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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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shlapak_ela

By John Helmer, Moscow

The Ukrainian revolution has been very bad for business in the country. But for Igor Kolomoisky’s Privatbank there has been compensation of almost a billion dollars in state funds: publicly, rival Ukrainian commercial banks call that favouritism; privately, Ukrainian business as usual.

Privatbank is Ukraine’s largest commercial bank. Since the replacement of the Ukrainian Government in February, and the start of the International Monetary Fund’s (IMF) financial aid programme in April, Privatbank has been the largest beneficiary of what the IMF and the Ukrainian Ministry of Finance are calling Emergency Liquidity Assistance (ELA) to the country’s banks. Published measurements of Privatbank’s share of ELA range from 36% to more than 40% of the additional financing which has flowed out of Ukrainian state funds into the commercial banks. Just how much Kolomoisky benefits, along with related companies to which Privatbank lends much of its loan book, is one of the control operations being performed this week, as the IMF’s Ukraine mission starts its first inspection since the IMF transferred $3.2 billion to the National Bank of Ukraine on May 7.
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sikorski_applebaum

By John Helmer, Moscow

In March, when he thought it was safe to speak his mind at the Amber Restaurant in Warsaw, Poland’s Foreign Minister Radoslaw (Radek) Sikorski (lead image, left) used a racial expletive to refer to the Polish relationship with the US government, which is so unpleasant, noone outside Poland has been willing to translate it into English. That was on top of an expletive describing what Sikorski said Poland’s metaphorical mouth has been doing with the US government’s metaphorical sexual organ.

Sikorski was talking with Jacek Rostowski; like Sikorski, Rostowski is a British-educated, British national, and a recent finance minister in Donald Tusk’s current Polish government. They were dining just after Crimea had voted to join the Russian Federation, and as the US government announced the first round of sanctions. The tape-recording, which has begun to be published by the Polish weekly Wprost, also reproduces jokes Sikorski told Rostowski, including one about a man with multiple sclerosis who over-exerts himself at a brothel.
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rosneft_force_majeure

By John Helmer, Moscow

In the New York and London markets brokers and bankers explain that they are being discreetly called by US Treasury officials with this message: buying Russian equity or debt paper is legal, but in the event there is a new round of sanctions, it will be illegal to re-sell them, so there can be no profit in Russian assets. The market is calling this campaign “stealth sanctions”. It is an attack on the international market for Russian corporations, and on the international currency and security clearance systems on which the market depends.

According to the highest UK and European courts — reported here on March 25 — the type of formal sanctions which the US and the EU have already introduced are likely to be found illegal, if they are challenged in court. Stealth sanctions are more difficult to substantiate in court -– and also financially much more damaging. Until now, there has been no Russian retaliation for the sanctions, and no litigation.
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russian_art

By John Helmer, Moscow

Putting money where the mouth is, the value of Russian artworks has reached a record high this month at auctions of Christie’s, Sotheby’s and MacDougall’s. Bad mouthing by the US State Department daily briefer is cheaper, as the US Government endorses Ukrainian government hate speech in referring to Russians in general as “subhuman”, and the president in particular as a “dickhead”. But for the heads of the Russian art departments at Christie’s and Sotheby’s, neither US sanctions nor the Russophobia of the London press have made any impact on cultural sentiment.

If anything, Russian art buyers are bidding against each other to recover and return to Russia works which have been on the walls of American and European collectors who acquired them before the revolution, or in the fire sales just after. Not exactly for patriotic reasons, Russian art buyers are doing this because they are confident the London market is securing new asset value, ensuring that even in the short run, Russian art will enjoy a lucrative resale price.
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