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pinchuk_imf

By John Helmer, Moscow

In a decision announced last week, the US Department of Commerce did Victor Pinchuk, owner of Interpipe, the Ukraine’s leading pipemaker and exporter, a favour worth between $6 million and $9 million per annum for the next three years.

At the same time, the International Monetary Fund (IMF) has ordered the government in Kiev to end the delay in collecting $38 million from Interpipe in overdue debt for deliveries of gas by the state gas supplier Naftogaz; and raise the price of this year’s gas deliveries to Interpipe by roughly two-thirds over last year’s subsidized price. Based on an unaudited estimate of energy costs which Interpipe paid in 2013, the IMF rescue will cost Interpipe the difference between $173 million for 2013 and $259 million estimated for this year; that’s $86 million. Add the Naftogaz debt; subtract the value of the US government benefit from the IMF obligation; and Pinchuk’s Interpipe will be poorer by about $100 million.
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sikorski_man

By John Helmer, Moscow

In the Broadway musical, My Fair Lady, elocution professor Henry Higgins fools an East European expert on spotting impostors. But believing he’s been fooled himself by his protégée, Eliza Doolittle, Higgins sings this lament to himself: “Men are so honest, so thoroughly square; Eternally noble, historically fair; Who, when you win, will always give your back a pat. Why can’t a woman be like that?”

In the case of Radoslaw Sikorski (lead image, right), the onetime British citizen who is currently Foreign Minister of Poland, the outcome of his campaign to be elected High Representative of the European Union for Foreign Affairs and Security Policy, has failed. This week in Warsaw, Sikorski’s reason is the Higgins song – he is too much of a honest man in a race where there are too many devious women.
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trojan_lebedev

By John Helmer, Moscow

When it comes to Trojan horses, who better than the Government of Greece to judge.

The Trojan Horse that’s meant is Leonid Lebedev (lead image), the three-term, 12-year Federation Council senator representing the Republic of Chuvashia. Lebedev claims to be a billionaire with control of a conglomerate called Sintez. Its cash generation is reported to come from oil production in Khantiy-Mansiisk; oil trading; the TGK-2 electricity-generating utility; and proceeds from the sale of a number of smaller businesses. According to investigations last year by the Government of Greece, Lebedev’s claims to represent Gazprom and powerful figures in President Vladimir Putin’s circle lacked credibility, and more importantly, money. Sintez was disallowed the right to bid for the privatization of Greece’s state-owned gas purchase and distribution companies, DEPA and DESFA.
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washday_blues

By John Helmer, Moscow

If Andrei Goncharenko paid £43 million for an asset worth no more than half as much, he has set something of a Russian record for business acumen. And he might well have kept that acumen secret, if not for a group of squabbling Englishmen wanting commissions for arranging the deal, and one in particular, who wanted to keep about £20,000 in value-added tax on his commission, to which the Commissioners for Her Majesty’s Revenue and Customs thought they were entitled instead.

Goncharenko is the deputy chief executive of a Gazprom subsidiary called GazpromInvest Yug (South). The company was created in 2002 as a contractor for construction projects decided on by its parent. The company website claims it does things like the “organization of construction and reconstruction of gas processing plants, the main gas pipelines, compressor stations, underground gas storage, gas distribution stations. In addition, the company is organizing the construction of energy, communications, infrastructure (boilers, wastewater treatment plants)…reconstruction of complex engineering and technical security systems, and anti-terrorist protection of objects.”
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dutch_court

By John Helmer, Moscow

A court in The Netherlands has dismissed a fraud claim for more than $800 million by Andrei Melnichenko against Alexander Mashkevich and the two other Kazakh owners of International Mineral Resources for lack of evidence. The 11-page judgement was issued by the District Court of Amsterdam on June 25. Three judges, A.W.H. Vink, K.M. van Hassel, and R. Raat, signed the unanimous ruling.

International Mineral Resources (IMR) is registered in Amsterdam, and is owned by Mashkevich, Patokh Chodiev, and Alijan Ibragmiov, the controlling shareholders of Eurasian Natural Resources Corporation (ENRC). The trio also hold a 48% stake in Shaft Sinkers (ShS), a South Africa-based, London-listed mine engineering company which specializes in building mine shafts. The lawsuit was initiated on March 25, 2013, by Melnichenko’s Volgograd-region potash mining subsidiary, EuroChem Volga-Kaliy LLC. This escalated the conflict between Melnichenko and Mashkevich, after they had failed in direct and indirect meetings to agree on compensation for the failure of Shaft Sinkers technology for one of the mineshafts at Eurochem’s newest potash mine, Gremyachinksoye, in the Volgograd region.
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frank_surprise

By John Helmer, Moscow

In a unanimous three-judge ruling issued on Friday, the UK Court of Appeal has rejected a claim from Novoship, the state shipping company which is part of the Sovcomflot group, for recovery of more than $243 million in profits and interest. Novoship had claimed the money was earned corruptly by vessel charterer, Yury Nikitin. The court upheld Nikitin’s appeal, overruling a High Court judgement of December 2012, and decided that Nikitin’s profits had been earned honestly.

In a judgement written for the appellate court by Lord Justice Sir Andrew Longmore, the court upheld an order for Nikitin to pay $410,304.39. That amount, Nikitin’s lawyers say, had been offered at the start of the court case, but refused. According to Mike Lax, Nikitin’s solicitor, “as soon as Novoship alleged that the money was tainted, Mr Nikitin offered to repay it, even though he did know the background. We made a Part 36 offer to this effect at the commencement of the litigation which was not accepted by Novoship. Since Novoship have done no better than the offer we made from the outset, it is likely that Novoship will also have to pay most of our costs and their own costs of the litigation.”
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unfunny_cow

By John Helmer, Moscow

Russian dairy producers have filed for protection from pseudo-cheese exported in growing volumes from Ukraine through customs checkpoints in the Belgorod region. According to Soyuzmoloko, the Russian dairy producers’ association, Ukrainian exporters have been cutting their cheese shipments across the border, and more than doubling the volume of the substitutes, camouflaging the switch with identical packaging and false labelling.

Conventional customs inspection cannot distinguish between cheese manufactured from dairy fats and fakes made out of vegetable oil. So Soyuzmoloko has applied to the Kremlin to install specialized testing units at border checkpoints, and to introduce a new labelling regulation to identify the vegetable oil substitution. An application to the Eurasian Economic Commission (EEC) – the rule-making executive of the customs union of Russia, Belarus and Kazakhstan — was filed on June 25 to impose protective duties against all Ukrainian cheese, pseudo-cheese, and other dairy product imports ranging from 25% to 35%.
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rusal_bankers

By John Helmer, Moscow

United Company Rusal has admitted that one large international bank is refusing to accept the restructuring terms the company has offered for loans totaling $5.15 billion which fall due for repayment by July 7. Until now, there has been speculation that state-owned Chinese banks had been pressing for repayment in cash, rather than accept extension of the loan maturity date and other terms. On Friday, the holdout banks were identified by Rusal sources as Royal Bank of Scotland (RBS), which is majority-owned by the UK Government; and the German bank WestLB, which has been in a form of bankruptcy management since June 2012. Today, Portligon, which has taken over WestLB, reportedly changed its mind, and accepted Rusal’s offer of terms.

The latest Rusal disclosures also provide for an international court to oblige the last holdout to accept another four to five months of negotiating time, thereby preventing it from pitching Rusal into default and bankruptcy next Monday.
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kolomoisky

By John Helmer, Moscow

The Swiss Federal Police and the Federal Office for Migration will shortly decide whether the residency permit issued to Igor Kolomoisky to live in Geneva will be extended beyond the current expiry date. Kolomoisky’s permit comes up for renewal in October, and four months of investigation may be required by the Swiss authorities to authorize his stay.

Regular reviews of foreign residency permits in Switzerland are required every one or two years, according to government sources referring to Swiss law and regulations. But in Kolomoisky’s case, the Swiss authorities are obliged to determine whether Kolomoisky’s activities since March as the governor of the eastern Ukraine region of Dniepropetrovsk, and a recent Russian indictment of Kolomoisky for war crimes, represent a violation of the rules and disallow him for residency.
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severstal_us

By John Helmer, Moscow

Three years of litigation in New York and Delaware between Severstal and US steelmaker RG Steel over a failed Maryland steelmill, for which Alexei Mordashov paid $810 million, will be finalized at a US court hearing on July 15. Moscow and US sources report that lawyers for the two sides are expected to present for the judge’s approval an agreement for RG Steel to receive $30 million in cash from Severstal, and in exchange, Severstal will acquire RG Steel’s 50% stake in their joint coke venture, Mountain State Carbon (MSC).

At most, this outcome for Severstal is worth $70 million – one-eleventh of what Mordashov originally paid in March 2008, announcing at the time: “We believe in the long-term promise of the U.S. market.”
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