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Eurasian Energy Games

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Wednesday, November 14, 2012

BP May Open Britain to Russian Gas

Additional ramifications of the BP-Rosneft deal are now coming to light.  With the purchase of TNK-BP by Rosneft, BP’s Russian partners have agreed to end their legal battles with British Petroleum.  Sources claim that the two sides agreed to settle all their disputes after BP  made a $325 million payment to the Russian consortium AAR.  Supposedly, this move has been taken to give BP the freedom to pursue the development of Arctic oil.  “BP is not taking an equity position in Rosneft as a portfolio investor,” said chief strategist at Sberbank CIB Chris Weafer.  “they are looking at a future relationship through which they can grow production and reserves in Russia.”

It appears, however, that this deal has also cleared the boards for BP to work with Gazprom to bring Russian natural gas to Great Britain.  AAR had previously taken the position that their partnership with BP mandated all BP business opportunities in Russia be run through TNK-BP.  With all claims settled, sources report that the consortium has relinquished all claims on BP’s future Russian activities.  That could include moving into the natural gas market.  Gazprom’s  Chief Executive Alexi Miller reported in June that BP was interested in participating in an expanded Nord Stream pipeline, one that would carry product to Britain.

Such a move is a  questionable investment decision by the British company, given the plummeting price natural gas is commanding, and the large quantities of liquified natural gas (LNG) coming on the market to compete with pipeline gas.

Friday, November 2, 2012

Reprecussions from the sale of TNK-BP

With the recent decision of OAO Rosneft to purchase TNK-BP from its various owners, one of the most strained partnerships in Russian economic history comes to an end.  Rosneft has agreed to pay a total of $54.8 billion to BP plc and the Alfa-Access-Renova consortum (AAR) controlled by four Russian billionaires.  These oligarchs–Mikhail Fridman, German Khan, Viktor Vekeselberg and Len Blavatnik– defied the stated policy of the Kremlin last year to prohibit BP from entering into an artic exploration agreement with Rosneft.  With ill feelings all around, it was apparent that this business union was headed for a divorce.

Initially, AAR offered to buy BP’s 50% ownership in TNK-BP, but this offer was withdrawn when Rosneft offered to purchase AAR’s shares instead.  AAR is slated to receive $28 billion for it’s half of the company.  Rosneft then offered BP the chance to sell its shares, as well.  Anxious to raise capital to pay its Gulf spill-related expenses, BP agreed to accept $10-$15 billion in cash,and a 12.5% share in Rosneft.  BP plans to use part of the cash payment to purchase an additional 5.66% of Rosneft which, combined with the 1.5% share they already hold, will bring their share of ownership to approximately 19.75%.  75% of Rosneft is owned by the Russian state, while the remainder is sold in the market.

Analysts believe that the majority stock holder Russian state will help finance the purchase.  “For Rosneft to buy both AAR and BP to form a fully state-owned oil champion would be the cleaner solution for the Russian state, and is likely to require further state injection into Rosneft, given that the company had previously been sounding out the market for a loan to buy part of BP’s share,” said RBC Capital Markets Corporation’s Peter Hutton.  Not as much cash is required for the deal as the original figures would indicate, since BP and AAR are owed about $2.5 billion in dividends from TNK-BP.  According to journalist Paul Whitfield, this means the cash proceeds from the two deals are actually $26.75 billion for AAR and $15.85 billion for BP, falling to $11.05 billion for BP after its acquisition of Rosneft stock.

Russian President Vladimir Putin appears happy with the deal.  “This is a very good signal for the Russian market.  It is a good, large deal.  I would like to thank you for this work,” he told Rosneft CEO and longtime ally Igor Sechin.  Putin should be happy:  the deal gives Rosneft a seat on BP’s board.  This will give Russia a voice in BP operations outside of Russian territory such as in the Caspian where BP is the lead oil company.

The deal puts Rosneft ahead of Gazprom as the leading energy producer in Russia.  After the deal is consummated, Rosneft will produce 4 million barrels of crude oil a day.  This does not appear to be the result of any inside-Kremlin politics, but economics.  As the price of natural gas declines in the face of the shale revolution, it should be anticipated that Gazprom’s importance would also decline.  Moscow needs revenues, however, and the price of oil remains high.  Igor Sechin, driven out of the cabinet by former President Medvedev, is back in the cat bird seat.

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Bulgaria Playing Both Sides

Against all expectations, Bulgaria has emerged as a key player in the battle for control of the Southern Energy Corridor.  This Black Sea country is astride the most logical route between the gas fields and European markets for both South Stream and TANAP.  Bulgaria has agreed to cooperate with both consortiums, while playing for maximum advantage.
In August 2012, Bulgaria and Gazprom announced they would conclude an investment contract in November for the construction of South Stream.  Simultaneously, Bulgarian Minister of Energy and Economy Delyan Dobrev announced a new gas-supply contract that featured an 11% price in gas for the remainder of 2012.
Once having achieved its goal of obtaining Bulgarian cooperation, however, the Russians appear to have upped the ante.  For construction of South Stream to begin, the Russians declared they wanted $1.3 billion in compensation for the Belene nuclear plant.  This was a project that the former Bulgarian government had contracted with Russia, but that current Prime Minister Boiko Borisov cancelled when he took office last year.  Borisov was outraged.  “We are observing all our commitments on South Stream.  For Belene we continue to negotiate…That is why I think we have been absolutely treacherously surprised by that claim.”  Bulgarian observers pushed back, threatening that the government would be forced to cancel South Stream.  Ilian Vassilev of Innovative Energy Solutions said, “There is no way Bulgaria can pay both the claim and let South Stream happen.”
The dispute has led to a delay in a visit by Russian President Vladimir Putin, who was supposed to be present in Sofia on November 9 for the signing of the South Stream papers.  Instead, Putin has postponed his trip until December, possibly signalling his unhappiness with Bulgaria’s recalcitrance.
Meanwhile, in September 2012 the European Union criticized Bulgaria for  supporting South Stream while lacking sufficient commitment to the EU’s version of a Southern Energy Corridor.  The EU’s concern was that South Stream only diversifies supply routes from Russia, but does not diversify the ultimate, Russian source of supply.  “Bulgaria needs to complete the ongoing investment projects on gas interconnectors with Romania, Serbia and Greece, and make reverse flows possible on its interconnector with Turkey…Bulgaria also needs to play a more proactive part in opening up the Southern Gas Corridor, which has the potential to diversify supply sources,” said a leaked document.

EC Report Slams Bulgaria’s Failure to Commit to Southern Energy Corridor

Energy | September 18, 2012, Tuesday| 1215 views

Bulgaria: EC Report Slams Bulgaria's Failure to Commit to Southern Energy Corridor
Мap of the so called Southern Energy Corridor from REEE

Bulgaria must commit more thoroughly to the development of the EU-sponsored Southern Energy Corridor (also known as Southern Gas Corridor) aimed at diversifying natural gas suppliers to Europe, according to a leaked report of the European Commission.

The draft report of the EC, which is still to be released, criticizes Bulgaria for throwing its weight mostly behind the Russian-sponsored South Stream gas transit pipeline, while lacking sufficient commitment to EU’s attempts to develop the Southern Energy Corridor, EurActiv reported Tuesday citing the leaked report.

Bulgaria needs to complete the ongoing investment projects on gas interconnectors with Romania, Serbia and Greece, and make reverse flows possible on its interconnector with Turkey, the EU executive says.

“Bulgaria also needs to play a more proactive part in opening up the Southern Gas Corridor, which has the potential to diversify supply sources,” the paper reads.

The Southern Gas Corridor is a key element of competing projects to bring natural gas to Europe from the offshore Shah Deniz II field in Azerbaijan.

Up to now, Bulgaria has made commitments to South Stream, a Gazprom-favoured project widely seen as a competitor to the Southern Gas Corridor.

The South Stream pipeline is intended to transport up to 63 billion cubic meters of natural gas to central and southern Europe, diversifying Russian gas routes away from transit countries such as Ukraine.

The pipes will go from Russia to Bulgaria via the Black Sea; in Bulgaria it will split in two – with the northern leg going through Serbia, Croatia, Hungary, and Slovenia to Austria and Northern Italy, and the southern leg going through Greece to Southern Italy. Recent reports have indicated, however, that Russian energy giant Gazprom may give up on the construction of the offshore section of the South Stream gas pipeline to Austria.

The Black Sea underwater section of South Stream between Russia and Bulgaria will be 900 km long, and will be constructed at a maximum depth of 2 km.

The construction of the South Stream gas pipeline will begin in December 2012, and the first supplies for Europe are scheduled for December 2015.

The pipeline’s core shareholders include Gazprom with 50%, Italy’s Eni with 20% and Germany’s Wintershall Holding and France’s EDF with 15% each.

Gazprom has already established national joint ventures with companies from Austria, Bulgaria, Croatia, Slovenia, Greece, Hungary and Serbia to manage the onshore section of the South Stream pipeline.

Bulgaria has committed itself to speeding up the construction of the Russian-sponsored pipeline on its territory, since on January 1, 2013, the EU is introducing new requirements for the access to energy networks.

In the draft gas supply report of the EC, Bulgaria is also urged to increase cross-border network capacity.

Regardless of its more favorable geographic location, Bulgaria is also singled out as one of the energy infrastructure black spots on the EU map.

The Bulgarian Prime Minister was non-plussed.  In an interview with Euronews, Borisov said he was commited to the European vision.  “It is very important that the Turkish Tanap-pipeline reaches Bulgaria and that Nabucco-West and the South East Europe Pipeline move closer to Europe…Regarding the Nabucco project, Bulgaria has done all it can:  the parliament approved its construction.  We have signed all the documents that are required and we can start construction work tomorrow if necessary.  I am looking forward to the launch of the Nabucco project.”
Despite any agreement with Nabucco, however, as of 30 September 2012 there was no agreement between Bulgartransgaz and Turkey’s Botas to connect with the Turkish pipeline network.  Without such a connection, any discussion of Tanap or Nabucco is moot.  To give the country some negotiating room, Bularia delayed its plans one year to connect its gas network with neighboring Balkan countries.  Bulgartransgaz announced the connection would take place in 2014, instead of the originally-planned 2013.

Wednesday, September 5, 2012

Transcaspian Back on the Board

Recent armed spats between Azerbaijan and Turkmenistan in the Caspian Sea placed the future of the Trans Caspian Pipeline in doubt, but European Union-backed talks in Ashkabat appear to have put things back on track.  According to EU spokeswoman Marlene Holzner, the Turkmenistan Energy Minister Myrat Artykow and Azerbaijan Minister for Industry and Energy agreed with EU Energy Commissioner Gunther Oettinger that the project could be an important part of efforts to reduce Europe’s dependence on Russian gas supplies.
Holzner said both Azerbaijan and Turkmenistan had expressed a desire to supply Turkmen gas to Europe, but neither country was willing to make any firm commitments.  “Turkmenistan said it continues to be interested in delivering gas to Europe.  Azerbaijan also confirmed its interest in being an ‘enabler’, meaning it would also be a transit country for gas.”

Despite the expressions of good intentions, who moves first to make the pipeline a reality remains in doubt.  Holzner said that the EU was waiting for a gurantee from Turkmenistan on supply (despite the fact that Turkmenistan President Gurbangulu Berdimuhammedov is on record as promising 40 bcm per year for the project).  At the same time, she said that the EU would neither own the pipeline nor pay for it.  For his part, Berdimuhammedov has previously said that while he would sell the gas to Europe, it would be up to the Europeans to figure how to get it from Turkmenistan.  So, all good wishes aside, no progress appears to have been made other than to get the parties talking again.

Turkmenistan appears to have turned its attention east, with most of its gas sales going by pipeline to China.  For Azerbaijan’s part, the pipeline could be seen as either competition for its own future gas production, or for Gazprom’s South Stream.  In either case, the benefits of a Trans Caspian Pipeline do not appear to be overwhelming.  The one country that would benefit is Turkey, who would like to see Turkmen gas made available to expand the proposed TANAP pipeline.

“With the TANAP project we have created a structure that will allow gas to transit across Azerbaijan and facilitate trade.  This structure is also targeting Turkmen gas.  We are seeking Turkmen gas,” said Turkish Energy Minister Taner Yilmaz.

According to Gulmira Rzayeva of the Center for Strategic Studies of Azerbaijan, an expanded TANAP could increase Turkey’s chances of joining the European Union.  “Turkey can achieve political gains with this pipeline; it can be an ace in terms of its European Union membership negotiations.  With the finalization of this project, Turkey will have a whole new position within the region.”  Whether Turkey wants to join Europe is, of course, an open question.  Turkey’s annual growth continues at around 7%, while Europe continues to stagnate and — possibly–sink back into recession.

Tuesday, August 28, 2012

Potential Backers Lose Interest in TAPI

Despite support from both the United States and the Asian Development Bank, potential investors are backing away from the proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline.  This proposal has been beset with concerns over security of the pipeline route, which passes through some of the most violent prone provinces in Afghanistan.

In the latest development, China has expressed new interest in Turkmen gas.  First, Chinese President Hu Jintao has proposed a new pipeline route that would bring Turkmen gas to China via Afghanistan.  The benefit of this latest proposal is that the pipeline route would traverse a safer route in Northern Afghanistan.  Second, China also signed in May 2012 an agreement with Turkmenistan to increase deliveries through the East-West Gas Pipeline from 30 bcm  per year to 65 bcm.  This pipeline does not pass through Afghanistan, has no security isues, and has been relatively trouble free since it opened in 2009.  Finally, China has assured Turkmenistan that its demand for natural gas will constantly increase over the next five years.  As a result, Turkmenistan’s enthusiasm has “softened” for TAPI, according to Pakistani correspondent Iqrar Haroon.

The Russian National Energy Institute has recommended the Russian government should avoid investing in TAPI because of security concerns, and questions over the viability of the project.  According to the Indian Institute for Defence Studies and Analyses, the proposed increases in Chinese purchases of Turkmen gas will have a negative impact on Russia.  Turkmenistan offers lower-priced gas to China, bringing downward pressure on Russian gas prices.  Russia and China have been in talks since at least June 2009 to import 68 bcm of gas per year, but have not been able to agree on a price.

Monday, August 27

Trans Adriatic Pipeline Receives Funding Commitment

The Trans Adriatic Pipeline (TAP), the southern competitor for carrying Caspian gas from the Turkish border to Europe, has received an economic boost.  British Petroleum and Total have signed an agreement with the State Oil Company of Azerbaijan (Socar) to fund the pipeline, designed to bring natural gas to Italy.   (The proposed Nabucco West would carry gas from the Turkish border to Baumgarten, Austria).  “These funds will contribute toward continued work in several important areas during the period running up to the final routing decision, expected in 2013,” said a TAP spokesman.

Kjetil Tungland, TAP’s managing director, issued a statement, “The signing of this agreement is a significant vote of confidence in the quality of TAP’s technical and commercial solutions from key industrial players, and underpins the cooperation agreement that was signed between TAP and Shah Deniz in June.”

While the Shah Deniz consortium has not yet decided between TAP and Nabucco West, TAP’s chances have been improved by both the funding, and by the pipeline obtaining government support.  Both the Greek and Italian governments have agreed to support the pipeline, something they previously had not done.  According to the Greek Foreign Ministry, Greek Deputy Energy Minister Makis Papagergiou and his Italian counterpart reached a “close cooperation agreement” to support the pipeline.  The Italian Foreign Ministry added, “Athens and Rome have decided to back the project after Aszerbaijan’s Shah Deniz 2 consortium chose TAP to transport gas to western Europe.  Nabucco West remains an alternative…”

With the Shah Deniz consortium sitting on the fence, other interested parties are also trying to cover all their bets.  the European Commission, which had previously said that Nabucco was a priority European project, has backed away.  It now says that it does not favor any project or route over another, as long as it carries Azeri gas, would diversify EU supplies, and would reduce EU dependence on Russian resources.  Similarly, BP is trying to support both TAP and its rival, Nabucco West.  “Our aim is to be involved in all aspects of the project so the aim is to be involved in Nabucco and TAP as well, and this is still being negotiated,” BP spokesman Toby Odone said.

Wednesday, August 22

Gazprom May Punish Hungary for Supporting Nabucco

Faced with Hungary’s approval of an environmental permit for the construction of the Nabucco pipeline, Gazprom may be considering moving west the route for the rival South Stream pipeline.
Reinhard Mitschek, managing director of Nabucco, announced on August 14 that Hungary was the first country to issue the project all its permits.  “The granting of this permit is a substantial step forward in Hungary and signifies the advanced stage of development of Nabucco West,” he said.
Within a week, Gazprom announced they were in talks with Croatia over the South Stream pipeline route.  “An intergovernmental agreement between Russia and Croatia on joint participation in the South Stream project was signed in 2010,” a spokesman commented.  “Currently, based on the results of a pre-investment stage, Gazprom and Plinacro Ltd. are discussing the terms of a shareholder agreement for a joint compnay project with a view to its subsequent establishment.”
The Croatian side is optimistic.  “At the moment the chances are 50:50 that we get the transit route of South Stream,” said a source involved in the Gazprom negotiations.  The reasons for changing the route are uncertain.    According to the Voice of Russia, a Croatian list serve, Jutarnji, listed a number of possible concerns:  lower costs, differences between Gazprom and the Hungarian leadership, uncertainty over ownership shares of various Hungarian companies, and slow work on the Hungarian economic feasibility stateement.  Gazprom’s board chairman Alexei Miller minimized these reasons, however, calling them “not significant.”  An unnamed Plinacro source added that there could be no official confirmation on the status of the talks, as both sides are bound by a mutual confidentiality pledge.
Timing would indicate the talks are retribution for Hungary’s cooperation with South Stream’s rival, Nabucco.  Whether the talks will result in the route change, or are merely a pressure tactic on Hungary by Gazprom officials, is yet to be seen.

Classified Nord-Ost Unknown Details [updated]


Deadly gas use haunts Moscow theater hostages 10 years later

A man crosses himself in 2010 in front of portraits of the victims of the Dubrovka Theatre crisis in Moscow.  File photo via AFP.
Topics:

A decade after Chechen militants seized a Moscow theatre in a hostage crisis which left 130 people dead, victims’ families are still seeking answers about use of a deadly gas by Russian forces to end the siege.

A total of 912 people, many of them children, were held hostage in the Dubrovka theatre for three days after coming to watch Nord Ost, a popular musical, on October 23, 2002.

The crisis ended on October 26 when Russian special forces filled the building with an unknown gas to neutralise the attackers, who had threatened to blow up the venue unless Russia pulled its troops out of Chechnya.

The effects of the gas killed 125 people, as well as the 40 attackers who were shot after being knocked out by the gas. The hostage-takers themselves killed five people.

The bloody end to the siege, two years into Vladimir Putin’s presidency, damaged his image as it appeared his regime had not made it a priority to prevent the deaths of the trapped civilians.

Survivors and victims’ relatives remain highly critical of how the authorities handled the crisis.

“We sat without moving in our seats right next to the stinking orchestra pit which had been transformed into a toilet,” a former hostage who wanted to be identified only as Oleg told AFP.

“We were exhausted after three days without food or water,” and were waiting for an assault as “our only chance to be liberated from that nightmare”.

But what followed was “chaos,” he said.

“Ten years have gone by, but so many questions are still unanswered,” said Natalia Kurbatova, whose 13-year-old daughter Kristina, one of the young stars of the musical, was among those killed.

“Why didn’t the authorities negotiate with the militants’ leader, at least to let the children go? What was the gas that killed our loved ones?” Kurbatova demanded.

“I still don’t know how she died,” she said in an interview with AFP. Her daughter was only found in the morgue the day after the security forces stormed the building.

Medical aid to the exhausted hostages who inhaled the gas was poorly organised, said survivors, with most of the deaths resulting from suffocation rather than from explosions or gunshots.

Russian courts however have systematically rejected lawsuits from the former hostages, who have blame the authorities and demanded compensation.

Last December, the European Court of Human Rights ordered Russia to pay 1.25 million euros ($1.6 million) to 64 claimants, including ex-hostages and relatives of those killed during the siege.

“The gas didn’t kill people right away, and many people died because they weren’t properly tended to,” said lawyer Igor Trunov, who represented the Nord-Ost victims in court.

“The doctors didn’t know the composition of the gas. To this day it is classified. There wasn’t enough of the antidote. The ambulances didn’t have access to the building, and the hospitals weren’t ready to accommodate so many ex-hostages.”

While the Strasbourg court did not criticise Russia’s use of force and the noxious gas, it did highlight the lack of preparation for the rescue operation.

The European court ordered Russia to reopen its investigation into the victims’ deaths and possible negligence by officials, but Moscow’s powerful Investigative Committee has refused to do so.

Moscow has experienced more horrifying attacks since Dubrovka. A 2011 suicide bombing in its main Domodedovo airport killed 36 people and a double suicide bombing in the metro in 2010 killed 40.

A recent poll by the independent Levada Centre pollster found that 53 percent of Russians expect more acts of terror and hostage-takings.

“The main way to protect ourselves from attacks is the work of the special forces, using agents to infiltrate terrorist networks to prevent attacks,” said military analyst Alexander Golts.

“But I wouldn’t say Russia’s special forces have advanced far on that front,” he added.

[Image via Agence France-Presse]

 


Sword law stronger than law

Litigation, usually heavily trailing behind, perhaps, every developer of Saint Petersburg, reflects difficult relations between construction companies and their clients. A lot of mutual claims are usually accumulated there. Purchasers of real estate argue on quality of work, in particular, on supplying the house with all necessary communications. Developers undertake attempts to interfere in the work of condominiums and other organizational structures that accompany life of separately taken residential complex. In the tug of war, parties usually don’t shun a seamy side as well. But we are interested in only one particular aspect of the issue, namely – the judiciary.

By default, a company usually overweights in a judicial confrontation between a large and rather well-to-do legal body and citizens. Many various resources are used here – from a direct bribery till penetration of “own” lawyers to the judicial system. Residents can oppose to it with only own enthusiasm, collective, but not less private, and not the biggest money, and, at last, knowledge of the law.

A long-running story of the JSC Stroitelny trest is one of the most classic examples of the war of residents and their developer. In open sources, the company is permanently mentioned with the prefix of the leader of brick housing construction in St. Petersburg. For 20 years of its existence, this leader, under control of Evgeny Rezvov and Beslan Bersirov, has put into operation 68 objects with a total area of 1.7 million square meters.

It is easy to see that there are 25 thousand square meters of active area at the average per object. This is an area of ​​a decent housing complex, so, Stroitelny trest specializes exactly in large projects and it is a rather big office itself. It is easy to see on an official site of Stroitelny trest. However, behind the glossy luster and reputation of a construction colossus which “always commissions all the objects on schedule”, the same predatory habits are hidden.

Uncomfortable Cozy home (literally Uyutny dom)

The situation around a huge residential complex at Kolomyazhsky Ave, 15, building 2 has become the most notorious and sensational for the last decade. Going up to the sky, the airy skyscraper, built in 2003, was in fact a trap for homeowners at the whim of the directors of Stroitelny Trest. The more information about still newer temptations falling upon the heads of the residents of the complex repeatedly surfaced in the media: starting from building of a two-storey parking with incredibly expensive parking spaces right in the center of the courtyard (and contrary to the original plan of the site development) and ending with a unilateral violation of the right of the residents to co-ownership of the adjacent territory with the stalls in the courtyard.

But in addition to the problems of general nature, the Stroitelny Trest puzzled owners in another way too. The tangled skein of mutual claims, which led, according to the apt expression of journalists, to “the revolution of homeowners”, began coming untwisted just with one of these judicial attacks. Thus, on December 25, 2009, MC Uyutny dom Kolomyazhsky JSC created by Rezvov and Bersirov filed up a statement of claim to the Arbitration Court of Saint Petersburg and Leningrad region about recovery of payments for maintenance and use of common property from several owners of non-residential premises in the house.

It requires a short explanation about Uyutny dom. In one of the many documents accompanying the judicial war with the Stroitelny trest, one of the owners of premises on Kolomyazhsky, 15, Evgeniy Taranov, characterized the relationship of the developers and the owners of the property in the following way.

“This company was not chosen by the residents, just as they didn’t agree the way of the house management – the management company. This company was imposed to the residents by the developer and it was under the threat of consequences adverse for them: the keys weren’t given out, the basic sale-and-purchase agreement (on the basis of the preliminary one) wasn’t concluded, the documents weren’t given on registration, and etc.

I believe that the management company, created by the developer, used some judicial mechanisms to achieve its illegal purposes, and it is now trying to court decision to admit that it alone legally disposes of the common property of the owners of the premises in the apartment building, that it on a legal basis uncontrollably uses money obtained from the disposition of the common property and collected from the residents of the house, that it lawfully discharges the owners of premises in the house of the management of the apartment house”.

That is, the management company initially came under very questionable circumstances. However, for some reason it didn’t call attention of the law enforcement bodies up to a certain time. However, Uyutny dom with its shaky legitimacy did not seem convincing in arguing to the judge Y.V. Zolotareva that left the statement of Uyutny dom without movement.

There was a curious further. On February 12, 2010, MC Uyutny dom Kolomyazhsky JSC filed the petition to the arbitration court about return of the application. It was satisfied by the arbitration court on February 15, 2010. Such a claim for the refund of the claim of the plaintiff means a desire to abandon the legal action. Having established this fact, judge Zolotareva took out the definition about returning of the statement of claim.

However, two weeks later, on February 27, 2010, Uyutny dom filed the same statement in the arbitration courts and that time it came at the newly appointed young judge Mikhail Suvorov who no longer saw the grounds for leaving the application without movement and immediately accepted for processing.

There is one legal subtlety. Uyutny dom didn’t eliminate all claim shortcomings within the initial case, but withdrew it and filed again. That was a smart tactics not to wait for the return of the statement of claim but exactly to withdraw the own lawsuit in the day when the judge issued the definition of the return of the statement. These seemingly meaningless bodily motions successfully hid the base for the leaving the statement of claim without movement by the judge Zolotareva.

And that was the trick the director of Uyutny dom Olga Martynovskaya, who had graduated with honors from the faculty of law of Saint Petersburg State University, counted on. Really, if at adoption of the statement of claim from the company calling itself “managing” it becomes clear that a minutes of the meeting of the owners of the premises of the apartment building on the choice of a method of managing the house and the plaintiff’s choice of the management company doesn’t exist, the court will return the claim due to the lack of the proofs confirming the right to sue the claim. This will be added to the relevant protocols and, as an established fact, can strongly prevent further plans of the Messrs. developers who proclaimed himself as the managers as well.

Olga Martynovskaya wasn’t mistaken in her smart tactics. Judge Suvorov, when adopting the statement to proceedings, “didn’t notice” the things that previously was immediately evident to a more experienced Zolotareva. To one of the defendants in the lawsuit by Martynovskaya, the aforementioned Evgeniy Taranov, the motives of the strange decisions of the judge Suvorov seemed to do less with inexperience but with criminal negligence based on bias. In this connection, Taranov issued a statement to the Investigative Committee of Russia addressed to Alexander Bastrykin.

Really, the absurdities in the procedure of the litigation sounded by Taranov would appear to be very funny if they had not caused gloomy reflections. First of all, at the preliminary hearing appointed on April 16,2010, the defendant, represented by the Kolomyazhsky 15 Condominium, demanded from Uyutny dom the confirmations of competency “to operate” at least something within the housing complex. The judge Suvorov agreed with this requirement… and safely «forgot» to make it in the definition on the continuance of the hearings on May 14, 2010. Thus, this quite legal requirement simply vanished during the break between the hearings. At the same time Suvorov rejected but equally reasonable request for the amount of the plaintiff’s claims.

But it is only child’s play in comparison with the absurd appearance of the representatives of at once two Chairmen of the Kolomyazhsky 15 Condominium in the court on May 14. One was from Svetlana Sklar chosen by the meeting of the owners, another, what is significant, from Beslan Bersirov. Why on earth would the Deputy of the General Director of Stroitelny Trest need to go to the condominium management? In general, it is not a mystery. Too many material issues were exactly depended on the decisions of the condominium, for example, the provision of the territories under the same parking lot. The question is: who is the real Chairman?

Comrades of Chairman

The statement addressed to the public prosecutor of Saint Petersburg Sergey Petrovich Zaitsev of October 3, 2010, sent by Svetlana Sklar, allows to get into background of the collision with the two Chairmen. It is worthy of a literal, even partial, citation.

“On January 30, 2006, General Director of Stroitelny Trest E.G. Rezvov, his deputy B.R. Bersirov and a certain citizen T.N. Lyutinskaya decided to set up the Kolomyazhsky 15 Condominium Partnership in the newly built apartment building. At the same meeting, E.G. Rezvov, B.R. Bersirov and T.N. Lyutinskaya elected themselves to the board of the condominium partnership. Originally, T.N. Lyutinskaya was elected chairman of the condominium partnership. Then, in May 23, 2006, B.R. Bersirov was elected chairman”.

During the whole time of the existence of the condominium partnership, under various pretexts, the persons mentioned above avoided admission of the real owners to the membership of the condominium partnership of the owners of the premises in the apartment (somewhat about 1300 flats) house refusing to receive any correspondence and stopping any attempts of the residents to get some information about the house common property disposal or to learn about the expenditure of the money collected from the residents, etc.

Perhaps, to ultimately remove the owners from the management of the house, Bersirov, Rezvov, and Lyutinskaya decided to liquidate the condominium partnership, and since that they had been refusing any attempt of the residents to join the condominium partnership under the pretext of the liquidation of the latter.O.A. Martinovskaya, who is also the general director of the Uyutny dom Kolomyajsky management company created by E.G. Rezvov and B.R. Bersirov, was appointed the bankruptcy commissioner.

Here is a very important fact that neither of the persons stated above is the owner of the house on Kolomyajsky 15. And Sklyar highlights it specially, stressing that in such a way all the decisions undertaken by the self-constituted condominium partnership are juristically miserable. However, how did the Uyutny dom Kolomyajsky MC appear in this scheme?

“On the same day, it was decided to make an agreement between the Kolomyajsky 15 condominium partnership and the Uyutny dom MC. It was for the managment of the apartment building and transfer of all powers of the condominium partnership for the management of the house including the authority to manage the account”, Svetlana Sklar writes in her statement. Indeed, such a transformation would be possible if the condominium partnership was legitimate body of management. But where nothing is, nothing can be had.

However the violation was not the only fact of the illegitimacy of the condominium partnership “named after Stroytelny trest” and of its decisions. The very handover of authority occurred with gross law violation.

According to Paragraph 3 of Art. 161 of the Housing Code of Russia, the choice of a method of management of an apartment house is the only responsibility of the general meeting of the owners of the premises in the apartment house. According to Paragraph 1 of Art. 137 of the Housing Code of Russia, condominium partnership are given the right to conclude contracts on management of their apartment house, but in accordance with working law. Under the current law, by P.3. of Art.137 of the Housing Code of Russia, such a conclusion of a contract is possible under conditions of a choice of a method of management and management company by a general meeting of owners of premises. However, the general meeting of the owners of the premises in the house did not make a decision on choosing a way of management of the house by the management company”.

Thus, forming a threesome hastily collected condominium partnership, the directorate of Stroitelny Trest in the same way, behind the scenes, delegated the power to the management company that was created, as we already know, again by the representatives of the developer. The «extra» possible participants, who were capable of making decisions not in favor of the developers, were surely cut off from the management of the housing issues. The Uyutny dom (read: Rezvov and Bersirov) received “the key of the apartment where the money is” (quoted, I. Ilf, E. Petrov, The Twelve Chairs book) in the form of a “right of disposal of the common property of the apartment buildings and uncontrolled disposal of the money received from renting of the common property of the house to third parties”. Of course, the state of liquidation was too long. That situation suited all the participants of the fraud. Because during that time they managed to divide the land plot on which there was the apartment complex and started a brisk commerce. For example, the parking spaces were sold to a third party that had been created, by the way, at the expense of the shareholders and related to inalienable land fund of general disposal by all the residents.

According to Sklar, the actions of developers form “an offense under Part 2 of Article 159 of the Criminal Code of the Russian Federation – ‘fraud committed by a group of persons’, i.e., acquisition of another’s property by fraud or breach of trust of citizens – owners of premises in an apartment building”.

The liquidation of the condominium partnership was in suspense until January 30, 2010. On that day, the initiative group of residents who were openly gotten at the clutter that was reigned in the yard and surrounding areas and, above all, the direct attack by the Uyutny dom on the rights of the owners convened a general meeting of the owners of the premises. The residents submitted the request for inclusion to the condominium partnership. There were immediately adopted the decisions on the re-election of the liquidator – Svetlana Sklar was approved there, on the withdrawal from the state of liquidation, and, finally, on the re-election of the Board and the election of a new Chairman of the condominium partnership’s Board. On one of the following meetings, on February 10th, Svetlana Sklar was elected chairman as well.

She specifically states the fact that the January meeting was attended by “more than 60 owners of the premises in this house”. Is it a sufficient number for the required quorum? But the numbering of the apartments in the residential complex in the Kolomyajsky Ave comes up to four-digit numbers. The answer is simple, and that was the very specific imaginary violation of the provisions of the Housing Code to which Bersirov refered in court later trying to prove the legal nullity of the decisions of the reconstituted condominium partnership. The nicety, however, is that the developer had no right to challenge the decision of the general meeting. Consequently, it couldn’t be a matter of contention on his part. As they say, that was not your war, sir.

Of course, Bersirov perfectly understood that even if he made some not very appropriate steps as a result of the “mutiny aboard”. However, he was the one who was found in the position of Chairman of the condominium partnership in the court. By May 2010, he was not taken aback by the purchase of housing in the house built by his company. Because he initially could not be a member of the Board of the condominium partnership. In general, he couldn’t be a member of a partnership at all. However, Svetlana Sklar found that on March 24, 2010, Bersirov had filed in the request to the 15th Interdictrict Inspectorate of the Federal Tax Service (IIFSC) of Saint Petersburg for amending new records to the Uniform State Register of Legal Entities. According to it, the developer declared himself chairman of the condominium partnership.

The condominium partnership had no meetings about it. It took time out for the period from February 10. No one was informed, no one was invited anywhere. And it gave Taranov a handle to doubt the validity of all possible false meetings of the condominium partnership convened in the period from February 9 to March 24, 2010. He filed in a corresponding claim to the Petrogradsky district court in order to “settle hash” the decisions possibly generated by the alleged fraudsters of a virtual condominium partnership. However, on September 15 of that year, representatives of Bersirov in court stated that there had been no meetings of the condominium partnership at the appointed period, and it allowed doubting the legitimacy of the “self-coronation”.

But most of all, Svetlana Sklar angered the simple fact that the Bersirov’s statement to the IIFTS was sealed by “her” condominium partnership. The seal existed in the amount of one (1) piece and had been ordered specifically for the reanimated condominium partnership. It was significantly different from the old one, operating by Bersirov before “the liquidation process”, and it kept in the safe to which only Sklar herself had access. This was the basis for the new chairman to accuse Bersirov of forgery of the seal.

And here is a question: what kind of condominium partnership Bersirov manages if he signed some documents with the stamp of the old partnership where the three board members were, but he preferred the new stamp to sign documents on his election of the Chairman? In addition, the uncertainty of the situation with the legitimacy is created confusion as well. Really, if the general meeting of homeowners did not have a quorum, then, it wouldn’t make any sense to try to lead it. It was enough just to stand stubbornly in the court, rejecting any possibility of the legitimacy of the existence of the “new” condominium partnership. But that was not enough: if Bersirov was right and the meeting on January 30 had been a fake, then the Uyutny dom still remained the only body managing the apartment complex, and so there he had nothing to be chairman of.

However, the absurdity of the situation was not only in that. Evgeny Rezvov, General Director of Stroitelny Trest suddenly appeared the owner of the housing in the complex. In accordance with that, on April 15, 2010, he filed a lawsuit in the same Petrogradsky district court against the condominium partnership where he specified the ineligibility of the decision dated January 30 and the infringement of his rights of an owner and – in such a state – a member of the “true” condominium partnership.

But Sklar parried this claim by the simple fact that Rezvov appeared a share participant of the construction with the right for the apartment. And that apartment, according all extracts from all registries, actually belonged to an absolutely other person (to Michael Risin). Another apartment, on which Messrs from the Stroitelny Trest pretended to possess, actually didn’t belong to them personally, but it was on the balance of the company headed by them. So, if some people could have challenged the decisions taken on January 30, 2010, they were definitely not Bersirov and Rezvov.

Twice blind Justice

As we know, on April 16, 2010, during the preliminary hearing on the case of A56-9917/2010, Judge Suvorov favorably reacted to the defendant’s request and demanded from the plaintiff Olga Martynovskaya the minutes of the general meeting of the owners of premises on a choice of a way of management of the housing complex. A (non-existent) protocol on a choice of the MC ‘Uyutny dom’ Kolomyazhsky JSC as the management company-liquidator also came in his vision. On this occasion, the Kolomyazhsky 15 condominium partnership was brought to the case as well.

The staff lawyer of the ‘Uyutny dom’ Kolomyazhsky Kolomyazhsky Yulia Yakovleva frankly stated that there was no such protocols “in nature”. The Uyutny dom managed the complex only on the basis of the munutes made by the shareholders of Stroitelny Trest Rezvov and Bersirov.

In a modified order (the court decision of May 14, 2010), the court ordered the plaintiff to provide a minutes of the meeting of shareholders of the Stroitelny trest JSC and set out the legal position on choosing the method of management of the apartment house taking into account the presence of the homeowners’ partnership of the house. It was absolutely clear that the two governing body could not legally get along under the same roof.

The judge in this case clearly indicated that in the absence of the minutes of the homeowners on choosing the way of management and on choosing the Uyutny dom as the management company, he saw no reason to satisfy the lawsuit filed by the improper plaintiff.

The presence in the courtroom of the two representatives of the same condominium partnership under the powers of the attorneys issued by the different chairmen forced the judge Suvorov to apply for evidence of the authority of the individuals who had issued the powers of attorneys on behalf of the condominium partnership. That request was especially critical for the party of the Stroitelny Trest as earlier the Arbitration Court of Saint Petersburg and the Leningrad region had already stated – in the case A56-15175/2010 – a critical relation to the position of a representative of Bersirov, Terekhova, who was an employee of the Stroitelny trest JSC at the same time.

The staff lawyer Yakovleva was absent at the meeting of June 18, 2010. And here the most interesting things began, because she was replaced by a certain Natalia Veresova who was surprisingly a full namesake of the Deputy Chairman of the Kolpino district court of Saint-Petersburg.

And from that moment the judge Suvorov’s behavior had changed dramatically. He was no longer interested in the case file and in the credentials of the representatives of the parties, although the representative of the condominium partnership from Sklar renewed his request for the authority of Bersirov’s right to issue a power of attorney on behalf of the condominium partnership. In that regard, Natalia Veresova stated that she didn’t consider it necessary to provide any evidence beyond the ones attached to the claim.

Then Veresova demonstratively ignored a further definition of the judge on reclamation of the evidence. As a result, the inexperienced judge Suvorov came to the point that the evidence, obtained by the court demand before, was not actually required for the case, as it turned out. In fact, the authority of Bersirov to appoint representatives, and therefore, implicitly, the legitimacy of “his” condominium partnership, was taken on trust. Suvorov also ignored the previous criticisms of the Arbitration Court on the possibility of Terekhova to represent his employer in court.

From the moment of Veresova’s introduction, the newly appointed judge began to submit to some procedural rules known only to him. None of the evidence presented by the defendants was not considered by him, the application were not considered or rejected without any reason. The declared petition for participation in the case of one of the tenant of the house, Konstantin Chernakov, was considered by the judge only two months later and only after a complaint to the chairman of the arbitral tribunal. During that time, the “managing” company Uyutny dom made the life of the unfortunate tenant very uncomfortable to cut off his electricity as a warning.

The laudable zeal of the judge Suvorov, who tried to prevent postponing the examination of the case and make a decision as soon as possible, led to repeated breaks which term exceeded all the limits established by the Administrative Procedure Legislation of Russia. The Administrative Procedure Legislation modestly limits the duration of one break in the framework of one same session to no more than five days. But the meeting was delayed until July then.

In this case, perhaps, the Administrative Procedure Legislation was wrong, and the drafters did not consider that there were real workers in the judiciary who were ready to work like galley slaves. That was a praiseworthy quality, as a desire to reduce consideration of the essence of the case at the expense of insignificant details. Thus, the petitions of the defendants for reclamation of evidence of the size of the declared claims were not even considered by the judge.

Every time when the defendants, including Taranov, advanced another petition in order to destroy the process cruelly, the unflappable Natalia Veresova claimed that she had nothing to add to the statement of claim. Then the judge immediately threw to stamp decisions without even listening to the representatives of the defendants.

The representative of the “virtual” condominium partnership (of Terekhov) behaved as haughtily as the judge. He entirely accepted the plaintiff’s side and ignored the court decisions for the reclamation of evidence to confirm the authority of the person who had issued to him the power of attorney.

So, from the time of filing the claim the plaintiff did not provide any documents, including the number called by the court. However, the initial opinion of the judge on the absence of a proper plaintiff miraculously changed to the opposite. The belief in miracles would allow us to claim divine intervention, but we do not believe in miracles. And most likely, the explanation for this metamorphosis lies in a much more pragmatic area, nothing to do with evidence and case materials, and caused by other reasons which are “outside of the procedural plane”, speaking in vague language of lawyers.

After all, there was no even evaluation of the presented evidence in the motivation part of the decision submitted by the judge. There was nothing about the reasons for which the court had ignored the arguments of the defendants. There was no guidance on the norms of the law giving the plaintiff the right to sue. It remained unclear on what basis the Uyutny dom could recover any payment for use of common property to the extent permitted by the law. Suvorov, taken aback by the unexpected turn, even forgot in a hurry to somehow divide the judicial process into a preliminary stage and an actual examination. It turned out comical: the court made the decision in the framework of preparation for consideration of the case.

This “one-way street” case, which had turned out as a result, was eloquently described in the complaint of July 20, 2010 to the Saint Petersburg Qualification Commission of Judges on behalf of one of the owners, businessman Svetlana Mekhontseva. We find a final chord of the amateur performance of Suvorov in the same document. At the next “preliminary” hearing on July 7, 2010, the judge, without any justification, rejected the request of the defendants for collegial examination of the case. Meanwhile, as Mekhontseva noted, “defendants have the right to collegial examination of a case in accordance with current legislation, in view of complexity of proceedings and high importance of the trial for defendants who use the premises for commercial activities, for hundreds of renters of trading places in the commercial complex, and for owners of the residential apartment buildings who don’t elect the plaintiff as a management company of the apartment building”.

As expected, on July 14, 2010, the final meeting was completed with the satisfaction of all the claims of the plaintiff. The Uyutny dom could celebrate a victory for a while. Then some specific requirements for the entrepreneurs owning non-residential premises in Kolomyazhsky, 15 were finally detailed. Of course, the blow of maximum force fell on Evgeniy Taranov. For “debt under the contract for the management, maintenance and repairs of the apartment house” from March 1, 2008, they collected from him 5 489 238 rubles and 32 kopecks. While they took multiply lesser amounts from other “rebels” (including the Mekhontseva). In total, they covered 8.4 million rubles from five entrepreneurs.

In the court’s decision, which Suvorov had been preparing a few days, the obligation of the owners to pay for the services of Uyutny dom was never doubted. There was a simple statement with indication of the relevant articles of the contract. There was nothing about legitimacy of the management company to manage.

Is there any use to remind once again the principle of Qui prodest? (“Who benefits””)? It seems that everything is clear here.

Game played up to the end

But in the case A56-9917/2010 there was one more thing, a “detail” forgotten by the judge Suvorov – a counter-claim of the businessmen who had paid services on repairing the roof in due time but then understandably required to reimburse the amount spent. Of course, compared to the claims of Uyutny dom, everything looked much more modest there. Nothing short of 90,000, really, it wasn’t serious. However, as it soon became clear, “the size really does not matter” (a slogan of a famous advert).

No one anticipated that the formal phrase which completed the decision of the arbitration court of July 14 (“The decision can be appealed to the Thirteenth Arbitration Court of Appeal within one month from the date of the decision”) would be decisive finale of the all subsequent events. The entrepreneurs did exactly as Judge Suvorov recommended. And by the end of that year, the same 13th was ready to render its decision. It is worth noting that by the time, the panel of judges had found the complaint against Suvorov to be justified.

Not the appeal was surprising to the developers and their manipulator Martynovskaya: they could easily reject it. But the threat to behold the terrible to Stroitelny Trest words in the decision of the court once again – a void transaction. It was that the director of the Stroitelny Trest tried to escape withdrawing her statement of claim against the same defendants in February of that year. Do anything, even get in an uproar, just for some circumstances of the appearance of the management company in the scheme not to surface. However, the Thirteenth became truly unfortunate for the Stroitelny Trest. In considering the circumstances of the case, as soon as any doubt of legitimacy of the ‘Uyutny dom’ Kolomyazhsky appeared, the representatives of the company managed to withdraw the case again. But there the second claim fired – a counter one.

By the time of the delivery of the decision of the 13th Arbitration Court, the litigants had already had the unprecedented decision of the same Arbitration Court of St. Petersburg and Leningrad region, but on the case A56-23426/2011. The amount of counter claims was 1 555 242 rubles and included unjustified enrichment of the management company which was not entitled to manage, in general. There was a catastrophe approaching, and the Messrs from the Stroitelny Trest hastened not to reach the final.

On December 17, 2010, the defendants led by Taranov were refused to satisfy the requirements to Uyutny dom on the grounds that the parties owed each other nothing. Literally, “the Company and the owners have no obligations to each other following out of the contract number 08/08 dated March 1, 2008, as the contract is void”. The last phrase crossed out the results of all previous victories, a very dangerous precedent was created. There was no doubt that the developers in their zeal would no longer be limited to a simple blackout of the facilities owned by Taranov, however – “the contract is void”. Now they had no right to even turn down the power switch, aside from greater tricks.

One thing remained – at any price to return the claim to the judicial proceedings: to punish, to destroy, and to finish off. Since Uyutny dom played his game out, another “management company” immediately came to light – Dohod (literally, the Income) in favor of which they wanted to withdraw cash of the entrepreneurs by a relatively honest way. At the same time the decision on the collection of sums of undue income for the period of “anarchy” on behalf of alleged victims was challenged there.

However, taken out toothpaste does not return in the tube. All the requirements of the Uyutny dom to reconsider the claims remained unsatisfied. Its cassational appeal, filed in the Federal Court of Appeals for the North-West Region, was returned on March 22. One can think that judge Tatyana Shpacheva did it with a slight smile.

As for ill-fated contract of 2008, recognized null and void, we note that it is common for a number of similar cases of secondary legislation. Conclusion of such void contracts with the management company is not something out of the ordinary. In fact, a developer just does not give the observation sheet and the keys to the apartments to the holders until they sign a contract with the management company. At this time the developers have slipped on their own orange peel which they put to another person.

Double blow

Relatively undisturbed parasitizing of the developers in the internal affairs of the residential complex ended on January 30, 2010. However, for a while, apart from the annoying claim by Martynovskaya, the representatives of the Striotelny Trest had no other way to defend the right to a further lawlessness in pleadings. Really, Bersirov could not legally represent the condominium partnership that was formally dismissed. Rezvov was not an offended party because he had no share in the construction and, therefore, did not own an apartment in the residential complex. All the “confirming” documents appeared later. At the beginning, to start a counter attack on the shameless tenants on the base of organizational logic was charged to Uyutny dom.

Olga Martynovskaya initiated a trial on the case A56-15175/2010 directed against the condominium partnership led by Sklar. However, in preparation for trial on the suit of Martynovskaya who had appealed the decisions of the general meeting of the condominium partnership Kolomyazhsky 15, the arbitration court judge Anna Borovaya, as well as all the other judges, expressed doubt about the validity of the right of Martynovskaya to appeal to arbitration with this claim. Again, such a right didn’t automatically follow from the content of the statement of claim.

However, the strange behavior was happened with this judge as well. Even in the preliminary hearing on the case, despite the lack of justification of Martynovskaya’s right to sue, the judge Borovaya didn’t satisfy the petition for the introduction in the case by the third party (Sklar) who wanted to represent the condominium partnership.

At this hearing the judge tried to issue the decision which would be equally affected the rights of both the liquidators of the condominium partnership: both Martynovskaya who was not even the owner of the premises in the house, and Sklar.

Only a timely application of the tenants of the house to the Chairman of the Arbitration Court of St. Petersburg and Leningrad region, which drew attention to the fact that the arbitration was considering the case which really was not in its jurisdiction, provided the passing of reasonable fair judicial act on termination of the case.

Then Evgeny Rezvov entered the game. On April 15, exactly a month after the meeting (which has never been, according to the certificate presented by Bersirov to the Petrogradsky District Court Judge Elena Medvedeva on January 20, 2011) of the board of the “virtual” condominium partnership (also being in the state of liquidation, according to the acts signed by the developers) on which Beslan Bersirov had been unanimously elected chairman, Rezvov, by the Petrogradsky district court, brought a legal action upon the rebels. That was a real “oil-painting”: in the related statement, Rezvov was called a member of the condominium partnership, and the defendants were – the 15th Interdistrict Inspectorate of the Federal Tax Service of St. Petersburg, which had dared to include the name of Svetlana Sklar in the register as a new chairman of the condominium partnership, and …. all the same condominium partnership Kolomyazhsky 15.The General Director of the Stroitelny Trest wasn’t confused with certain surrealism of the situation.

In that claim, Rezvov, who had found “absence of quorum” at the general meeting of the owners on January 30, however, made a ridiculous statement. “Since all the members of the condominium partnership Kolomyazhsky 15, namely: Evgeny Georgievich Rezvov, Beslan Ramazanovich Bersirov, Tatiana Nikolaevna Lyutinskaya, did not participate in the general meeting, the quorum for the meeting, established by paragraph 3 of Article 146 of the Housing Code was absent, and the quorum designated in the Protocol of February 9, 2010 is 100% was a frame-up”.

But, again, it is clear what a quorum could be for a general meeting of owners (and not for a condominium partnership with which Rezvov so sloppy confused it). It is just unclear where the three men, claiming to be “kings of the hill”, came to the matter if by then they had transferred the power to the Uyutny dom long ago. In that claim, Rezvov didn’t yet thump his chest calling himself a homeowner. But very soon he did it.

The lawsuit had been filed by Rezvov thrice. And twice it had been returned with the reasons that the meeting of the condominium partnership didn’t affect his rights because he hadn’t been a member of the premises of the condominium partnership at the time of the meeting. But, as we have seen, the gentlemen from the Stroitelny Trest are not afraid of paradoxes. Certain persons related to the judiciary board protect their interests.

As we know, third time’s a charm. The claim of Rezvov had found its grateful judge for the third time. There was Sergei Kovalev, who accepted it for processing. Certainly, the interests of Rezvov were represented by the same Natalia Veresova, and the actions of the judge Kovalev, just as in the case with the arbitration proceedings by Suvorov, were subordinate to the very mysterious logic.

The Deputy Chairman of the Petrogradsky district court Kovalev could not have been unaware that only an owner of the premises in the house and a member of the condominium partnership had the right to appeal a decision of the general meeting of the condominium partnership. These requirements must be met simultaneously. The very existence of the right to file a claim is set by the judge at the stage of receiving the complaint. That’s why Rezvov had had to leave the court twice empty-handed.

But not now. Even in the absence of proofs of Rezvov’s ownership of the premises in the apartment building, on March 28, 2011, the judge of the case 2-35/2011 issued an order to granting interim measures on the claim. Moreover, even after the request of the defendants convinced Kovalev that the plaintiff had no rights of the ownership of the premises in the house, he still refused to cancel his decision.

Then – from bad to worse. Once more, a person by proxy issued issued by Bersirov appeared in the court as a representative of the Kolmyazhsky 15 condominium partnership, but a representative by proxy issued by Sklar wasn’t allowed to the process by the judge. That decision was motivated by the same “tale of a white bull” (Russian proverb) – by the “legitimate reasons” the gentlemen of the Stroitelny Trest had. Although Kovalov was just convinced of the opposite.

The theater of the absurd was added by the presence of the minutes of the meeting of the condominium partnership on the election of Svetlana Sklar as chairman of the board in the materials of the case, while the minutes on the election of Beslan Bersirova were absent. But the judge did not consider it necessary to reclaim them.

As a result of the dropping out, it was a real Sabbath in the court. The three people who were vitally interested in the liquidation of the condominium partnership – Rezvov, his deputy Bersirov, and Martynovskaya (and neither owned premises in the Kolomyazhsky 15 complex) – tried to cancel the decision of the owners of the premises and drown the condominium partnership which had nearly popped up.

Needless to say, in whose interest the judge was acting. The “interim measures” taken by him violated the rights of all the owners of the premises. The winners were the outsiders who didn’t want to go away.

To satisfy the Rezvov’s claim, the judge Kovalev obviously incorrectly defined the quorum of the disputed meeting. According to Part 3 of Article 45 of the Housing Code of Russia, quorum is determined by the number of votes with the right of ownership of more than 50% of residential and non-residential premises of the house. The judge Kovalev took into account not the area of ​​the premises owned, but the projected area of ​​the apartment building. I.e. he took into account the areas that hadn’t been bought and registered as the property.

Certainly, the law distinguishes quorum requirements to a meeting of owners and to a meeting of members of a condominium partnership. The quorum of a meeting of members of a condominium partnership is determined by a percentage of the members of the condominium partnership. However, in order to satisfy the claim of Rezvov, judge Kovalev said that, for a quorum, it had to be 50% of the owners presented at the meeting of the condominium partnership members. Thus he equated the meeting of all the owners and the meeting of all the members of the condominium partnership. Thus, he agreed blind with the Rezvov’s arguments in his amusing wording on the pages of the statement of claim.

The outcome of that trial initially was beyond question, especially taking into account the presence of Natalia Veresova at the meeting. Most likely, the judge was pressured again. Otherwise, the original methods of his work remain misunderstood.

The miracles also continued in considering the cassation in the city court. The judges behaved so rude, defiant, talking down the representatives of the owners, that the same scenario and the same “technology”, that had been used by the Stroitelny Trest in other litigation as well, could be seen behind all the things. There was no other way for the city court to uphold the ruling legally. There was only such a way – semi-legal.

Endless war

Certainly, the misadventures of the “rebels” were not over there. In 2011, Taranov tried to achieve excitation of a criminal case upon illegitimacy of the actions of officials of the city court who had ping-ponged the cassation of the newly elected condominium partnership. Formally, this operating body ceased to exist, however, in fact, people were still united by the common enemy.

All the attempts to breathe life into the lawsuit failed. The decision made by the judge Kovalev had been lobbied so thoroughly that all the appeals invariably failed. And that was despite the fact that the real spuriousness of the agreement on share participation of Rezvov in the construction of the residential complex was proved! If we consider this agreement carefully, we would question for which purpose such a rich man as Evgeny Rezvov needed a studio apartment under the roof of the cost less than 2 million? Moreover, it already belonged to a completely different person, who had paid the share for it.

A small consolation was the decision of the Petrogradsky District Court of January 20, 2011 to invalidate the amendments made to the relevant registers by the tax authorities indicating Bersirov as chairman of the condominium partnership. The solution was automatically devalued after the farce played by Kovalev. However, it was upheld by the September decision of the Court of Appeal with the phrase “absence of the subject of the dispute”. In other words, the absence of any meetings of the condominium partnership from February 9 to March 24, 2010 still remained the official version.

However Taranov wasn’t going to leave the subject alone. On March 15, 2011, the triumphing Bersirov asked the registration authorities “to return everything back” because he, allegedly, was finally elected as the legitimate President of the condominium partnership. But in November of that year, Svetlana Sklar, getting acquainted with the materials of the case connected with the claim of Uyutny dom to her, found two protocols there. Accordingly, there were the minutes of the general meeting of members of the Kolomyazhsky 15 condominium partnership of March 15, 2010 on the election of the Board of the company composed of E.G. Rezvov and B.R. Bersirov and the minutes of the meeting of the Board of the condominium partnership of March 15, 2010 on the election of Bersirov as chairman of the partnership. The Primorsky District Prosecutor’s Office responded to a baffled request of Sklar about the circumstances in the same day – with reference to all the same protocols.

It turned out that Bersirov simply ignored his own one-year-old invention. That could only afford a very confident person. The degree of that certainty was so high that the developers, who had finally achieved the point and liquidated the condominium partnership in mid-November by the right of representation of Olga Martynovskaya newly asserting herself liquidator, did not even bother to make ends meet in the balance liquidation statements. The “liquidators” submitted to the tax authorities a certificate of 2009, other words – two-years old. It was listed exactly 0 rubles. Consequently, for all that time, the “liquidation”, as one would expect, was in a deep sleep.

However, the remains of more than a million rubles were left in the balance; therefore, certain financial movements had still occurred. But who was worried then? All references to the fact, all attempts to attract the attention of the authorities to the inconsistencies in the versions and mutual contradictions in the existing documents led to a polite refusal.

Moreover, Sklar and the member of the aforementioned “new” condominium partnership Chernakov were accused by the Uyutny dom of not paying for the actual utility bills. The petty revenge was of fundamental importance: both the defendant at the time had regularly transferred money to the account of the condominium partnership, thereby acknowledging the validity of “managing” by Uyutny dom. Both were charged with absolutely identical claims, but the trial results were different.

The matter was that the claim against Chernakov was considered in the Petrogradsky District Court and the claim against Sklar – in the Primorsky District Court. Chernakov remained unattended by powerful lords, who were busy with the proceedings with Sklar and Taranov. Therefore nobody influenced the judge. As a result, the claim was denied.

Sklar appeared “under the hood” (Russian saying, means – closely watched). The judge even got past the fact that the plaintiff changed his position retroactively and claimed in the end that there had been more than one contract on rendering of services to tenants. Thus, it was implicitly assumed that Sklar was associated by certain obligations on payment of services with a “managing” company and with the condominium partnership as well. But for the period from 2008 to 2010 Sklar had only one obligation – to the Kolomyazhsky, 15condominium partnership.

In the case of Chernakova, the decision of the court was the following: “The plaintiff didn’t present documents proving his authority to manage the apartment building providing by the owners of the housing at the general meeting.

For the period 2008-2010, the accounts for utilities and maintenance of the common property in the house 15 block 2 Kolomyazhsky Ave in Saint Petersburg were exhibited for the apartment 598 by the condominium partnership Kolomyazhsky, 15 as well, and they was paid by the defendant on November 15, 2010.

The court comes to the conclusion that there is no evidence in the case of a relationship between the parties, entitling the plaintiff to require the defendant to pay for utilities and money for maintenance of the common property of the house 15 block 2 at Kolomyazhsky Ave in St. Petersburg, in connection with aforementioned, there is no basis for satisfaction the requirements of the plaintiff”.

The following decision was on hands of Sklar: “The arguments of the representative of the defendant, that only the Kolomyazhsky 15 condominium partnership could be the proper plaintiff due to the stated requirements, the court finds invalid as there is no evidence in the case file that during the claim period, utilities and services on management, maintenance and repairing of the common property of the apartment building were carried out by the defendants directly to the Kolomyazhsky 15 condominium partnership”. The plaintiff carried out the actual delivery of public services to all the owners of residential and non-residential premises”.

The answer is simple. For satisfaction of the claim of the Uyutny dom company, created by Rezvov and Bersirov, on collecting the payments from Sklar, 10 days before making the decision, the experienced judge of Primorsky District Court Kravtsova was replaced with the judge Dmitry Medvedev (what an irony!) who had been appointed just a month before that. It was his lack of experience made him easy tool in the hands of the manipulator.

Far away to outcome

The epic of the initiation of the criminal case on the fact of likely falsification of the stamp by Bersirov, with which the false minutes of the election of the chairman of the condominium partnership was sealed, was finished unordinary. For the period of verification of the material (Police Report Database № 13520) by the security officer of the Regional Office of the Ministry of Internal Affairs of Russia in the Petrogradsky district of St. Petersburg, six times T. V. Shmelev issued the decisions on refusal to initiate the criminal cases, which the prosecutor’s office of the Petrogradsky district of St. Petersburg canceled as illegal and unjustified.

With that, the following situation formed. Supervising the legitimacy during the review procedures, the Prosecutor’s Office of the Petrogradsky district each time found no reasons for cancelling the issued order to dismiss the criminal complaint. Once the applicant appealed to the Petrogradsky District Court against the same resolution as provided by Article 125 of the Criminal Procedure Code, the prosecutors of the Petrogradsky district brought to the court the decision on cancelling of the decision on dismissal the criminal complaint and on direction of the materials to an additional check. That, in its turn, became the basis for the termination of the application in the court.

Some kind of ping-ponging of the law enforcement with the court serving as a wall finished with the consideration of a counter claim of the general director of the Stroitelny trest Rezvov on arbitrary and illegal actions of Sklar by the same security officer Shmelev (Police Report Database № 12762 of September 26, 2011). By the report on the detection of a crime of January 23, 2012, a criminal case number 562 085 was initiated already against her by part 1 Art.330, part 3 Art.327 of the Criminal Code of Russia. She imputed to “unauthorized convening of the owners despite the established order” and ‘failure to sign contracts” which apparently led to “property damage” On the same basis, the seller of services can easily apply to the security officer Shmelev against any buyer passing by.

As a result of that not very long story of appealing, on July 19, 2012, the Petrogradsky District Court under the chairmanship of Judge Svetlana Zhigunova cancelled the decision on initiation of criminal case. The reason was the absolute vagueness of the accusative specifications. Sklar did not even know in all details what kind of acts she was charged of. Especially since it was not clear what the relationship between something unknown done by her and the “consequences” was.

There was a curious detail in the circumstances of the criminal proceedings on the criminal case of Sklar. The court of the first Instance (Petrogradsky), despite the flagrant violations of the law committed in the criminal case, not even delved into the matter and limited with a rather chaotic order to dismiss the appeal of Sklar giving the adoption of the decision on the legality of the order on institution of criminal proceedings at the mercy of the city court. Already after the judges of the city court introspected the case and wrote the decision, the Petrogradsky court, again without going into the matter, very simply put into the base of its decision the decision of the High Court. Independence of courts subjected to verification again and again with disastrous results.

Not less disappointing was consideration of May 15, 2012 case on the destruction of the condominium partnership by the Smolninsky District Court. Taranov and Sklar substantiated to the court the quite clearly evidence of their claims, in particular, an improperly designed file of documents filed in 2011 on assumption of chairman office of the condominium partnership by Bersirov. But Natalia Veresova was present in the court, and the result was entirely predictable. The court referred to the fact that the registration authority was not obliged to verify the legitimacy of accepted documents presented in order of registration. In addition, the balance liquidation report for 2009 filed to the tax authorities in 2011, did not have anything illegal in the very fact of its presentation. There was some movement of the funds on the balance report, but it was self-evident fact. The matter is wrapped in mystery.

Finally, yet another lawsuit which Taranov decided to take up on a very specific issue was finished. On March 22, 2010, the Stroitelny Trest and Sport Time JSC signed an agreement on purchasing and selling a land area of ​​1567 square meters. This area was part of the territory assigned to the Kolomyazhsky, 15 housing complex. Thus, the rights of the homeowners who had every right to domestic (non-commercial) use of the land were violated. As a result of the proceedings which ran from the fall of 2011, Taranov had on hands the decision of the Arbitration Court of St. Petersburg and Leningrad region of February 16, 2012 (case A56-36585/2011) rejecting his claims to the Stroitelny Trest.

The explanations given by the company-developer on September 29, 2012, is read as a Raider Bible. It was said there in a plain text that permission on acquisition of land in St. Petersburg by the owners of real estate was issued by the Governor of St. Petersburg, as well as by Chairman of the Committee of urban development and architecture (KGA). In that regard, the developer was introduced the non-applicability of the Federal Law № 214-FL in this situation. After all, he had the appropriate order of the Committee of urban development and architecture of St. Petersburg № 50 of April 24, 2002 on hands. No comments.

Relatively honest confiscation of housing

Another very revealing case was a lawsuit between the Stroitelny Trest and shareholder Natalia Lischuk. In the autumn of 2009, Lischuk filed a lawsuit against the developer for the return of the money paid by the shareholder due to the reducing area of ​​the apartment by the contract on shared construction. They came from the declared value of a square meter of the living space. At the time of the entry in the share participation, it was little more than 20 thousand rubles.

The Kalininsky District Court partially satisfied the shareholder’s claims and collected 70827 rubles from the Stroitelny Trest in favour of the plaintiff. The court, referring to the law on participation in shared construction, admitted the obligation of the developer for return of overpaid funds transferred by shared building participant in case of reduction of the area of the apartment relative to the project size.

In response, the Stroitelny Trest proposed a counterclaim for the recovery from the shareholder, who fully paid his share for the apartment, a penalty in the amount of 3 037 675.50 rubles for delay of several payments. The circumstances of the case were considered in the Vyborgsky court that rightly pointed out in the decision that the amount of the contribution from Lischuk with her share paid 3 659 850 rubles, such a”fine” was clearly disproportionate.

With that, it was considered that some of the payments were made by share participants ahead of time and in a larger size, and the delays were of insignificant character, As a result, by the court, Stroitelny Trest received from the sharer … 2 000 rubles.

However, both of these judicial acts created a serious threat to Rezvov and Bersirov. First of all, a dangerous precedent was created, based on which the courts of any instances in the future could deprive developers from the sources of profits extracted from the collection of crazy penalties (they were registered in all contracts of the company). Further, only in sections A, B, C, D, E, F, G of the house on Kolomyazhsky, 15, the total area of ​​the housing “appeared” less than designed by 963.60 square meters. In terms of the current prices for a square meter that was not less than 77 million rubles. Of course, the management of the Stroitelny Trest didn’t intend to return the money.To remedy the situation by the methods we are aware of, Rezvov and Bersirov involved a certain Elena Ivanova who, according to some online resources, had some very close relatives who held judicial positions in the Kalininsky and Dzerzhinsky district courts, as well as in the Qualification Collegium of Judges of St. Petersburg.

From this moment, the outcome of the cases involving the Stroitelny Trest Company had changed dramatically. The City Court of St. Petersburg ignored explanations of the Supreme Court of the Russian Federation pointed out that if there appeared relations on transfer of apartment in property or on performance of work completed with transferring apartment to citizen, and citizen at the conclusion of the contract had intention to use the apartment only for the personal, family, household needs, it applied to the Federal Law “On Protection of Consumers” which provided citizens more guarantees of protection of their rights against unscrupulous contractors on the contract signed than the Russian Civil Code limiting the rights of citizens by the framework agreement.

The city judges preferred to be guided a framework of the contract, which limited the rights of citizens, and having cancelled the decision of the first instance court, they refused the shareholder on returning of the investment overpaid.

With such scrupulousness, the City Court was able to overlook the falsified evidence presented by the developers, to ignore the dates and the terms of issue of the permission for construction, and copied the content of the developer’s appeal in the judicial act, up to the phrase that the shareholder refusing to take an apartment that didn’t meet the conditions of the contract and abused his power!

In addition, some documents, containing false information about the number of the total area of ​​the constructed buildings, were submitted to the materials of the cases. Affirming the court decisions on the actual seizure of the apartment of the Lischuk’s family paid by them, the courts ignored the obvious facts and referred to invalid documents. Thus, in all the cases involving Lishchuk, the seizure of the apartment was substantiated by non-application of the Law on shared construction with reference to the order of the Committee for City Planning and Architecture of 2002, represented by Ivanova as permission for building. For a long time, she concealed the permission for construction the developers had, since the permissions did not coincide by the dates with the very building which, therefore, had been carried out post factum, and only then they worried about obtaining the necessary papers.

The fact of involvement of the Stroitelny trest JSC to responsibility for conducting the construction without permission and issue of the valid constr

Edgar TARADZIN, specially for Rumafia.com

 


Case Name:Gazprom & the Russian Mafia

Surname: Alisher

Name: Usmanov

Fathername:

Position: General Director of “Gazprominvestholding”

Biography:

Born September 9, 1953 in the city Chust of the Namangan region, Uzbekistan SSR. In 1976, he graduated from the Moscow State Institute of International Relations (”MGIMO”), International Law department. After graduation, Usmanov worked as a junior researcher at the Center of Scientific Information in the presidium of the Academy of Sciences of the Uzbek SSR; he was a senior consultant for the Central Committee of Komsomol of Uzbekistan, Director General of Foreign Trade Association of the Soviet Committee for Defense of Peace (“SKZM”).

In the late 1980’s, he engaged in intense business activities. According to several media sources, in those years Usmanov was vice-president of Uzbek-Belgian joint venture “Vita” (Tashkent).

In 1990-1994 he worked as first deputy general director of JSC “Intercross” (according to other sources, he was president of JSC “Intercross”). In December 1992, he acted as the founder of the Moscow OOO “Company ‘Bars’ (Moscow)”, in June 1993 he became head of the finance and investment company AOZT “PRNB-Invest” (a subsidiary of the First Russian National Bank).

In August 1994, he became the founder of the AOZT “Goldkross”.

In 1994-1995 he was adviser to the director of the Moscow Aircraft Production Association (“MAPO”). In 1995 he became first deputy chairman of the MAPO-Bank. In 1994-1998, he led the Interbank Investment -financial company “Interfin” (ZAO “MIFK Interfin”), one of its founders was MAPO-Bank.

In 1997 he graduated from Finance Academy under the Government of Russia with a degree in Banking.

In 1997-2001, served in the Board of Directors of OAO “Arkhangelskgeoldobycha” (“AGD”) (according to other sources, in 1997 he became a member of the Board of Directors of “AGD-Invest”, and in 1998 – joined the Board of Directors in AGD.

In 1998 he became first deputy general director of OOO “Gazprominvestholding”, and in February 2000 he was appointed CEO of the holding.

In 1999 he became a member of the Board of Directors of ZAO “Arkhangelsk Almazy” (“Arkhangelsk diamonds”).

Starting from November 2000 to July 2001 was an adviser to chairman of Gazprom, Rem Vyakhirev.

In January 2005, he became co-owner of ZAO “Metalloinvest” – the former management company of Mikhailovsky GOK (“Mining and Processing Combine”) (MGOK), which had need acquired by Usmanov shortly before.

In August 2006, Usmanov became the owner of the publishing house “Kommersant” (he acquired both the media and the property owned by “Kommersant” with total area of 7.5 thousand square meters in Moscow and St. Petersburg). “Media holding” is listed as the owner of Kommersant – it is a registered overseas personal company of Usmanov. In December 2006, PB “Kommersant” and the company Metalloinvest also purchased some assets of PB “Sekret firmy” (“The secret of the company”) with its magazines: “The secret of the company,” “You have got the right”, “All is clear”, and the online newspaper Gazeta.ru.

On June 22, 2007 it became known that Usmanov had bought 75 % stake of the music channel “Muz-TV”. On August 30, 2007 he became co-owner of the London soccer club “Arsenal”. On September, 6 the businessman bought the American company Films by Jove and gave VGTRK the right to run 550 Soviet cartoons in the world (including “Cheburashka”, “Snow Queen”, “Mowgli”, “Hedgehog in the Fog”). According to some reports, the amount of the transaction amounted to 5.10 million dollars.

On September 17, 2007 the press reports appeared that the businessman bought a collection of paintings belonging to the singer Galina Vishnevskaya and her late husband, musician Mstislav Rostropovich. The singer was going to sell this collection at London auction Sotheby’s on September, 18-19. The deal amounted to 72 million dollars. On October 1, 2007 Usmanov officially announced the transfer of the collection of Rostropovich-Vishnevskaya to the Konstantin Palace in Strelna near St. Petersburg.

On May 7, 2008 the firm by Usmanov “AF Telecom Holding” and the IPOC Fund agreed to purchase through the Usmanov firm an 8 % stake in MegaFon and 58.9 per cent stake in Telecominvest, which, in turn, owned 31.3 % stake in Megafon . After the elimination of IPOC Usmanov has become the full owner of that share.

In June 2008, Usmanov and the owners of the company “SUP” (“Soup”), including the financier Alexander Mamut agreed to expand the partnership and exchanged their web assets. As a result, Kommersant received up to 50 % of “SUP” (which owned an Internet service LiveJournal), as well as an opportunity to appoint two members of the board of the company, and “Soup” became the owner of 100 % Internet-edition “Gazeta.ru”.

Usmanov is the executive vice-president of the British company Middlesex Holdings.

Usmanov’s company New Media Technologies was called the largest shareholder of the co-owner of one of Russia’s most popular social network “Odnoklassniki.ru” by the Company Digital Sky Technologies (DST). As of December 2009, the share of New Media Technologies in the company was 35 %.

In December 2008 he was elected president of the International Fencing Federation (FIE).

Usmanov is married. His wife Irina Viner is a head coach of Russia in rhythmic gymnastics. In December 2008, he was elected president of the All-Russian federation of the sport.
Source: lenta.ru (Updated on 22.12.2009)

In the world ranking of Forbes-2010 Usmanov has held the 100th place. His fortune by this year has been estimated at $ 7200 million; while in the last year it was $ 1600 million

Usmanov has two kids.
Source: forbesrussia.ru

Dossier:

According to press reports, in 1980, Alisher Usmanov- the son of the prosecutor of Tashkent – was sentenced by a military tribunal of the Turkestan Military District for extortion. It was reported that his accomplice had been an operative of the special department of the KGB Nasymov, son of Vice-Chairman of the KGB in Uzbekistan. Usmanov was sentenced to 8 years of imprisonment in a penal colony with confiscation of property. After the scandalous trial fathers of both convicts lost their jobs. In 1986, Usmanov was released on parole “due to sincere repentance” and “for good conduct.” Subsequently, Usmanov said that he was a victim of political repression. There is no information on the circumstances of the crime committed by Nasymov and Usmanov because the criminal case files had been destroyed, according to the media: in July 2000, the Uzbek Supreme Court fully rehabilitated Usmanov and called the criminal case against him as fabricated.
Sources: “Sobesednik” on 23.10.2007, “The Company” from 14.08.2000

Since the late 90-s the press began to report on a close acquaintance of Alisher Usmanov with a lieutenant colonel of foreign intelligence in the KGB Yevgeny Ananyev, as well as with Sergei Yastrzhemsky, in 2000 he became assistant to Russian President Vladimir Putin. It was reported on the ambiguous relationship of Usmanov: his name was mentioned in one context with Sergei Mikhailov, known under the nickname “Mikhas” and was considered the leader of the Solntsevo OPG. It was also reported on Usmanov’s dealings with State Duma deputy Andrei Skotch and businessman Lev Kvetny (both appeared in the media as members of the Solntsevo OPG, first – under the nickname “Scotch”, the second – “Kvetnoy”), as well – with the North Caucasian mafia clan.

According to the press, Usmanov met Ananyev in the late 80’s. After graduating MGIMO Usmanov headed the firm “Association of the 8th day”, which as written in the media, arranged hunting rare animals in the Pamirs for wealthy foreigners. It was reported that one of the customers allegedly tried to recruit Usmanov. But he tipped about the queer client to deputy chairman of the KGB Uzbekistan, after which he met the officer of the 6th Directorate of the KGB, USSR – Yevgeny Ananyev. When Usmanov opened shop for production of plastic bags in the Moscow area based on Ramensky plastics plant Ananiev allegedly helped him avoid the second arrest, according to press reports. The local police became interested in the shop : according to some sources, the waste of which the packages had been made in fact was a first-class raw material from the factory.

According to the press, in April 1993 MAPO-Bank was established with the participation of the first Russian Independent Bank, Usmanov was in the board of directors there. The bank reportedly was needed to serve the financial contracts of the state enterprise generating aircraft MAPO “MiG”. It was also reported that by the request of Usmanov shortly before the establishment of MAPO-Bank Evgeny Ananievwas introduced to the surrounding of Vladimir Kuzmin, then head of MAPO “MiG” , and was appointed an adviser.

As written in the press, according to some data, the bank enjoyed the patronage of the then Vice-Premier Oleg Soskovets and the Chief of Security Service of President Alexander Korzhakov. In August 1997, Ananiev was appointed director general of Rosvooruzhenie by decree of Boris Yeltsin. As a result, according to the press, MAPO-Bank received a serious clientele in the face of the FSB, SVR(Foreign Intelligence Service) and Rosvooruzheniye.

As written in the media with reference to operational data, before the establishment of MAPO-Bank Ananiev had met with one of the most influential in Central Asia boss nicknamed Gafur (Gafur Rakhimov) in the country house of Usmanov . Reportedly, then Usmanov allegedly had met with a criminal leader Sergei Mikhailov several times.

According to the press, accounts of the FSB, SVR and Rosvooruzheniye were transferred to other banks because of strengthening the position of organized crime in the MAPO-bank. As reported, starting from August 1996 MAPO-Bank focused on serving the project on creation a financial-industrial group “AtomRudMet” developed with the participation of Usmanov.

According to the press, MAPO-Bank became the main bank of “AtomRudMet”, its authorized capital consisted of the collective funds. Citing the security sources, the press reported it was through the export flows of “AtomRudMeta” the foreign currency funds of the North clan had been transferred abroad. And then there was information that the “collective funds” of the North Caucasian clan having been located in MAPO-Bank for almost four years, was removed and transferred to one of the offshore zones. Then on February 16, 2000 the Bank of Russia decided to revoke the license for banking operations of the MAPO-Bank, according to official information, it was due to its “inability to satisfy the claims of creditors on monetary obligations”.
Source: “Version” from 20.06.2000

According to the press, Usmanov co-founded the Inter-bank investment-financial company Interfin, which became a shareholder in MAPO-Bank; he did so at the same time with the creation of MAPO-Bank

As reported, this time the partner of Usmanov appeared to be Andrei Scotch, a former head of the firm “Oka-Oil” – an oil products trader. Since 1999, Andrew Scotch was member of the State Duma. In the press there is evidence of Scotch’s involvement in the Solntsevo OPG. In early 2003, Usmanov said in an interview that the group “Interfin” was owned by three partners. As reported, he said those were him and Kvetnoy. The third one, as suggested by journalists, was Scotch. The media suggested that the latter was not named because of his parliamentary mandate.
Sources: “The Company” from 15.09.2006, “Kommersant” dated 22.07.97, Kompromat.ru

In 2003, as it was written in the press, Alisher Usmanov became the owner of an asset with a bad reputation. As reported that the fall of 2002, he sided with General Director of “Russian Aluminum”, Oleg Deripaska, in a struggle for possession of “NOSTA” – Orsk-Khalilovsk steel plant. On a par with Deripaska Usmanov created LLC “Ural Steel”, which in October 2003 purchased the assets of “NOSTA”. Media reported that since the beginning of the 90’s the owner of “NOSTA” (as well as Avtobank Ingosstrakh, etc.) was Andrei Andreev – former senior officer of OBKhSS. According to press reports, the participation of Andreev in the bank’s capital and the insurance company was camouflaged by offshores and cross-ownership. But attempts by Andreev to work in a highly competitive industries had not been supported by sufficient financial and administrative resources. As a result, in 2001 Andreev lost his business empire. The owner of its assets became the consortium, consisting of Basic Element, Millhouse Capital and Nafta-Moscow (Abramovich and Deripaska). As the press wrote, later the entrepreneur insisted he had not sold Avtobank, Ingosstrakh, Nosta and others, but that they had actually stolen them from him. Ingosstrakh stayed with Oleg Deripaska, “Nosta” came under the control of Alisher Usmanov. Avtobank became an integral part of Uralsib (Nikolai Tsvetkov).
Source: lenta.ru with reference to the Center for Economic and Policy Research and Development of 24.06.2004, “The Secret Companies» # 39 (174) on 23.10.2006, # 6 (141) on 13.02.2006

In 2004, former British ambassador to Uzbekistan, Craig Murray publicly accused Usmanov of a number of serious crimes. It was reported that Murray had been British Ambassador to Uzbekistan in 2002-2004, then he accused the Uzbek government of violating human rights. Later he wrote the book “Murder in Samarkand”. In that book Murray wrote about the beginning of negotiations between Gazprom and Uzbekistan over the expansion of the gas trade. Citing its own sources, the author claimed that a key figure in this business had been an oligarch Alisher Usmanov. He had allegedly given bribes over 80 million dollars to President Karimov’s daughter, Gulnara Karimova (the company, in which she had interests, was listed in the media as a link between the management of Uzbekistan and Gazprom).
Source: newsru.com of 9.04. 2008

Murray wrote in an article posted in the British press that:

“Large sums for bribing ‘necessary” people had been sent through ‘Gazprominvestholding’ of Usmanov. Thus, in November 2004 they paid 44 million pounds to the president’s daughter Gulnara Karimova who allowed Gazprom to snatch a contract with Uzbekistan from the Americans. In exchange for the money Putin gave instructed Karimov to kick out the Americans from the military base that was controlling the Central Asian region, and Gazprom received a strategic bridgehead for hegemony over the gas reserves of Central Asia and Caucasus.
Source: “The Mail on Sunday” (Translation: InoSMI.Ru from 28.05.2007), “Sobesednik” on 23.10.2007

Press wrote that once the site of Craig Murray (at that time – the famous British blogger) came with the publication of allegations against Alisher Usmanov, web hosting company shut off several well-known political sites. As they explained in the hosting company, the work of the site of Craig Murray had been suspended due to the fact that “potentially dangerous defamatory material.” had been placed on it. And it was done after the London law firm Schillings had submitted the provider a demand to remove the contents of the site Murray, representing the interests of Usmanov in the UK.
Source: RB.Ru from 24.09.2007

In May 2005, as the press wrote, Usmanov made a “capture attack” on “Magnitka” – Magnitogorsk Iron & Steel Works (“MMK”). It was reported that the businessman had intended to subordinate the factory itself. But its leader Viktor Rashnikov proved intractable. The MMK historically lacked the proper raw materials, and Usmanov, “put” it on the “raw diet”. In May 2005, the supply of iron ore from the mining and concentration complexes (Mikhailovsky and Lebedinsk) controlled by Usmanov were stopped. Usmanov also persuaded the Kazakh colleagues, Sokolov-Sarbaiskoye mining production enterprise (“SSGPO” previously provided 70% of MMK) to join the “raw blockade” of Magnitka. As the press wrote, in a few days the largest company of the steel industry in the country, which share of Russian production was 20%, appeared to be without a supplier. MMK was on the verge of stopping. But, as reported, Rashnikov’s relations in the Kremlin helped him avoid a takeover by Metalloinvest.
Sources: “The Company” from 15.09.2006, http://www.met1.ru, http://www.metalloprokat.ru from 30.05.2005

In May 2005 the press reported that two months beforehand Usmanov had bought a luxurious mansion secretly in London, formerly belonging to the Emir of Qatar. It was reported that the house had been built in the style of the English Empire and was located in an area of 11 acres in North London. According to media reports, it was put up for sale in January 2004 for 65 million pounds. Usmanov paid much lower price – 48 million pounds, but he bought the estate which is still proved to be one of the most expensive real estate in the history of London. Journalists noted that, based on cadastral documents, Usmanov bought real estate through a company registered on the Isle of Man.
Source: The Sunday Times (Translation: Inopressa.ru from 19.05.2008)

In August 2006, Alisher Usmanov bought PH “Kommersant” from Badri Patarkatsishvili,which had been previously owned by Berezovsky. The press went burst with the publications of the cardinal change of the situation in the Russian media market. Media broadcast the views of analysts who suggested that Usmanov had been acting on behalf of Gazprom which since 2001 had been buying up the media in the interests of the Kremlin.
Source: Press Attashe.Ru of 31.08.2006

It was reported that Usmanov himself claimed that he had bought Kommersant at his own expense, for $ 200 million. Usmanov called the new purchase a “long-term investment in business which was new for him.
Source: Regnum from 31.08.2006

A number of analysts expressed the view in the press that the purchase of Kommersant confirmed the story of the task posed by the Kremlin to create media holding on the threshold of the forthcoming parliamentary (2007) and presidential (2008) election, which was to have credibility in the eyes of potential voters. National News Agency, for example, wrote that the purchase of Kommersant virtually ensured the victory of the current government in the upcoming elections, as the leading publications of the country had already been under the control commercial and governmental structures close to the Kremlin(Promsvyazbank, Gazprom-Media) Source: National News Agency of 25.12.2006

In October 2007 the press reported that the multinational diamond company De Beers accused Alisher Usmanov of fraud. It was reported that a subsidiary of De Beers – Archangel Diamond Corporation (ADC) – filed a lawsuit in the U.S. court to recover the losses incurred due to the ill-fated collaboration with a former business of Usmanov – Arkhangelskgeoldobycha (“AGD”). Press wrote that, according to plaintiffs, De Beers lost control over the diamond fields due to the fact that Usmanov deliberately had been buying its shares. According to media reports, the subject of the claim was a long-standing deal between the ADC (which owns a controlling stake in De Beers) and AGD (former company of Usmanov). Referring to the materials of the case, the press wrote that in the late 90’s De Beers became the majority owner of the diamond pipes named after Gribov in the Arkhangelsk region. According to the position of the plaintiffs, the shares of the pipes named after Gribov had been bought by Alisher Usmanov, and after some time the company was privatized. De Beers lost its access to the diamond fields. According to press reports, the plaintiffs pointed out that the deposit was explored in 1996, and Usmanov, served in the Board of Directors of AGD from 1997 to 2001.

It was reported that De Beers estimated its damage from the alleged fraud at 30 million dollars of investments. According to the press, the plaintiffs also argued that they had lost at least $ 400 million of guaranteed profits. According to the documents of the state of Colorado court, as journalists wrote, the position of ADCwas reduced due to the fact that Usmanov and other interested persons from Russia “had entered into a criminal conspiracy in order to mislead” the company “about the agreement on the right for 40% of the company which was having the right for exploitation.

According to press reports, hearings on the suit of ADC in the court of Colorado had to begin in November 2007.
Source: newsru.com of 8.10. 2007, The Sunday Times 08.10.2007, “version” of 20.06.2000

Media reported that on the day of the news appearance about the lawsuit in the court of Colorado, the press office of the businessman denied the message. As they explained to reporters, the information in the press did not correspond to reality, and Usmanov was not a defendant on the claims of the company ADC.

The representatives of the press-service said that ADC lost all claims against AGD filed in 1998-2003. AGD won the courts on the territory of Russia, as well as in the Stockholm court (Sweden) and in the district court of Denver (USA). According to the press service, the only case lasted in Colorado was against JSC “LUKoil (AGD was called subsudiary of the oil company). Meanwhile, as the press service told, during the trials the facts of fraud had been established committed by the persons representing the interests of ADC. For example, there were indications that the basic document ADC based its claim turned out to be false.
Source: “Times” of 08.10.2007

In late 2007, the press mentioned the wife of Alisher Usmanov – the legendary coach Irina Viner in connection with an ugly story. It was reported that she had appropriated to heself the roof of the luxury house at the street Krylatsky hills, taking 100 sq meters of the property. According to press reports, Irina Viner bought an apartment in 200 sq.m. in that house. The scandal burst because of the superstructure on the roof made by the coach without the consent of the other tenants. The heads of the housing cooperative “AlStar” filed a lawsuit to court.

As reported in the press, during the proceedings Viner allegedly said “I am not aware of what is happening there. I do not live at that address, but do repairs!”. The Kuntsevsky court granted the plaintiffs, ordering Viner to dismantle the substructure.
Source: “Express-Gazeta” on 02.10.2007

In early 2009, Usmanov’s name was mentioned in the press in connection with the development of Udokan copper deposit scandal. According to media reports, in September 2008 a subsidiary of Metalloinvest – Mikhailovsky GOK in a concession to Rostechnology received the right to develop this deposit. In early 2009, there were indications that ” Metalloinvest did not pay the remaining 10.5 billion rubles for the license to develop Udokan. In this regard, the press wrote that Metalloinvest seemed to find a powerful patron in the person of Deputy Head of Federal Agency for Subsoil Use, Vladimir Bavlov because the company offered a six-month delay in paying the rest of the amount. The press reported that because of the economic crisis Metalloinvest was going to reconsider the license conditions by changing the terms of the construction (from 7 years to 9-10 years) and payback period of mining-processing enterprise.

The press wrote that Usmanov has decided to seek assistance from the State Bank like several other oligarchs suffering a difficult situation. It was reported that the head of state corporation “Rostehnology” Sergey Chemezov was negotiating with Vnesheconombank for a loan of 10 billion rubles for the start of Udokan development. By the words of Chemezov, the funds were scheduled to be received by the spring of 2010.
Source: “Moskovsky Komsomolets” from 23.04.2009

According to media reports, in early 2010 the management of Metalloinvest argued that the company was showing signs of recovery. But it was reported that strup of the development of Udokan, which had been scheduled to begin in spring 2010, was postponed.
Sources: moscow-post.ru from 13.01.2010, expert.ru from 23.11. 2009

The press wrote that the business of Alisher Umanov suffered greatly from the economic crisis. The businessman does not deny this also. According to media reports, in 2009 Usmanov admitted that Metallinvest had huge debts. As of April 2009, the oligarch estimated them at $ 5 billion. In an interview with Vedomosti and Kommersant, he acknowledged that he was doing not very well. The press reflects the opinions of experts who believe that debts of Usmanov exceed 5 billion dollars. Journalists wrote that Usmanov was selling non-core assets. He has already sold 75% in the operator of the South Tambeyskoye gas condensate field. According to the staff of Center political conjuncture of the entrepreneur’s business structure have owed about $ 10 billion altogether.
Source: “Case of the Week” from 23.04.2009

Surname: Korzhakov

Name: Alexander

Fathername: Vasilyevich

Position: Advisor to Governor of Tula region

Bio:
Korzhakov was born on 31 January, 1950 in Moscow. He comes from the family of workers.
In 1967-1968 he worked as a second-class assembly mechanic at Moscow Electromechanical Plant.
In 1969-1970 served in the Kremlin regiment.
In 1970-1989 he worked for the Ninth Chief Directorate of the KGB. He was engaged in protection of superior government officials. In 1971 Korzhakov joined the Communist Party and became a member of the party bureau and a member of the Komsomol committee of the Ninth Directorate.
In 1981-1982 he served in Afghanistan.
In 1985 – 1987 he was a bodyguard of Boris Yeltsin, the first secretary of Moscow city party committee.

In 1989 he was dismissed from the KGB “on age and health grounds”, but the actual reason was his support to Yeltsin who had quarrelled with the government by that time. Korzhakov remained Yeltsin’s bodyguard and worked under his direction at the reception of chairman of the Supreme Soviet construction and architecture committee.
In 1990 – 1991 he was the head of security department under chairman of the RSFSR Supreme Soviet Boris Yeltsin.
In 1991 – 1996 he was the chief of the Presidential Security Service
In 1991 – 1995 he was the first deputy chief of the Protective Service of Russia.
In 1996 he was a member of Yeltsin’s election staff. In June 1996 was removed from all the positions he had taken. A few months later he allied with general Alexander Lebed.
In 1997 Korzhakov was elected State Duma deputy from the Tula region. At that time he also published a book titled Boris Yeltsin: From Dawn to Dusk.
Since January 2000 he has been deputy chairman of the State Duma Defense Committee.
Awards:
Order For Personal Courage
Korzhakov has two daughters, Galina and Natalia, by his first wife Irina Semyonovna Korzhakova. In 2008 he married to his assistant Galina.
In 2010 Korzhakov earned 2.4 million rubles. He had an apartment provided for free use that had an area of 68 square meters. Korzhakov owned a land plot measuring 3,400 square meters and a house. He owned Chrysler 300 car, Chevrolet Avalanche truck, Chevrolet-Express j3500 bus and ATV.
Source: Wikipedia

Dossier:
While being the chief of the Presidential Security Service, Korzhakov had profound influence on Yeltsin. The service was established by special Yeltsin’s decree and was not regulated by law. To control it Yeltsin issued Presidential Security Service Regulations that became classified information. Security Service was engaged in operational-search activity and surveillance of potentially dangerous citizens. The service used hidden camera techniques, phone tapping and so on, although the Presidential Security Service was not mentioned in the law On operative-search activity that granted a licence for that kind of activity. Security Service call-forward was included in confidential part of the budget message avaliable only for specially authorized officials, including members of the Duma Security Committee. No one, but the Kremlin officials, was supposed to know about fund amounts and expenditure pattern of Korzhakov’s departments.
Source: Dossier on Korzhakov by Most group.

The Communists reported that on 3-4 October 1993, during the armed conflict in Moscow, Korzhakov had been involved in shooting defenders of the government quarters. He was said to demand their execution after they had been captured and brought to the stairs of the quarters: “I am ordered to liquidate all the uniformed people!”

But in fact, Korzhakov’s role was insignificant. He confined himself to arresting security officers Rutskoi , Khasbulatov and Makashov. Rumours about “bloody butcher Korzhakov” are still not confirmed. There is no evidence of the very fact that militants who had surrendered were shot.
Source: old.flb.ru, 21 November 2007

The first overt conflict between Korzhakov and Gusinsky-Chubais alliance was provoked by Korzhakov’s attack on Gusinsky’s Most holding corporation. On 2 December1994 officers of the Presidential Guard were ordered by Korzhakov to raid Moscow office of Most-bank, located at the City Hall quarters in Novy Arbat street. Officers blocked the office for several hours. A criminal case on the raid was dismissed “for lack of corpus delicti”. Moreover, chief of Moscow FSB office Evgeni Savostyanov, who then had come to the aid of Gusinsky along with his officers, was immediately discharged. Soon after that Gusinsky left for London and spent there five months

Source: Vremya novostey, 16 June 2000

On 19 June 1996, in the evening, Arkadi Yevstafyev and Sergey Lisovsky, members of Yeltsin’s campaign staff, headed by Chubais, were detained while carrying a photocopier box out of the Government House. Cash amount totalling 538 thousand U.S. dollars was found in the box. After questioning Yevstafyev and Lisovsky were released. Chief of the Presidential Security Service Korzhakov, the FSB director Mikhail Barsukov and first deputy Prime Minister Oleg Soskovets, who had initiated their detention, were forced to resign because of vigorous campaign launched by certain media.

In fact, half a million dollars turned to be costs of eliminating the group undesirable for Chubais. Korzhakov, Soskovets and Barsukov were no longer close to Yeltsin. As Korzhakov claimed in his memoirs, Security Service received reports on “plundering” of the campaign funds. On 19 June1996 Security Service secretly broke open a safe of Deputy Finance Minister German Kuznetsov and allegedly found 1.5 million U.S. dollars there. Korzhakov stated that the amount had been kept there without any documents indicating its source, while payment warrants of the foreign banks were found.

According to Korzhakov, after his resignation Chubais asked Korzhakov’s deputy to “return his 500 thousand”. In 1999 prosecutors dismissed the case.

Source: Riw.ru, 2001

In February 2004, while being a State Duma deputy, Alexander Korzhakov filed a request with the President, the Prime Minister, the Prosecutor General’s Office, the FSB, the Chamber of Accounts and Gazprom company. He reported on the activities of Gazprominvestholding director-general Alisher Usmanov and former department head of Gazprom public company Alexander Krasnenkov.

As Korzhakov stated, he was informed about their arbitrary and lawless usurpation of Gazprom by retired FSB officer and shareholder of Zapsibgazprom Tyumen company Alexey Rudakov. In September 2002 Rudakov sent him a letter.

As Rudakov learned, Usmanov and Krasenkov employed any means to ”prevent Zapsibgazprom from getting improved under external control. To avoid external interference, while having 8 billion rubles payables they reached out-of-court settlement, according to which the company property was to be distrained and sold by auction” .

Krasnenkov Usmanov rejected all the accusations and filed a counter-claim on protection of honor and dignity. Korzhakov was forced to drop the investigation.
Source: Gazeta, 2 February 2004

On 11 January 2010 Yeltsin’s daughter Tatyana Yumasheva posted to Live Journal her own version of the incident “with photocopier boxes “. According Yumasheva, the money found on Lisovski and Yevstafyev was intended for payments to actors who had taken part in the show held in Yeltsin’s support. Businessmen were to convey the money to the recipients.

As Yumasheva claimed, Korzhakov, who controlled Yeltsin’s campaign funds, knew about it and grabbed the opportunity to regain its former influence on the president, having fabricated an embezzlement case. Yumasheva called Korzhakov’s actions “stupidity, baseness and betrayal.”

Alexander Korzhakov replied that he had not controlled the Yeltsin’s campaign funds. “Chernomyrdin, Chubais and deputy Finance Minister Kuznetsov were responsible for that,” he said. Korzhakov added that the operation on the arrest of Lisovski and Yevstafyev had been conducted at Yeltsin’s request, as Yeltsin had suspected stealing money from his funds.
Source: Utro.ru, 19 January 2010

In November 2010 Andrey Bagdasarov, an assistant to State Duma deputy Alexander Korzhakov, was found shot dead at his Moscow apartment. Bagdasarov formerly served as a senior officer in the Federal Protective Service of Russia.

Investigators considered various motives for his murder, including his business activity. However, the most intriguing thing was the fact that Bagdasarov had been a witness of a search of the apartment , where Alexander Tikhonov, the father of lawyer Stanislav Markelov’s and journalist Anastasia Baburova’s murderer Nikita Tikhonov, lived.

Source: Versiya, 11 November 2010

Surname: Kvetnoy

Name: Lev

Fathername: Matveyevich

Position: Director General of JSC “Oskol Electrometallurgical Combine

Biography:

Date of Birth on August 27, 1965

Rogachevo, Moscow region.

Education: Graduated from the Leningrad Institute of Physical Culture in 1989. He graduated from Finance Academy under the RF Government in 1997.

1990-1992 Managing Director of JSC “Pragma-trading”;

1992-1995 Vice-President of JSCB “Montazhspetsbank”;

1995-1996 Deputy Director General of Interfin (the CEO is Alisher Usmanov). Founder of JSC “Financial Consulting and Management”. The representative of the Board of Directors of JSC “Oskol Electrometallurgical Combine “;

1997 Director General of the company “Lukoil-Garant”. Member of the Board of Directors of “AGD Invest”;

1998 Member of the Board of Directors in OAO “Arkhangelskgeoldobycha” and OAO “Lebedinsky GOK”;

1999 General Director of Oskol Electrometallurgical Combine. Member of the Board of Directors of JSC “Arkhangelsk Diamonds”;

2000 Head of holding “Gazmetal”;

2005 Member of the Board of Directors of OAO “Vnukovo Airport”;

2006 Owner of the banks “National Standard” and “Novoroscement”.

Hobbies: History.

Marital status: Married; Has two children.

Source: dirbiz.ru

Since 2006 – the owner of OAO “Novoroscement”

In September 2009, he was re-elected to the Board of Directors of OAO “Vnukovo Airport” (owns the terminal internal lines)

Source: http://www.vedomosti.ru

Dossier:

In 2000 Kvetnoy was involved in the conflict between the structures of Gazprom (Gazprominvestholding and Interfin), controlling the Lebedinsky GOK, and the Novolipetsk Metallurgical Complex (NLMC). Shareholders of LGOK did not introduce the representative of the NLMC supervisory council. At the same time shareholders reduced the number of members of the Supervisory Board, so that Chairman of the Board of Directors of NLMK, Vladimir Lisin could not carry his member into the supervisory board of GOK. Lev Kvetnoy entered it among others, while representative of NLMK, Andrey Leschikov did not.

This combination was performed in order to make NLMK waive the requirements to reduce tariffs on raw materials supplied to it. However, the Chairman of the Board of Directors of NLMK Vladimir Lisin did not to make concessions.

Source: “Kommersant» № 86 (1971) on 17.05.2000

In 2005 Kvetnoy was elected to the Board of Directors of OAO “Airport Vnukovo”. His candidature was proposed by a private shareholder of the company Vnukovo Vnukovo-Invest” to be an independent director. At the time Kvetnoy entered the board of directors, it largely consisted of government officials from Moscow.

Source: “Kommersant» № 125 (3209) on 09.07.2005

In 2006, Lebedinsky GOK (LGOK) purchased shares of “Oskol Electrometallurgical Combine” (OEMC) – so the consolidation of assets began on the basis of mining and metallurgical holding that Alisher Usmanov created. At the time Alisher Usmanov owned a controlling stake of the company Gazmetall controlling LGOK and OEMC, other securities belonged to Kvetnoy and Andrey Scoch.

Source: “Kommersant» № 51 (3382) on 24.03.2006

In the same year it became known that Alisher Usmanov, and Andrey Skoch had bought Kvetnoy’s shares in the LGOK and OEMC to merge the company with assets of Metalloinvest owned by Usmanov and Vladimir Anisimov into the largest iron-holding country.

The idea of its creation came from Usmanov after he had bought Mikhailovsky GOK. But Kvetnoy did not want to become his partner in the creation of the holding. He decided to sell his stake in the GOK and OEMC to the companies by Usmanov and Skoch .

Partnership of Kvetnoy with Usmanov and Skoch started in the 90’s when they began buying up shares of LGOK and OEMC. For a while all three had been partners in Gazprom.

In 2000 they, created Gazmetall along with Gazprominvestholding, GOK and OEMC gave their shares to it. Kvetnoy headed Gazmetall.

In 2005, Kvetnoy were at odds with Usmanov because of the Magnitogorsk Steel Plant. In May 2005, Michael and Lebedinsky GOKs stopped deliveries of ore to the MSP.

Source: Vedomosti from 20.04.2006

This was due to the fact that there was no agreement on the price of supplies. Kvetnoy insisted on the resumption of supplies by LGOK, disagreeing with Usmanov.

Source: Kommersant (Voronezh) № 71 (3402) on 21.04.2006

After Kvetnoy had had his shares bought a subsidiary of OEMC – JSC “OEMC-Invest” he owned gained control over the bank “National Standard”, it served accounts of the companies of the metallurgical holding Gazmetall. Kvetnoy received the bank in exchange for his shares Gazmetall.

Source: “Kommersant» № 171 (3502) on 14.09.2006

Bank “National Standard” was captive and served enterprises of metallurgical industry. Kvetnoy announced plans to turn it into a universal bank, with a broad range of clients.

Source: http://www.vz.ru ot13 September 2006, 15:04

In 2007, due to growth in demand for cement Kvetnoy became interested in the cement business and acquired a controlling stake in OAO Novoroscement “- the second largest industrial enterprise in Russia. Earlier, Oleg Deripaska was interested in this plant, but did not agree on the price. The plant is close to Sochi, which almost guaranteed orders in the Olympics in 2014. However, Kvetnoy will have to compete with Inteko by Elena Baturina, whose cement assets are located nearby.

Source: Journal “Sekret Firmy” № 7 (190) from 26.02.2007

In 2007 the bank of Kvetnoy, National Standard began buying up regional banks. The first purchase was the Volgograd “Russian Southern Bank”.

Source: rbkdaily.ru from 15.08.2007

Soon Kvetnoy announced his intention to buy the company “Gornozavodsktsement”, in which the Basic Element of Oleg Deripaska had been interested also.

Source: Kommersant (Perm) № 150 (3726) on 22.08.2007

In 2009 Kvetnoy after two years became a member of the Board of Directors in Vnukovo again.

Source: AviaPort.Ru from 07.09.2009, 17:42

Previousely, upon having left the council, he retained an indirect connection with the airport: some accounts of OAO Vnukovo Airport and all accounts of “Vnukovo-Invest” had been served by owned by served the Bank “National Standard” of Lev Kvetnoy.

His return had to be at a difficult time for the shareholders. His arrival was associated with a desire to protect shareholders from the Moscow authorities’’ attempts to strengthen influence in the airport.

Kvetnoy replaced the former board member, deputy director general of the airport – Gennady Goncharov.

The Moscow government believed that Kvetnoy and Usmanov are the beneficiaries of offshore structures behind the private shareholders of Vnukovo. But they had been appealed for help only after Vasily Kichedzhi, a new member of the board of directors from the Government, wrote to Mayor Yuri Luzhkov on the need to make a check, assuming that they had been deriving assets from the airport.

Source: “Kommersant» № 165 (4220) on 08.09.2009

According to some reports, Dmitry Baranovsky, one of the leaders of the Solntsevskaya OPG, nicknamed Dima Bely (“White”) had worked for Kvetnoy and Skoch .

There is information that Kvetnoy has intimate relations with the daughter of ex-chairman of the MAPO-Bank, Ananyev.

Source: Kompromat.ru from 30.06.2000

Surname: Skoch

Name: Andrey

Fathername: Vladimirovich

Position: Deputy of the State Duma of the Russian Federation

Biography:

 

 

Born on January 30, 1966 in settlement Nikolsky, Moscow Region; In 1988 graduated Moscow state pedagogical university (MSPU), faculty of Psychology, PH.D; Graduated from Russian Academy of Public Administration under the President of the Russian Federation.

In 1984 he served in army in reconnaissance and landing troop; was wrestling in David Rudman’s Moscow club “Sambo-70”, gat certificate of mastery, then was training. Subsequently he worked in commercial structures, was the assistant to the general director of OOO Open «Kuznetsov and partners», the assistant to the general director of investment company “Interfin”.

Since 1996 Andrey Skoch is the citizen of Israel.

In 1997 Skoch was the chairman of the Moscow regional lottery fund «Youth Planet», in December, 1997 he unsuccessfully stood in deputies of the Moscow regional Duma from the district including territory of Zheleznodorozhny, Balashihinsky and Lyuberetsky areas. Besides, Skoch proposed the nominee on elections for the State Duma in Mari El Republic. He participated in elections as the president of international fund “Generation”.

In 1999 Andrey Skoch became the deputy director of investments and development of AO «Lebedinsky MPC».

In 1999-2003 – deputy of the 3rd State Duma of the Federal Assembly of the Russian Federation, the member of Committee on the industry, construction and high technologies. In 2000 became the chairman of Advisory council on metallurgy and mountain-ore industry of this committee.

In 2003-2007 – Deputy of the 4th State Duma of FA of the Russian Federation.

In December, 2007 was elected as the deputy of the 5th State Duma of FA of the Russian Federation. A member of fraction “United Russia”, the president of the international fund “Generation”, honored trainer on sambo-wrestling and judo.

According to “Finance” magazine, his fortune for 2009 was 1.50 billion dollars, and the 33rd place in a rating of Russian billionaires.

Andrey Skoch is married, has seven children, four of them – twins of 1994 year of birth.

Sources: duma.gov.ru, lobbying.ru, viperson.ru, c-society.ru, magazine «Company Secret»

 

 

File:

 

 

In the early nineties Andrey Skoch was one of the leaders of «Solntsevskaya» organized criminal community and had a nickname Scotch Tape. Among criminal communications of Skoch there were named such as the head of Solntsevskaya Sergey Mikhailov (AKA Mihas), Averin brothers, Alexander and Victor – active members of Solntsevskaya criminal community. Together with others Solntsevskaya’s authorities – Kvetnoy brothers, Lev and Vladimir, and Dmitry Baranovsky (nickname White) – Skoch headed the criminal group which was engaged in illicit weapon business. Arms supplies were carried out to Russia from Poland, the Baltic States and Belarus. Legalization of the received incomes occurred by an investment of money resources in processing and a mining industry, through various commercial structures. Skoch’s group with more than 20 former sportsmen and persons with previous convictions supervised commercial banks “Montazhspecstroy”, “Dialogbank”, and also a capital casino “Karusel”. Andrey Skoch was registered as on one of owners of Moscow casino «Arbat court yard».

Source: «New newspaper» № 3 from 1/17/2000

 

In the late nineties press wrote about Andrey Skoch’s participation in showdowns concerning Serpukhov oil base – the enterprise became a dispute subject between «Solntsevskaya» and “Podolskaya” criminal structures. Podolskaya group – the second biggest and influent group after «Solntsevskaya» in Moscow region – went on rupture, despite earlier strong communications between two criminal communities. The conflict occurred because of long dispute on control over Serpukhov oil base. In February, 1998 members of “Podolskaya” group attached a tank farm from grenade discharges, then company “Oka-oil” located there and headed by chairman of the board Andrey Skoch, had to leave the territory of the base and to locate in another place.

Source: «New newspaper» № 3 from 1/17/2000

 

In 2000 in the biographic data of Andrey Skoch published in mass-media, there was an information that he served in research division of KGB which ostensibly was engaged in experimental researches of mass suggestion. There is no any more concrete data on this stage of his activity in open sources.

Source: «Moskovsky Komsomolets» from 3/15/2000

 

In State Duma Andrey Skoch is named as the active lobbyist of metallurgical branch. His desire to be the chairman of Advisory council on metallurgy and the mining industry (the lobbyist organization) became a main objective of Skoch’s coming to politics. Skoch was said to be informally delegated to the Duma by a metallurgical complex of Belgorod – Lebedinsky and Stoilensky MPC, Oskolsky electrometallurgical industrial complex. Then the former minister of an antimonopoly policy Gennady Khodyrev and the representative of the Ural region Zelimhan Mutsoev became his assistants to the Head of council. Council included: Deputy Peter Shelishch, the ex-minister of metallurgy of the USSR, the president of the International union of metallurgists Serafim Kolpakov, the owner of “Severstal” Alexey Mordashov, the head of “Mechel” – Alexey Ivanushkin, “Nornickel” – Alexander Khloponin, SUAL – Victor Vekselberg, Novolipetsk metallurgical industrial complex – Vladimir Lisin, a member of Academy of mountain sciences Evgeny Panfilov, the deputy director of institute in the system of State Science Center Chermet Leonid Makarov.

Source: www. svh-home.zeonweb.ru

 

In 2000 Andrey Skoch came into the view of police in connection with criminal case on charge of the head of “Montazhspecbank” Arcady Angelevich, in the past – the basic treasurer of «Solntsevskaya» criminal group who was accused of plunder over 7 million dollars belonging to commercial bank “Unity”. Andrey Skoch who was registered as the councilor in “Montazhspecbank”, together with Lev Kvetnoy, assistant to Angelevich, was targeted in the investigation as the witnesses. Actually, according to journalists, both of them were “authorities”. During the investigation Angelevich colluded department of economic counterespionage of FSB, and the employee of FSB Vladimir Vanesyan who forced Skoch and Kvetnoy to leave from “Montazhspecbank” was directed to the bank. Lev Kvetnoy was written to declare during investigation that Vanesyan threatened him to put a grenade in trousers. Solntsevsky then left the interest to bank.

Source: “Version” from 4/11/2000

 

Mass-media wrote about a certain conflict in relations of Andrey Skoch and his colleague in «Solntsevskaya» Lev Kvetnoy. In 2006 Skoch, having united with businessman Alisher Usmanov, redeemed shares of Lev Kvetnoy in Lebedinsky MPC and Oskolsky electrometallurgical industrial complex. After this transaction Usmanov and Skoch began to unite the enterprises with actives of “Metalloinvest” in mining-ore holding. For some time all three businessmen were “Gazprom” partners. In 2000 they together with “Gazprominvestholding” created “Gazmetall” where they transferred the share holdings of MPC and ОEMC. Kvetnoy headed “Gazmetall”. In 2005 Kvetnoy had disagreements with Usmanov because of the conflict concerning Magnitogorsk metallurgical industrial complex. Sckoch took Usmanov’s part in this conflict.

Source: “Vedomosti” from 4/20/2006

 

In the State Duma Andrey Skoch lobbied interests of the large alcoholic companies. It was one of initiators of the bill «About modification of the Federal law « About state regulation of manufacture and a turn of ethyl spirit, alcoholic and alcohol-containing products» (regarding introduction of an obligatory denaturizing of nondrinking spirits), brought in the State Duma in October, 2006. The bill obliged manufacturers of methyl and isopropyl spirit which are the basis for substitute production, to denature the production, adding, for example, gasoline. It should bring additional 5 billion roubles to manufacturers of strong alcohol. Apart from Skoch, the deputies Valery Draganov, Alexander Kogan, Yury Medvedev, and Alexey Rozuvan were authors of the bill.

Source: “Kommersant” № 191 (3522) from 10/12/2006

 

In 2006 minorities of OAO «Oskolsky electrometallurgical industrial complex», supervised by Andrey Skoch, businessmen Alisher Usmanov and Vasily Anisimov, submitted the claim to arbitration court of Belgorod about recognition of founders of industrial complex, instead of simple shareholders. Minorities tried to challenge industrial complex privatization. The claim was that in 1993 during the act of acquiring shares and formation of joint-stock company of open type, and then creation on its base of open joint-stock company workers of industrial complex received the status of the shareholder, having lost the status of the founder, though the circle of powers of founders is wider, than shareholders. The court decided that process of privatization ОEMC which took place in 1993, was according to norms of the legislation of that time. Subsequently the group of minorities made the complaint to Voronezh arbitration court, but there the first judgment was upheld.

Source: “Commersant” № 151 (3482) from 8/17/2006

 

In 2010 in a rating of Russian billionaires magazine Forbes named six deputies of the State Duma including also Andrey Skoch. According to Forbes, Skoch is the richest Russian deputy with the fortune of 1.4 billion dollars. At the same time, according to his declaration, Skoch is one of the poorest deputies: in 2009 he submitted data to tax department that he earned 1.7 million roubles, that in his property he has only one apartment with the area of 65,31 sq. m and no any car.

Source: “Newspaper” from 14.05.10

Surname: Berezovsky

Name: Boris

Fathername: Abramovich

Position: Entrepreneur

Biography:

 

 

Born in 1946 in Moscow. In 1967 he graduated from the Moscow Institute of Forestry Engineering, in 1973 — the mechanic-mathematical department of MSU, later defended PhD and doctoral thesis; became a member of the Academy of Sciences of the USSR. In 1989 he became CEO of the Soviet-Swiss joint venture LogoVAZ engaging in supplies of software to AvtoVAZ and sales of domestic cars and servicing cars. In 1994, he resigned as general director of LogoVAZ, becoming a chairman of its board of directors.

In 1991 he co-founded the Moscow Independent Broadcasting Corporation (MIBC). In 1993 – the general director and member of the Board of Directors of JSC “Automobile All-Russia Alliance” (AVVA), which was planning to build a new automobile plant on the money of private investors. The project failed later .

In winter 1993-1994, Berezovsky entered the inner circle of President Boris Yeltsin by getting acquainted with Valentin Yumashev, who introduced him to Yeltsin’s daughter Tatyana Dyachenko.

In December 1994, Berezovsky became the first deputy chairman of the board of directors ORTV. In the second half of 1995, Berezovsky and businessman Roman Abramovich created Sibneft. In 1995, Berezovsky became one of the shareholders of MIBC channel “TV-6 Moscow”.

In October 1996 he was appointed deputy secretary of Russia’s Security Council, in November 1997 was removed from his post. In the same month Berezovsky became an adviser to the head of presidential administration of Russia Yumashev, and in April 1998 he was appointed executive secretary of the CIS. In May 1998, he was dismissed from his post as adviser to the head of the presidential administration, and in March 1999 — was removed from his post as chairman of the CIS Executive Secretariat.

In March 1997, he became a member of the Federal Commission on the problems of Chechnya, in May – participated in the signing of a peace treaty between Russia and the Chechen Republic of Ichkeria.

In spring 1999, he obtained 75% of shares in MIBC “TV-6 Moscow”; in July 1999 he acquired the publishing house “Kommersant”.

In December 1999, he was elected to the Duma, but in July 2000 – resigned his office as deputy, and began to criticize the actions of President Putin. In late 2000 he went to London in fear of further prosecution on the «case of Aeroflot».

In December 2000, Berezovsky created Civil Liberties Foundation in the U.S. – a charitable human rights organization. In November 2001, he was admitted to the motion of the «Liberal Russia» and elected to its political council.

In September 2003, he was granted political asylum in Britain. Later in the UK Berezovsky had been issued new documents in the name of Platon Elenin.

In summer 2005, Berezovsky changed the direction in PH “Kommersant”, and then sold the shares of PH Patarkatsishvili. In August 2006, Patarkatsishvili sold his PH to Alisher Usmanov, general director of Gazprominvestholding, a wholly-owned by OAO Gazprom.

Berezovsky was married several times and has six children, and many grandchildren. In April 2006 the British newspaper Sunday Times put him on the 68th seat in the 1000 list of richest people in the country with the fortune of 800 million pounds sterling.
http://www.lenta.ru on 11/01/2010

 

Dossier:

 

 

For the first time the press wrote negatively about Berezovsky in connection with his appearance in August 1994 in the board of directors of AvtoVAZ. As reported by the media, Berezovsky and CEO Vladimir Kadannikov in order to establish full control over Avtovaz used the scheme of cross-shareholding. As reported, the essence of the scheme was that the majority of shares in the company was bought by VAZ-controlled firms, including LogoVAZ and AVVA. It turned out that the top managers of the plant became heads of the structures that had kept its shares.

It was also reported that another “invention” by Kadannikov and Berezovsky was schemes of sham cars re-export. Their essence was that the exported vehicles cost less than those that went to the domestic market. But the cars crossed the border only on paper. In fact, they were sold in Russia on domestic prices.
“Profile» № 43 (115) on 23.11.1998

 

Press wrote about the scandals associated with secret service owned by Boris Berezovsky – a private security company “Atoll”. It was reported that this structure provided not only security services, but also engaged in spying, espionage and collecting dirt for enemies and friends of Berezovsky. According to the media, the people of Yeltsin’s inner circle, known as the “Family” appeared in its field of view .

They wrote that in the summer of 1998 “Atoll” of Berezovsky got in the field of view of law enforcement agencies. Employees of DOCU in the Eastern District of Moscow withdrew specialized equipment and materials collected on the leading politicians of the country from the base of the security company . But soon the “Atoll” got its property back.

According to press reports, in January 1999 the General Prosecutor’s Office of Russia opened a criminal case, and repeatedly searched «Atoll».
Source “Moskovsky Komsomolets” on 20.01.99, on 21.06.2006, from 21.06.2006

 

According to the head of «Atoll», the case against his company was terminated. But, according to the media, Berezovsky chose to get rid of it. First, funding for security services was reduced and then stopped altogether.
“Moskovsky Komsomolets” on 21/06/2006

 

Berezovsky’s name ended up in the media in connection with reports about his collaboration with Chechen field commanders about the abduction and release of the hostages in 1996. It was reported that the militants earned money through such a cooperation, while Berezovsky gained political capital. First, as the press was writing, with the help of Berezovsky there were 22 OMON riot policemen released from the Chechen captivity, captured on December 14, 1996 in Dagestan. Shortly thereafter, 11 Chechens were released from the Russian prisons, and then pardoned retroactively. Berezovsky helped to return from the Chechen captivity the NTV correspondent Helen Masyuk, and Plenipotentiary Representative of President of RF, Valentin Vlasov. The entrenched image of a peacemaker was spoiled with the release of a Ministry of Interior of Russia, General Gennady Shpigun. The Chechens were to release him on June 12, 1999. But after the Berezovsky’s intervention in the negotiations Shpigun was killed.
“Moskovsky Komsomolets” of 22.06.2006

 

In late 1996, Berezovsky appeared in the scandalous story related to the assignment of his Israeli citizenship. Media reported that on October 29, 1996 that Berezovsky was appointed Deputy Security Council Secretary, Ivan Rybkin on presidential decree. But then the information appeared he had had citizenship of Israel at the time. Moreover, he received Israeli citizenship in November 1993. Those two circumstances – the new appointment and Israeli citizenship – conflicted with Russia’s law on civil service.
“Izvestia” on 22/11/1996

 

According to press reports, on November 13, 1996 Berezovsky confirmed he did have Israeli citizenship. He said that even before the new appointment, he applied the Israeli Foreign Ministry for annulling it. Press wrote that, according to some reports, there was a falsification of documents. Berezovsky reportedly sent a statement of revocation of citizenship for a couple of months before the appointment. But the documents were lost by the Israeli authorities.
“Moskovsky Komsomolets” on 21/06/2006

 

According to media reports, on November 20, 1996 the Israeli embassy in Russia officially stated that Berezovsky was no longer a citizen of Israel.
“Izvestia” on 22/11/1996

 

The press described the protracted conflict between Boris Berezovsky and Russia’s law enforcement and supervisory authorities.

On November 13, 1998 Berezovsky published an open letter to the FSB director Vladimir Putin, saying the preparation of attempt on his life. Berezovsky argued that in late 1997 the former management of the Office for development and suppress the activities of criminal organizations FSB allegedly instructed its subordinates to kill him.
“Kommersant» № 212 (1615) on 13.11.1998, “Moskovsky Komsomolets” on 23/01/2006

 

On November 17, 1998 Berezovsky organized the ORT press conference in which representatives of the FSB took part, including Lt. Col. Alexander Litvinenko, who later defected from Russia in the UK. FSB officials reportedly confirmed that they had received an instruction from the superiors to eliminate Berezovsky. The same was to occur with the brother of famous Chechen businessman Umar Dzhabrailov – Hussein. Litvinenko also said that they had prepared an attempt on a senior tax official also. As written in the press, the FSB officers asked the public to protect them from the criminal leadership. Media wrote that experts linked that action to the campaign discrediting the government of Yevgeny Primakov.
Source “Profile» № 43 (115) on 23.11.1998 and # 12 (134) on 05.04.1999

 

In 2001, as the press stated, Berezovsky asked the Ministry of Internal Affairs of Great Britain and announced that Russia’s security services had been preparing an attempt on his life. After that Berezovsky obtained political refugee status in the UK.
gzt.ru № 51 dated 21.03.2008

 

According to media reports, on January 24, 2002 the confrontation between Berezovsky and Russian intelligence services continued. Berezovsky was accused by FSB director Nikolai Patrushev of the financing the illegal armed formations in Chechnya. As reported, in response to those charges Berezovsky declared about the involvement of special services of Russia to the bombings of apartment blocks in Moscow and Volgodonsk in 1999.
lenta.ru citing IUE “Panorama” on 23/01/2006

 

On March 5, 2002 the media reported that Berezovsky was involved in the preparation of a campaign of Chechen bandit formations to Dagestan in the summer of 1999; and also took part in the kidnapping and murder of General Shpigun in Chechnya. Prosecutor’s Office released the statement of an unnamed witness. Reportedly he claimed that Berezovsky had had relation to Chechen separatists, and also maintained close relations in business as well with the Chechen criminal group in Moscow and its leaders – Khozh-Akhmed Nukhayev and Movladi Atlangeriev. The media wrote that, according to some sources, Nukhaev and Atlangeriev owned a large stake in the St. Petersburg branch of JSC «LogoVAZ».
lenta.ru citing Demfront.narod.ru from 01.09.2005

 

The press wrote about Boris Berezovsky in connection with the notorious “case of Aeroflot», its investigation began in April 1999. According to press reports, in late 1995 Berezovsky played a key role in the change of leadership in “Aeroflot”; as a result, Marshal Yevgeny Shaposhnikov headed the company. The first deputy general director on commerce in «Aeroflot» became the former director of LogoVAZ, Samat Zhaboev. However, Berezovsky made no secret of that he wanted to take part in the company privatization.
“Kommersant» № 212 (930) on 16.11.1995, “Kommersant-Vlast» # 48 (159) on 26.12.1995

 

In 1999, according to press reports, Berezovsky was accused of illegal business activities associated with Aeroflot. It was reported that on April 6, 1999 Prosecutor General of Russia ordered the imprisonment of Berezovsky and the Deputy Director General of Aeroflot, Nikolay Glushkov. On April 14, 1999 the decision was reversed. According to investigators, Glushkov along with another deputy general director of Aeroflot, Alexander Krasneker, and chief accountant Lidia Kryzhevskaya misled the head of “Aeroflot” Shaposhnikov by persuading him to concentrate 80 % of the free foreign exchange earnings of the company on account of the Swiss company “Andava». According to press reports, one of the founders and major shareholders of “Andava” was Glushkov, and the other major shareholder – Boris Berezovsky.

As the press was writing, in the Prosecutor’s Office opinion 252 million dollars passed through “Andava” in 1996-97. According to investigators, nearly 40 million had been illegally transferred in the Swiss bank Credit Suisse to personal accounts of Glushkov, Krasneker, and Kryzhevskaya.
Source gzt.ru from 15.03.2004, “Kommersant” dated 09/07/2002

 

According to investigators, Berezovsky participated in the embezzlement of funds through his Swiss company Forus Holding. As the press reported, the main part of “case of Aeroflot” had lasted five years and ended with a verdict by the Savyolovsky court of Moscow. Glushkov, Krasneker, Kryzhevskaya, and another helper were found guilty, but on the whole the version of the Prosecutor General’s Office of serious crimes committed by them had been rejected. In March 2004, as reported, all of the four received minimum terms and were released in the courtroom immediately after sentencing. The case against Mr Berezovsky was separated in a special case.
gzt.ru from 15.03.2004

 

According to press reports, in November 1999, Berezovsky was acquitted of charges, and he became involved in the case as a witness.
RIA Novosti on 07/12/1999

 

The media wrote that on October 2, 2001 Prosecutor General of Russia ordered the compulsory process of Berezovsky’s interrogation on the case of “Aeroflot” as a witness . On October 22, 2001 Prosecutor General Vladimir Ustinov said that Berezovsky would be arrested if one appears in Russia
lenta.ru citing IUE Panorama of the 23.01.2006

 

On July 12, 2007 the Savelovsky court of Moscow began an absent trial of Berezovsky. He was charged of fraud – embezzlement of Aeroflot at 214 million rubles (Part 3 of Article 159 of the Criminal Code of Russia), as well as the legalization of stolen money in excess of 16 million rubles (Part 3 of Article 174 of the Penal Code).

Berezovsky refused to participate in the process, even through his lawyers, calling it a “farce”.
RIA Novosti on 12/07/2007

 

As reported, on November 29, 2007 the Savyolovsky court of Moscow sentenced Berezovsky in absentia to six years imprisonment. He was found guilty of fraud, but not of the legalization of stolen funds of Aeroflot.
RIA News of 29.11.2007

 

Boris Berezovsky appeared in the scandal connected with the murder of Ukrainian journalist Georgy Gongadze.

As the press was writing, a former employee of the State Security Service of Ukraine, Major Mykola Melnichenko secretly recorded his conversations when working in the administration of the President Leonid Kuchma. In late 2000 some of the records were made public; that provoked a “cassette scandal” in Ukraine: it was an opportunity to accuse Leonid Kuchma and his closest associates of the murder of journalist Georgy Gongadze, as well as – of the pressure on the deputies and judges, and of sales of radars «Mail» to Iraq.
lenta.ru with other links on Correspondent.net on 05/03/2005

 

Media reported that in 2002 Nikolai Melnichenko sold part of his archive to Boris Berezovsky.
Nezavisimaya Gazeta № 261 (3659) from 01.12.2005

 

And in March 2005, Melnichenko turned to Berezovsky for ensuring his safety as he was the last witness in the case of Gongadze murder after the strange suicide of former Interior Minister of Ukraine, Yuri Kravchenko.
Law and Business № 49 (725) on 03.12.2005, Today (Ukraine) # 1993 from 05.03.2005

 

As reported, in April 2006 already Melnichenko accused Berezovsky of films manipulations. According to him, the patron attempted to publish only some parts of the film, hiding the rest.
Nezavisimaya Gazeta № 261 (3659) from 01.12.2005

 

A little later the relationship between Melnichenko and Berezovsky had completely spoiled. The first said that Berezovsky conspired with the senior Ukrainian government in order to rig the criminal investigation of the Gongadze murder. Representatives of the latter accused Melnichenko of the fact he had forbidden to make public records and possibly fabricated part of the transcripts.
lenta.ru with reference to the phrase (Fraza.com.ua) from 05.12.2005 and from 06.12.2005

 

The press wrote about the scandal caused by Berezovsky’s visit to Georgia under a different name. According to media reports, on September 12, 2003 Berezovsky was granted a political asylum in Britain. The London Court dismissed the case for his extradition to Russia. In the same year, British authorities issued a travel document to Berezovsky under the name of Platon Elenin. In December 2003, Berezovsky met with his business partner Badri Patarkatsishvili in Georgia, and then he presented documents in the name Elenin on the border.
Source BBC News, Russian service from 23.01.2004, Kommersant »# 166 (2769) on 13.09.2003,” Nezavisimaya Gazeta» № 40 (3720) of 01.03.2006

 

Newspapers wrote about the Brazilian prosecutors’ interest to Boris Berezovsky.

It was reported that according to unconfirmed reports, Berezovsky managed the company Media Sports Investment (MSI) through his trustee – Iranian Kia Joorabchian, and was the general sponsor of the soccer club “Corinthians” (Corinthians) – champion of Brazilian championship in 2005.
Source Kommersant № 80 (3411) on 05.05.2006 and # 81 (3412) on 10/05/2006

 

According to press reports, in 2005 the Brazilian authorities for combating financial irregularities became interested in the possible involvement of MSI in money laundering. Brazilian law enforcement authorities could not understand what the source of funds was, enabling the company to buy and sell the leading Latin American players (the press called Media Sports Investment the sponsor of the Brazilian soccer club Corinthians).

According to media reports, May 5, 2006, Berezovsky was arrested by theBrazilian police in the airport Kumbika in city of Sгo Paulo, and gave testimonies for several hours. The reason for the detention was a criminal case on money laundering through the football clubs in Brazil.

According to press reports, in September 2006 the Prosecutor’s Office in Sгo Paulo prepared a report, according to which some of the money allegedly laundered through the Corinthians, “in fact belonged to Berezovsky, Patarkatsishvili, and Dzhurabchan (by the time the latter had already left his post as head of MSI).
“Vision” from 06.05.2006, “Labor» № 171 from 16.09.2006

 

Brazilian general prosecutor demanded to arrest the leaders of the investment group Media Sports Investment; it suspected them of money laundering and forming a criminal group. In July 2007, it was reported that the Brazilian court issued a warrant for the arrest of Mr Berezovsky, as well as other co-owners of MSI, including – Kia Joorabchian, and financial director of the investment group “Noyana bedru”. Since all the three at the time had been outside of Brazil, the request for their arrest was handed over to Interpol, and the MSI’s accounts were frozen in all the country’s banks.
ITAR-TASS on 13/07/2007

 

But in September 2008, as the media reported, the criminal case was closed, and the warrant for the arrest of Berezovsky was withdrawn. The press accosiated Such an odd final with the violations committed during the investigation.
lenta.ru with reference to the Associated Press on 17/09/2008

 

The press described a conflict between Boris Berezovsky and another oligarch – Roman Abramovich. According to the press, in the second half of 1995 Berezovsky and Abramovich did not conflict, but instead organized a joint business in the petroleum sector. Abramovich was engaged in organizational matters, while Berezovsky – in lobbying

project in the administration of President Yeltsin.
“Business news” (Omsk) from 27.04.2005

 

According to press reports, in August 1995 “Siberian Oil Company (Sibneft) was established by a decree of Boris Yeltsin.
“Moskovsky Komsomolets” on 02/06/1999

 

It was reported that several companies established by Abramovich and Berezovsky were engaged in the acquisition of Sibneft’s shares – they became winners of investment tenders either independently, or through subsidiaries.
Conflict.Rosbalt.Ru on 14/12/2003

 

Thus, as the press was wrote, the controlling stake in the company cost Abramovich and Berezovsky 25 times cheaper than its market value.
“interlocutor” on 05/03/2003

 

According to press reports, the open stage of the conflict began in July 2005 when Mr Berezovsky announced that he and Patarkatsishvili had received about 1 billion dollars from Roman Abramovich for their shares in Sibneft Russian Aluminum, and ORT. Berezovsky claimed that this sum was far below the real value of securities sold, and announced that he was going to file a lawsuit to Abramovich in the UK.
«Vedomosti» № 121 (1402) from 05.07.2005

 

It was reported that the suit was brought to the Supreme Court of Justice in London on June 1, 2007.
“Kommersant» № 52 (3869) on 29/03/2008

 

On October 6, 2007 press described an incident in one of the trendy shops in central London. Berezovsky found Abramovich there and tried to give him a summons to court. It was reported that Berezovsky gave several papers to Abramovich, but the latter put his hands behind his back, and the papers fell to the floor.

Later, Berezovsky told reporters that that was the agenda. And according to British law agenda is considered to be handed, even if it was thrown at the feet of the recipient in front of witnesses.
lenta.ru with reference to The Daily Mail dated 06.10.2007; IA cursor on 10/07/2007

 

According to the press, the judicial war between Berezovsky and Abramovich has not yet ended. At the moment, reportedly Berezovsky accuses Mr Abramovich that he forced him to sell half of Sibneft at a reduced price – Boris Berezovsky received 1.3 billion dollars for his package, while in 2005 Gazprom paid to Roman Abramovich for that package 10 times more.
wek.com.ua on 11/09/2009

 

Television channels broadcasted a person who introduced himself as “Peter”, and reported that in 2003, Berezovsky allegedly offered him money for false testimony in court. Supposedly Berezovsky needed it in order to obtain political asylum in the UK and to avoid extradition to Russia. “Peter” was asked to pose as an agent of the FSB, who was sent to London to kill Berezovsky. By the words of “Peter”, he declined the offer. But they slipped psychotropic substances in coffee, made an audio record with false confessions, and presented it in court. “Peter” also said that Litvinenko knew the scheme of obtaining political refugee status by Berezovsky; allegedly on that reason he had been killed.
lenta.ru with other links on the “News of the Week” from 08.04.2007

 

Berezovsky, as written in the press, said that the real name of the mysterious “Peter” was Vladimir Teplyuk; he had already been mentioned in the press in January 2006 in the article of the deputy, Alexander Khinshtein. According to that article, in 2003 Berezovsky allegedly intended to use Teplyuk as a fallback for political asylum in Britain. As reported, Teplyuk the initiator of the meetings. He was so insistent that Litvinenko had even begun to suspect him a FSB officer.
Source Kommersant »№ 53 (3629) on 02.04.2007, № 81 (3412) on 06.05.2006, Gazeta.ru from 02.04.2007

 

According to press reports, in March 2010 the High Court in London ruled on the suit of Boris Berezovsky to VGTRK (on the television channel “Russia” in VGTRK which had shown the program “News of the Week” with “Peter”). The Court acknowledged that the program contained false accusations against the businessman who allegedly had been granted political asylum in Britain by deception. Reportedly, Boris Berezovsky was awarded compensation in the amount of 150 thousand pounds ($ 223 thousand). Defendants stated that they intended to appeal the decision.
finansmag.ru on 10/03/2010

 

April 13, 2007, as the press reported, Boris Berezovsky launched a new international scandal. The British newspaper The Guardian published an interview with Berezovsky, in which he declared his involvement in a coup in Russia. Disgraced oligarh accused Putin of creating an unconstitutional regime, power centralization, closure of democratic reforms, and the actual destruction of the political opposition.
lenta.ru with reference to The Guardian, 13.04.2007

 

As the press reported, Russia’s chief prosecutor Yuri Chaika due to the statement by Mr Berezovsky ordered to bring a new criminal case against him.
Gazeta.Ru on 13/04/2007

 

Soon the Prosecutor General of Russia indeed brought criminal case against the entrepreneur under Article 278 of the Criminal Code (violent seizure of power “), providing imprisonment for a term of 12 to 20 years.
lenta.ru with reference to The Times of 16.06.2003

 

However, Russia’s Foreign Minister Sergei Lavrov accused Berezovsky of abusing the political refugee status and, based on this, said that Britain should have extradited him.

As reported, the Ministry of Foreign Affairs of Great Britain also condemned the statement of Mr Berezovsky. By the evening of the same day, Berezovsky softened his stance; he said in an interview with The Guardian that he had not meant the forced overthrow of Russia’s power.
gzt.ru on 13/04/2007

 

On July 18, 2007, the British press once again burst with scandal associated with Boris Berezovsky. The businessman told reporters that they intended to kill him. From the words of Mr Berezovsky, he had been warned by the British police and advised to temporarily leave the country. Berezovsky said that he had been receiving threats for too long, which had been the result of “the Russian intelligence services activities”. On the same day comment appeared in the British press from official sources in Scotland Yard, which confirmed they arrested a man in London, who had determined to kill Berezovsky.
lenta.ru with reference to The Times of 18.07.2007

 

Only in 2008 information appeared in the press that the British suspected the Chechen criminal “authority” Atlangeriev of preparingthe assassination of Berezovsky and deported him to Russia.
“Kommersant» № 62 (3879) of 14.04.2008

 

On July 30, 2007 the press reported on the regular claims to Boris Berezovsky from the Prosecutor General of Russia. The olygarh was suspected of embezzling 13.7 million dollars of SBS-Agro. As reported, the position of the investigation lied in the fact that Berezovsky organized a criminal group, together with which he fraudulently obtained a loan of SBS-Agro in 1997. According to investigators, Berezovsky spent the money on the purchase of real estate on the Mediterranean coast of France. A corresponding criminal case was opened June 29, 2007, and, as reported by Berezovsky’s lawyers, was the eleventh criminal case having brought against their client in Russia. As press wrote, the prosecutors sent a petition for the arrest in absentia of Berezovsky to the Basmanny court.
RIA Novosti on 30/07/2007

 

On August 7, 2007 the Basmannyy Moscow court sanctioned the arrest of Berezovsky in absentia. Judge substantiated decision on the fact that the entrepreneur had had extensive contacts in law enforcement and commercial structures, and might have affected the investigation.
Interfax news of 07.08.2007

 

In autumn 2009 the press reported that the Investigation Committee of the Prosecutor (ICP) charged the political emigrant Boris Berezovsky under article 159 (fraud) and section 174 (money laundering) of the Criminal Code. According to investigators, Berezovsky obviously was not going to return the money to “SBS-Agro”, and brought the money abroad through accounts of the company Forus controlled by him, and then got real estate on the Mediterranean Sea.
http://www.finansmag.ru on 22/09/2009

 

One more criminal case on Boris Berezovsky was associated with the embezzlement of “AvtoVAZ”. According to press reports, in November 2008 the case against Boris Berezovsky and the former director general LogoVAZ “Yuli Dubov was transferred in the Krasnogorsk City Court of the Moscow region. They were accused of theft of AvtoVAZ funds in 1995, and of the legalization of funds derived from the criminal activity. According to investigators, Berezovsky and Dubov had not paid the company for the more than 5.5 thousand Zhiguli cars of different models, set by the plant LogoVAZ, and thus had kidnapped 143.7 billion non-denominated rubles. The press noted that prior to the criminal case delivered in the court, the arbitration courts had recognized that transaction legal.
“Kommersant» № 215 (4032) 26/11/2008

 

Media reported that in June 2009 the Krasnogorsk city court found Berezovsky and Dubov guilty of embezzling the funds of the company AvtoVAZ. Boris Berezovsky was accused of embezzling 58 million rubles from the company AvtoVAZ, and was sentenced to 13 years imprisonment. Yuli Dubov was sentenced to 9 years of imprisonment. As the press reported, Prosecutor General of Russia announced their intention to send a new request to Britain for Berezovsky’s extradition.
BBC News on 26/06/2009

 

According to press reports, in March 2008 the Investigative Committee at Russia’s prosecutors filed a new case against Boris Berezovsky. It was “on the fact of knowingly false denunciation, connected to the artificial creation of prosecution evidence”. Under such an article the petition of the entrepreneur in the UK Ministery of Internal

Affairs had been brought in 2001; he wrote on 96 pages that in Russia he had been persecuted for political reasons, his business had been taken, etc. He pointed out that Russia’s security services were going to kill him. Russia’s investigators believe that Berezovsky did that for the subsequent receipt of refugee status.
“Kommersant» № 46 (3863) on 21.03.2008, gzt.ru № 51 21.03.2008

 

In January 2010, as written in the press, the Basmanny Court in Moscow seized the businessman’s New York apartment. The decision was taken in a framework of the criminal case against Berezovsky on providing false information in order to obtain political asylum in Britain. Boris Berezovsky reacted to news of the arrest by stating that he has no apartments in New York.
trud.ru from 22.01. 2010

 

According to media reports, by the end of January 2010 there have been 12 criminal cases investigated against Berezovsky in Russia. The latter charge was on the organization of a criminal community; he was charged in absentia in September 2009. That charge was a part of the criminal case initiated in 2007 – of theft in the credit bank “SBS-Agro”. In total, reportedly Berezovsky has been charged in absentia over a dozen cases. Those were the accusation of actions aimed at seizing power (it was a series of interview with Mr Berezovsky in early 2006), the illegal acquisition of house and land in Zhukovka in the Moscow area, as well as fraud, money laundering, etc. Berezovsky said to journalists that all the cases against him were just a “political farce”, and forbade his lawyers to participate in any trials in Russia. According to media reports, the Prosecutor General’s Office of Russia has repeatedly appealed to the British authorities requesting for Berezovsky’s extradition, but the positive response has not been received yet.
gzt.ru on 22/01/2010

 

 


Russia’s Gazprom ,Barroso,,The Iraqi Kurds and the Moscow Corruption – The Gazprom Cables

BAGHDAD (AP) — A Middle East subsidiary of Russia’s Gazprom Neft has inked two oil deals with Iraq’s self-ruled northern Kurdish region, becoming the fourth major oil company to enter into agreements with Iraqi Kurds that bypass the central government in Baghdad.

The Kurds and the central government are at loggerheads over rights to develop resources. Baghdad wants to manage its energy resources nationwide, but Kurds insist the constitution doesn’t require them to go through Baghdad.

Since the 2003 U.S.-led invasion, the Kurds have signed scores of oil deals with small and mid-sized oil companies. But the entry of the oil majors may be a game changer that could lead to de facto policies the Kurds have long sought.

In a statement issued on Wednesday, the St. Petersburg-based company said it has acquired a 40 percent share in the 1,780-square-kilometer (687-square-mile) Garmian block. The Canada-based WesternZagros company will also hold a 40 percent share.

In the second deal, the company will hold an 80 percent share in the 474-square-kilometer (183-square-mile) Shakal block. The Kurdish Regional Government will hold a 20 percent share in each contract.

Both blocks are located in the southeastern part of the region and are expected to hold about 3.6 billion barrels of oil reserves. Gazprom’s up-front payment is to be around $260 million.

“Gazprom Neft considers the territory of the Kurdistan Region of Iraq promising for further geological study and consequent production at the fields,” First Deputy CEO, Vadim Yakovlev said.

With its latest deals, Gazprom has joined France’s Total S.A., U.S. oil majors Chevron Corp. and Exxon Mobil Corp. who have already made their own forays into the region.

Iraq’s post-invasion governments have until recently blacklisted energy companies that signed contracts with the Kurdish government to prevent them from working elsewhere in the country or purchase crude oil.

But in the case of Exxon Mobil, the Iraqi government has had a light hand. Baghdad prevented the U.S. company from taking part in Iraq’s fourth energy bidding round in May but has not touched its deal to develop the 8.6 billion West Qurna field near the southern city of Basra along with Royal Dutch Shell PLC.

No moves have been made against Total, which has a share in a consortium led by China’s National Petroleum Corporation to develop the 4.945 billion barrel Halfaya field in the south. Gazprom is developing the 100 million barrel Badra field in central Iraq.

Baghdad has so far only blacklisted Chevron, which has no deals with the government.

There is considerable incentive to work directly with the Kurds — unlike the flat fee the central government pays for each of barrel of oil extracted, the Kurds offer lucrative contracts allowing the developers to claim a share in reserves and the oil produced.

Also Wednesday, the Iraqi Kurds announced that they will resume crude oil exports from their region in the first week of August after they were halted in April over a payment row with Baghdad.

In 2011, the two administrations struck a tentative deal by which the Kurds send oil to Baghdad, which then sells it and each side then takes 50 percent of the revenues. But exports were halted in April by the Kurds who claimed that Baghdad failed to send them the money. In return, Baghdad accused the Kurds of keeping billions of dollars that ought to go to government coffers and also of smuggling oil.

The Kurdish statement said the exports will start at 100,000 barrels a day for a month as a “confidence-building” measure and if payments were forthcoming, they could move swiftly up to 200,000 bpd. If not, the exports will be halted again.

Since 2008, Iraq has awarded 15 oil and gas deals to international energy companies, the first major investments in the country’s energy industry in more than three decades.

The original goal was to boost daily production from about 3 million barrels now to 12 million barrels by 2017. That may be revised downward to fewer than 10 million barrels however, given infrastructure bottlenecks and a possible falloff in demand on international markets [source]

BARROSO AND PUTIN LOCK HORNS ON GAZPROM

Putin has signed a decree giving the government the right to protect natural gas
giant Gazprom from a stupid antitrust probe of Barroso. Galileo muttered the
phrase Eppur si muove, And yet it moves, after being forced
to recant in 1633, before the Inquisition, his belief that the Earth moves
around the Sun. Similarly the new inquisition of regulators forces executives
to admit something they did not do, in order to get smaller penalties. Eppur si
muove!

There is an Antitrust Armageddon in Europe between tiptop companies and Fourth
Reich(EU). Eurokleptocrats are willing to do anything in order to get kickbacks
from industry leaders. The European antitrust laws have the unfortunate
consequence of harming Europeans by chilling innovation and discouraging
competition. Instead of protecting competition, EU laws protect competitors who
give kickbacks to kleptocrats! Kickback is the lubricant that allows a European
industry to run smoothly! No European machinery can run without lubricant! Eppur
si muove!

The new Russian law prohibits companies deemed strategic from disclosing
information, disposing of assets or amending agreements without Russian
authorities’ ratification in the case that the claims are initiated by foreign
states or entities.

European antitrust law is wielded most often by favor-seeking businessmen and
their kleptocrat allies. Instead of focusing on new and better products,
disgruntled rivals try to exploit the law by consorting with kleptocrats. EU
officials routinely direct antitrust regulators to bend the rules in pursuit of
political ends. In reality, the threat of abusive EC power is far larger than
the threat of oligopoly. Eppur si muove!

Gazprom declares it is incorporated beyond EU jurisdiction, and is a company
which under Russian law exercises functions of public importance and has the
status of a strategic organization controlled by the state.

When a company is forward-thinking, proactive, innovative, and productive, it
will produce good products that customers want to buy. As a result, it will win a
large market share. If the company is much better than its competitors, it might
win most, or almost all, of the market. This is the case with Microsoft. It has
earned its market share by producing good products that customers want to buy.

Barroso is investigating whether Gazprom, the world’s largest gas exporter,
resorted to unfair competition and price-fixing in Central and Eastern Europe’s
natural gas markets. The EU, which gets 25% of its gas from Russia, wrongfully
claims that Gazprom has hindered the free flow of gas across its member states,
preventing supply diversification and limiting customer choice in delivery
points. Barroso also suspects Gazprom of imposing unfair costs on its customers
by linking the prices of gas and oil.

A company that wins a large market through its own productive efforts deserves
accolades. This is because justice, morally, tells us that we must reward the
good. However, to the government, a large market share is taken as evidence of
anti-competitive behavior, which makes the company a target for antitrust
action. This seems to be the motive behind the antitrust suits against Microsoft
and Google.

Barroso notes Gazprom’s long-term supply contracts linking gas prices to oil
prices are no longer justified because of the appearance of a spot market for
gas and increased supplies of shale gas. Gazprom may face a
fourteen-billion-euro penalty, according to estimates based on the fact that
companies found to breach EU competition rules can be fined as much as 10% of
annual revenue.

European antitrust laws lead to huge corruption, because government officials
ask for kickbacks in order to erase the alleged violation. The standard kickback
in EU is 10% of the erased penalty! Many Greek officials were caught on tape
asking for the corrupt tithe! Many European political parties make up their
election expenses from kickbacks on antitrust cases! This is the worst possible
blackmail, where tiptop ethical companies are held hostage by European
kleptocrats. Eppur si muove!

Putin warns Barroso that there would be losses on both sides if the thorny issue
isn’t tackled. Putin accuses Barroso of trying to burden Russia with the
subsidizing of formerly communist EU states by forcing Gazprom to reduce prices
for customers in Eastern and Central Europe. Gazprom says the Barroso
investigation is an attempt to reduce gas prices, and it won’t give discounts to
Barroso without the Russian government’s go-ahead. [source]

The Gazprom Cables ‘Not a Competitive Global Company’

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.

June 10, 2009, Moscow: “Too many political constraints”
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.06.2009 11:02

09MOSCOW2528

Embassy Moscow

CONFIDENTIAL

09MOSCOW367|09MOSCOW403|09MOSCOW971

VZCZCXYZ0000

PP RUEHWEB

DE RUEHMO #2528/01 2791102

ZNY CCCCC ZZH

P 061102Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 4993

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART ONE

REF: A. MOSCOW 971

C o n f i d e n t i a l moscow 002528

Sipdis

Dept for eur/rus, eeb/esc/iec gallogly and wright, s/eee

morningstar

doe for hegburg, ekimoff

doc for jbrougher

nsc for mmcfaul

E.o. 12958: decl: 10/05/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part one

Ref: a. Moscow 971

b. Moscow 403

c. Moscow 367

Classified By: Econ MC Matthias J. Mitman for Reasons 1.4 (b/d)

1. (U) This is the first of a two-part report on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

summary

——-

2. (SBU) Far from reaching its ambitions of becoming “the

most valuable company in the world,” Gazprom’s fortunes have

reversed dramatically in the past year. The company’s market

value, production, and sales have all plummeted since the

onset of the economic crisis. With dramatically reduced

cash-flow, the company has been forced to cut back on capital

expenditures and its ambitions, despite political rhetoric to

the contrary. However, as we will examine in part two of

this report, Gazprom’s problems are likely longer term. End

summary.

————————————

massive reversal in major indicators

————————————

3. (U) Major indicators of Gazprom’s performance have all

reversed course dramatically in the past year. (Note:

Figures in this report are taken from Gazprom reports,

statements, and presentations, unless otherwise indicated.

End note.)

Market capitalization —

4. (U) At its peak in May 2008, Gazprom’s market valuation,

based on the small percentage of its shares that trade

publicly, was over $350 billion, and company president Alexey

Miller declared Gazprom would become “the most valuable

company in the world.” Miller suggested Gazprom’s market

capitalization would reach $1 trillion in the near future.

By May 2009, in the midst of the global economic and

financial crisis, the company’s market capitalization had

dropped to its recent low of approximately $75 billion, but

has since rebounded to approximately $120 billion.

Production —

5. (U) Gazprom’s gas production peaked in 2006, at 556

billion cubic meters (bcm). In 2008, it was 550 bcm. In the

first seven months of 2009, however, Gazprom’s production was

down almost 25% over the same period in 2008. As of

September 2009, Gazprom expects 2009 production to reach just

474 bcm, and many analysts believe that figure to be overly

optimistic. In a September note on Gazprom, investment bank

Troika Dialog predicted Gazprom would have difficulty even

reaching 460 bcm. On the low end, some analysts estimate

Gazprom could produce just 450 bcm or less in 2009 — a 100

bcm or more decline from its peak production. Even this

massive drop in production is masked to some degree by the

halt in gas imports from Turkmenistan since April (ref A).

In 2008, Gazprom imported 42 bcm from Turkmenistan, nearly

all of which was re-exported to Ukraine. Having halted these

imports, Gazprom itself is supplying the Ukrainian market out

of Russian production.

Revenues —

6. (U) The Russian Customs Service reports that Russian gas

export revenues were down 50% in the first 7 months of 2009,

compared to the same period in 2008, a decline of almost $20

billion. While Gazprom’s official results for 2009 will not

be published until well into 2010, a back-of-the-envelope

calculation using Gazprom’s own projections for average price

and volumes of exports to Europe in 2009 (ref C) indicates

the company might receive about $30 billion less from exports

to Europe in 2009 than in 2008. This represents a loss of

about 2% of Russian GDP and is in line with estimates from

various analysts. (Note: Given the relative significance of

export sales to Europe (excluding FSU), the relative

reliability of the figures, and to avoid exchange rate

complications, we focus only on export revenues here.

According to its recent bond prospectus, Gazprom’s exports

are divided into sales to the FSU, and to Europe. Sales to

the FSU and Europe represent 16% and 63%, respectively, of

its sales by revenue — meaning exports represent 79% of

Gazprom’s revenues. End note.)

Domestic sales —

7. (U) Gazprom’s domestic sales are not down as dramatically

as one would expect given the economic crisis, due primarily

to artificially low domestic prices, which prop up demand.

While Gazprom has not yet reported official results for the

first half of 2009 (1H09), various analysts predict a drop of

about 10% in gas volumes to the domestic market.

Export volumes —

8. (U) Gazprom’s overall exports peaked in 2008 at 281 bcm.

Gazprom’s sales to the FSU peaked in 2007, at 101 bcm,

dropping slightly to 97 bcm in 2008. Sales to the rest of

Europe peaked in 2008, at 184 bcm. (Note: Interim

statements regarding 2009 sales often do not coincide in

definition with audited annual reports. Thus 1H09 sales

estimates only give an indication of the trend and are not an

exact comparison with 2008 figures. Gazprom has not yet

released official results for 1H09 and only released first

quarter (1Q09) results on August 26. End note.) Through

1H09, Gazprom has said it shipped about 33% less gas to

European customers than in 1H08. In a recent statement, the

company said its exports to the FSU in 1H09 dropped 54%

compared to 1H08. A weighted average of those estimates

indicates overall exports shrunk by about 40% 1H09.

9. (U) As Gazprom and many analysts point out, however, 2H09

should be much better for Gazprom exports as many European

customers restrained purchases in 1H09, knowing that prices

— which are tied to oil prices with a six to nine month lag

— would drop dramatically in 3Q09. Furthermore, export

volumes in 2H08 were already dropping rapidly due to the

economic crisis and high gas prices that were reaching their

peak in 4Q08. Results for 1H09 were also significantly

affected by the 21 day gas cutoff to Ukraine and 10 day

cutoff to Europe in January. That said, 2009 will still be a

dismal year for Gazprom export volumes.

—————

forced cutbacks

—————

10. (C) Facing financial realities, Gazprom recently cut its

capital expenditure budget by $7.5 billion, or about 25%,

including cuts to Shtokman and Yamal development. However,

Gazprom and GOR leadership continue to take the tack that

“everything is fine” (ref B). One attendee at the recent

gathering of the “Valdai” group of international Russia

experts told us that Gazprom CEO Alexey Miller told the group

that the company’s plans for the Nord Stream and South Stream

gas pipelines, and for the development of the Shtokman and

Yamal gas fields are “all on track.”

11. (C)xxxxxxxxxxxx told us recently that

Miller’s and other GOR leaders’ public statements on Gazprom

should be ignored. xxxxxxxxxxxx said these leaders understand well

that Gazprom is in trouble but they just don’t know what to

do about it.

12. (C) According to xxxxxxxxxxxx, Gazprom simply doesn’t have the

money to move forward on all its so-called “priorities,” and

it will need to choose which are most important, while facing

insatiable political demands on its revenue streams. xxxxxxxxxxxx, told us

recently that he believes Gazprom has “a heck of a lot of

cost-cutting capacity” still available, but that the company

has too many political constraints preventing it from taking

the most necessary and painful measures. Furthermore, he

figures the company needs to spend about $5 to $8 billion a

year just to maintain its aging system and that these costs

will rise in the future. xxxxxxxxxxxx is thus also very

skeptical of Gazprom’s other major commitments such as South

Stream and Shtokman.

——-

comment

——-

13. (C) Gazprom’s capital expenditure cuts reflect an

understanding that, public rhetoric aside, the company can’t

spend money it doesn’t have. However, Gazprom’s longer-run

problems are largely beyond its control and require

fundamental reforms that will be difficult to achieve. In

part two of this report, we examine the constraints to

Gazprom’s return to dominance.

Beyrle

Gazprom headquarters in Moscow: “Private bank accounts and dirty deals”

Gas giant Gazprom was meant to catapult Russia back into its role as a global superpower. Executives dreamed of the “most valuable company in the world.” But secret cables from the US Embassy in Moscow provide a different picture: The Americans consider the mega firm to be chaotically organized and corrupt.
Info

High-ranking representatives of Russian gas giant Gazprom are hard to pin down for appointments. So when American diplomats finally got the chance, they cut right to the chase: What are the giant energy company’s actual business aims?

The Gazprom man was candid. The first priority, he said according to US diplomatic cables obtained by WikiLeaks and shared with SPIEGEL and other partners, is to provide reliable and affordable gas to the domestic population. The second, he said is to “fulfill its social obligations,” including charitable projects all across Russia.

The American envoys persisted in their questioning. Was it not also the goal of the company to maximize its shareholder value and its market share? Yes, of course. The cable cites the official also adding a third priority to his company’s goal: to maximize “control over global energy resources.”

A “Gazprom official describes the company as a socialist rent-seeking monopolist,” the US envoys reported after a September 2008 meeting in a dispatch cabled to Washington.

‘Huge Wealth, but Inefficient’

That’s the tenor of a number of secret US Embassy reports about the model Russian company, cables that are filled with critical American assessments about a bureaucracy that has gone overboard and a mafia-like political system in Russia.

But the assessments are particularly pointed when it comes to Gazprom, the company the Russians themselves most like to celebrate and to deploy in their battle to regain lost power in the world. Even as recently as May 2008, Chairman Alexei Miller was pledging that Gazprom would soon be “the most valuable company in the world,” with market capitalization that would reach $1 trillion in the near future. But around one year later, in the midst of the global economic and financial crisis, the company’s market capitalization had dropped to $75 billion.

“Gazprom is,” the Americans summed up in one cable, “what one would expect of a state-owned monopoly sitting atop huge wealth — inefficient, politically driven, and corrupt.” The American diplomats also painstakingly detailed the sectors in which the energy giant is engaged in and in which falling gas prices are creating problems for it.

Falling Demand for Gas

Their results are sobering. One 2009 cable states: “Far from reaching its ambitions of becoming ‘the most valuable company in the world,’ Gazprom’s fortunes have reversed dramatically this year. The company’s market value, production, and sales have all plummeted since the onset of the economic crisis.” With dramatically reduced cash-flow, the cable reads, the company has been forced to cut back on capital expenditures and its ambitions, despite political rhetoric to the contrary.

The US diplomats described Gazprom’s problems as likely being “longer term,” and not just a by-product of the crisis. That’s because demand for gas in Germany and Europe is in decline because industrial production there and across Europe has become more efficient.

At the same time, a cable noted, few new markets are opening up in the former Soviet states. Ukraine, for example, indicated it was considering halving its gas purchases. Gazprom Chairman Miller has for some time now been longing to establish a new market in the US but, as a cable states, the country is “looking more and more saturated every day with ever larger estimates for domestic production.”

According to the assessment by the US diplomats, Gazprom’s greatest problem is the company’s own Byzantine structures. “Gazprom is not a competitive global company,” the assessment reads, despite sitting on the world’s largest gas reserves. “Gazprom is the legacy of the old Soviet Ministry of Gas and still operates much the same way.”

A Top Executive with a Love for Hockey

There were many indications that this was the case. The Americans learned from an informant that a senior partner in an international accountancy firm needed two years just to unravel Gazprom’s holdings. The empire included one of Russia’s largest banks, an important Russian media company and a major construction firm.

Originals: Key Gazprom Cables

July 10, 2009, Moscow: “Huge wealth … corrupt’
XXXXXX: Redacted by the editors. Important note on the dispatches…

<>

10.07.2009 13:42

09MOSCOW2541

Embassy Moscow

CONFIDENTIAL

09MOSCOW2528|09MOSCOW854|09VLADIVOSTOK110

VZCZCXRO4339

PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR

DE RUEHMO #2541/01 2801342

ZNY CCCCC ZZH

P 071342Z OCT 09

FM AMEMBASSY MOSCOW

TO RUEHC/SECSTATE WASHDC PRIORITY 5023

INFO RUCNCIS/CIS COLLECTIVE PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

RHEHNSC/NSC WASHDC PRIORITY

RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

TAGS: EPET, ENRG, ECON, PREL, RS

SUBJECT: GAZPROM’S REVERSAL OF FORTUNE, PART TWO; COMEBACK

REF: A. MOSCOW 2528

C o n f i d e n t i a l section 01 of 04 moscow 002541

Sipdis

Dept for eur/rus, eeb/esc/iec gallogly and greenstein,

s/eee morningstar

doe for hegburg, ekimoff

doc for jbrougher

nsc for mmcfaul

E.o. 12958: decl: 10/06/2019

Tags: epet, enrg, econ, prel, rs

Subject: gazprom’s reversal of fortune, part two; comeback

unlikely

Ref: a. Moscow 2528

b. Vladivostok 110

c. Moscow 854

Classified By: Ambassador John R. Beyrle for Reasons 1.4 (b/d)

1. (U) This is part two of a two-part cable on the new

economic realities facing Gazprom, Russia’s state-owned gas

sector giant.

——-

Summary

——-

2. (C) Gazprom faces many external and internal constraints

to renewed growth, following a dismal year in which all main

indicators of its performance deteriorated dramatically. The

globalizing gas market, a gas glut that shows no signs of

reversal, and politicized management likely mean that Gazprom

will not reach the heights of revenues and power achieved at

its peak in 2008. Unfortunately, the types of reforms (e.g.

privatization) that would result in a more valuable and

productive gas industry are stymied by the GOR’s seemingly

firm belief in a state-controlled sector. While Gazprom will

remain a major economic force, its influence on GOR policy

and its relative role in the Russian economy likely will

diminish in the short- and medium-term. End summary.

———————————

external constraints to a rebound

———————————

3. (SBU) Gazprom’s current problems (ref A) are not solely

the result of one-off contractions in demand due to the

economic crisis. Gazprom faces a fundamental shift in the

gas demand picture at a time of increasing competition.

Demand stabilization and decline —

4. (SBU) xxxxxxxxxxxx told us recently that Gazprom was simply unprepared

for the inevitable leveling off and current decline in

European gas demand. He explained that Gazprom’s management

has only known rapidly rising European demand for Russian gas

as most European countries “gassified” their economies over

the past two decades. He noted that anyone looking at the

trend could have been excused for thinking it would continue

perpetually; but now the period of gassification is over.

According to xxxxxxxxxxxx demand for gas in Germany is

actually in decline, as industrial production in Germany (and

across Europe) has become more efficient and as much of it

has been outsourced.

Competition —

5. (SBU) Gazprom not only faces a demand problem, but also

competition from an increasingly globalized gas market —

“for the next 5 to 10 years, gas will clearly be a buyers

market,” said xxxxxxxxxxxx has calculated (using data

from the BP Statistical Review of World Energy) that

Gazprom’s share of EU 27 gas imports has dropped steadily

from about 50% in the mid-90s (when gassification increased

demand) to just 34% in 2009. xxxxxxxxxxxx expects Gazprom’s share to

decline to about 30% and stabilize at that level. xxxxxxxxxxxx also

calculated that LNG’s contribution to EU imports over the

last decade has increased from about 10% to about 20%, a

figure he projected to continue to grow. In addition,

Gazprom will have to cope with massive new volumes of LNG on

the global market from projects already underway in Qatar and

elsewhere (ref C).

No help from other markets —

6. (C) Gazprom is unlikely to get any relief from its former

Soviet Union(FSU) customers either. Despite the likely rise

to “market prices” for gas sales to the FSU, lower demand

will continue to hurt Gazprom. Ukraine, Gazprom’s major

export market outside of non-FSU Europe, earlier signed a

take-or-pay contract which outlines a minimum amount of gas

which Ukraine is obliged to purchase from Russia. Ukraine

Moscow 00002541 002 of 004

has recently indicated it might take as little as 50% of the

52 bcm of gas it had earlier agreed to buy in 2010. Russian

government officials remain concerned over Ukraine’s ability

to pay for gas this winter and are already signaling they are

prepared to shut off exports to Ukraine in the event of

non-payment.

7. (SBU) Global markets will also offer little hope for

Gazprom, at least in the medium-term. Gazprom executives

have often expressed the expectation that the company would

become a global gas supplier, perhaps through newly expanded

LNG capacity. However, their preferred future export

destination, the U.S., is looking more and more saturated

every day with ever larger estimates for domestic production.

In a recent meeting with Embassy officials in Sakhalin,

Shell oil representatives stated that no LNG had been shipped

from the Sakhalin II facility to the U.S. due to soft prices

in that market. Much of this LNG has been shipped to Japan

instead.

Domestic market —

8. (SBU) Gazprom often touts future revenue gains from

domestic market price liberalization. However, it neglects

to account for demand elasticity in the wake of sharp

proposed increases in prices. With one of the most energy

intensive economies in the world, future hikes in domestic

gas prices would likely cut domestic demand substantially, as

evidenced in other countries that have implemented rational

pricing. Thus Gazprom’s revenue gains from higher domestic

prices would be at least partly offset by lower sales volumes.

External politics —

9. (SBU) In addition to the headwinds from market forces,

Gazprom faces the political and PR difficulties in external

markets that it has largely brought on itself through the gas

cutoffs of 2009 and 2006. Despite some pain in certain

Central and Eastern European countries, Ovchinnikov

explained, the 2009 gas cutoff showed that Europe could get

by without Russian gas. This should bolster EU determination

to minimize its dependence on Russian gas, and to explore new

options to diversify energy supplies.

——————————

internal constraints to growth

——————————

The Ministry of Gas —

10. (SBU) A Gazprom that behaved more like a competitive

global company would probably find a new path to growth more

quickly. But Gazprom is not a competitive global company,

despite sitting on the world’s largest gas reserves. Gazprom

is a legacy of the old Soviet Ministry of Gas and it still

operates much the same way. As a Gazprom executive himself

admitted to us, the company’s first two priorities are to

provide reliable and affordable gas to the domestic

population, to “fulfill its social obligations.” One contact

with direct information told us it took a senior partner from

a major accounting firm two years of full-time investigation

just to unravel Gazprom’s holdings, which include one of

Russia’s largest banks, one of Russia’s major media

companies, and a major construction company.

Technologically backward —

11. (SBU) Gazprom’s legacy and the government’s ownership of

the company also mean that it must act in the interests of

its political masters, even at the expense of sound economic

decision-making. From building unneeded pipelines (ref B) to

maintaining employment at some unneeded facilities, Gazprom

declines to solely act on financial and economic grounds. As

a state-controlled monopoly during the flush times of the

past decade, Gazprom had little incentive to develop new

technologies and capabilities long enjoyed by other global

oil and gas companies. Despite management’s interest in

expanding Gazprom’s LNG capacity, the company has only one

LNG export terminal, which it took over by forcibly becoming

the majority owner in a Shell-led consortium. Rapid

Moscow 00002541 003 of 004

expansion of LNG export capacity is unlikely without the help

of international oil companies (IOCs), who are still trying

to find an acceptable future working model in Russia.

Inability to adapt —

12. (SBU) Gazprom’s inability to meet competitive pressures

is apparent in the current European gas market. According to

xxxxxxxxxxxx Gazprom is the only major European supplier that

has had to cut production. xxxxxxxxxxxx blames Gazprom’s “self

inflicting wound” of tying gas prices to oil prices. He said

this convention dates back to when gas was a substitute for

fuel oil for heating. xxxxxxxxxxxx explained that this oil

price link has made Gazprom the high-price supplier in

Europe, a situation that is likely to continue into the near

future. xxxxxxxxxxxx said that with European gas demand unlikely to

recover to pre-crisis levels until 2013 and Europe facing

“excess supply” for at least the next decade, Gazprom will

have a very tough time just maintaining market share. A

major oil company senior executive echoed this analysis in a

recent meeting with us, noting “if you are a European

consumer, the last molecule of gas you want to buy is from

Gazprom.”

—————————————

possible tensions, but reforms unlikely

—————————————

13. (SBU) The tough times may be creating (or exacerbating)

tensions within Gazprom and the GOR over the company’s

future. Several contacts have told us they have heard of

such tensions. One Russian company executive said he has

heard that xxxxxxxxxxxx has been pushing for dismantling

Gazprom, to at least take away its control over the domestic

gas pipeline system. An executive at a Western company told

us recently that there are two camps within the upper levels

of the GOR on the issue of Gazprom’s direction. One camp

favors the current “one national company” approach, while the

other favors competition to spur a more efficient and modern

gas sector. Unfortunately, this executive explained, “the

number one factor” in managing Gazprom from the GOR

perspective is “how to increase government revenues from the

company.”

14. (C) xxxxxxxxxxxx, brushed off rumors of infighting

at Gazprom as nothing new. xxxxxxxxxxxx said there has always been

infighting at the company because it is such a bureaucratic

behemoth. “Everyone is always looking to make others look

bad in order to move ahead themselves,” xxxxxxxxxxxx said. While

xxxxxxxxxxxx acknowledged Gazprom’s substantial problems, xxxxxxxxxxxx did

not think any major reforms would be forthcoming.

15. (SBU) Rumors aside, nobody with whom we have talked

believes Gazprom is in any danger of losing its monopoly on

exports or its preferred status within the Russian economy.

Nor is the government likely to give up control of the

company anytime soon. Without such fundamental reforms, it

is difficult to see how Gazprom can transform itself into a

modern corporation in the current environment.

——-

comment

——-

16. (C) Gazprom is what one would expect of a state-owned

monopoly sitting atop huge wealth — inefficient, politically

driven, and corrupt. For years, with its exports and export

prices rising rapidly, it could easily pretend that all was

well and that the future was bright. That pretense may now

be giving way to the new reality of declining sales, lost

market share, and an inability to maneuver adeptly in the

face of global competition. Although Gazprom will likely

muddle along as a major corporation and major contributor of

jobs and budget funds, its economic contribution will likely

be diminished. While Gazprom can still shut off gas to

Ukraine or to other parts of Europe, each such threat further

undermines the company’s credibility as a reliable energy

supplier, and underscores the fact that Gazprom is

Moscow 00002541 004 of 004

politically subordinate to the Kremlin. Gazprom’s influence,

both domestic and international, has been directly tied to

its cash flow — money that funds employment, suppliers,

budgets, charities, foreign ventures, and, surely, many

private bank accounts and dirty deals. Unfortunately for

Gazprom and for the GOR, the massive revenues and profits

that the company produced in 2008 are unlikely to return

anytime soon. End comment.

Beyrle

Experts estimated that the company had to also spend between $5 billion and $8 billion on keeping its aging infrastructure in good working order — costs that will only increase in the future. A prominent Western oil executive told the US diplomats that while drilling a borehole in Canada only took 10 days in Russia it took twice as long.

A meeting with top Gazprom executives, such as Deputy CEO Alexander Medvedev, were also sobering. In a discussion with US diplomats, the hockey fan complained that there was still no cooperation between the Russian and American hockey leagues — and fulminated against Ukraine, which he claimed had orchestrated the gas dispute with Russia.

The Americans’ conclusion is devastating: “Gazprom’s legacy and the government’s ownership of the company … mean that it must act in the interests of its political masters, even at the expense of sound economic decision-making.” The company had made funds available for many “private bank accounts and dirty deals,” one cable wrote, though it lacked any concrete proof for this claim. Gazprom itself has consistently defended itself against accusations of corruption.

In any case, the Gazprom money was not flowing as much as previously, the US diplomats wrote. “Unfortunately for Gazprom and for the Russian government, the massive revenues and profits that the company produced in 2008 are unlikely to return anytime soon,” one cable reported. Although Gazprom would remain a major company, its economic contribution was likely to be diminished, the US diplomats concluded.
[read the full article]

 


Depopulation via Oil Spills: Uninsk,Russia 1994

 

Oct 14, 2006

Russia’s government, keen to show it is not only targeting foreigners for environmental breaches, said yesterday it might strip up to 19 licences from domestic giant Lukoil.

Russia’s outspoken environmental watchdog Oleg Mitvol led the criticism of the nation’s top oil firm while on a trip to the Arctic north of the Komi republic in western Russia, where Lukoil is active.

After listening to villagers’ complaints about pollution, he prodded a frozen pond with a stick to reveal oily-looking water underneath. “In the rest of the world, companies work according to environmental regulations. But here in Russia for the past 15 years people have been doing whatever they wanted,” he said.

Markets were sceptical that Russian environmental authorities, who have waged a fierce campaign against Royal Dutch Shell’s giant Sakhalin-2 project, would actually remove licences from a Russian oil giant.

Lukoil’s shares were up almost 3 per cent at 2,085 roubles 61.71) by lunchtime yesterday, despite Mr Mitvol’s threats.


Oil and gas pipelines social and environment impact assessment from daydev

Mr Mitvol, who works under the Natural Resources Ministry, has also been vociferous in his attacks on foreign companies working on Sakhalin. “Everywhere I’ve been in Russia, I’ve never seen anything as bad as Sakhalin,” Mr Mitvol said.

But he added that foreign firms were more cooperative than Russian firms, which needed to put their house in order too.

In 1994, the republic of Komi, where Usinsk lies 60 kilometers (40 miles) south of the Arctic Circle, became the scene of Russia’s largest oil spill when an estimated 100,000 tons splashed from an aging pipeline.
It killed plants and animals, and polluted up to 40 kilometers (25 miles) of two local rivers, killing thousands of fish. In villages most affected, respiratory diseases rose by some 28 percent in the year following the leak.
Seen from a helicopter, the oil production area is dotted with pitch-black ponds. Fresh leaks are easy to find once you step into the tundra north of Usinsk. To spot a leak, find a dying tree. Fir trees with drooping gray, dry branches look as though scorched by a wildfire. They are growing insoil polluted by oil.
Usinsk spokeswoman Tatyana Khimichuk said the city administration had no powers to influence oil company operations.
“Everything that happens at the oil fields is Lukoil’s responsibility,” she said, referring to Russia’s second largest oil company, which owns a network of pipelines in the region.
Komi’s environmental protection officials also blamed oil companies. The local prosecutor’s office said in a report this year that the main problem is “that companies that extract hydrocarbons focus on making profits rather than how to use the resources rationally.”
Valery Bratenkov works as a foreman at oil fields outside Usinsk.
After hours, he is with a local environmental group. Bratenkov used to point out to his Lukoil bosses that oil spills routinely happen under their noses and asked them to repair the pipelines. “They were offended and said that costs too much money,” he said.
Activists like Bratenkov find it hard if not impossible to hold authorities to account in the area since some 90 percent of the local population comprises oil workers and their families who have moved from other regions of Russia, and depend on the industry for their livelihood.
Representatives of Lukoil denied claims that they try to conceal spills and leaks, and said that no more than 2.7 tons leaked last year from its production areas in Komi.
Ivan Blokov, campaign director at Greenpeace Russia, who studies oil spills, said the situation in Komi is replicated across Russia’s oil-producing regions, which stretch from the Black Sea in the southwest to the Chinese border in Russia’s Far East.
“It is happening everywhere,” Blokov said. “It’s typical of any oil field in Russia. The system is old and it is not being replaced in time by any oil company in the country.”
What also worries scientists and environmentalists is that oil spills are not confined to abandoned or aging fields. Alarmingly, accidents happen at brand new pipelines, said Barenboim.

Other oil sites in the Komi area, close to the town of Usinsk, include Total’s Kharyaga PSA, although it was not in Mr Mitvol’s sights yesterday.

The Natural Resources Ministry in Moscow said eight Lukoil deposits in Khanty-Mansiisk in western Siberia and 11 in Komi could lose licences due to alleged breaches of licensing terms.

“The inspections are a part of a state campaign to strengthen control over the oil and gas sector,” said Valery Nesterov, an energy analyst at Troika Dialog brokerage. But he downplayed the risk that Lukoil might be deprived of valuable licences. “The list of the companies which have been threatened with having their licence revoked is very long but no licences have actually been withdrawn so far,” he said.

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Russia’s Population Meltdown
Declining birth rates and soaring rates of disease now threaten Russia’s very survival as a nation.

Last July, in his first annual presidential address to the Russian people, President Vladimir Putin listed the 16 Amost acute problems facing our country. Number one on the list, topping even the country’s dire economic condition and the diminishing effectiveness of its political institutions, was the declining size of Russia’s population. Putin put the matter plainly. The Russian population is shrinking by 750,000 every year, and (thanks to a large excess of deaths over births) looks likely to continue dropping for years to come. If the trend is not altered, he warned, the very survival of the nation will be endangered.

Unfortunately, even Putin’s grim reckoning of the numbers may understate the dimensions of the calamity confronting his country. Its birthrate has reached extraordinarily low levels, while the death rate is high and rising. The incidence of HIV/AIDS, syphilis, tuberculosis, hepatitis C, and other infectious diseases is soaring, even as the Russian health care system staggers. Perhaps 40 percent of the nation’s hospitals and clinics do not have hot water or sewage. Seventy-five percent or more of pregnant women suffer a serious pathology during their pregnancy, such as sepsis, toxemia, or anemia. Only about 25 percent of Russian children are born healthy. (The rate of infant mortality, however, has declined, at least according to official statistics.) The leading Russian pediatrician Aleksandr Baranov estimates that only five to 10 percent of all Russian children are healthy.

As if these challenges were not enough, Russia bears the burden of decades of environmentally destructive practices that have a direct, harmful impact on public health. Their legacy includes not just conventional pollution of the air and water but serious contamination around many nuclear and chemical sites throughout the country. In Dzerzhinsk and Chapayevsk, two of the 160 military chemical cities that produce chemicals for the military-industrial complex, the rate of spontaneous abortions or miscarriages is above 15 percent of conceptions a strong indication of chromosomal aberrations produced by the environment. Yet a weakened Russia lacks the means to contain ongoing pollution or to begin the monumental task of environmental cleanup. The decline in the size of the Russian population, and in Russians’ general health, vastly increases the difficulty of creating the economic health upon which such a cleanup and so much else depends.

It is not only compassion that should arouse the concern of the West. While some may cheer the weakening of this less-than-friendly power, still armed with large numbers of nuclear, biological, and chemical weapons, Russia’s sickening decline raises the twin prospects of political disintegration and subsequent consolidation under an authoritarian leader hostile to Western interests. The nation’s problems, in any event, can no longer be thought of as somehow only its own. Last year, an unclassified U.S. National Intelligence Estimate warned that the global rise of new and re-emergent infectious diseases will not only contribute to social and political instability in other countries but endanger U.S. citizens at home and abroad. Deaths from infectious diseases (including HIV/AIDS) in the United States have nearly doubled, to some 170,000 annually, since 1980. And Russia’s deteriorating weapons stockpiles pose a threat of unknown dimensions, particularly to the nearby Scandinavian countries.

The broad outlines of Russia’s looming catastrophe can be sketched in stark terms. Russians are dying at a significantly faster rate than they are being born. Gloomy as it was, President Putin’s speech was based on the relatively rosy projections of the Russian State Statistical Agency, or Goskomstat. This scenario assumes an increase in the total fertility rate beginning in 2006, a decline in the mortality rate, and an increase in net in-migration. But only the latter projection is remotely plausible. By 2050, I believe, Russia’s population will shrink by one-third. In other words, it will drop from roughly 145 million today to about 100 million, a blow that even a stable, prosperous country would have difficulty sustaining.

My projections, based on a model developed for West Germany by the Population Reference Bureau, are less apocalyptic than those of some other Russian officials, Duma members, and demographers. A new study produced under the auspices of the Institute of Social and Political Research of the Russian Academy of Sciences, for example, predicts that population will decline to between 70 and 90 million by 2045. If one takes the annual 750,000 decrease noted by Putin and multiplies it by 50 years, the result is a drop in population of 37.5 million persons, to a net total of 108 million not far from my estimate of 100 million. The U.S. population, meanwhile, is projected by the U.S. Bureau of the Census to grow by 2050 from today’s 275 million to 396 million, a level almost four times the projected Russian population.

In broad demographic terms, one can say that Russia’s population is being squeezed by two pincers. On one side is the fertility rate, which has been falling since the early 1980s. Russian women now bear little more than half the number of children needed to sustain the population at current levels. In absolute terms, the number of annual births has dropped by half since reaching a high of 2.5 million in 1983. Due to Russia’s rising mortality rates, fertility would need to reach 2.15 births per woman just to reach the so-called simple population replacement level. As of 1999, however, the total fertility rate stood at 1.17 births per woman. That is to say, Russian women bear an average of 1.17 children over their entire fertile life, from ages 15 to 49. Fertility would need to rise by some two-thirds to reach the replacement level.

The Goskomstat projection points to an increase in fertility to 1.7 births per woman by 2006. But this prediction seems to be based on a simple extrapolation of existing trends that does not take into account the deterioration of Russians’ health. The harsh reality is that the number of women in the prime childbearing ages of 20 to 29 is falling, while the rates of sexually transmitted diseases among men and women (which affect fertility) and gynecological illnesses are both rising. The ranks of eligible parents, especially fathers, are being thinned by tuberculosis, HIV/AIDS, alcoholism, drug abuse, and other causes. Fifteen to 20 percent of all Russian families experience infertility, with males accounting for 40 to 60 percent of the cases. Even as mortality and disease take more and more young people out of the pool of potential parents, attitudes toward childbearing have changed for the worse. An estimated two-thirds of all pregnancies now end in abortions. It is hard to see how the hoped-for fertility gains will occur. A steeper decline in Russia’s population seems unavoidable.

Mortality rates are also assumed to rise in the official calculation, but much less markedly than I anticipate. Some perspective on the Russian situation is provided by a comparison with the United States, which projects an average life expectancy at birth and survival rates for specific age groups that are far from the best in the world especially among 15- to 19-year-old males, who kill themselves with drugs, alcohol, and motorcycles. But in the United States, a boy who lives to age 16 has an 88 to 90 percent chance of living to age 60. His Russian counterpart has only a 58-60 percent chance. And those chances are shrinking.

Tuberculosis is only one of the maladies whose surging incidence is not reflected in current Goskomstat projections. The disease flourishes among people weakened by HIV/AIDS, alcoholism, and poverty. Findings by the research institute of the Russian Federal Security Service project enormous numbers of deaths from tuberculosis. Whereas only 7.7 of every 100 new Russian tuberculosis victims died in 1985, the death rate is now 25.5 per 100. According to official reports, the number of tuberculosis deaths soared by 30 percent in the 1998-99 period. The 1999 death toll of 29,000 was about 15 times the toll in the United States, or nearly 30 times greater when measured as deaths per 100,000 population in both countries.

The Russian authorities also underestimate the future impact of HIV/AIDS, spread chiefly by sexual contact and intravenous drug use. Vadim Pokrovskiy of the Federal Center for AIDS Prevention, Russia’s leading HIV/AIDS epidemiologist, estimates there will be five to 10 million deaths in the years after 2015 (deaths that, I believe, aren’t reflected in the projections). Most of the victims will be 15 to 29 years old, and most will be males further diminishing the pool of potential fathers.

Moscow reported 2.5 new cases of HIV nationally per 100,000 population in 1998, but the actual rate may be five, 20, or even 50 to 100 times greater, according to Russian epidemiologists and health officials. (The U.S. HIV incidence rate was 16.7 new cases per 100,000 population in 1998.) The Baltic port city of Kaliningrad and its surrounding oblast hold the unhappy distinction of recording the highest official rate of HIV increase, at 76.9 new cases per 100,000. Moscow, however, is currently overtaking it.

Some Russian demographers take comfort from the fact that their country is not entirely alone, since deaths exceed births in a number of European countries. But in countries such as Germany and Italy, the net ratio is close to 1.1 deaths to every birth. In Russia, deaths exceeded births by 929,600 in 1999, a ratio of 1.8:1 . If health trends and environmental conditions are not dramatically changed for the better, Russia could see two or more deaths for every birth in the not-too-distant future.

None of this is to say that there are not some signs of improvement. Childhood vaccination rates for tuberculosis, diphtheria, whooping cough, and other diseases have risen since 1995. Vaccination for rubella (German measles), which causes birth defects when contracted by pregnant women in the first trimester, was added to Russia’s prescribed immunization calendar in 1999. (How­ever, no vaccines are produced in the country and none are yet imported; almost 600,000 cases were reported in 1999.) But the larger trends support the vision of looming demographic catastrophe. And a number of other developments also offer dark portents for the country’s future rates of fertility and mortality, and for the general health of its people, especially its children.

Sexually transmitted diseases have seen incredible rates of increase during the past decade. These diseases cripple and kill, damage reproductive health, and are associated with the spread of HIV/AIDS. The causes can be traced to the explosion of pornography and promiscuity; to the growth of prostitution, notably among 10- to 14-year-old girls; and, especially, to drug abuse involving shared needles and syringes. In 1997, the Ministry of Internal Affairs estimated that the market for illegal drugs was around $7 billion, 600 times greater than in 1991.

The Russian Ministry of Health reported 450,000 new cases of syphilis in 1997, and Goskomstat published a figure of close to 405,000. These are the last reasonably accurate statistics we are likely to have, thanks to a 1998 law that imposes prison terms on syphilitics who contract the disease through drug abuse.

Just as one would predict, the number of registered new cases of syphilis declined in 1998 and 1999. However, the explosion in new cases of HIV, and a concomitant increase in the estimated number of drug addicts, belie the latest figures on syphilis. The epidemiological synergy between HIV/AIDS and other sexually transmitted diseases (including gonorrhea, which is vastly under-reported) suggests not only that syphilis is more widespread than reported but that further increases in the incidence of HIV/AIDS can be expected.

The 1998 law that classified drug addicts as criminals ensured that few addicts a group at high risk for HIV will seek treatment. A specialist cited in Komsomol’skaya Pravda in 1998 made this grim prediction: We will see increased risk of complications and overdoses, the death rate among drug addicts will rise, incidence of HIV/AIDS will rise; and…the illegal market of drug-related services will begin to develop quite intensively.

Smoking is a habit among an estimated 70 percent of Russian males and one-third of females, and multinational tobacco companies aim to increase their sales in the country. The World Health Organization estimates that some 14 percent of all deaths in 1990 in the Soviet Union and Eastern Europe were traceable to smoking-related illnesses; it expects that number to rise to 22 percent by 2020.

Alcohol consumption reflects an epidemic of alcoholism. Russian vodka produced for the domestic market (usually in half-liter bottles) comes with a tear-off top rather than a replaceable cork or screw top because it’s assumed that the bottle, once opened, will not be returned to the refrigerator. An estimated 20 million Russians roughly one-seventh of the population are alcoholics. Russia’s annual death toll from alcohol poisoning alone may have risen to 35,000 in 2000, as compared with 300 in the United States in the late 1990s.

Hepatitis B has sharply increased in incidence, but the sole producer of vaccines for the disease told me in Moscow that only 1.3 million doses are produced annually to meet a total demand of 13 to 14 million doses. Perhaps even more alarming in the long run are increases in the incidence of hepatitis C, an illness that chiefly attacks the liver and requires a very costly treatment protocol. The disease is often fatal.

Micronutrients are in short supply, especially iodine. No iodized salt has been produced in Russia since 1991, and little or none has been imported. In young children, iodine deficiency causes mental retardation.

Avitaminosis is common. A longitudinal study by the Institute of Nutrition of the Russian Academy of Medical Sciences finds shortages of folic acid as well as vitamins A, B complex, D, and E among 30 percent of the population.

Heart disease exacts a toll, in age-standardized death rates, more than twice that in the United States and Western Europe. The death rate from such disease per 100,000 population is currently 736.1 in Russia, 267.7 in Belgium, 317.2 in the United Kingdom, and 307.2 in the United States.

Cancer is becoming more common. New cases increased from 191.8 per 100,000 population in 1990 to 200.7 in 1998. The incidence is likely to rise as a consequence of long-term exposure to low doses of radiation from decades of nuclear testing, as well as to benzo(a)pyrene, dioxin, and other industrial carcinogens. As in so many other cases, official statistics understate the problem. There is significant under-reporting of breast cancer, for example, especially among women of Muslim origin, who are reluctant to seek treatment from male doctors.


To all the foregoing challenges to the Russian future we must add a daunting collection of environmental ills. Russia will have to cope with a legacy of industrial development undertaken virtually without heed of the consequences for human health and the environment, just as it will have to contend with the consequences of decades of testing and stockpiling of nuclear, chemical, and biological weapons.

The crises that temporarily focus worldwide attention on these problems, such as the 1986 Chernobyl nuclear power plant accident, only begin to hint at their severity. The news media beamed shocking reports of the 1994 Usinsk oil spill around the world, but it was only one of 700 major accidents and spills (defined as those involving 25,000 barrels of oil or more) that occur every year in Russia, spreading phenols, polyaromatic hydrocarbons, and a variety of other toxic chemicals. As Victor Ivanovich Danilov-Danilyan, the former head of the State Committee on Environment, notes, these losses are equivalent to about 25 Exxon Valdez spills per month!

Radioactivity remains a continuing concern. After the 1963 Test Ban Treaty barred open-air atomic weapons testing, the nuclear powers continued to conduct underground tests. But there was an important difference in the Soviet Union. There, many of the nation’s more than 100 nuclear explosions occurred in densely populated regions such as the Volga, as well as in the Urals and Yakutiya (Sakha) regions. After first denying that any of those explosions had been vented into the atmosphere, then Minister of Atomic Industry Viktor Mikhaylov later admitted that venting had occurred in 30 percent of the underground blasts.

What goes on today within the 10 formerly secret nuclear cities devoted to the development and production of nuclear weapons in Russia remains largely a mystery. Around the city of Chelyabinsk, a thousand miles east of Moscow in the Urals, some 450,000 Russians face unknown risks from a series of spills and accidents that occurred from the late 1940s to the 1960s. And area rivers may have been tainted by seepage from nuclear waste directly injected deep underground at the Krasnoyarsk, Dmitrovgrad, and Tomsk sites. Near the Tomsk-7 facility, the site of a serious nuclear accident in 1993, Russian and American environmentalists recently found evidence of phosphorous-32, a radionuclide with a half-life of only about two months. The discovery strongly suggests that radioactive wastewater used in cooling Tomsk-7’s two remaining plutonium-producing plants was illegally dumped.

Chemical pollution is widespread. Even in Moscow, which is home to much heavy industry, there is evidence that pollution has caused genetic deformities in the young [see photo, facing page]. In a study of the impact of chemical, petrochemical, and machine-building industries on human health, the Russian Ministry of Health found that newborns suffered congenital anomalies at a much higher rate (108 to 152 per 10,000 births) in industrial cities than in rural localities (39 to 54 per 10,000).

Alarming cases of mercury pollution, which causes illness and birth defects, have been reported (though aggregate official data have never been published). Three years ago, 16 tons of mercury was released upriver from the major northern city of Arkhangel’sk. In Krasnoural’sk, a city in the Urals that produces car batteries, Russian and American researchers have found that 76.5 percent of the children are mentally retarded. Lead is the cause. Cadmium and arsenic are prevalent in the air and land throughout much of Russia. In the Arctic north, wind-blown heavy metal salts and other pollutants from the city of Norilsk’s nonferrous metal plants have left the land barren and treeless for 75 kilometers to the southeast. Lakes and rivers everywhere are badly polluted by heavy metals dumped by industry and allowed to run off farmland. Estimates by the Yeltsin-era Ministry of Ecology and other observers suggest that only 25 to 50 percent of Russia’s fresh water is potable.

The world has not been blind to Russia’s plight. By late 1998, the United States and other donors had sent more than $66 billion in aid, according to a U.S. government estimate. The list of donors includes even South Korea, and recently officials of the European Union and the World Health Organization have recognized the need to act aggressively. But the aid has been inadequate and piecemeal, and its delivery has been hampered by corruption and inept administration. The frightening reality is that it may already be too late to help. Andrey Iliaronov, an economic adviser to President Putin, has pointed to 2003 as the year of reckoning, when the demographic crisis, the crumbling infrastructure, and the burden of massive foreign debt may combine to deal a crippling blow to Russia’s remaining productive capacity and thus, to its ability to help itself.

Where will the money come from for all the myriad improvements needed in reproductive and child health, for tuberculosis prevention and treatment, for HIV/AIDS cocktails of protease inhibitors? Who will supply the $400 billion needed to clean up the water supply over the next 20 years, or the $6 billion to clean up chemical weapons storage sites, or the hundreds of billions to clean up nuclear waste? The list of needs is depressingly long, and the Russian government has not always taken the right steps to address them. Last year, for example, President Putin abolished Russia’s main environmental agency, the State Committee on Environment, and transferred its responsibilities to the Ministry of Natural Resources, which is in the business of developing the country’s oil and mineral reserves. And yet, despite how daunting the task may seem, and how long the odds of success, we cannot simply ignore the ruin in Russia. The United States and other nations of the world have a profound interest in helping to avert an economic and demographic Chernobyl that would give a fearful new meaning to the word meltdown.
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