By John Helmer in Moscow

Sovcomflot chief executive Sergey Frank (left, centre figure) testified in the UK High Court last week that as Russia’s Minister of Transport he opposed the privatisation and IPO sale of Sovcomflot shares, despite company board and other ministry approvals starting in 2002. Under cross-examination by counsel for former CEO Dmitry Skarga (right, left figure) and questioning by Justice Andrew Smith, Frank dismissed the share sale plan, which was intended to raise $300 million to buy new ice-class oil and LNG tankers to service the Sakhalin-1 and Sakhalin-2 oil and gasfields. Implying this plan lacked “the proper price received and value”, he testified the government preferred to “sack the management and…find a better team to run the company.”

Frank denied that after losing his own ministry post, he fought against several ministers and Kremlin advisors backing the privatisation, until he was appointed CEO of the shipping company in Skarga’s place in late 2004. Asked if his takeover had been arranged by Igor Sechin (now deputy prime minister) and the oil trader Gennady Timchenko, who wanted to merge Sovcomflot with Novoship before selling shares, Frank said: “basically, my level of education giving me enough comfort to express my own vision of any issue, and that doesn’t need any support of people to say that.”
(more…)

by John Helmer - Sunday, October 11th, 2009
No Comments »

by John Helmer - Friday, October 9th, 2009
No Comments »

By John Helmer in Moscow

The board of Vnesheconombank (VEB), the state bailout bank chaired by Prime Minister Vladimir Putin, agreed yesterday to extend for a year a $1.8 billion loan to the Evraz group, controlled by Roman Abramovich’s Millhouse holding.

The loan was first issued in mid-November 2008, and is the largest single government financing for the Russian steel sector since the global crisis began a year ago. It was sought to enable Evraz to repay foreign bank loans, which had been raised to pay for Evraz’s expansion abroad, primarily for purchase of steelmills in North America. At the time of last year’s VEB rescue, Evraz was the third most heavily indebted Russian company, with a total of $9.9 billion in net foreign debt outstanding. Only the two state-owned energy companies, Rosneft and Gazprom, were more heavily indebted abroad than Evraz.

Its short-term (6-12 month) debt at the time of the VEB loan was $4.2 billion; $2.1 billion was due and payable by December 31. Although it is a state institution funded by public money, VEB does not issue transaction or audited financial reports, not even in open form to the Russian parliament. Nor has VEB disclosed the terms by which it has secured loans to borrowers.
(more…)

by John Helmer - Friday, October 9th, 2009
No Comments »

By John Helmer in Moscow

Sergey Frank, the chief executive of state owned Sovcomflot (SCF), one of the top-5 tanker companies in the world, is now into his fourth straight day of cross-examination in the UK High Court for what is turning out to be an unexpectedly dramatic examination of the way high Kremlin officials have fought each other over the management of Russia’s oil shipping concession.
(more…)

by John Helmer - Thursday, October 8th, 2009
No Comments »

By John Helmer in Moscow

It took several shots over a thousand years before people who scribble for a living could get the jingle about their business quite right. Euripides tried it with: “The tongue is mightier than the blade”. To the modern ear that sounds a little on the sado-erotic side. Shakespeare had the phallic inspiration: “many wearing rapiers are afraid of goosequills”. The great Nap got into the right ballpark, but struck out with: “four hostile newspapers are more to be feared than a thousand bayonets.”

Then along came Edward Bulwer-Lytton, who arranged in 1839 for the lead in his play about Cardinal Richelieu to say: “the pen is mightier than the sword”. Even more forgotten than Bulwer-Lytton, though, is what the stageboard Richelieu says next: “Behold the arch-enchanters wand – itself a nothing! – but taking sorcery from the master-hand to paralyse the Caesars”.
(more…)

by John Helmer - Wednesday, October 7th, 2009
No Comments »

By John Helmer in Moscow

Alrosa appears to be selling all of its rough diamond production this year to the state stockpile agency, Gokhran, exceeding earlier estimates of the state budget funds previously allocated to sustain the state-owned company’s mining operations. Both Alrosa and Gokhran are under the control of Russia’s Finance Minister, Alexei Kudrin (pictured right).

According to a report by Interfax, in September Alrosa has sold Gokhran rough worth an estimated Rb20.4 billion ($669 million). For the 9-month period just ending, Interfax reports that Alrosa has sold a total of Rb32.5 billion ($1.1 billion) worth of diamonds to the state repository. Alrosa’s chief executive, Fyodor Andreyev (pictured left), and his spokesman, Alexei Polyakov, were unavailable to confirm the numbers, but a Gokhran source has confirmed their accuracy. Alrosa is not clarifying either its production target for the year, or its sales target.
(more…)

by John Helmer - Wednesday, October 7th, 2009
No Comments »

By John Helmer

On July 31, the UK Court of Appeal upheld the ruling of High Court Justice Christopher Clarke that the administration of law in Russia is liable to be manipulated by powerful Russian businessmen and politically influential individuals pursuing vendettas for their financial gain. “Improper interference by State actors” was the phrase accepted by the three appeal court judges to refer to the behaviour of the Russian prosecutor-general, ministries of Interior and Justice, police, and courts.
(more…)

by John Helmer - Wednesday, October 7th, 2009
No Comments »

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.
(more…)

by John Helmer - Tuesday, October 6th, 2009
No Comments »

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.
(more…)

by John Helmer - Tuesday, October 6th, 2009
No Comments »

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,
(more…)

by John Helmer - Sunday, October 4th, 2009
No Comments »