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bear_2014_september

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akhromeyev
 

On August 24, 1991, Marshal Sergei Fyodorovich Akhromeyev committed suicide. He had returned from his holiday at Sochi responding to the attempted removal of Mikhail Gorbachev from power. According to the reports of the time, he hanged himself in his Kremlin office, leaving behind a note. One version of what it said was: “I cannot live when my fatherland is dying and everything that has been the meaning of my life is crumbling. Age and the life that I have lived give me the right to step out of this life. I struggled until the end.”

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august14

The Nile crocodile and some species of hedgehog and tortoise take a break and sleep through the peak of the summer season. It’s usually called aestivation, and this bear is taking a leaf out of the other animals’ book.
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margelov_card

By John Helmer, Moscow

It’s in the nature of arbitrage transactions that if you are buying an asset cheap, you try to avoid the risk of failing to find someone to buy dear. Naturally, noone really enjoys gambling if the risk can be avoided. The knack of Russian arbitrage is to cover that risk by arranging for a state bank loan to finance your buyer, and for you, your asset buyer, and your banker to rig the valuation and share the spread. Arranging with a friend at a state enterprise to do the buying with budget money comes to the same thing. Nice hedge; a trifle wrong.

Political arbitrage is much rarer because it’s riskier, and it’s harder to rig the spread in advance. It happens when a politician leaves one job before he’s sure he will be elected (or appointed) to a more powerful one. When a politician suddenly announces to his voters that he’s resigning, but doesn’t tell them why, it’s regarded as a case of disloyalty, at least in democracies. Also, it’s usually not supposed that the resigning politician would run the risk of unemployment — unless something worse than that was in the offing for him.
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lords_seats

By John Helmer, Moscow

The sanctions programme adopted against Russia to date aims, according to this week’s declaration by US President Barack Obama, at curtailing the capabilities of the Russian government to field men and arms on or across Russian borders; and to penalize individuals and corporations for sustaining the Russian economy while the war in eastern Ukraine continues.

For the first time, US officials have declared that every sector of the Russian economy, including investment and financing for industry, urban development, farm production and food supply, are targets.
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pnchk_results

By John Helmer, Moscow

Interpipe, the steel and pipemaking group owned by Victor Pinchuk (lead image, centre) and based in Dniepropetrovsk, is high and dry, according to the latest financial report signed by the auditors on June 30, 2014. That is despite having suffered a 14% downturn of sales revenues for the year to $1.5 billion; a 5% increase in the bottom-line loss to $73.4 million; and its default on borrowings which now total $1.03 billion. Just $34.5 million in cash is on hand. With additional current liabilities of $343.2 million, Ernst & Young, Interpipe’s auditors calculate that , “the Group’s current liabilities exceed its current assets by $649.1 million.” That’s ground, the auditors warn, “of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.”

Excerpts of the report were issued to creditors and bondholders two weeks ago. The full report can be read here. The company’s website has yet to publish the 55-page document.
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soros_rusal

By John Helmer, Moscow

A combination of American and British commodity traders, aided by George Soros (lead image, left), is planning to oust United Company Rusal, the Russian aluminium monopoly, from its Friguia bauxite and alumina concession in the west African Republic of Guinea. The plan, according to sources in London and Conakry, the Guinean capital, calls for the Guinean President Alpha Conde to revoke Rusal’s production agreement, according to the recommendations of an inter-ministerial group of officials known as the Comité Technique de Revue des Titres et Conventions Miniers (Technical Committee of Review of Mining Titles and Concessions). Conde is being urged by Soros to replace the Russians led by Rusal chief executive, Oleg Deripaska (lead image, right).

The Gerald Group, according to a London source, has a double-barreled target, aiming also at Rusal’s control of the Nikolaev Alumina Refinery (NGZ) in eastern Ukraine. Defending Rusal from the attack, says a source close to Rusal, is Glencore, the Switzerland-based global commodity trader, which is a minority stakeholder in Rusal and the financier of much of its aluminium and alumina trade.
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scf_loses

By John Helmer, Moscow

The British Court of Appeal has issued a ruling to deny the Sovcomflot group and its Novoship subsidiary the right to appeal a corruption judgement to the Supreme Court, the highest of the British courts. The judgement puts an end to nine years of attempts by Sovcomflot group chief executive Sergei Frank and Russian government officials to have the British courts convict Yury Nikitin, their former chartering partner, of bribery and corrupt profiteering in the business of shipping oil.
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akhmetov_war

By John Helmer, Moscow

Rinat Akhmetov (lead image, above left and right) is still the Ukraine’s richest man. If you believe the financial reports just issued by his Metinvest group, Ukraine’s largest steel, iron-ore, coal and coke maker, it’s a case of his singing all the way to the bank in Switzerland — without the irony of the musical, “O! What A Lovely War!”

A new ratings report issued by Moodys claims that Metinvest is benefitting from “the company’s ability to generate positive cash flows even in times of a severe downturn as observed in 2009 and more recently; (2) low leverage; (3) high degree of vertical integration; (4) large iron ore reserves; and (5) the geographically advantageous location of some of its major assets.” Exactly what advantage the geography of eastern Ukraine is conferring on Akhmetov’s business Moody’s analysts don’t say.
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buk_radar

By John Helmer, Moscow

The Russian and US intelligence versions of what preceded the destruction of Malaysian Airlines MH17 on July 17 have come close to agreement on the same set of facts. Their disagreements and conflicts of evidence are much smaller, by comparison.

The Russians and Americans concur that a Buk-M1 missile battery (lead image, interior operator panel) fired an SA-11 missile which detonated in front of the Boeing, and brought her down. The US Government now says it lacks the evidence to say who fired the missile. It also claims that “Ukraine had no antiaircraft missile system within range of the Malaysian flight at the time it was struck”.
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