The Donbass Industrial Union (ISD) corporation paid millions of dollars in lobbying in the Kremlin circles during the sale of half its stake in Russia, according to an investigation by DW, a Russian version of which was made public on the media company's website.
It is emphasized that after the annexation of Crimea and the war in eastern Ukraine, Russian claims to influence the post-Soviet space were the focus of attention of the international community. Against this background, few people mention the economic expansion of Moscow that took place before this event. Starting in 2009, Russian businessmen and Russian businessmen close to the Russian leadership have been buying up entire industries. Priority was given to energy-intensive industries such as the chemical industry or metallurgy.
"Russia supported buyers with gas discounts or billions of loans from Vnesheconombank (VEB), a state development corporation. After the purchase of Ukrainian Prominvestbank, the metallurgical holding" Industrial Union of Donbass "(ISD) was also included in the sphere of interests of Russians, .
It is recalled that the ISD in the process of privatization in the nineties of the last century was created by a Ukrainian industrialist, and now Verkhovna Rada deputy and former governor of Donetsk region Serhiy Taruta together with his partner Vitaliy Haiduk. Subsequently, a third partner — Russian Oleg Mkrtchan — joined them. After the financial crisis of 2008, the holding was in a difficult position. As a result, a majority stake in ISD was sold to a group of Russian investors in December 2009, the key media being the former co-owner of Evraz Group, Alexander Katunin. The lender was Russian Web.
Taruta is convinced that an agreement would not be possible without the support of the Kremlin.
"Important decisions at VEB are made by the Russian Ministry of Finance together with the head of government, who is the chairman of the supervisory board," Taruta said in a recent interview with DW. The Russian government was headed by current Russian President Vladimir Putin at the time of the ISD sale. According to Taruta, Katunin's nominal owner is a screen. According to the businessman, the real owner who is hiding behind the intricacies of foreign firms is the VEB and thus the Russian state. The Russian corporation still does not confirm this information. DW's request to purchase an ISD was unanswered.
The investigation states that for many years the circumstances surrounding the sale of ISD were not discussed. So far, the details of the deal, which remained behind the scenes, have not shed light on the litigation in London between former holding partners. It turns out that the intermediary in the process of selling to the Russians was former politician and businessman Igor Bakai. According to a confidential memorandum in the possession of DW, Taruta and his partner Mkrtchan pledged to pay Bakay an unprecedented 8.2% commission on the sale of the asset. The brokerage fee was to be paid into the account of an offshore company in Belize. According to the memorandum, the intermediary had to find a buyer for the controlling stake of the ISD and provide credit financing for the transaction if necessary.
Bakay at that time had very good ties in Moscow, right down to the Kremlin offices. He established these contacts through gas business and later at the head of the state-owned Ukrainian company Naftogaz. For 15 years, the entrepreneur has lived in Russia, where he disappeared from criminal prosecution at home and obtained his citizenship.
For his successful lobbying work in the ISD sale, Igor Bakai received an impressive sum of $ 225 million, according to court documents in London. When considering the case, it became known that the price of the sale of ISD was $ 2.7 billion for 50% plus two shares.
Responding to a question from DW, Taruta confirmed that the agreed generous commission was indeed paid. For him, it seems, it has become a good investment. With the help of the Russians, the businessman managed to sell the ISD stake more profitablely, while remaining a large shareholder with a blocking block of 25%.
In turn, it is noted that the agreement on ISD has become possible thanks to state funding through the Russian Development Corporation. Shortly before the sale of the controlling stake to the Russians, Taruta and his partner Mkrtchan bought a third partner, Vitaly Gaiduk, from his third partner. Money for the purchase of Gaiduk's shares was given to Ukrainians by the Russian Web Bank. In just a few weeks, the shares of Taruta and Mkrtchan, bought from ex-partner, were sold to the Russians, adding 8.1% of their shares to this package. In terms of per share, they received several times what they paid to their partner. Haiduk received $ 750 million for his package of 33.8%, while Taruti and Mkrtchanu paid $ 1 billion for the *% sold by each of them, according to a DW investigation.
"It was years before Vitaliy Haiduk accidentally found out how much his former partners had received from the Russians. In 2016, he filed a lawsuit with the High Court of London. Haiduk finds himself duped and demands $ 1 billion in compensation from Taruta and Mkrtchan. The litigation is pending. In a written explanation to the court, Taruta dismissed allegations that he misled a partner. According to him, during the sale, Haiduk "was able to take the advice of experts." He also believes that the former partner could trade at his own discretion. In addition, the purchase of Haiduk's share has nothing to do with the sale of the shares to the Russians, according to Taruta's written explanations to the court, "the media company said.
However, according to court documents, the Baku Commission was also subject to review in London. Haiduk's lawyers suggest that the payment could have been a "kickback" — that is, hidden by a bribe to third parties behind the operation. "The claim that establishing contacts between the Russian buyer and Mr Taruta and Mkrtchan alone could be worth $ 225 million, is absurd," Gaiduk's lawyers say.
Taruta rejected in an interview with DW the assumption that the money I paid could be a kickback. "Buckeye made that money. We owe it to him," says Taruta. According to him, lobbying for this agreement was associated with a large amount of work. DW could not reach Igor Bakai. Oleg Mkrtchan is in a Russian prison. He was found guilty of misappropriation of VEB loan facilities granted after the sale of the controlling interest in ISD.
There is no evidence that other recipients of the $ 225 million payment could have been received. Taruta did not answer DW's questions about whether he knew the beneficiaries of the Belizee company to which the funds were transferred.
"It is interesting that in the negotiations on the future of the ISD, in addition to Bakay, a person close to Vladimir Putin was also involved: Ukrainian Viktor Medvedchuk. This politician and entrepreneur was considered to be a" Putin man "in Kiev. During the London trial, it became known that Bakay and Medvedchuk in the Memorandum of Understanding enshrined an option to buy 10% of ISD shares, in an interview with DW Taruta explained these intentions — there were agreements that VEB would lend to the development of the company, and related expectations of growth. But when they saw that It didn't happen to them, it was absolutely uninteresting to them ", — DW materials say.
At present, the management of ISD enterprises in ORDLO has been lost, the management of self-proclaimed DNR and LPR has established control over local factories and mines operating under Ukrainian laws. In this case, Taruti states that the metallurgical holding is today de facto bankrupt. Since 2014, the largest ISD factories are under the control of the Donbas government, their market value is near zero. Billionaire loan of WEB, according to press reports, is not serviced. The Russian Development Bank did not respond to questions from DW about the share of the money invested and the possible losses caused to the Russian taxpayers.
According to Alexander Pylypenko, who was previously the Vice President of ISD Corporation, the holding had not previously sent any funds for PR support in Russia.
"But funds for servicing transactions in Russia could be channeled, but I did not participate in it," — said the source.
At the same time Pylypenko specified that earlier Katunin's name was not mentioned in the process of selling the ISD share.
ISD was founded in 1995. It is an integrated holding company that owns stakes in the enterprises of the mining and metallurgical complex. The corporation includes the Alchevsk CNC Metallurgy Plant, which has lost control since the end of 2017, as well as the Dnipro Metallurgical Combine (DMK, Kamenskoe Dnipropetrovsk Region) and the ISD-Dunaferr Metallurgy Plant (Hungary). ISD-Huta Czestochowa (Poland) is in bankruptcy and ISD has lost control of the business. The CEO of ISD and the former owner of the Russian football club "Kuban" Oleg Mkrtchan was convicted by a Moscow court in August 2019 of a particularly large fraud with money of Vnesheconombank and sentenced to 9 years in prison and imprisonment in a penal colony 900 thousand rubles.
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