Raiding takeover of Karat holding – settlement of old scores or global redistribution of market? 

Raiding takeover of Karat holding – settlement of old scores or global redistribution of market?
Aleksander Tugushev was arrested and charged with extortion of 33% of shares in Karat Management Company fishery holding Photo: The CrimeRussia

The former Deputy Chairman of the State Fishery Committee of the Russian Federation has been charged with extortion of a portfolio of shares in a major Russian fishery holding. The failed raiding takeover attempt might be a part of the global redistribution of one of the most nontransparent markets in the country.

Divide impossible to seize

The fishery industry is one of the most corrupt and criminogenic spheres of the Russian economy. For example, the murder of Valentin Tsvetkov, the Governor of the Magadan Region, was linked with the distribution of fishing quotas, while several high-ranked functionaries of the State Fishery Committee of the Russian Federation had been criminally prosecuted in the last 15 years. In 2002 and 2014, Deputy Chairmen of the State Fishery Committee Mikhail Dementiev and Yuri Moskaltsev had been sentenced to 5 and 4 years behind bars respectively. 

In 2006, another Deputy Chairman of the State Fishery Committee – Aleksander Tugushev – had been sentenced to 6 years behind bars for receiving a bribe in the amount of $3.7 million. In 2009 Tugushev was released, but recently he has attracted the attention of law enforcement structures again. On the eve of 2017, Aleksander Tugushev has been arrested and charged with extortion of 33% of shares in Karat Management Company fishery holding. Tugushev has been placed under home arrest, and it turns out that his past and present deeds are much more interesting that the bribe-taking episode in 2006. Being deprived of the right to hold governmental positions, Tugushev still works in the fishery industry – at the time of arrest, he was the General Director of the National Fishing Fleet company and maintained close relations with Vitaly Orlov, the Head of Karat Management Company.

Бывший зампредседателя Государственного комитета России по рыболовству Александр Тугушев

Aleksander Tugushev, the ex-Deputy Chairman of the State Fishery Committee of the Russian Federation 

Tugushev and Orlov know each other since their studentship in the Murmansk Higher Engineering Nautical School; they had started the fishery business together – and currently it encompasses all enterprises controlled by Karat Management Company. Initially, Vitaly Orlov, Aleksander Tugushev, and Norwegian entrepreneur Magnus Roth were business partners; each of them owned 33% of shares in the joint company. Then Tugushev decided to become a governmental servant and left the business. The former partners provide totally opposite versions of his departure. Tugushev claims that his abandonment of the business was fictitious; he has done this with the sole purpose to become a Deputy Chairman of the State Fishery Committee of the Russian Federation and contribute to their joint venture in this capacity. Orlov states that his former partner was an honest man and had really quit the business. The position of lawyers representing Tugushev is simple: the former official has become a victim of his trustfulness, and now he tries to retrieve what is rightfully his.

Орлов

Vitaly Orlov, the Head of Karat Management Company

Testimonies provided by Vitaly Orlov confirm – in some way – the version of Tugushev. According to the questioning record of Orlov, upon the sale of his share in the business, Tugushev had received not only its nominal price (20,138 rubles as per the agreement of purchase and sale), but a decent compensation of $30 million. According to Orlov, the money had been transferred to dummy companies, so it is impossible to prove the fact of the payment. 

Immediately after the release of Tugushev, Orlov has introduced him to boards of directors in two enterprises and appointed Tugushev his aide. In addition, Orlov mentions his attempts to find a compromise solution following the Tugushev’s requirement to transfer the shares to him. This implies that the business relations between the partners, in fact, had not been severed after the sale of shares in 2003, and this was a fictitious deal indeed. However, the questioning record of Orlov provides further interesting details.

Kings of sea depths

Orlov mentions much more prominent figures than the convicted former Deputy Chairman of the State Fishery Committee. According to the General Director of Karat Management Company, Tugushev had addressed some “oligarch” for help. The mysterious “oligarch” has instructed A. Delimkhanov and I. Traber (supposedly, Deputy of the State Duma of the Russian Federation Adam Delimkhanov and St. Petersburg businessman Ilia Traber, also known as ‘Antikvar’ (Antiquary) – the CrimeRussia) to ‘settle’ the conflict. The identity of Delimkhanov is indirectly confirmed by the presence of lawyer Pavel Krotov representing interests of Adam Delimkhanov at one of the meetings between Orlov and Tugushev. The name of the mysterious “oligarch” still remains unknown. However, Vitaly Orlov does not look like a helpless victim, and many people from the Forbes List might have an edge on him. 

So what is the empire of Vitaly Orlov – who, according to Bloomberg, has become a new dollar billionaire just recently? Karat Management Company led by Orlov controls Norebo fishery holding, which includes 10 fishing companies operating concurrently in the Russian North and Far East and trade representations all over the world. Until recently, Orlov was totally unknown to the public because Aleksander Tugushev had been representing the company in Russia. 

Business interests of Orlov were so extensive that in 2004, his Ocean Trawlers company had attracted attention of the Norwegian law enforcement authorities. By that time, Ocean Trawlers had literally monopolized the Norwegian fishery industry. In his investigation entitled “ Rovfiskerne”, Norwegian journalist Rune Ytreberg has provided information on poaching activities of Ocean Trawlers in territorial waters of Norway and involvement of Aleksander Tugushev, then-governmental official, into the company operations. Since 2011, Norebo fishery holding has started aggressive expansion on the Russian market and in a few years purchased many companies, including Murmansk Trawler Fleet, Sakhalin Leasing Fleet, Akros, and Roliz. At that time, Vitaly Orlov owned 67% of Norebo.  

The efficient business strategy has produced results – in 2015 Norebo became the leading supplier of codfish and Pacific herring on the Russian market; it has driven back such major players as Gidrostroy and Russian Aquaculture (earlier Russian Sea). Concurrently with the market expansion, Orlov managed to gain support of top-rank fishery officials – Ilia Shestakov, Chairman of the State Fishery Committee of the Russian Federation, has personally launched a new factory belonging to Karat.

Глава Росрыболовства Илья Шестаков лично открывает новый завод «Карата»

Ilia Shestakov, the Chairman of the State Fishery Committee of the Russian Federation, personally launches a new factory belonging to Karat  

It is necessary to note, however, that Gidrostroy belongs to Aleksander Verkhovsky, Member of the Council of the Federation, while Russian Aquaculture belongs to Maksim Vorobiev, brother of the Governor of the Moscow Region, and Gleb Frank, son-in-law of Gennady Timchenko. It is unlikely that the old players, who had divided the market between themselves long ago, were happy with the intervention of Orlov. In the light of this, the mysterious “oligarch” might be recognized. Tugushev has got the support from this “oligarch” shortly after the consolidation of all Karat shares in the hands of Orlov. Immediately after the arrest of Tugushev, a counterblow was delivered to Orlov: searches and seizures of documents have been performed in Trawler Fleet offices. All major media outlets had covered the arrest of Aleksander Tugushev – but no one knows the true reasons behind the SWAT raid in Trawler Fleet.

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Largest fish producers in Russia as of 2015 (source: Vedomosti newspaper) 

Based on the scope of the recent events, it seems unlikely that all the hassle is about old conflicts between the former partners. The attempted raiding takeover of Karat Management Company might become the beginning of a global redistribution of the aquatic bioresources market, a large share of which currently belongs to minor players. Taking the names of some participants, the result of this struggle is easily predictable.

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