Rebound. Dmitry Mazepin’s attack on TogliattiAzot hits him back 

Rebound. Dmitry Mazepin’s attack on TogliattiAzot hits him back
Dmitry Mazepin is fighting for a toxic asset Photo: The CrimeRussia

The ten-year conflict over control of TogliattiAzot (ToAZ) seems to have entered the final stage. It is still far to the end, but the plot, which began as a thriller, has already turned into a judicial drama. The Irish High Court prohibited the minor shareholder of the holding Dmitry Mazepin, from taking any action against TogliattiAzot. At least until the final verdict of the Irish justice. Majoritarians are celebrating, and the market is waiting: will the Russian Themis turn away from Mazepin, too?

Nitrogen can bring one to Dublin

The genre of “Russian seasons in Western justice” invariably matches the expectations of the public. The new season of this “series” is gaining momentum in Dublin. It was there that on June 27, the High Court of Ireland banned oligarch Dmitry Mazepin and his structures any encroachments on TogliattiAzot until it, the High Court, understood everything. This decision does not guarantee victory to opponents of Mazepin, but clearly hints: their arguments sound convincing. Given that the lawsuit is full of accusations of falsifying documents, making an imaginary transaction and trying to seize control of ToAZ, Mazepin’s chances of success are fading away.  

Our
Note

TogliattiAzot holding is one of the five largest enterprises of the Russian chemical industry. More than 70% of ToAZ belongs to the family of Vladimir Makhlay. The controlling stake is distributed in the offshore areas of Trafalgar Development Limited, Instantania Holding Limited, Kamara Limited and Bairiki Incorporated, which were the plaintiffs against the structures of Dmitry Mazepin (Uralchem) registered in Dublin. 

Mazepin purchased a minority stake of ToAZ at 7.5% from Viktor Vekselberg’s Renova in 2008. Later, Mazepin increased his share to 9.73%. The goal was to take over TogliattiAzot, but after three years of unsuccessful attempts to buy up the shares of ToAZ, Vekselberg sold a non-core asset. Mazepin, in turn, has been trying to gain control over the company for more than 10 years. 


In London, they have already become accustomed to it, but it is hard for the Irish. The High Court of Ireland began plunging into the Russian business traditions at the end of 2016, when majority shareholders of TogliattiAzot sued minority shareholders controlled by Dmitry Mazepin. Majoritarian authorities accused the structures of Mazepin and him personally of a “raider attack” – a term that the judges of Dublin are still trying to conceive, replacing it with the words “conspiracy” and “scheme.” The damage to TogliattiAzot is estimated by the plaintiffs at $ 2 billion, that is, two-thirds of the company's value, according to the plaintiffs themselves. What did Dmitry Mazepin come up with, owning less than 10%?

TogliattiAzot

TogliattiAzot

Our
Note

Earlier, the High Court of Ireland has obliged another minority shareholder, Yevgeny Sedykin (0.00019% of TogliattiAzot), to compensate the enterprise for the damage caused by unjustified lawsuits and collusion. The court will determine the amount of damage later, but the assets of both in the amount of $ 78 million are frozen just in case.

In Russia, Sedykin also has problems with the law. In 2017, he was sentenced to four years for attempting to seize control of ToAZ. Two years earlier, Sedykin called a fictitious general meeting of shareholders, replacing the entire board of directors. An illegal management body managed to take a number of decisions (by no means in favor of the majority shareholders), and its members even demanded payment of dividends in court. From the real term Sedykin was saved only due to his age, being 73-year-old at the time of sentencing.

Yevgeny Sedykin

Yevgeny Sedykin

Another take

Plaintiffs described difficult for the Irish ear "raider attack" in several episodes. In 2011, as follows from the lawsuit, Mazepin, who controlled Belport Ltd and UralChem, made an imaginary deal to sell the ToAz share between its structures. The transaction for $203 million was allegedly prevented by the main owners of ToAz, without providing documents on the meeting of shareholders. Uralchem went to Samara arbitration to protect its interests. The court concluded that UralChem received a list of shareholders of interest to it before going to court, and denied the lawsuit. Mazepin was disappointed in the arbitration and made a bid for criminal proceedings.

How it all began:

The idea was brought by all the same by Viktor Vekselberg, from whom a senator in the past and a Cypriot in the present Leonid Lebedev demanded $2 bln in the court of New York. Here we need to mention that Lebedev’s past includes management of the Nizhnevartovskneftegaz fuel company in the distant 90s. Over the years, Lebedev, same as his past, only became richer, but he felt the opposite. In 2014, Lebedev finally realized: he was robbed. The robbers turned out to be people who were not poor either, namely billionaires Viktor Vekselberg and his longtime friend Leonid Blavatnik. They sold TNK-BP to Rosneft, which also included the assets of the once controversial Nizhnevartovskneftegaz, without sharing with Lebedev. The robbed senator had not ruled anything in the oil company for a long time, but insisted that he was its secret shareholder. The term, already included in English law as untranslatable Russian vocabulary, meant that Vekselberg and Blavatnik sympathetically helped Senator Lebedev break the law and hide his income. However, with the sale of the company, their warm attitude towards senatorial pranks has disappeared somewhere. Blavatnik and Vekselberg assured the court that they had never seen anything like this. The judge, having heard about the investigation of Special Prosecutor Muller, finally believed Vekselberg and completely rejected the claim of the former senator.

Viktor Vekselberg

Viktor Vekselberg

In 2005–2008, Renova attempted a raider seizure of ToAZ. The result was a criminal case against Vladimir Makhlay and the company's manager, Alexander Makarov, who were suddenly convicted of tax evasion. Makhlay hid in Hungary, but did not give away the company. Medvedev's policy of liberalization has softened both the tax authorities, the ICR and Vekselberg himself. The thaw bypassed only the new buyer of ToAZ Mazepin. From the failure of Renova, he learned other lessons, having greatly enriched Vekselberg's strategy. The suit of Trafalgar Development mentions only a few notions of the owner of UralChem: the organization of illegal searches, pressure on judges, submission of forged documents to the court. Many noteworthy know-hows were simply omitted due to the difficulty of translation and understanding by the English-speaking public.  

makhlai_.jpg

Vladimir Makhlay

Thus, in 2012, Dmitry Mazepin followed in the footsteps of Vekselberg. And if earlier Makhlay was accused of non-payment of 300 million rubles ($4.8 mln) of taxes, this time it was almost 100 billion rubles ($1.6bln). In the course of the proceedings, the damage decreased to 85 billion rubles ($1.3bln), but this did not become more believable. According to investigators, the top managers of ToAZ since 2008 (that is, as soon as Mazepin bought out the holding’s share from Renova) stole from the enterprise all carbamide and ammonia, sold it at a lower price to the affiliated Nitrochem Distribution AG, and then the chemicals went to the open market at commercial prices. How 85 billion rubles ($1.3bln) were earned? How TogliattiAzot, from which all products were stolen, showed a multi-billion-dollar income, neither the investigation nor the prosecutor's office could explain, which is not surprising.

The criminal case against TogliattiAzot was led by the investigative department of the ICR in the Samara region under the leadership of Vitaly Gorstkin. Gorstkin's subordinates became famous for a number of high-profile cases. A native of Samara Georgy Kutuzov died from injuries, handcuffed to the horse, which then rushed off to a gallop. According to investigators, Lydia Kotova, a police officer who found a non-standard use of handcuffs, was a victim in this story. Only Kutuzov’s death and public outcry changed their minds. They did not see anything criminal in the actions of the senior investigator Roxana Djuraeva, who protected the pimps gang. Gorstkin himself was engaged in promoting the business of his wife and demanded immediate explanations about his own resignation from Governor Merkushkin and head of the ICR Alexander Bastrykin.  

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Perhaps Gorstkin was so sure of himself because he was involved in the big work of ToAZ, and a great reward awaited him for “solving the crime”? In any case, TogliattiAzot is the only thing on which the investigators work tirelessly. Even with the departure of Gorstkin, Vladimir Makhlay and his son Sergey are receiving new accusations. One of the last – in the organization of an OCG. Logical inconsistencies overshadow spectacular stylistic decisions – first secret court witnesses will appear at the court with their faces not visible, and pseudonyms instead of names, then Sedykin will personally perform, presenting his opuses written under a pseudonym. Those accused look from afar at this surrealism. Makhlay, arrested in absentia by the Basmanny Court in 2014, is in London. 

Vitaly Gorstkin

Vitaly Gorstkin 

Toxicosis

Makhlay’s repeated attempts to sell the business to a third party were unsuccessful. Kirsan Ilyumzhinov, who bought the controlling stake, changed his mind in literally three months. According to some reports, the president of FIDE retreated under the onslaught of information attacks by Mazepin. Even the invincible king of the state order, Arkady Rotenberg, who was nominated to the new owners of the holding, preferred not to get involved in a toxic asset. Rumors that Mazepin is cracking down on competitors not only in the force field, but also in the information field, are confirmed by the materials of the investigation.

In December 2016, TogliattiAzot received another, apparently, New Year's "gift" - extremist literature and RPG-18 anti-tank rocket launcher Mucha, planted inside the enterprise. It created an impression that someone was preparing a terrorist act on a chemical giant. But the investigation of the upcoming "terrorist attack" was taken not by the time-tested the investigative department of the ICR in the Samara region, but by the regional FSB Directorate. The Chekists discovered that it was a staging, and soon they found the whole “theater troupe” – the organized criminal group, headed by the former head of the Berezovsky’s security service Sergey Sokolov. Some double agents came into the picture as well. The group consisted of the former head of the security service of TogliattiAzot Oleg Antoshin and his deputy Alexey Alekseev, as well as police major Alexander Pertsev. Behind the scenes was only the director of the spectacular performance. 

Sergey Sokolov

Sergey Sokolov

It is late to run the file, but even in court dramas there should be some intrigue. Therefore, in the case of TogliattiAzot, another criminal group appeared. According to investigators, it was headed by Makhlays father and son in the distant 90s. Now the total abduction of carbamide and ammonia from ToAZ has been named only one of the episodes of its hectic activity. The investigation promises new "episodes" very soon. So that the spectators, including Makhlays, bored on the banks of the Thames, did not get bored, the main characters were sentenced for the first ammonia episode. Vladimir and Sergey Makhlay received nine years in a general regime colony and a fine of 900 thousand rubles ($14,000). Ex-CEO of TogliattiAzot Yevgeny Korolev and Director of Nitrochem Distribution AG Beat Ruprecht “earned” 8.5 years in prison. 

Sergey Makhlay

Sergey Makhlay

The case of another OCG, deftly scattering extremist pamphlets and a grenade launcher on ToAZ, somehow stalled. In the Samara FSB, they are still limited to words about an unidentified financial-industrial group that was preparing a raider seizure of the enterprise. Is it possible that several “financial groups” made attempts on one of the largest chemical holdings of the country at the same time? But one such group is already known both in Russia and in Ireland.

A simple question remains: why should Dmitry Mazepin act so openly? Market analysts are ironic that with the money spent on lawyers, "artists" and other participants, Mazepin could open up a new chemical industry. But did not open. Because he does not know how. As soon as Mazepin was removed from the presidency, he went to the free swimming. And he swims consistently in debt. 

Mazepin’s victory

Mazepin’s aggressive expansion into the chemical fertilizer market has been repeatedly criticized. After all, he bought 20% of Uralkali and the ill-fated share in ToAZ with borrowed funds. The monstrous debt load of UralChem (253 billion rubles ($4bln) as of the third quarter of 2018) makes it a colossus with feet of clay. The holding itself for several years does not publish financial statements. The bonds issued last year have hardly found their buyers.

Not all is well for Dmitry Mazepin with the law either. Tax officers found in UralChem 1 billion rubles ($16mln) of arrears. By the way, the long-standing criminal case on the embezzlement of shares by AKhK Azot (Agro-Chemical Corporation Azot) from Gazprom-Mezhregiongaz has not yet been closed. AKhK Azot should have transferred its property (and these are shares of Cherepovets Azot, Kirovo-Chepetsk Chemical Plant, etc.) directly to Gazprom. Instead, they were repeatedly resold and ended up in the hands of Dmitry Mazepin. Figures of the dust-covered business were the director general of Mezhregiongaz Nikolai Gornovsky and his deputy Andrei Karklin. But if you shake off the dust from the yellowed pages, another question arises: where did the former deputy head of the Russian Federal Property Fund, Dmitry Mazepin, have money for such purchases? 

Dmitry Mazepin

Dmitry Mazepin

A lot of uncomfortable questions makes the UralChem owner nervous and mistaken. All of his financial decisions in recent years seem like one big mistake. And this conclusion is purely arithmetic. To swim out of debt, he needs a lifeline. That is why Mazepin is so eager to get ToAZ, that he has long lost count both to time and money. Let's help a confused person with numbers. The sum of the Makhlay family’s claims in the High Court of Ireland is $ 2 billion. The amount of damage attributed to Makhlay in a Russian court is 85 billion rubles ($1.34 billion). If the requirements of the offshore structures of Makhlay are satisfied, which is extremely likely, and the Russian court will be able to recover the damage from them (almost unlikely), Dmitry Mazepin will still be at a loss of about $ 660 million. Such is the price of victory.

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