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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By John Helmer in Moscow

According to Edgar Rice Burroughs, Nemone, Queen of the City of Gold, was one of those notorious Hollywood types – too beautiful, not enough brains, and a perverse streak that enjoyed making people suffer. Tarzan gets help from his pet lion, and together they despatch the worst Nemone sends after them. Nemone is a sore loser, and seeing no purpose in life without getting her own way, she kills herself.

Alexei Mordashov is smarter than Nemone, but he is a sore loser nonetheless. After confronting the combined forces of the minority shareholders in High River Gold (ticker HRG:CN) for six months, and losing, he’s despatched in the space of a single week the chief executive of the company, the head of investor relations, and a member of the HRG board.
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by John Helmer - Sunday, September 27th, 2009
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Key: Rear left, Congressman Bill Pascrell, Democrat, New Jersey
Rear right, NBA Commissioner David Stern
Centre, Stuart Levey, Under Secretary of the Treasury for Financial Intelligence
Rack: Mikhail Prokhorov
Front left, Senator Paul Sarbanes, author of financial accountability statute
Front right, Daniel Goelzer, Chairman of Public Company Accounting Oversight Board

For Immediate Release
September 23, 2009

For Information Contact
Paul Brubaker (973) 523-5152

CONGRESSMAN PASCRELL REQUESTS NBA COMISSIONER
DAVID STERN TO INVESTIGATE NEW JERSEY NETS SALE

WASHINGTON – U.S. Rep. Bill Pascrell, Jr. (D-NJ-8) today sent a letter to NBA Commissioner David Stern urging him to thoroughly investigate former nickel mining baron Mikhail Prokhorov, who reached an agreement today to buy the New Jersey Nets.
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by John Helmer - Sunday, September 27th, 2009
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By John Helmer in Moscow

A secret meeting in the middle of the night in the presidential palace in the Guinean capital of Conakry, requested by the Russian aluminium oligarch Oleg Deripaska, has triggered a Guinean court ruling and a tax investigation of claims amounting to $700 million. The claims catapult the Guinean government and its leader, Army Captain Moussa Dadis Camara, to the head of the table of international creditors seeking more than $8 billion from the insolvent Russian aluminium monopoly, United Company Rusal.

Guinean government officials say that Deripaska, who is chief executive and controlling shareholder of Rusal, made the arrangement to meet Camara through an intermediary, Raoul Delaware. A British passport-holder from Mauritius, he is well-known in Conakry from his involvement in international business deals during the 25-year rule of President Lansana Conte. Conte died last December. He has been replaced by the Guinean Army.
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by John Helmer - Thursday, September 24th, 2009
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By John Helmer in Moscow

Mahmoud Thiam, the US-trained banker turned resource policymaker for the Guinean government (pictured right), says that the nine-month review he has initiated of the country’s major mineral and mining concessions is not intended to reopen or renege on every deal done with foreign miners during the 25-year rule of Lansana Conte, Guinea’s president until last year. When Conte died suddenly in December, he was replaced by the Guinean Army, led by Captain Moussa Dadis Camara. Thiam, who was educated in France and the US, and worked at Merrill Lynch and UBS, was appointed Minister of Mining, Energy, and Hydraulics last January.

“We view concessions as legally binding,” Thiam told Minesite.com, and “we intend to respect them.” Distinguishing his approach from mine licence and privatization investigations under way elsewhere in Africa, Thiam said: “we have tried to avoid a blanket questioning , which can be time-consuming and expensive. Freezing everything and putting everything in question is not the right approach. We didn’t come to renege.”
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by John Helmer - Thursday, September 24th, 2009
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