 1.7 billion rubles ($27 million). The funds allocated for the poultry plant acquisition were not returned to the state treasury. Just a sleight of hand and no fraud – the investigators were unable to find the money that had disappeared in the course of the ‘generation’.

Ovomir currently belongs to Moscow-based Orion Limited Liability Company whose founder and factual owner is Pavel Kadushin, Chairman of the Board of Directors of Chelyabinskaya Poultry Plant and concurrently the Director of the Control and Audit Department of Development Corporation.

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Businessman Pavel Kadushin

‘Debt’ bridge

On September 12, 2015, Sergei Maslov participated in the grand opening of one of the sections of the Northern Latitudinal Railway – the bridge across the Nadym River in the Urals Federal District. The cost of this 1.3-km-long bridge with a single-track railway and an automobile road having a traffic capacity of 3 thousand cars per day was 14 billion rubles ($222.3 million). The bridge became the key element of Surgut–Salekhard regional highway and Salekhard–Nadym–Korotchaevo railroad.

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Bridge across the Nadym River

Later, it became known that the customer, Development Corporation, has refused to pay the general contractor, Mostostroy-11 Joint Stock Company, whose final beneficiaries reportedly are structures subordinate to Russian Railways, for the performed works. The contractor had to address the Arbitration Court of the Sverdlovsk Region to recover more than 200 million rubles ($3.2 million) owed to it under the governmental contract worth 3.3 billion rubles. Lawyers of Development Corporation had explained the nonpayment by a terminated contract annulled in court after the commissioning of the bridge.

Interestingly, Development Corporation was involved in this litigation as an investor – i.e. a third party – while the defendant was Uralstroytekhnologii Limited Liability Company belonging 100% to Development Corporation. The customer had referred to the absence of contractual relationships – but in February 2018, the court has ordered it to pay the outstanding balance.

Development Corporation also attempted to cheat another contractor, Mostostroy-12 Joint Stock Company, who had performed 75% of the construction works. The contractor has claimed the unpaid debt in the amount of some 2 billion rubles ($31.8 million) in the Moscow Arbitration Court – while the customer refused to pay due to the allegedly poor quality of the performed works. Still, the court has upheld the stance of the plaintiff on the basis of expert assessments.

‘Endless spending’

One of the embezzlement schemes designed by Sergei Maslov involved the provision of fake consulting services. Since May 2014 and until October 2015, Development Corporation has paid some 500 million rubles ($7.9 million) to various consulting companies, auditors, and law firms for services allegedly rendered to it. No one can explain the nature of these services. On December 17 and 18, 2015, Development Corporation has transferred under governmental contracts some 4 million rubles ($63.5 thousand) to Valery Tsyplukhin, General Director of Viktoria Shipbuilding Yard established by Sergei Maslov’s brother Viktor and his wife Valentina. The same technique was used to transfer some 2 million rubles ($31.8 thousand) to Anatoly Ozhogin, founder of Kaliningrad-based Atlant-Personal company, for marketing researches in the framework of the Project “Construction of a Shipbuilding Complex in the Urals Federal District and Preliminary Feasibility Study of the Project”.

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Sergei Maslov was an ‘efficient manager’ in his field of specialty

The embezzlement machine was running smoothly under the rule of Maslov. He had literally forced the Urals Federal District to ‘develop’ only through Development Corporation. For instance, at some point, Russian Railways announced that it does not need intermediaries – i.e. Development Corporation – for railroad construction, but the structure administered by Sergei Maslov continued spending funds on construction projects, while governments of the Urals regions continued purchasing shares of Development Corporation.

Friendship with Chubais and ‘cover’ provided by Sobyanin?

In 2003, the Ministry of Energy of the Russian Federation has awarded an honorary certificate and the “Honorary Oiler” title to Sergei Maslov. In 2006, he was awarded the Order of Friendship. Being in charge of Development Corporation, he established friendly ties with Lukoil lobbyists and so-called ‘old family group’ led by Anatoly Chubais. Sources familiar with Maslov claim that the ties with Chubais enabled him to become a member of the Boards of Directors of ATS Joint Stock Company and CFR Open Joint Stock Company. However, currently his name is not present among the directors of the above legal entities.

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Sergei Maslov had friendly ties with Anatoly Chubais

According to the sources, the friendly ties with Anatoly Chubais had kept Maslov afloat for a long time and allowed him to avoid criminal prosecution and negative consequences of corruption scandals. In addition, Sergei Maslov was proficient in shady schemes – so, it was impossible to prove his machinations. He had repeatedly attracted the attention of the law enforcement authorities – but managed to get off the hook every time. Even the high-profile case pertaining to the embezzlements from Narodny Kredit Bank had no criminal implications for him.

Some open sources claim that Sergei Sobyanin is the ideologist, lobbyist, and ‘Moscow cover’ of projects implemented by Development Corporation. Interestingly, both Sobyanin and Maslov used to work in Lukoil.

As it is known, the Mayor’s interests spread far beyond the Russian capital. His name, as well as names of companies affiliated with Sobyanin and his numerous deputies, often pop-up in various regions. The Urals Federal District is not an exception – especially taking that in 2001–2005, Sergei Sobyanin was the Governor of the Tyumen Region. It is pretty logical therefore that Maslov and Sobyanin had collaborated on certain terms.

Navy business

Reportedly, Maslov had participated in shipments of military and civil cargoes to Syria via the Bosporus. In October 2016, Radio Télévision Suisse (RTS) announced that Novorossiysk ship purchased by Luxembourg-based SVM Holding had made at least two trips from Novorossiysk to Tartus where the Russian naval logistics base is located. According to RTS, "businessman Sergei Maslov implementing industrial projects in the Urals" was involved in operations of SVM Holding.

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Novorossiysk ship purchased by SVM Holding

The media wrote that in May 2014, SVM Holding had allegedly granted a loan in the amount of $12 million to Liberia-based Nexus Maritime Services Gmbh controlled by Russia for the acquisition of two ships. The database of the Arbitration Court of the Russian Federation includes 12 cases where Nexus Maritime Services Gmbh acts as a defendant. One of the lawsuits mentions its ships Novorossiysk (IMO 7822160) and Sevastopol (IMO 7822184). In September 2016, officers of the Federal Bailiff Service of Russia have seized Novorossiysk and Sevastopol for salary arrears owed to their crews. The Oktyabr’sky District Court of Novorossiysk and Gagarinsky District Court of Sevastopol have examined lawsuits filed by crew members and issued execution writs. Sevastopol was put up for sale and sold for 278 million rubles ($4.4 million); the salary arrears to its crew have been paid out. Novorossiysk is not sold yet. Recently it became known that, contrary to the maritime law, the vessel is prepared for sea.

It is necessary to keep in mind that Sergei Maslov could be involved in maritime shipping not directly – but via his partners. For instance, Iskender Agasalim ogly, a cofounder of Invest Management Group Limited Liability Company where Maslov owns 25% of shares, and his son Rakhman Iskender own a large transportation company – IFR Trans Limited Liability Company. In addition, Oleg Abdulkarimov, General Director of Invest Management Group, owns 100% of shares in Tanker Freight Limited Liability Company specializing in maritime shipping and using foreign vessels.

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