Shukin got screwed. Trusted lawyer robs his billionaire client 

Shukin got screwed. Trusted lawyer robs his billionaire client
The Kuzbass oligarch received the heaviest blow from a person he had fully trusted Photo: The CrimeRussia

‘Mining King’ Aleksander Shukin remains under home arrest since November 2017 in the framework of a high-profile criminal case pertaining to the extortion of Inskoy pit shares. While the oligarch is busy with law enforcement authorities, his own trusted lawyer decided to rob Shukin. Timur Frank managed to embezzle at least 2 billion rubles ($35 million) from one of the richest Russian businessmen. The CrimeRussia became aware of the scheme used by Frank and concluded that Shukin has a very little chance to retrieve his assets.⁠

Kuzbass coal tycoon Aleksander Shukin had hit the headlines in November 2016, after his arrest in the framework of a high-profile criminal case pertaining to the extortion of Inskoy pit shares worth 1 billion rubles ($17.5 million). The CrimeRussia wrote earlier that in addition to the oligarch, the following persons were arrested and escorted to Novosibirsk in the case of an attempted raiding takeover of the coal enterprise: First Vice Governors of the Kemerovo Region Aleksei Ivanov and Aleksander Danilchenko; Yelena Troitskaya, Head of the Department of Administrative Structures of the Administration of the Kemerovo Region; General Sergei Kalinkin, the Head of the Investigations Directorate in the Kemerovo Region of the Investigative Committee of the Russian Federation (ICR); and several other suspects.

Since November 2016, the Kuzbass billionaire remains under home arrest as per decision of Tsentralny District Court of Novosibirsk. On August 14, 2017, the court has extended this pretrial restriction for Shukin until November 13, 2017. The oligarch has to stay in Krasnoobsk township located near Novosibirsk. The cofounder of Sibuglemet Holding owns there a humble apartment suitable rather for an ordinary miner. It is hard to imagine this level of comfort to be sufficient for a businessmen whose personal wealth, according to Forbes, was $1.8 billion in 2011. But apparently, the main concern of Shukin while he remains under home arrest are not the Spartan amenities but continuous losses of assets.

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On August 14, 2017, the court has extended the pretrial restriction for Shukin until November 13, 2017 

The home arrest has weakened the positions of Shukin – and many people are eager to take advantage of this. Numerous rivals are tearing apart the empire of the ‘coal’ oligarch. As The CrimeRussia wrote earlier, Ruslan Rostovtsev, a former partner of Shukin in the coal business, started winning his lawsuits filed against Shukin. In February 2013, the Moscow entrepreneur managed to convince courts of the Novosibirsk region and Moscow to seize accounts and assets of the Kuzbass colleague for the total amount of 533 million rubles ($9.3 million).

Since the beginning of the year, Shukin has lost all his retail outlets. He owns Kuzbass-based Thsentrprodservis Joint Stock Company that used to unite the following retail chains: Blizhny (Closest), Apelsin (Orange), Evropeiskie Produkty (European Products), Produkty (Groceries), and Universam (Supermarket). Now stores of federal retailers, including Magnit, are opening in premises earlier occupies by the largest chain of the Kemerovo region.

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The closure of stores is reportedly linked with the investigation of the criminal case against Shukin 

In late July, it became known that Shukin is to be held vicariously liable for debts of West-Siberian Coal Company Limited Liability Company. The tax authority intends to collect 163.4 million rubles ($2.9 million) from persons controlling the Novokuznetsk-based enterprise, and the Kuzbass coal tycoon is among them.

But the heaviest blow was delivered to Shukin by the person he had fully trusted – by his ‘pocket’ lawyer Timur Frank. This experienced specialist was the confidant and authorized representative of Shukin. The home arrest has considerably reduced the capacity of his grantor, thus, providing new opportunities for Frank.

In early September, local media outlets have reported that in the end of 2016, Frank had made a number of deals encumbering assets of the coal tycoon. Using his powers of the authorized representative of Shukin and acting on his behalf under power of attorney, the lawyer managed to transfer a portion of oligarch’s assets to other persons. Ultimately, a considerable part of the grantor’s assets has been transferred to Frank and companies under his control According to preliminary estimates, direct damages sustained by Shukin due to the actions of his lawyer amount to at least 2 billion rubles ($35 million).

The final estimation of the losses hasn’t been performed yet. Attorneys for the oligarch retained in the framework of the criminal case pertaining to Inskoy pit have just started calculating the damages and clarifying details. The local media have reported that the lawyers intend to file claims with courts and submit criminal complaints to law enforcement authorities. The investigation is to be carried out in Novosibirsk.

Interestingly, during the preparation of this material, the CrimeRussia had used inter alia publications in the Kuzbass media – but all of them have later been removed one by one. The reason behind the removal of materials from the online portals remains unknown – although they still exist in the cache memory of search engines.

We found out that the information earlier published by the media was not 100% consistent with the reality. In fact, a major legal battle for assets of a prominent Russian businessman has already begun. And the first fight in the Arbitration Court of the Novosibirsk Region on July 4 was lost by Shukin.

As the majority stakeholder owing 99% of shares and official representative of Investment Fuel and Power Company (IFPC) Joint Stock Company, Shukin had filed a lawsuit with the arbitration court to declare the deal made in June 2016 with Region Sibir K (Region Siberia K) Limited Liability Company null and void. The deal was made by Timur Frank, General Director of IFPC Joint Stock Company. In accordance with the guarantee agreement and assignment of claim (cession) agreement, IFPC Joint Stock Company has undertaken a commitment to repay a debt in the amount of 1 billion rubles ($17.5 million) to Region Sibir K Limited Liability Company. According to the plaintiff, Frank has abused his powers, thus, inflicting damages to IFPC. By siphoning off the assets, Frank has driven the enterprise to bankruptcy. IFPC Joint Stock Company has been declared bankrupt in August 2016.

During the hearing of the bankruptcy case, Shukin has allegedly heard for the first time about another deal made by Frank for the benefit of Region Sibir K – also in the amount of 1 billion rubles ($17.5 million). According to the plaintiff, the second deal had also been made illegally and was economically unsound. In February 2017, the Arbitration Court of the Novosibirsk Region has incorporated the claim of Region Sibir K Limited Liability Company in the amount of 1 billion rubles ($17.5 million) into the register of creditors' claims against IFPC Joint Stock Company.

The home arrest has weakened the positions of Shukin – and many people are eager to take advantage of this    

The amount of the deal made by Frank to the detriment of IFPC Joint Stock Company exceeded 150% of the balance value of the company’s assets. Such large-scale decisions can’t be made without a voting of shareholders. Shukin owns 99% of the enterprise, and his voice would be decisive. According to the plaintiff, if Frank had notified him, he wouldn’t allow to make this deal and increase the indebtedness of the enterprise. Therefore, Shukin had requested to declare the deal null and void.

But how could Frank make that deal? In fact, Shukin has become a victim of his own fraudulent schemes and excessive trust to his attorney. Not only was Frank the General Director of IFPC Joint Stock Company, but until April 2016, the oligarch’s lawyer officially was its majority stakeholder. Back in January 2013, Aleksander Shukin had ‘sold’ 495 thousand shares (99%) to Frank at a fraction of the cost.

Apparently, in December 2015, the factual company owner started suspecting a foul play. Shukin decided to secure himself and regain full control over his enterprise. Evgenia, wife of Shukin, has filed a lawsuit with the Arbitration Court of the Novosibirsk Region requesting to declare the sale of the control block of shares null and void because she allegedly was not aware of it. According to her claim, the husband had made this decision without her knowledge, and Evgenia Shukina hadn’t provided her consent for the deal.

At that time, Frank was not ready yet to lose the trust of his grantor and admitted in court that the deal was just a formality. Aleksander Shukin was and still remains the factual company owner. The court has recognized the agreement of purchase and sale null and void and ordered Frank to return 495 thousand shares to the real owner.

Therefore, in April 2016, Shukin became the majority stakeholder of IFPC Joint Stock Company again. This enabled him to dispute the legitimacy of deals with Region Sibir K made by Frank after the return of the control block of company’s shares to the oligarch.

But the lawyer of the coal tycoon has outsmarted his former client. His line of conduct in the court was likely an unpleasant surprise both for Shukin and his new attorneys. Frank told the court that it is irrelevant whether the deal allegedly made by him as the General Director of IFPC Joint Stock Company was legitimate or not – because no deals were ever made between these two companies. According to Frank, the debt of 1 billion rubles ($17.5 million) was incorporated into the register of creditors' claims against IFPC on totally different grounds. Region Sibir K possesses a promissory note for 1 billion rubles ($17.5 million) issued by IFPC Joint Stock Company in January 2016 to another legal entity, Energo Investment and Financial Company Joint Stock Company, in payment of some agreement of purchase and sale.

But why did Frank, being the General Director of IFPC Joint Stock Company, issue a promissory note for 1 billion rubles ($17.5 million) to Energo Investment and Financial Company? Because Timur Frank is one of its three cofounders.

The second cofounder of Energo Investment and Financial Company is Alfa Limited Liability Company, and Frank is one of its two cofounders.

99.97% of shares in Alfa Limited Liability Company belong to Adonis Limited Liability Company 100% belonging to Frank.

In other words, on January 19, 2016 – a month after the court verdict ordering him to return the shares of IFPC Joint Stock Company – Franks has issued a promissory note for 1 billion rubles ($17.5 million) to himself in the form of Energo Investment and Financial Company Joint Stock Company. To eliminate the possibility to dispute the promissory note, it was sold on the same day to Region Sibir K Limited Liability Company. Region Sibir K is a bona fide holder of the promissory note issued by IFPC Joint Stock Company; therefore the circumstances of its issuing and circulation can’t be disputed in court.

Shukin failed to present in court any evidence of the deal allegedly made between IFPC Joint Stock Company and Region Sibir K Limited Liability Company that he had requested to declare null and void. Therefore, the court has thrown out the lawsuit in full for absence of a matter of dispute.

According to the Decision of the Presidium of the Supreme Arbitration Court of the Russian Federation №13603/10 of February 15, 2011, it is impossible to dispute a promissory note in a separate court action. The validity of a promissory note can’t be the subject of a separate lawsuit; it can be disputed only in the framework of an enterprise insolvency case. Shukin told in court that he is determined to do this. The question is whether he has enough time – the investigation of the ‘Inskoy pit case’ is ongoing and the Kuzbass oligarch may go to jail soon.

But the most interesting detail is that in January 2016, Frank has issued a promissory note payable effective January 30, 2017. How could the oligarch’s confidant know that by that time Shukin won’t be able to protect his empire at full capacity being placed under home arrest in the framework of a criminal case pertaining to Inskoy pit? The coal tycoon has been arrested only in November 2016, while Frank has decided to rob his boss back in January...

After the high-profile arrests of seven superior regional functionaries in the framework of the ‘Inskoy pit case’ in November 2016, everybody in Kuzbass thought that this was just the beginning. Governor Aman Tuleev also thought so. At a press conference held shortly after the arrests and searches, he has called all the accusations against his deputies absurd: “Nobody needs them [the accused officials]. Most probably, they need the Governor”.

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Aman Tuleev believes that the investigation targets him, not his deputies

However, a year passed since then – while Tuleev still sits (or rather lies) in his chair. The Governor has returned to his home region after an extended sick leave. Rumors had circulated in August that the Kuzbass Governor would be questioned over a list found in the residence of Kalinkin. The list provides names of people who were giving money to general’s wife Nadezhda Gorbuseva after the arrest of her husband and includes, among others, the Head of the Kemerovo Region. There were also rumors that Tuleev may be prosecuted or even jailed in relation to Inskoy pit – but nothing like this has happened so far. May be, the true target of the law enforcement authorities was not the Governor, but the coal empire of Shikin? All the fuss over the raiding takeover and criminal case has begun after an attempt to expand this empire... Perhaps, Frank has just understood: it is now time to get a piece of the pie?..

There is another version of this story. In November 2015, a legal dispute between the ‘Mining King’ and British businessman Adrian Barford heard in London has attracted the attention of watchdog authorities to Cyprus-based offshore companies of the oligarch. The General Administration for Economic Security and Combating the Corruption of the Ministry of Internal Affairs (MIA) of the Russian Federation has submitted to Interpol a request to assist in the identification of all the accounts of Aleksander Shukin in Cyprus. Being an experience lawyer, Frank understood that the law enforcement structures are after his boss and proceeded to action...

The coincidence of dates supports the last version. In November 2015, the Kuzbass oligarch became doubtful of the loyalty of his confidant and decided to retrieve the shares of IFPC Joint Stock Company. But it was too late: Frank managed to pull of the scheme with the promissory note and robbed Shukin for 1 billion rubles ($17.5 million). Or may be, for a larger sum – after all, the lawyer had all the required powers and authorizations from the ‘Mining King’.

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