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By John Helmer, Moscow
  @bears_with

Boris Dubrovsky (lead images), President Vladimir Putin’s governor of Chelyabinsk between 2014 and March 19, 2019, has long been at risk of lung disease, and he is now reported to be in a Swiss clinic for treatment. His prognosis is uncertain.

More certain it is that Dubrovsky will not be returning to Chelyabinsk. That’s not because the  city air is injurious to his health, as federal regulators and citizens’ groups have measured throughout Dubrovsky’s gubernatorial term;  but rather because Dubrovsky has been charged by the Investigative Department of the Ministry of Internal Affairs with the criminal scheme of monopolizing road construction contracts in the Chelyabinsk region. The sum of the criminal damage for which Dubrovsky is accused currently stands at Rb20 billion ($308 million). That’s damage to the regional and federal budgets. How much money Dubrovsky has trousered for himself is not charged or reported.  

No Russian prosecution claims have been filed against Dubrovsky to the Swiss authorities. The Swiss press are now investigating the accommodations in local banks and real estate where Dubrovsky’s money may be located under his own or his son’s name.

Read the report of the criminal charges against Dubrovsky by Ivan Zhilin in Novaya Gazeta this week, or in its republication by Kompromat.ru

Zhilin quoted Dubrovsky’s lawyer as acknowledging that the indictment, under Art. 285, Part 2, of the Russian Criminal Code, carries a seven-year prison sentence if Dubrovsky is convicted.  According to the Code,  the alleged crime is one of abuse of official powers by misdirecting budget money. Dubrovsky has not been accused of procuring bribes or taking kickbacks for himself.

His lawyer says Dubrovsky’s Swiss house was built at the time, and on the money he earned as an executive and board director at the Magnitogorsk Metallurgical Combine (MMK). The newspaper also records the lawyer as saying that “two weeks before his departure [to Switzerland], Dubrovsky visited the Kremlin for a meeting between President Vladimir Putin and former governors, where he received the Order of Friendship.”

There are also disputes between Moscow lawyers as to which of them represents Dubrovsky at the moment, and what they know about the indictments. “If a criminal case is initiated,” one of the lawyers told Novaya Gazeta, “the person is notified. My client was not notified of any of this.” 

The plot alleged against Dubrovsky is that his son, his lover, and the family members of a former head of the Federal Security Service in the region conspired together to capture state contracts for road construction, as well as for collection of solid waste. The favoured contractor in the scheme started with 9% of regional road-building contracts when Dubrovsky became governor; when he left office in mid-March, this year, this amounted to 92%.

A more detailed report appeared in the CrimeRussia website last March, a few days after Dubrovsky had resigned. This report identified the lover and the daughter she appears to share with Dubrovsky. The publication claimed Tatiana Solonchak lives in Switzerland, while her daughter with Dubrovsky studies in London.

For the archive of reports of Dubrovsky’s connivance with the leading industrial polluter of Chelyabinsk, steel, coal and coke-maker, Igor Zyuzin (lead image, left), start with this report of February 2017. The archive of Chelyabinsk dirt can be clicked open here.  First official release of the federal government’s concern with Dubrovsky’s road construction scheme appeared in August, a year ago. Dubrovsky retained the governorship, and the confidence of the President, as well as the Kremlin’s official in charge of air pollution, Sergei Ivanov, for seven more months before the Kremlin agreed to accept Dubrovsky’s letter of resignation.

The latest report of the high air pollution in Chelyabinsk appeared three weeks ago, on September 23.  The criminal prosecution of Zyuzin’s plants for causing this pollution was abandoned weeks before because the two-year statute of limitations covering the offences of 2017 had expired.   The offences are continuing, unindicted.

Zyuzin’s Mechel group is one of the most heavily indebted in the country, with a current net debt reported   at June 30 of Rb411 billion ($6.1 billion). Almost 90% of that is owed to Russian state banks. They, and the Kremlin, have had effective control over Zyuzin’s cashflow since 2013, when his debt was over $9 billion, and the state banks began converting his foreign bank debt into state bank paper, creating a semi-nationalized entity which Zyuzin has continued to run. 

The banks have made no effort to curb Mechel’s pollution. To that end, Zyuzin pays Alexander Shokhin to lobby the Kremlin, government ministries and regulators to allow Mechel to pay fees for its pollution instead of stopping it. Putin has accepted this kill-fee, pay-to-pollute system, announcing on a Chelyabinsk region plant visit in November 2017: “regrettably, in the past few years we had to postpone the enforcement of this law due to harsh pressure from industry. There were many reasons for this, including crisis elements in the economy. Industry representatives told the Government and us that the implementation of the so-called best technology would increase their spending. In this case, they told us, they would have to lay off some of their personnel in order to maintain their profitability.”


Source: http://johnhelmer.net/

With its shares listed on the New York Stock Exchange since 2004, Mechel reached a market  valuation peak in May of 2008, when the share was $32 and the market capitalization almost $9 billion. The current share price is $1.85; market cap, $582 million. This collapse is almost unprecedented in Russian business history; only Oleg Deripaska’s Russian Aluminium (Rusal) is worse.

From the international stock market point of view, Zyuzin has proved to be the dog of Russian steelmakers – peaking higher, collapsing lower than his listed Russian peers.

10-YEAR SHARE-PRICE TRAJECTORY FOR RUSSIAN STEELMAKER-COAL MINERS


KEY: Grey=Mechel (Zyuzin); green=Severstal (Alexei Mordashov); orange=NLMK (Vladimir Lisin); brown=MMK (Victor Rashnikov); yellow=Evraz (Roman Abramovich). Source:  https://markets.ft.com/

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