By John Helmer, Moscow

At the freedom-flush Moscow parties of the 1990s, I was never sure whether Alexander Venediktov (2) was real, or a Vladimir Mamyshev-Monroe (1) impersonation. Mamyshev-Monroe died last month in what is described as a shallow swimming pool in Indonesia. Venediktov is alive, and like Mamyshev-Monroe does his radio turns on Ekho-Moskvy as performance art. At least those two are/were genuine Russians. There’s a pseudo-Russian in London, calling himself Peter Pomerantsev (3), who claims to have been exiled from Russia at the age of 11 months. He lionizes all that’s bad about Russia for the delectation of the English intelligentsia reading literary papers. He can’t be a Mamyshev-Monroe impersonation; he could be Masha Gessen (4), who does a similar turn for the American intelligentsia, in drag.

Pomerantsev has produced a diary for the current issue of the London Review of Books in which, after a potted version of the last quarter-century of Russian history, he concludes that Mamyshev-Monore and Boris Berezovsky “defined post-Soviet Russia”. By that he means the faker Mamyshev-Monroe (aka performance artiste) was more real than targets like Vladimir Putin whom he mocked. “What place”, Pommy concludes rhetorically, “could he have in a Russia where to watch a grotesque piece of performance art you just had to switch on the news?”
(more…)

by John Helmer - Friday, April 26th, 2013
No Comments »

By John Helmer, Moscow

At a physicists’ teaparty, Albert Einstein once asked Niels Bohr whether the two of them should accept that “the moon does not exist if nobody is looking at it.” Bohr’s reply was that, hard as Einstein might try, so long as the moon was accompanied by noone, Einstein’s proof would be hard to come by.

As a businessman selling off visible assets for cash in the bank, Mikhail Prokhorov is rapidly becoming just such an unprovable moon. So Einstein to Bohr, he’s agreed with his trusted friend and manager, Dmitry Razumov, managing director of the Onexim holding in Moscow, to issue a public strategy statement and give the former’s lunacy more credibility. According to Razumov, the two of them speak once every two or three weeks, depending on Prokhorov’s phases. “He is completely away from the daily management of work items. He did not meet with the management; he isn’t included in the [Onexim] board of directors. However, he is still the main beneficiary. We are meeting relatively regularly to discuss politics and the economy.” Based on paper values, and before counting the impact of commodity price falls, Razumov says Onexim is worth between $13 billion and $15 billion. Here is the April 24 interview.
(more…)

by John Helmer - Wednesday, April 24th, 2013
No Comments »

By John Helmer, Moscow

If necessity is generally judged to be the mother of invention, crude invention – the fake that is exposed swiftly – is generally the product of desperate mothers. The idea that the Oppenheimer family is keen to buy Alrosa shares, reported by one Moscow business newspaper yesterday and reinforced by another, was regarded as ludicrous by miners and diamantaires who know the circumstances in which Nicky Oppenheimer (image centre) and De Beers were ousted from their last Russian venture in 2008. But a little checking by the Moscow reporters should have turned up the evidence that such a deal, even the faintest interest in it, is also impossible until at least August 15, 2014. So who in Moscow is so desperate as to promote an impossible sale of Alrosa shares? And what does a display of desperation do to the future share price?

The Oppenheimers were pushed out of Russia in 2008 in circumstances which have never been publicly admitted. LUKoil’s controlling shareholder, Vagit Alekperov, the De Beers joint-venture partner initially approved by then Prime Minister Vladimir Putin, had a hand in it. So did Alrosa, then ruled by Deputy Prime Minister Alexei Kudrin. Between the three of them, the formal approval by the government’s Control Commission to authorize the mining of the Grib pipe in Arkhangelsk, was privately reversed, first by delay, then on a technicality, and finally by the writing on the wall. Since the same cast of characters is still running the same business in the same way – expect Kudrin’s return shortly – the Oppenheimers can be certain there is noone in Russia whose word could reliably safeguard their investment.
(more…)

by John Helmer - Tuesday, April 23rd, 2013
No Comments »

By John Helmer, Moscow

United Company Rusal has been defeated in a brief but powerful ruling by the US Court of Appeals in New York last week. The order by three judges, issued on April 15, quashes a lower-level US court order for discovery of bank and other evidence against shipping companies Rusal used to transport its bauxite and alumina cargoes a decade ago. That was when Andrei Raikov, former friend of chief executive Oleg Deripaska, headed the company’s procurement division, and Dmitry Osipov ran the shipping companies.

In a blow against Rusal’s offshore structure on the English Channel island of Jersey, the court ruled that RTI (aka Rusal Trading International) fails the legal and statutory tests to qualify on Rusal’s behalf in litigation in the US courts. “We conclude that the present factual record does not support a finding that RTI is an ‘interested person’ with respect to the relevant foreign proceedings,” says the order signed by Judges Robert Katzmann, Barrington Parker, and Miriam Cedarbaum. “We further reject RTI’s argument that it qualifies as an interested person because, by virtue of its corporate relationships, it now oversees the business operations at issue in the foreign proceedings.”
(more…)

by John Helmer - Monday, April 22nd, 2013
No Comments »

By John Helmer, Moscow

Igor Zyuzin (right) is almost entirely dependent on the Russian government for the solvency of his Mechel steelmaking and coalmining group. With between $9 billion and $10 billion in debt, Zyuzin, who owns 65.49% of Mechel’s shares and controls the company as chairman of its board, is now the steel and coal sector’s most heavily indebted proprietor. If not for a series of cash loans, bond purchases and guarantees from state-controlled banks – Sberbank, VTB, Gazprombank, Eurasian Development Bank (EDB), and Transcreditbank – he would be bankrupt.

That is, Mechel, with a bottom-line loss last year of $1.7 billion, would be as bankrupt as the Estar group of steelmills, which Zyuzin took over in 2009, when Estar’s proprietor Vadim Varshavsky went bankrupt. Varshavsky was consigned by state officials and the state banks to go belly up for debts of about $3 billion. Zyuzin has been preserved in his place for three times that debt. He has also been permitted to buy Varshavsky’s old assets at a fraction of their value, using tolling schemes which may be considered asset stripping, a form of larceny, outside Russia — if their terms were known. In other words, Varshavsky’s insolvent steelmills appear to be paying Zyuzin to take them over for Mechel.
(more…)

by John Helmer - Saturday, April 20th, 2013
No Comments »

By John Helmer, Moscow

Announcing its sale of the South African asset, Highveld Steel & Vanadium, to Nemascore, a company created just weeks before, Evraz issued the following announcement: “EVRAZ announces intention to sell its South African steel mill. EVRAZ plc…announces the signing of a non-binding term sheet in respect of the proposed sale of its 85% stake in EVRAZ Highveld Steel and Vanadium Limited (“EVRAZ Highveld”) to Nemascore (Pty) Ltd, black economic empowerment consortium, for an indicative cash consideration of approximately US$320 million (the “Transaction”). EVRAZ will utilise the sale proceeds for general corporate purposes.” That was on March 27.

Yesterday, April 18, the company referred in a quarterly report of its production results to the following “recent development”: “In March 2013 Evraz executed a non-binding term sheet for potential sale of Evraz Highveld.”
(more…)

by John Helmer - Thursday, April 18th, 2013
No Comments »

By John Helmer, Moscow

United Company Rusal appears to have been stripping assets from the Aluminium Smelter Company of Nigeria (Alscon) at the same time as it was creating large loan obligations which the loss-making smelter has little chance of repaying.

Public protests got under way at Alscon, which is located at Ikot Abasi, in the southernmost corner of the country, after Rusal announced on March 26 it was sacking most of Alscon’s workforce. On April 14, Bassey Udo, a leading investigative journalist in Nigeria and business editor for The Premium Times in Abuja, reported details of the annual Alscon company report for 2011. This is the most recent annual report from Alscon on file. The details have been retrieved from the records of Nigeria’s Corporate Affairs Commission. KPMG, which is the designated auditor for Rusal’s consolidated financial reports, refuses to confirm that it provided a qualified report and notes to the Alscon filing. Udo reports he obtained the filing on application to CAC. Read Udo’s full report here.
(more…)

by John Helmer - Tuesday, April 16th, 2013
No Comments »

By John Helmer, Moscow

When Oleg Mukhamedshin, head of investment strategy for United Company Rusal, was in London recently, he complained the stock market isn’t giving Rusal’s share price a fair valuation, taking into account how much profit the non-aluminium line of business – that’s the dividend to be paid to Rusal by Norilsk Nickel — is likely to generate this year for Rusal’s loss-making bottom line. What Mukhamedshin didn’t mention is that the market suspects Oleg Deripaska, chief executive and manager of the controlling shareholders’ trust, of operating a scheme to protect asset value and income for an inner circle of Rusal shareholders, and let all other shareholders suffer the worst.

Initial evidence of the inner circle scheme was first uncovered in the records of RTI Limited (aka Rusal International Trading), a Jersey Island-registered entity which appears to be the next to highest control entity in Rusal’s corporate organization. Registered on October 27, 2006, one day after the parent company was incorporated in Jersey, RTI’s carefully worded articles of association contain a code which provides privileged treatment for one class of Rusal shares at the expense of the founding shareholders; the latter include Mikhail Prokhorov, Victor Vekselberg, Len Blavatnik, and Glencore; and the shareholders who “anchored” Rusal’s Hong Kong Stock market listing in January of 2010, including the Russian state banks.
(more…)

by John Helmer - Sunday, April 14th, 2013
No Comments »

By John Helmer, Moscow

Nemascore, the South African buyer of Evraz Highveld, the loss-making steel and vanadium producer, is run by a part-time lawyer, a part-time entrepreneur, and the part-time executive of Fire Check, a Durban-based company specializing for the past twenty years in installing home and office fire alarms around that east coast city.

One of this trio has acknowledged that to find $320 million — the price Nemascore has agreed to pay Evraz for the loss-making Highveld — it is negotiating with the South African government’s Industrial Development Corporation (IDC) to guarantee repayment of a loan for the transaction amount. That loan, according to other SA sources, is to be issued by Russia’s state-controlled bank, VTB. Why everything else is secret about a deal which (apparently) repatriates to South African ownership a well-known steelmaking company listed on the Johannesburg Stock Exchange, is a deep-six mystery. Read the story so far here.
(more…)

by John Helmer - Friday, April 12th, 2013
No Comments »

By John Helmer, Moscow

Nigerian judge, Okechukwu Okeke, failed to show up in his Lagos court yesterday for the scheduled trial on arms smuggling charges of the crew of the Myre Seadiver. There was no explanation for his non-appearance.
(more…)

by John Helmer - Thursday, April 11th, 2013
No Comments »