By John Helmer

Sergey Frank, Sovcomflot’s chief executive, has testified in the High Court that he knew nothing about an illegal information- gathering operation, targeted against his rival and former CEO, Dmitry Skarga, but that the figure in charge, who is referred to in the court evidence, may have been Russia’s Deputy Prime Minister, Igor Shuvalov, chairman of the SCF board until last year.

Frank and his company charge Skarga and SCF’s former chartering partner, Yury Nikitin, with fraudulent ship sale and lease-back transactions, and receiving kickbacks on hull sales and shipyard orders. The lawsuit was initiated almost four years ago, after Frank, a federal transport minister, had been dropped from the government, and appointed to the shipping company instead. Skarga was then moved by the Kremlin to the Federation Council, the upper house of parliament, to be Senator for Volgograd.
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by John Helmer - Tuesday, October 6th, 2009
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By John Helmer in Moscow

Noone can say that Alexei Mordashov (pictured left), owner of Severstal, Russia’s third largest steelmaker, and Anatoly Kruchinin, the chief executive of the Russian steel operations (right), are overdoing it when it comes to human sacrifice.

In 1487, when the Aztecs had rebuilt the Great Pyramid of Tenochtitlan after flooding, they sacrificed 80,400 people in reconsecration ceremonies over the course of four days. Mordashov’s atonement for the loss pyramid he has run up buying loss-making American steelmills as a haven for his personal capital has so far been the sacrifice of 9,500 Russian steelworkers over 11 months. This is Mordashov’s way of increasing the profitability of his Russian steel operations, in order to subsidize the losses of the American mills, and keep Severstal’s anxious bankers at bay.
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by John Helmer - Tuesday, October 6th, 2009
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To Muratov D.A.
Editor in chief
“Novaya Gazeta”
101990, Moscow, Potapovsky per., 3

From: Law firm “Ivanyan and partners”, lawyers of “Gunvor” company of T. Tornqvist and G.N. Timchenko

Subject: Publication in “Novaya gazeta” dated 24.08.09 and letters addressed to T. Tornqvist and G.N. Timchenko dated 11.08.09 and 31.08.09.

September 4th, 2009.

Dear Dmitry Andreyevich,
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by John Helmer - Sunday, October 4th, 2009
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By John Helmer in Moscow

On Thursday, the Russian state shipping company Sovcomflot (SCF) opened its three-year old, $800 million claim in the UK High Court; Justice Andrew Smith is presiding.

Preliminary applications were heard on the first day, along with a presentation by the barrister representing Sovcomflot. Presentations for the defence commence today. Next Monday, Sergey Frank, the SCF chief executive, is scheduled to testify. It is rare for a Russian state official to testify in a foreign court proceeding; Frank was the Minister of Transport before he was appointed to the shipping company. Frank’s spokesman in Moscow declines to say whether he will appear.

The Russian defendants in the case are Frank’s predecessor at SCF, Dmitry Skarga, and the former chartering partner of the company, Yury Nikitin. They claim the court case is a fight for commercial advantage between two rival management groups, and their allies in the Russian oil trade. They deny Frank’s allegations of fraud.
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by John Helmer - Friday, October 2nd, 2009
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By John Helmer in Moscow

The test of a rising empire is how far from home it will go to take wealth from the natives. The test of a declining empire is how much more it will spend on keeping the natives down than being there is worth. By this standard, Russian Aluminium (Rusal) in Africa is no imperialist — more smash-and-grab raid gone wrong. And the Kremlin realizes it.

The Guinean Government in Conakry now says it has enough evidence to launch a court claim against Rusal for at least $1 billion. A local court filing is expected shortly, government sources in Conakry say, citing evidence of inflated costs and other alleged manipulation of financial accounts that have reduced taxes Rusal was obliged to pay in Guinea over several years. At the same time, the Guinean government has decided to engage an internationally recognized accounting firm to analyze both the internal financial accounts, and also Rusal’s export declarations, to support the court claim, and if warranted, increase it.
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by John Helmer - Friday, October 2nd, 2009
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By John Helmer in Moscow

The Russian government’s quid pro quo for state financing for the Mechel group’s coalmining operations appears now to include the takeover of a fourth steel plant from the bankrupt Estar group, owned by Vadim Varshavsky. According to Dmitry Teplov, the head of the industry department in the Perm region, Mechel sent representatives to the Nytva Metallurgical Plant two weeks ago; and Igor Zyuzin, the controlling shareholder and chief executive of the Mechel group, is now considering whether he will take over operational management of the plant.

His spokesman Ilya Zhitomirsky won’t say that Zyuzin is happy to do so. The spokesman won’t say anything at all about the terms of Zyuzin’s new concession with the Russian government. The silence is a signal that Zyuzin is afraid that Mechel may be dragged into repaying some of the debts Varshavsky ran up by pledging steelmill assets as security for cash Varshavsky took elsewhere. Alfa Bank steel analyst Barry Ehrlich reports “it is hard to assess the impact of taking the small assets of Estar Group under management. We believe that this could help Mechel to expand in other production segments and diversify the geography of its sales. On the other hand, this may lead to additional costs with no substantial returns.” It’s the last part that’s the rub: Zyuzin appears to be anxious not to welch on his Kremlin deal, nor reveal to his foreign shareholders what the real cost may be.
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by John Helmer - Thursday, October 1st, 2009
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By John Helmer in Moscow

Russia’s Economic Development Minister, Elvira Nabiullina (pictured left), has confirmed the government’s intention to privatize the shares of the oil tanker group, Sovcomflot (SCF), which is currently 100% owned by the state.

Nabiullina, speaking at an investment conference in Moscow, said that in order to increase state budget revenues, the privatisation of “ports…airports, Sovcomflot [is] now [being] discussed,” according to news agency reports.

Nabiullina’s ministry spokesman declined to say if the government has decided on a valuation of SCF for the sell-off, on the volume of shares to be sold, or the revenue target to be aimed at. At her public appearance, Nabiullina claimed the proceeds of the selloff might be “several tens of billions of roubles”.
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by John Helmer - Wednesday, September 30th, 2009
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By John Helmer in Moscow

The Guinean Government in Conakry says it has enough evidence to launch a new court claim against Russian aluminium company, Rusal, for at least $1 billion. A local court filing is expected shortly, government sources in Conakry say, citing evidence of inflated costs and allegations of manipulation of financial accounts that have reduced taxes the government says Rusal was obliged to pay in Guinea over several years. At the same time, the Guinean government has decided to engage an internationally recognized accounting firm to analyze both the internal financial accounts, and also Rusal’s export declarations, to support the court claim, and if warranted, increase it.
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by John Helmer - Wednesday, September 30th, 2009
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By John Helmer in Moscow

Oleg Deripaska, the controlling shareholder and chief executive of Rusal, Russia’s bauxite and aluminium monopoly, is attempting to run the gauntlet of international courts and Hong Kong stock exchange investigators, as time runs out for him to meet his cash-or-list obligations to his shareholding partners, Russian oligarchs Mikhail Prokhorov and Victor Vekselberg. They, like Michael Cherney, Deripaska’s founding partner in the aluminium business, hold signed undertakings from Deripaska that if their private shares in Rusal do not achieve a public market listing by deadline, Deripaska must buy back their shares for cash.

And as Russia’s most indebted man, with about $20 billion in obligations, not counting the share value, Deripaska has no money to spare.

The pressure on the Russians has turned into an unprecedented problem this week for the Hong Kong Exchange (HKEx) listing division, headed by Mark Dickens; and the Hong Kong government market regulator, the Securities and Futures Commission (SFC), headed by Martin Wheatley. Dickens, an Australian with three decades of Australian and Hong Kong market experience, has had no investigative involvement with Russian companies. Wheatley, an Englishman, was with the London Stock Exchange until 2005, before the Russians started to list there.
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by John Helmer - Tuesday, September 29th, 2009
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By John Helmer in Moscow

Vadim Varshavsky, the owner of the bankrupt Estar group of midsize, specialty steel mills, has made his first public appearance in Russia since his financial group collapsed with debts of up to $4 billion. Until recently, he had been thought to be staying in London, or in another location abroad.

Varshavsky was in Rostov on Saturday to meet the Rostov region governor, Vladimir Chubb, the governor’s spokesman told CRU Steel News. The meeting also included the Mechel group chairman and controlling shareholder, Igor Zyuzin. According to the governor’s office, the meeting was intended to confirm terms of transfer of Varshavsky’s management and financial interest in the operation of four Estar units in the region — the Rostov Electrometallurgical Works (REMZ), the newest of the mills of the Estar group; Lomprom, a scrap unit of the Estar group; a power station supplying electricity to the Rostov mill; and a small coal mine.
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by John Helmer - Tuesday, September 29th, 2009
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