Passion for raidership. Deripaska suffers from sanctions, wages legal battles for Trekhgornaya Manufaktura 

Passion for raidership. Deripaska suffers from sanctions, wages legal battles for Trekhgornaya Manufaktura
In London, Russian oligarchs settle their conflicts in court; in Moscow, they do this in the old-fashioned way Photo: The CrimeRussia

Billionaire Oleg Deripaska has to defend his assets in the London court yet again. In addition to legal battles with Vladimir Potanin for Nornickel, he has to struggle with Vladimir Chernukhin, ex-Deputy Minister of Finance of the Russian Federation, for Trekhgornaya Manufaktura. This litigation involves, aside from the money, women, mudslinging, corruption, and global politics.

The London High Court of Justice has recently held the first hearing of a dispute between Russian oligarch Oleg Deripaska and Vladimir Chernukhin, ex-Chairman of the Board of Vnesheconombank (VEB) and ex-Deputy Minister of Finance of the Russian Federation, pertaining to the complex of buildings in Moscow belonging to Trekhgornaya Manufaktura. 

Raidership 

Interesting details have popped-up at the hearing vividly illustrating how Deripaska does business not in law-abiding Europe – but in his native country. The attorneys for Chernukhin presented to the court a video recorded on December 14, 2010 and showing a group of 30 persons sent by the oligarch to forcibly seize the property. The assailants managed to drive guards out from it, while the Security Chief of Trekhgornaya Manufaktura was wounded and had to undergo hospital treatment.

The video shows men surrounding him, escorting to an adjacent room that gets dark on a regular basis, and putting the security chief to the ground. 

According to Rosbalt news portal, one of the attackers allegedly was Arkady Sarkisyan, a former navy officer and old companion of Deripaska. According to some information, he had ties with law enforcement structures in the 1990s and was actively involved in criminal wars for aluminum plants waged by the oligarch. In addition, he had purchased, via dummy companies, shares of Sayan Aluminum Plant and later became a Deputy General Director and Security Chief of the enterprise amalgamated with Basic Element Group of Companies. In 2000, Sarkisyan was appointed a Vice President of Sibirsky Alyuminii (Siberian Aluminum) Group Limited Liability Company managing shares of Krasnoyarsk, Sayan, and Bratsk aluminum plants. In the same year of 2000, he was transferred to Gorky Auto Plant (GAZ) also belonging to Deripaska.

Аркадий Саркисян

Arkady Sarkisyan (on the right)

In 2001, Sarkisyan has been elected to the Council of the Federation as a Senator from the Republic of Khakassia; he was a member of the Commission for Natural Monopolies in the upper chamber of the parliament. In 2007, he became a Deputy of the State Duma according to the federal list of the Liberal-Democratic Party of Russia (LDPR). In other words, he had always served the interests of Deripaska, especially if the force was required to settle issues.

Our
notes

The buildings of Trekhgornaya Manufaktura on Rochdelskaya street, Presnya district used to belong to the oldest textile plant known since the 18th century. This is an outstanding example of the Moscow industrial architecture of the later 19th – early 20th centuries. The ensemble determines the appearance of Rochdelskaya, 1905 Goda, and Nikolaeva streets and Krasnopresnenskaya quay.

In 2002, Basic Element belonging to Deripaska has purchased, via Cyprus-based Navio Holdings, the control block of shares in Trekhgornaya Manufaktura. Lolita Danilina, common-law spouse of Chernukhin, was appointed in charge of the enterprise. 

Later, Chernukhin started claiming that he was an equal partner of Deripaska in Navio Holdings allegedly belonging 50% to each of them. In spring 2005, his relations with Deripaska have been formalized through a shareholders' agreement. Danilina was just a nominal figure because, at that time, Chernukhin was a civil servant. 

Chernukhin admitted in the London court that millions of pounds sterling kept on Danilina’s bank account are his emergency ‘reserve’. He also confirmed that he had transferred these funds while being a Deputy Minister of Finance. 

Олег Дерипаска (фото - Chris Ratcliffe/Bloomberg)

Oleg Deripaska (Photo: Chris Ratcliffe/Bloomberg)

On the one hand, the appointment of Danilina seems logical – she has experience in the textile industry. On the other hand, the businessmen have likely purchased Trekhgornaya Manufaktura not to produce textile. They just needed its lands in the historical center of Moscow – near the Moskva River and close to the Russian White House. 

According to the financial excerpt, Cyprus-based Navio Holdings Limited Liability Company became the owner of 64% of shares in Trekhgornaya Manufaktura in late 2005. In 2015, this portfolio was transferred to Bank Soyuz belonging to Deripaska. Lolita Danilina became a co-owner of Trekhgornaya Manufaktura only in March 2018 with a share of 0.02%. 

In 2008, the financial standing of Bank Soyuz controlled by Finansresurs Holding belonging 81% personally to Deripaska has drastically worsened. To restore its financial health, the Deposit Insurance Agency of Russia and Gazfinans (a 100% subsidiary enterprise of Gazpromregiongaz subordinate to Gazprom) have injected into it significant public funds. In March 2010, the situation has stabilized, and 49.99% of bank’s shares were transferred to Ingosstrakh Insurance Company also subordinate to Basic Element. Two years ago, Ingosstrakh has acquired at an auction 50% plus 1 share in the bank from the Deposit Insurance Agency of Russia for 2.8 billion rubles ($42 million), thus, increasing its portfolio in Bank Soyuz to 99.99%. 

Nice place 

The development plan for the 12 ha of land currently occupied by the textile plant was produced as early as in 2003. It was planned to build commercial premises with a total area of some 500 thousand square meters. But the Moscow Government has rejected the suggestion to relocate the textile production to a different place.

Trekhgornaya Manufaktura Trekhgornaya Manufaktura Trekhgornaya Manufaktura Trekhgornaya Manufaktura Trekhgornaya Manufaktura Trekhgornaya Manufaktura
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In 2006, Deripaska has finally agreed with the Moscow authorities a plan to relocate the main production facilities to the Gavrilov-Yam Linen Factory in the Yaroslavl region earlier purchased from Guta Group. However, the development of Trekhgornaya Manufaktura hasn’t commenced due to the world crisis. 

Still, in October 2016, the Urban Development and Land Commission of the Moscow Government has approved the project to reconstruct Trekhgornaya Manufaktura buildings for modern uses. According to Marat Khusnullin, Deputy Mayor for Urban Development Policy and Construction, in a few years, some buildings are to be reconstructed, while others – demolished. 

Currently, the buildings of Trekhgornaya Manufaktura accommodate only the head office of the enterprise, while the rest of the premises are occupied by numerous offices, entertainment clubs, parlors, showrooms, shops, and other establishments.  

Forward Media Publishing House belonging to Deripaska's wife Polina and Look At Media company partially purchased by her in late 2016 are also accommodated there. In addition, the headquarters of the oligarch's main asset – Basic Element – is located right across Trekhgornaya Manufaktura.

 Our
notes

Oleg Deripaska is a Russian and Cypriot (he has the citizenship of that state) businessman, billionaire, and Chairman of the Board (in 2009–2012, General Director) and sole beneficiary of Basic Element industrial group. He controls En+ holding, RUSAL aluminum holding, Evrosibenergo electrical companies, GAZ Group, Ingosstrakh, Basel Aero, Kuban Agricultural Holding, etc. Last year, Forbes had estimated the wealth of Deripaska at $5.1 billion and ranked him the 23rd richest man in Russia. In 2016, his income was $16.8 billion.

In 2010, the former partners have met at the Davos Forum, and Deripaska allegedly promised to buy out the portfolio of Chernukhin in Navio Holdings for $100 million – but instead, he just seized the property. 

Chernukhin has filed a lawsuit with the London Court of International Arbitration; it has ordered Deripaska to pay $95.2 million to the plaintiff – but the defendant appealed this verdict in the London High Court of Justice. 

Deripaska has personally attended a court session on November 28 and admitted that his people had indeed changed the management of Trekhgornaya Manufaktura – but this was not a raiding takeover. Later, representatives of the oligarch have commented on the video presented to the court as follows: the Security Chief had suddenly slumped to the ground – and the henchmen of Deripaska “tried to take him outside to catch a breath of fresh air”.

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According to Bloomberg, an attorney for Chernukhin has noted at the same court session that in the period of their joint investments into the textile plant, Deripaska had dealt with his client – not with Chernukhin’s former mistress Danilina. Especially taking that she neither had any influence nor was listed among the biggest Russian businessmen. In response, Deripaska said that this list includes only males raising a laugh in the courtroom. Speaking of Chernukhin, the billionaire added that some Russian oligarchs wield temporary powers – therefore, it is ridiculous to present the ex-Chairman of the Board of Vnesheconombank (VEB) as a business magnate.

Our
notes

Lolita Danilina is the Chairperson of the Board of Directors of Ozera (Lakes) Textile Factory Open Joint Stock Company and Trekhgornaya Manufaktura Open Joint Stock Company. She graduated from the Faculty of International Economic Relations of the Moscow State Institute of International Relations of the Ministry of Foreign Affairs of the USSR. Started her career at the Ministry of Foreign Economic Relations of the USSR. In the 1990s, became an economist at Tekhnopromimport. Later was appointed its Deputy Chairperson of the Board for Project Financing. Since 1998, has been an Advisor to the Chairman of the Board of Interprombank. In 2000, became the Chairperson of the Board of Directors of Aleksandro-Nevskaya Manufaktura Open Joint Stock Company.

Danilina confirms the version provided by Deripaska – to protect her financial interests, she has also filed a lawsuit against Chernukhin with the London High Court of Justice. 

The situation is pretty delicate – and not only because of longtime non-business relations between Danilina and Chernukhin and their breakup in 2007. According to Danilina, in the course of the division of their joint assets, Chernukhin failed to comply with some of their earlier arrangements. 

It is known that the former couple have divided a home in Antibes, France worth £55 million, collection of arts, collection or vintage cars, and samples of ancient weapons. However, millions of pounds sterling kept in trust funds on the Channel Islands still remain disputed.

Still, the London High Court of Justice decided that the lawsuit filed by Danilina is interrelated with the claim of Deripaska and decided to examine those together.    

Smear war 

SC Strategy consulting agency retained by Chernukhin found out that Danilina acts in the interests of Deripaska. Allegedly, he has personally paid her $2 million for filing the lawsuit against Chernukhin and promised to cover all her legal costs. Furthermore, in the case of success, he has promised Danilina $10 million in exchange for her ‘share’ in Navio Holdings. 

According to Forbes, the court became aware that a company belonging to Deripaska has also hired a British private detective to carry out an inquest against Chernukhin.

Владимир Чернухин

Vladimir Chernukhin

The Times wrote that the findings of that detective were reflected in questions asked by Deripaska’s lawyers to Chernukhin. They had questioned the former Russian banker inter alia about the origin of his wealth. 

The point is that Vladimir Chernukhin had never run a private business. A graduate of the International Business Academy with a major in International Business Relations and Financial University under the Government of the Russian Federation, Chernukhin has started his career at Tekhmasheksport of the Ministry of Foreign Trade of the USSR and Khimmasheksport of the Ministry of Chemical and Oil Mechanical Engineering of the USSR. 

He joined Vnesheconombank in 1996 as a Deputy Head of the Department of Credits and Guarantees and advanced through ranks to a Deputy Chairman of the Board. In May 2000, Chernukhin was appointed a Deputy Minister of Finance in the Government of Mikhail Kas’yanov, then-Prime Minister of Russia, – they were familiar since the 1980s. In June 2002, Chernukhin returned to VEB as the Chairman of its Board. 

 Our
notes

Vnesheconombank (VEB) is a national development institute, a Russian state corporation whose primary duties are to create conditions for economic growth, promote investments, manage the foreign debt, and support the Russian financial system. Under the rule of Chernukhin, one more objective has been added: manage retirement savings of citizens unwilling to transfer their money to a non-governmental company.

In May 2004, Vladimir Putin dismissed Vladimir Chernukhin by a decree. The termination of the Chairman of the Board of a bank whose balance sheets included over 70 billion rubles ($1 billion) in debts to Russia was explained by his closeness to Kas’yanov dismissed a few months earlier. One of Kas’yanov’s deputies – Denis Mikhailov – was even arrested in that period on suspicion of divulgence of state secrets and bribe-taking. Therefore, Chernukhin decided to be on the safe side and relocated to the UK that same year.

Здание бывшего офиса Midland Bank

Former office of Midland Bank

In 2006, the once-humble official started living in high style in Britain. He shocked local residents by purchasing one of the most expensive buildings in London – the former office of Midland Bank where a James Bond movie was filmed. Chernukhin has paid £72 million for it. Representatives of the London Assembly told Channel 4 that he was ready to pay additional £100 million for the conversion of the building into a luxury six-star hotel consisting of 184 suites. 

Apparently, this information is just the tip of the iceberg – and Deripaska knows very well how has Chernukhin made his fortune in Russia while working at the Ministry of Finance and state-owned bank. 

In the light of the Criminal Finances Act adopted by the British Parliament in April 2017, this may severely affect the well-being of Chernukhin whose wealth is estimated by independent experts at some $1 billion: according to the act, assets of foreigners may be confiscated if they are unable to prove the legitimacy of their origin.

Interiors of The Ned Hotel launched in the former office of Midland Bank in 2017 Interiors of The Ned Hotel launched in the former office of Midland Bank in 2017 Interiors of The Ned Hotel launched in the former office of Midland Bank in 2017 Interiors of The Ned Hotel launched in the former office of Midland Bank in 2017 Interiors of The Ned Hotel launched in the former office of Midland Bank in 2017 Interiors of The Ned Hotel launched in the former office of Midland Bank in 2017
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In that situation, even the overtures with top political circles of the UK won’t help Chernukhin. 

Business and politics 

To refresh background: back in 2012, his ‘true’ wife Lyubov Chernukhina had attempted to make a donation in the amount of £10 thousand to the Conservative Party – but was recognized an "undesirable donor". However, later she made three contributions, £5.5 thousand each, and all of those have been accepted. 

In 2014, Chernukhina has again hit the lines in Britain by purchasing a tennis match between David Cameron, then-Prime Minister, and Boris Johnson, then-Mayor of London, for £160 thousand. The game was put up for auction for the benefit of the Conservative Party.

Дэвид Кэмерон и Борис Джонсон

David Cameron and Boris Johnson

Despite the worsening relations between Russia and the UK, Lyubov Chernukhina still remains an active donor of the Conservative Party. In summer 2017, she became one of the 27 VIP donors – providers of more than half of £6.2 million raised by the Tory after the parliamentary elections. 

The position of Deripaska is equally precarious. First, he was already involved in a political scandal in Britain. 

In 2008, it became known that the Russian oligarch had hosted on his Queen K yacht cruising near Corfu Island George Osborne, then-Chancellor of the Exchequer. Journalists found out that Osborne had asked Deripaska to donate £50 thousand to the Conservative Party. The billionaire had also hosted onboard Peter Mandelson, then-European Commissioner for Trade, – and a month after their joint cruise, the European aluminum import tariffs have been reduced, thus, giving a significant advantage to Deripaska.

Джордж Осборн

George Osborne

Second, according to The Daily Telegraph, the British secret services intend to put significant pressure on Russian businessmen considered henchmen of the Kremlin by the national intelligence. Oleg Deripaska is now on the same list with Roman Abramovich, Alisher Usmanov, and brothers Rotenberg. The journalists claim, citing their source in the British Government, that the free movement and operations of all ‘blacklisted’ businessmen will be restricted in the UK and other Western countries.

Питер Мандельсон

Peter Mandelson

It is also necessary to keep in mind that in April 2018, En+, RUSAL, and GAZ Group belonging to Deripaska have been slapped with American sanctions. This implies the seizure of assets in the USA and ban on any business relations with these companies for American citizens, including operations with debt instruments and shares. The US Department of the Treasury had initially allowed one month to sell shares and debt instruments of the above companies and two months to terminate the current contracts and cease all relations with them. Later, these deadlines were extended several times. The current deadline is January 21, 2019. 

In fact, both Chernukhin and Deripaska may rely on the objectivity of the British justice – after all, this is not the Basmanny District Court of Moscow. In all other aspects, the oligarchs may fully rely on Russia – the home country won’t leave them in distress. 

It is known that RUSAL – hit so hard by the sanctions – is going to get state support. The Government intends to reduce by half the import of aluminum products by raising the tariffs. The Road Map of the Aluminum Industry Development until 2023 includes such a measure aimed at the increase of the domestic demand. 

In addition, the Ministry of Industry and Trade of the Russian Federation has recently suggested to provide to Russkie Mashiny (Russian Machines) – the parent company of GAZ Group – preferences at governmental acquisitions. The question is: why this particular company, how about the competition?

Новая продукция группы «ГАЗ»

New products of GAZ Group

Furthermore, a crazy idea to permit the use of aluminum wiring in residential apartments since 2019 has been proposed – earlier, the aluminum wiring was prohibited for fire safety reasons. According to preliminary estimations, companies belonging to Deripaska may earn $400–800 million per year on this. 

Therefore, regardless of the court verdict in relation to Trekhgornaya Manufaktura, all its further transformations, as well as the legal costs, will be paid at our expense.


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