By John Helmer, Moscow

“It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God” – Jesus Christ

After the ancient Jewish preachers spoke of improbability as elephants trying to navigate needles, the Christians slimmed down to camels. But there was also the post-gospel interpretation that what Jesus actually meant, in that piece of advice to a nervous rich man, was a gate in Old Jerusalem, which opened after the main gate was shut at night. A camel could only pass through this smaller gate if it stooped and had its baggage removed. A lot of camel bones have been excavated around Jerusalem, but the small gate hasn’t turned up yet.

By contrast, there are plenty of small gates in the Kremlin wall, and plenty of camels who make it through without having to unload their baggage until they get inside. So is there a small gate in Federal Law (FZ) No. 79, which President Vladimir Putin (image left) signed on May 7, 2013?
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by John Helmer - Tuesday, June 11th, 2013
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By John Helmer, Moscow

Eurochem, a Russian fertilizer miner and manufacturer owned by Andrei Melnichenko, is suing the South African mine technology company Shaft Sinkers for $800 million on account of a mining technology which Eurochem says has failed in Volgograd (image right). Shaft Sinkers says the technology works perfectly well, in Yorkshire (left) for example. $800 million is the sum of Eurochem’s claims. Much less than that is at stake — according to Shaft Sinkers $15 million in unpaid invoices – but also much more, in Kazakhstan, where Eurochem’s plan for a large new phosphate mine is in trouble of another sort. About that Eurochem doesn’t want to talk at all.

In 2008 Eurochem made several announcements about its new potash mine, Gremyachinskoye mine in Volgograd. In the context of Melnichenko’s proposal to reduce his personal exposure in the company, and sell assets to Gazprom or shares to international investors, Eurochem reported growing reserves, speed in mining new output, and jumping sales revenues. Gremyachinskoye was to be commissioned in two stages, start shipping 2.3 million tonnes of potash per annum in 2012, and by 2015 double that volume.
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by John Helmer - Monday, June 10th, 2013
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By John Helmer, Moscow

If the Union de Banques Suisses (UBS), Credit Suisse and Deutsche Bank decided to put their employees in uniform; contracted with a factory in Bangladesh to make the costumes as cheaply as possible; and then floated shares of the Bangladesh Uniform Company (BUC) on an international stock market, taking underwriting fees, capital gains, and dividends as large BUC’s annual profit, would that be a clever line of business? What independent investor would want to buy into such a scheme?

The question arises as a group of Russians spin out of their holding, an Isle of Man entity called IBS, their British Virgin Islands subsidiary called Luxoft, and sell brand new shares of the latter on the New York Stock Exchange at a valuation of between $500 million and $1 billion; and with better than 50% capital gain forecast in just six months. If IBS, with a market capitalization on the Frankfurt Stock Exchange of €419 million ($549 million) can double its money by getting UBS to flog off an outsource department, isn’t a share-buyer guaranteed his return so long as the banks renew their outsourcing contracts? Will they do that, though, if the graduate-degree Russians who do the work insist that Luxoft pay them better than grade-school wages?
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by John Helmer - Monday, June 10th, 2013
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By John Helmer, Moscow

The scandal surrounding Barry Cheung, the Hong Kong politician and former chairman of United Company Rusal, the state aluminium monopoly, has intensified the interest of shareholders and regulators in spending by Rusal’s chief executive, Oleg Deripaska. The company charter and the Hong Kong listing rules require supervision by the independent directors on the Rusal board’s governance, remuneration and audit committees. But Cheung, a member of the first two, has now resigned. Elsie Leung, a member of the audit committee, is facing a no-confidence motion at the Annual General Meeting (AGM) on June 14.

Newly available evidence suggests that Rusal has made an agreement with a London-registered trader whose business seems to have nothing to do with bauxite, alumina or aluminium; whose accounts fail to reveal millions of dollars it has been receiving from Rusal; and whose UK Companies House registration will be wound up next week if it doesn’t file missing financial reports. According to Rusal insiders and sources familiar with the matter, the transfers were for individual services of multi-million dollar importance.
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by John Helmer - Thursday, June 6th, 2013
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By John Helmer, Moscow

What can have motivated Vladimir Yevtushenkov (image right) of the Sistema conglomerate of Moscow to hire for his board of directors last week a man who is a magnet for negative British press coverage, and who was judged last year by the UK High Court for an action brought, and lost, by his friend, Nathaniel Rothschild?

The announcement of Lord Peter Mandelson’s (top left) appointment to the Sistema board, replacing Yevgeny Novitsky, was issued last Thursday. The announcement doesn’t explain what was wrong or obsolete with Novitsky’s talents or connexions, about which the Russian press have printed many allegations. Mandelson, on the other hand, is the owner of a small public relations company tied to WPP, an international conglomerate of PR firms controlled by Philip Lader, who sits on Oleg Deripaska’s Rusal board. Lader’s relationship with Mandelson has been described in a WPP press release as “provid[ing] seed capital along with additional benefits in kind including office accommodation”.
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by John Helmer - Monday, June 3rd, 2013
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By John Helmer, Moscow

Gazprom, the Russian gas producer and exporter, is thinking of reviving an old idea to refine natural gas on the Baltic shore and ship liquefied natural gas (LNG) westward to European markets in competition against Qatar and Nigeria. At least that’s what Ziyavudin Magomedov (image right), chairman of the Summa Group, wants everyone to think. Maybe Alexei Miller, Gazprom’s chief executive, too. Since neither Gazprom nor Magomedov’s spokesman at Summa Group, is willing to put a confirmation where the press leak was, noone is keen to believe either of them.

Alexei Miller, Gazprom’s chief executive, was speaking last week at a conference in the Siberian city of Tomsk where in an aside, he said the company might soon announce a new LNG project. “The key concept of Gazprom’s strategy is diversification,” Miller said in his prepared remarks. “Firstly, it is the diversification of our target markets. The Company’s operating principles are very simple: firstly, gas should be sold, then produced, conveyed and sold to consumers. Secondly, it is the diversification of our production regions, transport and finished products to be sold.”
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by John Helmer - Thursday, May 30th, 2013
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By John Helmer, Moscow

The share price of United Company Rusal, the state-controlled Russian aluminium monopoly, lost 3% in value in Hong Kong Stock Exchange trading on Monday on news that Barry Cheung, a prominent Hong Kong businessman, had resigned from the Rusal board as his own business collapsed, and that he was the target of a Hong Kong police investigation for fraud.

When Rusal wanted to promote Cheung’s importance in Hong Kong, it trumpeted the news among the press releases on the company website. Thus, in March of 2012, Rusal announced that the company “congratulates its Chairman Mr Barry Cheung for a successful campaign which helped Mr Leung Chun-ying (“CY Leung”) win the office of Hong Kong’s fourth Chief Executive in yesterday’s election. Mr Leung’s five-year term will begin on July 1, 2012. Mr Leung’s winning was the culmination of a long and active campaign supported by a highly professional campaign office headed by Mr Cheung.” A few weeks later, following voting at the Annual General Meeting (AGM) of shareholders, another Rusal press release announced that Cheung had been re-elected to a second term, and that he had convened a meeting of the new board.
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by John Helmer - Monday, May 27th, 2013
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By John Helmer, Moscow

According to Russian-language records and a Tashkent party film published by Stockholm television last week, Alisher Usmanov held the hand of Gulnara Karimova and whispered intimately to her just days after the latter had been making plans to collect millions of dollars in payments from Swedish telephone company, TeliaSonera. Karimova is one of two daughters of the President of Uzbekistan, Islam Karimov; she is a leading candidate to replace him if he falls ill, or to succeed him at the presidential election due in March 2015. Karimova is also one of several targets of official investigations underway in Sweden and Switzerland, alleged to have been behind a corrupt payment system through which TeliaSonera obtained and operated its mobile telephone concession in Uzbekistan, and through which the Russian rival, Mobile Telesystems (MTS), owned by Vladimir Yevtushenkov, lost its concession and was forced out of Uzbekistan last year. The tale of that billion-dollar expropriation can be read here.

Usmanov, who is Uzbek by origin, is TeliaSonera’s shareholding partner in Megafon, the London-listed mobile telephone operator and rival of Yevtushenkov in the Russian telecommunication market. Usmanov is also on the top of Rich Lists in Russia and the UK, based on estimates of his asset value in Russian telephony, iron-ore mines, steelmills, print and internet media, not counting his debts and obligations. He has been one of the more nervous of the oligarchs, ready to put up his hand to volunteer, and quick to implement the Kremlin’s marching orders.
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by John Helmer - Monday, May 27th, 2013
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By John Helmer, Moscow

Tethered high above Victor Pinchuk’s newest steel smelter at the Interpipe plant, visible for miles around the eastern Ukrainian city of Dnepropetrovsk, is a large balloon. It’s meant to symbolize what the Interpipe website is calling the smelter’s state-of-the-art technology — “the construction plant has no harmful effect on the atmosphere or social surroundings”; also its historical uniqueness in the steel industry west of the Russian border – “a vital step in the development of the domestic Ukrainian pipe industry.” For the curious and for asthmatics, Interpipe is offering guided tours of the plant to demonstrate how it “marks the beginning of a green era in the metallurgical industry.” The plant’s press office says the balloon construction is called Sun Interpipe. “It’s an art object, and we are not going to remove it.”

Less intentionally, the balloon symbolizes the sky-high cost of building the smelter and supplying it with electricity; Pinchuk’s growing billion-dollar debts; and the collapse of demand for the steel products Pinchuk is offering for sale in Ukraine and Russia, Interpipe’s make-or-break markets.

Although Interpipe remains privately held by Pinchuk, documents the company has prepared with his bankers to cover his debts, together with bank sources, reveal how strapped for cash Pinchuk is. The balloon is also going up for Pinchuk, as he tries to raise at least $143 million, perhaps ten times as much, from a claim filed in the UK High Court against two rival Ukrainian metals magnates, based on recollections of meetings Pinchuk and the others held in the Ukraine, Israel, Sardinia, and Switzerland, starting nine years ago.
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by John Helmer - Thursday, May 23rd, 2013
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By John Helmer, Moscow

There has been no movement in Evraz’s proposed sale of its South African unit, Highveld Steel & Vanadium, to Nemascore, a special purpose vehicle created in February by a black empowerment enterprise linked to South Africa’s President Jacob Zuma (right). The deal for $320 million was announced by Evraz in March. At the time, the transaction was reportedly to be financed by Russian state bank VTB at a price which was more than double the market value of Evraz’s 85% stake in the company.

Subsequently, the Industrial Development Corporation (IDC), the SA Government’s business stakeholder, said it was not involved in providing VTB with repayment guarantees to facilitate financing for Nemascore’s purchase. Neamscore’s directors have refused to discuss the deal, say where the money is coming from, or explain it in light of Highveld’s lossmaking and other troubles last year.
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by John Helmer - Wednesday, May 22nd, 2013
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