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Russian Oligarchs Escape from Russia Leaving Ruined Companies Behind

Companies / Russia Sep 17, 2009 - 08:12 AM GMT

By: Pravda


Best Financial Markets Analysis ArticleAs soon as air castles built on oil money start crumbling, Russian businessmen run to escape behind the thick walls of their oversea mansions. There they are unreachable for their creditors and police authorities. Unfortunately, debunking of mediocre management only results in the redistribution of property and does not lead to punishment.

The owner of the bankrupted Mirax Group, Sergey Polonsky, formerly a lucky businessman who used to shock the public with his escapades, was very surprised by a tough stance of his lending banks which for some reason want their money back. Polonsky built his empire at the time when oil money was flowing in. He, however, failed to properly invest his profit and save his company in crisis. Now he is genuinely puzzled by the fact that no one can give him a payment extension.

Last year Polonsky promised to eat his own tie if the real estate prices don’t grow 25 percent. Well, he didn’t do it and ran away from his mean creditors. He, however, had enough time to transfer $440 million from Mirax Group accounts to his personal account, which totally destroyed his company.

Yevgeny Chichvarkin, the founder of Russia’s largest retailer selling cellular phones, fled to London when he found out that he was facing criminal charges. He managed to sell his business to Alexander Mamut. In Russia Chichvarkin is charged with abduction and extortion. His VP, Boris Levkin, and several employees are also suspects in this investigation. However, unlike their former boss, whom Great Britain does not want to extradite at the moment, they have to face the charges in full. A local court has already issued a warrant for Chichvarkin’s arrest, but it does not mean he will be extradited.

Supposedly, the former head of Eldorado chain (stores selling electronics), Alexander Shifrin, is hiding in England as well. He is on the international wanted list, and a Moscow court issued a warrant for his arrest. The businessman owes the government 13.2 billion rubles.

It seems that closeness with Moscow officials should guarantee a comfortable and quiet life. However, Shalva Chigirinsky, who co-owned the largest Moscow construction projects and the Moscow Oil Company with the Moscow government, now resides in London as well. He had to move there when all his assets, including his collection of antique clocks, were seized. Sibir Energy, that Chigirinsky used to co-own, is now acting as his creditor. Chigirinsky fled and decided to fight for the assets he accumulated though backbreaking work by filing a claim in a London court. The claim was accompanied by the documents confirming a gratuitous transfer of 50 percent of his assets to Yelena Baturina, the wife of Moscow Mayor Yury Luzhkov. He also asked for political asylum in Great Britain.

The former President and Chairman of the Board of “Svyaz Bank”, Gennady Mesheryakov, is lying low in the Netherlands. Within a couple of years he was able to put his bank in the top twenty of Russian credit institutions. Then he suddenly resigned. A year later his flourishing bank was near bankruptcy. Experts say the new management was not to blame. They believe that Mesheryakov caused the situation by giving out loans with no collateral. When he saw what was coming, he quietly disappeared.

In the early 2000s, the Moscow government created a system of non-budgetary financing of investment programs. The companies participating in the project were to free the government of the worries regarding the real estate market near Moscow. They were to take full responsibility for fundraising, construction permits and other paperwork. Alexei Kuznetsov, a former Finance Minister of the Moscow region who was in office from 2004-2008, was signing construction cost estimates overstated by 50-70 percent. A sizable portion of the budget was spent on schools, kindergartens, stadiums and other socially significant structures. The extra millions, and sometimes, billions of rubles, gravitated towards the bank accounts of the RIGriop affiliates, a strategic partner of regional companies.

As luck would have it, Zhanna Bullock, Mr. Kuznetsov’s wife, was the President of the RIGriop.

The couple is held responsible for sending the budget funds offshore, acquiring land plots for pennies on the dollar, and other frauds. To this day only three people involved in those frauds have been charged. Kuznetsov and Bullock are not among them. The couple is spending the money in a New York suburb – turns out they both had American passports.

The moment Telman Ismailov threw a lavish party at the opening of the Mardan Palace Hotel in Turkey, his empire started crumbling.

Criminal charges against Ismailov’s AST Company; shutdown of Cherkizovsky market (the largest market in Europe) and confiscation of goods; searches in Moscow’s Praga restaurant. Those who know have no doubts – he is next. Of course, unless he has already settled down in Turkey or Israel. Experts think that the latter is easier and safer. Telman Ismailov is the Vice President of the Euro-Asian Jewish Congress and it won’t be hard for him to obtain Israeli citizenship. And the prior experience of the Russian Prosecutor-General Office shows that attempts to get someone extradited from Israel are for the most part fruitless.

Experts think that the clouds have been piling up above Oleg Deripaska’s head. His Rusal Company is one of those that suffered most from this crisis. Both the demand and prices on aluminum went down, and the company is in serious debt. The creditors have already asked for the minority stake of the largest aluminum plants as collateral. Besides, Deripaska’s former partner Mikhail Cherny filed a claim against him in London, stating that Deripaska owes him $4.5 billion.

“Many businessmen are trying to get another citizenship and it does not have to be US or European citizenship,“ legal expert Maskim Sokolinsky stated in an interview to Kompania magazine.” “Entrepreneurs associate dual citizenship with certain stability. They don’t see their future in Russia even when they make big money here. Great Britain is certainly the most attractive option. Britain’s officials do not recognize the decisions of Russian courts and normally deny requests for extradition. Disgraced businessmen can run their business in Britain even when their assets are seized in Russia and bring no profit. Although, when they run from the officials and creditors, they are looking for a safe place rather than a place for business,” he said.

Express Gazeta

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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