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By John Helmer in Moscow
Court documents and testimony, presented recently in the Colorado District Сourt in Denver, expose substantial new evidence that LUKoil has operated a significant business in the state. The new evidence, secret until now, stretches back for ten years, and shows a flow of cash every month from an alleged front company in Colorado to a LUKoil company in Israel. The evidence reinforceS the likelihood that LUKoil and its Russian subsidiary, Arkhangelskgeoldobycha (AGD), will be ordered to face trial on charges of defrauding Archangel Diamond Corporation (ADC) of its rights to develop the Grib diamond mine project.
ADC is a Toronto-registered company which in 1996, in partnership with AGD, discovered the Grib pipe in the Verkhotina licence area of Arkhangelsk. Drilling, sampling and assaying by De Beers have estimated the value of the diamond deposit at between $8.2 billion and $9.7 billion at the diamond prices prevailing in the first quarter of 2008. ADC’s stake in the original project was 40%. Through a cutout in Luxembourg, De Beers holds a control stake of 54% in ADC, plus a $10 million loan that was called for repayment in May.
In addition to its stake in the future Grib mine project, ADC’s biggest current asset is its US lawsuit against LUKoil. This claims recovery of $30 million in investment, $400 million in ADC’s share of profits, and another $800 million in potential profits.
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by John Helmer - Monday, July 20th, 2009
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By John Helmer in Moscow
Far Eastern Shipping Company (Fesco), the third largest of Russia’s fleet companies and the dry-cargo leader, reveals plummeting profit for last year will be followed by loss-making this year.
The bad news has taken some time to be disclosed by the publicly listed shipping company, which operates a fleet of 63 vessels, with an aggregate 866,000 tonnes in deadweight. A writedown of $166 million was taken in fleet value for the year. 52 of the vessels are mortgaged to secure loans from ING, Calyon, Citibank, and Vneshtorgbank. In all, Fesco’s liabilities total just over $1 billion, with $541 million classified as due for short-term repayment.
The company said it is planning on a $150 million loan coming through from the European Bank for Reconstruction and Development (EBRD). However, Richard Wallis, an EBRD spokesman, revealed to Fairplay that there is no sign of loan approval or the required preliminaries. “The EBRD cannot disclose confidential information about due diligence that might have been carried out regarding any company”, Wallis said. A year ago, the London-based EBRD paid $120 million for a 3.77% shareholding in Fesco. The EBRD has now lost most of its investment on paper: the stake is currently worth $32 million. After verifying that nothing new has been posted on Fesco since then, Wallis added: “I am declining to comment on any potential project until it appears as such on the EBRD website.”
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by John Helmer - Thursday, July 16th, 2009
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By John Helmer in Moscow
Loose Canadian stock listing rules, a compliant exchange regulator, and rubber-stamp directors have made it easy for a Russian raider to attack minority shareholders of High River Gold (HRG:TX), and threaten them with dilution and delisting, unless they give in to a low-ball buyout offer. That is what minority shareholders of High River Gold are this week charging against the majority shareholder, Alexei Mordashov, and his Moscow-based Severstal Resources group. But because at least some of the institutional minority stakeholders are powerful Russians – maybe as powerful as Mordashov — the outcome of the tussle over HRG may be decided in Moscow, not Toronto.
So far, Mordashov has instructed his appointees Nikolai Zelensky, the chief executive of HRG, Alexei Khudyakov, the HRG board chairman, and Alexander Grubman, a newly appointed chief executive at Severstal Resources, to apply maximum pressure on the minorities to accept a buyout offer of 22 Canadian cents per HRG share. Mordashov has started with an estimated 57%; the minorities with 43%. The offer started on May 22 at 18 cents, and was raised to 22 cents on June 9. The deadline for acceptances is July 31. Two weeks later HRG issues its first-half financial results. The deadline for the purported review of delisting by the Toronto Stock Exchange is August 18.
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by John Helmer - Thursday, July 16th, 2009
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By John Helmer in Moscow
The Caspian Energy Group, led by Ilya Kokarev, said this week it is confident the Russian courts will rule shortly to uphold its right to seats on the board of the Red Barricades Shipyard. This is the only standout among the Astrakhan yards to resist consolidation by Caspian Energy, which already incorporates Lotos, Astrakhan Third International, and the Korabel shipyard (Astrakhan Shipbuilding Production Association, ASPO).
After a year of negotiations, legal challenges, and the purchase of a 25% shareholding in Red Barricades, Kokarev said he expects the ruling to give him 2 seats on the board. “We’ve tried to start a dialogue but they don’t want to listen,” he told Fairplay.
The Red Barricades director, Alexander Ilichev, has branded Kokarev’s bid a hostile takeover, and appealed to the government in Moscow to protect his company under the wing of the state holding, United Shipbuilding Corporation, supervised by deputy prime minister Igor Sechin. The government remains silent. Noone picks up at the listed telephone numbers of Red Barricades in Astrakhan.
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by John Helmer - Wednesday, July 15th, 2009
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By John Helmer in Moscow
Sergei Stepashin, the head of the Accounting Chamber, Russia’s state auditor, has issued a press leak, claiming he was responsible for the firing of Alrosa chief executive, Sergei Vybornov, after a Chamber audit of Alrosa earlier this year had identified multiple problems, and what Stepashin is publicly quoted as calling “numerous infringements in company activity”. According to reports by news agency Interfax and a Moscow daily business paper, Stepashin, a former Russian prime minister, has claimed that the results of the audit led to the firing. “For this reason,” Stepashin is quoted, “we recommended the replacement of the president of Alrosa.”
Among the “infringements” triggering Stepashin’s call to remove Vybornov, it is now being reported that Alrosa sold rough diamonds to the state stockpile agency Gokhran at a price alleged to have been greater than the export price of the stones.
According to independent testimony by one of the auditors who took part, Angelica Zadorozhnaya, the Accounting Chamber investigated Alrosa’s books early this year. She told PolishedPrices.com that the completed audit report had then gone to the collegium, as the Accounting Chamber’s highest body is known, in April. She also said that this session decided to impose a state secrecy classification on the report.
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by John Helmer - Tuesday, July 14th, 2009
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July 14, 2009
Tim Whehell and BBC Newsnight for beating the English language of a UK High Court ruling into the opposite of what it said about the nature of Russian justice, its beneficiaries and victims
http://news.bbc.co.uk/2/hi/programmes/newsnight/8146052.stm
Letters
Sent: 17 July 2009 14:47
To: Tim Whewell
Subject: Your evidence please
Dear Tim:
In your recent broadcast on Oleg Deripaska, you make the following claim about the ruling of Justice Christopher Clarke in the Cherney v Deripaska High Court action (at minutes 0538-0550 of the tape):
“…The judge said that Deripaska had agreed a final global payment to end Mr Cherney and Mr Malevsky’s protection of his business, words used by Mr Deripaska himself in his statement to the court.”
Please provide me with your substantiation of the judge’s words, as I have searched the ruling and cannot find them; or anything approaching your interpretation of Justice Clarke’s opinion on the substance of the case. At 0526 minutes, you state: “the ruling didn’t deal with the substance of the claim”. Twelve seconds later you seem to have contradicted yourself.
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by John Helmer - Tuesday, July 14th, 2009
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By John Helmer in Moscow
The President of Turkmenistan, Gurbanguly Berdimuhamedov, said Friday his country is interested in diversifying gas export routes, and will participate in the Nabucco project. His statement came ahead of the signing on Monday of an intergovernmental agreement between Austria, Turkey, Hungary, and Romania to build the 3,300-km pipeline across their territories. It’s one thing to agree to sign up in favour of studying the construction and economics of the pipeline; but none of the signatories is rich or anti-Russian enough to bid up the price of the gas to make piping the Nabucco way profitable.
Several sources of gas supply for the 31 billion cubic metre-capacity gas route are available — Azerbaijan, Turkmenistan, Iran, Kazakhstan, and Uzbekistan. However, Gazprom has been negotiating first-refusal gas purchase agreements with Azerbaijan and Turkmenistan in order to lower the gas volume available to make Nabucco economically feasible to operate. The suppliers understand that if Gazprom takes this pricing risk up front, Nabucco won’t be built, and Gazprom’s alternative pipeline to the same countries — South Stream, under the Black Sea — will put a handy safety net under the suppliers’ long-term revenue projections. They also understand that the only way to persuade Gazprom to do something as costly as this is to make the Nabucco option look even more costly.
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by John Helmer - Monday, July 13th, 2009
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By John Helmer in Moscow
Regional mining officials in Kemerovo and the regional coalminers’ union say that ArcelorMittal had already begun closing down two coalmines and dismissing miners, before the Kemerovo region’s governor, Aman Tuleyev (picture left), issued an ultimatum to stop last Friday. If the charges cannot be resolved in negotiations this week, the legal impact of the claims against the company put in doubt all future operations by ArcelorMittal in Russia.
Yuri Udartsev, deputy head of the Industry Department at the Kemerovo regional government, told CRU Steel News said the focus of attention is “the two mines — Pervomaiskaya and Anzherskaya. ArcelorMittal is preparing to close them down, and has already started dismissing the miners. At the current rate [of coal prices], these two mines have no prospects for the future. That is why the regional government could not remain neutral in the situation. [Governor] Tuleyev proposed to ArcelorMittal either to take measures to save the mines, or their license for the Zhernovskoye deposit will be revoked.”
The governor’s aide, Oleg Shishko, confirmed that in the text of a telegramme Tuleyev sent Lakshmi Mittal (picture right) last Thursday, and posted publicly in Kemerovo on Friday, the governor charged “there is no transparency in their [mining] activity, there are serious infringements of technological discipline at conducting mining works”. As CRU Steel News reported on July 10, Tuleyev threatened that if the two mines are closed down, he will revoke ArcelorMittal’s licence to develop the Zhernovskoye-3 coal deposit.
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by John Helmer - Monday, July 13th, 2009
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