Under cover of State Duma Mandate: Secret life of Deputy Ivan Demchenko
The governmental service in Russia is not only a responsible and honorary – but also incredibly profitable – job. The example of Aleksander Tkachev, ex-Governor of the Krasnodar Krai and ex-Minister of Agriculture of the Russian Federation, vividly illustrates this. Forbes found out that his family currently controls lands worth over $1 billion. N.I. Tkachev Agrokompleks Firm Joint Stock Company holds the first place in the Rating "Most Expensive Land Holdings" with 649 thousand ha of agricultural lands estimated at 68.5 billion rubles ($1.1 billion).
Tkachev left the ministerial post a long time ago, and his example is illustrative but not unique. Persons seeking power pursue different goals: earn (i.e. ‘spend' and embezzle) money, gain higher status, or protect the already accrued wealth. Take, for instance, another native of the Krasnodar krai, Ivan Ivanovich Demchenko, a Deputy of the State Duma, member of the State Duma Committee for Control and Procedure, and owner of Abinsk Electric Steel Works (AESW) unofficially nicknamed ‘steel king of southern Russia'.
‘Authoritative’ Deputy of the State Duma
The Committee for Control and Procedure is rarely mentioned in the media; its duties are technical – but still very important. The parliamentary procedures include the ‘government hour’, work schedule, invitation of parties not present in the State Duma, administrative support for Deputies’ activities, etc. This technical work is crucial for control over the State Duma and organization of its functioning.
The committee’s duties include inter alia the control over the parliamentary procedure and voting. According to the official web site of the State Duma, during his first term in the Russian parliament (2007– 2011), Ivan Demchenko has attended 264 sessions, out of the 265, and mostly voted in support of introduced initiatives (67.4% in favor, 7.2% against, and 25.4% abstentions).
His statistics for the next five years is similar: attended 310 sessions out of the 311; 71% of votes in favor and 27.5% of abstentions. However, in the current convocation, the people’s choice’s workplace discipline has declined: as of today, Demchenko has attended only 179 sessions out of the 217; 59.7% of votes in favor and 40.1% of abstentions. There are two possible explanations of this: (1) the ban on giving Deputies’ cards to other Deputies for voting introduced by the State Duma, or (2) important matters preventing him from attending sessions and voting in favor or against proposed initiatives.
Ivan Demchenko has been a Deputy for almost 12 years (since December 2007); during this period, he had addressed the parliament only four times and was involved in the preparation of 19 bills and statements. Five bills have been approved: Act on Foreign Agents (2012), prohibition for US citizens to adopt Russian orphans (2012), amendments to the Tax Code in relation to revenues and expenses of ship owners (2018), counteractions to unfriendly actions of the USA and other states (2018), and a statement in relation to the US and EU sanctions. All other initiatives endorsed by Demchenko (either personally or via his colleagues) were put on the shelf or defeated.
What is distracting Ivan Demchenko from performing his Deputy’s duties?
The answer is obvious and directly contradicting the requirements to people’s choices enshrined in the Russian legislation. Apparently, he needs Deputy’s Mandate only for cover and immunity. In addition, this is a mandatory attribute (similarly with a scientific degree obtained in some suspicious way) in certain circles emphasizing the status of an ‘authoritative’ businessman demonstratively ignoring the law.
According to the portal of state executive bodies of the Krasnodar krai, Demchenko had meetings with Aleksander Tkachev, ex-Governor of the Krasnodar Krai, both as a Deputy of the State Duma and General Director of AESW – i.e. a person running a business. Based on video archives of local TV channels, that meeting took place in mid-June 2014 – but caused no questions or probes, not to speak of revocation of the Deputy's Mandate for commercial activities. Reportedly, Tkachev had received 10% of profits (both official and unofficial) gained by Abinsk Electric Steel Works.
Speaking of the commercial activities – the income of Deputy Demchenko varies significantly from year to year. For instance, in 2009 and 2010, the Deputy and primary shareholder of the two largest metallurgical enterprises of the Krasnodar krai had officially earned 1.9 million rubles ($30.1 thousand), while his wife earned even less in these years. Then he declared an income of 59.5 million rubles ($943.7 thousand), and a year later – 2.5 million rubles ($39.6 thousand). What is the reason behind such fluctuations? Perhaps, the people's choice had to show a high official income to explain the purchase of 26.32% of shares in Gaztransbank (former Koshekhablbank) for 50 million rubles ($793.1 thousand)? Two years later, Demchenko sold this portfolio to Denis, son of ex-Deputy Rizvan Isaev and co-owner of the credit organization, for the same price of 50 million rubles ($793.1 thousand), declared an official income of 55.9 million rubles ($886.6 thousand), and than started ‘growing poor' (4.7 million rubles ($74.5 thousand) in 2015 and 5 million rubles ($79.3 thousand) in 2017). It does not matter how much you earn; what does matter is how much you disclose.
Partners of Ivan Demchenko deserve special attention. Take, for instance, above-mentioned Deputy Isaev, a very ‘authoritative' person, who allegedly had communicated with Demchenko only in relation to the lawmaking. The brother of Rizvan Isaev was a Vice Premier of the Republic of Dagestan before being arrested for embezzling budget funds and swindling for the total amount of 400 million rubles ($6.3 million). His another relative, Magomed Abigasanov is wanted for the murder of a journalist of Chernovik.net portal in Makhachkala. What can a Deputy and owner of metallurgical plants have in common with thieves and murderers? The answer is in the strictly concealed past of Ivan Demchenko.
Guy got success
In the middle of the ‘turbulent 1990s,’ Ivan Ivanovich Demchenko had attracted the attention of the law enforcement authorities and was even locked up in the Pretrial Detention Facility № 1 of Krasnodar for the murder of prominent businessman Mikhail Savchenko, head and owner of Novoazovskie Linii (Novoazovsk Lines) oil bunker company. The investigation established that the company had uncovered a deficiency of oil products – and the future parliamentarian was accused of this. Two security guards of Novoazovskie Linii testified that somebody had offered them on behalf of Demchenko to assassinate the businessman, including the provision of an AK-47 submachine gun and shells for that purpose.
The biography of Ivan Demchenko included a similar episode in the past; therefore, the operatives arrested him and put in the pretrial detention facility. It became known that, in the mid-1980s, he was one of the primary suspects in the murder of a Cuban citizen – the owner of Mariupol-based Ukrbukdor shipping company. The investigation had dragged out – and Demchenko fled to an adjacent country.
The future Deputy of the State Duma managed to avoid criminal liability in his new motherland. The primary witness, who was the intermediary between the assassin’s paymaster and the killers has disappeared without a trace. The operatives had no choice but to release Demchenko.
After the release, the person suspected of two murders has shown his commercial talents in full. His Novorossmetall company became one of the largest scrap metal exporters in southern Russia. The shady wealth of Ivan Ivanovich had grown at an exponential rate.
Reportedly, Demchenko made a fortune on fraudulent value-added tax refund schemes pulled off with the support of his old friend and ‘patron' Ivan Peronenko, then-Head of the Department of State Revenues, Taxes, and Consumer Goods of the Financial Administration of the Executive Committee for the Krasnodar Krai of the Communist Party of the Soviet Union and future Head of the Tax Inspectorate for the Krasnodar Krai of the Federal Tax Service and Minister of Finance of the Krasnodar Krai. The ‘steel king' has gained powerful ‘patrons' at the federal level as well.
Demchenko frequently makes references to his top-level ‘cover’ and parades ties with Vyacheslav Volodin, Speaker of the State Duma, and contacts with high-ranked officers of the Federal Security Service (FSB) and Ministry of Internal Affairs (MIA) of the Russian Federation. Thanks to his friendship with Aleksander Tkachev, then-Governor of the Krasnodar Krai, Demchenko acquired plenty of real estate in the region.
A large manor 112,054 square meters in size belonging to Deputy Demchenko is located not far from Slobodka settlement, Krasnodar krai. It features an artificial lake created specially for Ivan Ivanovich who likes fishing and hunting ducks there.
The people’s choice travels in a burgundy Robinson helicopter (for his maximum comfort, helicopter pads have been established on the plant and in his second country home); his personal car fleet includes armored BMW and Mercedes vehicles.
The second estate of Demchenko is located in Myskhako settlement, Krasnodar krai – a local analogue of Rublevskoe highway in Moscow. There are two homes on the lot 5 ha in size; one of these homes is currently under reconstruction. A swimming pool separates the buildings; his guests have good time there with ladies of easy virtue. The property includes a guardhouse: the privacy of the owner and his friends is under strict protection.
The last photo shows a special pride of Ivan Demchenko – his horse stables. The surrounding lands belong to the Deputy as well.
Overall, Ivan Demchenko lives in grand style and indulges himself. The question is: on what money? The Deputy's salary is definitely not sufficient for that.
Ivan Ivanovich and his ‘boys’
It became known recently that Ivan Demchenko has purchased Balakovo rolled steel plant from oligarch Aleksei Mordashov, owner of Severstal. This acquisition was really weird and raised plenty of suspicions: the shares of AESW founders are currently held by Russian Agricultural Bank as a security deposit. Many market players believe that the structure controlled by Patrushev junior (i.e. the son of the Secretary of the Security Council of the Russian Federation) had provided funds for the purchase from Mordashov, thus, concealing the trivial siphoning off of funds.
Media reported, citing Demchenko, that he has purchased Balakovo rolled steel plant to become the primary steel supplier to Crimea. “After the completion of the bridge to Crimea, we will completely satisfy the peninsula’s need in rolled metal. It will be difficult to compete with us,” – the Deputy told journalists and added that he is not afraid of sanctions: allegedly, AESW has been affected since 2017 by prohibitive duties of 800% against the plant production. However, Ivan Ivanovich plays cunning: he is not afraid of the sanctions because he knows how to skirt them.
SPARK Interfax database includes two persons with the name "Ivan Ivanovich Demchenko". Different Individual Taxpayer Numbers and the date of birth (1995) imply that they are the father and adult (i.e. not mentioned in the Deputy’s income and asset declaration) son.
Ivan Demchenko junior is not only the ‘white crow in the iron and steel industry’ and Deputy General Director of AESW – giving numerous interviews and telling journalists about his business achievements. He is a co-owner of key enterprises of the family empire and trust manager of shares belonging to his father. In fact, it is pretty convenient to have a namesake son to conceal the wealth from competitors, taxmen, and curious journalists.
In fact, Ivan Ivanovich junior is not really interested in steel plants – the Deputy’s offspring lives in Empire Tower of Moskva City Business Center; his office and WOW private nightclub are located on the 46th floor.
WOW is a club, a restaurant, and a theater at once; famous Pasha face control welcomes Moscow ‘gold youth' at the entrance. The main feature of WOW is a bed where everybody can lay together with local male dancers. The majority of them work in the theater of Roman Viktyuk dubbed the leading gay stage director of Russia.
Other young men also render various services to the Demchenko family. Take, for instance, World Steel Trade company incorporated in Genève, Switzerland. It poses as the leader in the international metal trade, while its former General Director posts photos showing international conferences and scenic Swiss views on Instagram on a regular basis. No one would think that the real owner of this business is a Deputy of the State Duma of the Russian Federation – but its young Director Denis Zakutaev has direct ties with AESW, and Demchenko junior is his boss.
Based on the documents received from Switzerland, in early November 2018, the Demchenko family has appointed some Nikolai Mironov, born 1994, passport 71 5432547, residing at Rue de Lausanne, Genève, Switzerland, the General Director of World Steel Trade instead Zakutaev – who was put in charge of America Steel Trade Corp. As a result, Deputy Ivan Demchenko makes huge money on metal trade with the key geostrategic competitor of the Russian Federation.
It is hard to estimate how much money is Demchenko senior siphoning off abroad via World Steel Trade. Sufficient to say that the Deputy reportedly wasn’t upset at all with the loss of $10 million in liquidated Latvia-based ABLV Bank. Apparently, this sum was negligible in comparison with his fortune.
Rumors circulate that the law enforcement authorities are making great efforts to calculate the real wealth of Demchenko. Upon completion of their work, the Deputy's Mandate likely won't help Ivan Ivanovich anymore.