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By John Helmer in Moscow

Fyodor Andreev (also spelled Andreyev — see picture) is the new chief executive officer of Alrosa, the state owned Russian diamond miner, and will take up his functions this week, a high company source told PolishedPrices.com today.

It turns out that Alrosa’s CEO has a seat on the company’s Supervisory Board (board of directors) after all. But that is because Sergei Vybornov, the CEO since February 2007, has been replaced by Andreev, whose appointment to the board PolishedPrices.com reported on June 22. At the time, it was also reported that removal of the CEO from the board was unprecedented.

Vybornov continued to fight the ouster move, issuing a statement the next day that “the President of Alrosa [the chief executive] in any case participates in the Council work as the head of an executive office of the company.” A company announcement is expected to be made on Monday, and Andreev takes over in Vybornov’s place later in the week, the high company source said Sunday.

Andreev returns to Alrosa after leaving in 2003. At that time, he was chief financial officer, and had piloted Alrosa through several debt issues on the international financial markets. In 2001 Andreev had introduced international accounting standards reporting to enable Alrosa to develop an international credit rating, and lower the cost of its borrowings.

Before he joined Alrosa, Andreev spent three years as chairman of Baltoneximbank in St. Petersburg. A St. Petersburger himself, Andreev managed the bank as an affiliate of Oneximbank, which was owned by the oligarchs, Vladimir Potanin and Mikhail Prokhorov; at one time in the mid-1990s, they had the ambition of converting Alrosa’s debt into a commercial privatization of the company. But Onexim collapsed first in Augsut 1998, when the crash of the rouble and the national banking system left it with almost $2 billion in foreign exchange forward contracts it could not pay. In February 1999, Onexim then defaulted on its Eurobond issues, and lost its banking licence on July 1 of that year.

Potanin and Prokhorov then arranged for Baltoneximbank as a bridge, to which the parent’s assets, employees, and clients were transferred, before the establishment of the successor bank, Rosbank. Andreev was thus a key figure in the 1999 negotiations with the Central Bank and Onexim’s creditors, which resulted – in November 1999 – in a restructuring of about $1 billion in debts; a cash payment of $105 million; and the issue of $130 million in 12-year convertible Eurobonds by Rosbank. The Onexim licence revocation was then suspended, and by September 2000, Onexim was merged with Rosbank, and the slate cleaned.

Andreev then moved to Alrosa, and left in November of 2003 to become the chief financial officer of state-owned Russian Railways (RZD). At his departure from Alrosa, he was replaced by banker Alexander Nichiporuk, who took over the finance portfolio at Alrosa, and then in December 2004, the chief executive’s position. In February 2007, Nichiporuk was ousted by Vybornov, who had served under him at an affiliate, Investment Group Alrosa.

Company sources claim that Vybornov’s appointment on July 1 of a new company sales chief, Vladlen Nogovitsyn, was not approved by the board, and will not be implemented.

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