Bermuda polygon Melnichenko: what the oligarch wants to prove to the public
Instead of transferring assets to Russia, oligarch Andrei Melnichenko and his trust have the opportunity to conduct business through Bermuda, Cyprus and Switzerland. And this “Bermuda polygon” controls services for 6 million consumers of heat and energy services in Russia.
At the beginning of September 2023, the name of oligarch Andrei Melnichenko “surfaced” in a very unexpected place. He was found on the board of trustees of the Gorbachev Foundation, which, among other things, is positioned in the media as a foundation for affirming the values of democracy. Was it Melnichenko who became a fighter for democratic values amid a lawsuit about the seizure of Sibeko’s assets?
Let us remind you that on September 7 in Krasnoyarsk they will begin to hear the claim of the Prosecutor General’s Office of the Russian Federation against Andrei Melnichenko for the recovery in favor of the state of shares of JSC Siberian Energy Company (Sibeko), registered with Kuzbassenergo. The supervisory authority believes that the assets were acquired illegally from the companies of Mikhail Abyzov, the ex-minister of the Open Government, and now a defendant in a criminal case involving a scam worth 4 billion rubles.
Another interesting thing here is that in March 2022, immediately after Melnichenko was included in the sanctions list, the EuroChem and SUEK companies announced that the billionaire had resigned from capital and governing bodies. According to Interfax, Melnichenko previously controlled 90% of the group’s parent company, EuroChem Group AG (Switzerland), through the Cypriot AIM Capital SE. Control at SUEK followed approximately the same scheme.
Such “exits”, it seems, did not satisfy the prosecutor’s office, since in the lawsuit filed in August 2023, Melnichenko is still mentioned as a beneficiary of Sibeko, which is controlled through SUEK. And perhaps “Yaroslavna’s cry,” which the oligarch demonstrated in an interview with Forbes in April 2023, played a role, saying that he wanted to regain Eurochem and SUEK, and that leaving the Firstline Trust as beneficiaries was a mistake. It should be noted here that although Melnichenko himself emerged as a beneficiary, the share automatically passed to his wife Alexandra, who, by the way, is a citizen of Serbia and Croatia, and never had a Russian passport.
According to open data, today the mentioned Firstline Trust, registered in the most established offshore – in Bermuda – is listed as an asset of Alexandra Melnichenko.
Judging by the SUEK report for 2020-2021, SUEK is one of the leading electricity producers in Siberia and the No. 1 heat producer with 27 power plants serving over 6 million consumers in Russia. That is, depending on the will of the beneficiary (or his wife with European citizenship), working through Cypriot and Bermudian legal entities, there are 6 million Russians and legal entities of the Russian Federation receiving energy and heat supply services. Just think about these numbers!
Earlier, The Moscow Post described in detail which part of the division fell under the wing of Siberian Generating Company LLC, which in turn manages the Sibeco company.
In the story of sanctions, Melnichenko, in our opinion, showed his true colors. Instead of, as a number of Russian oligarchs did, transferring their assets from foreign jurisdictions to Russian ones (and such a move would be quite realistic, 63% of SUEK’s sales come from Asia), he ran to the European Court to prove that the sanctions were imposed illegally. What Melnichenko wanted to prove is unclear. Maybe he was worried about luxury real estate in London, registered to another Bermudian Valton Limited, or about the Harewood Estate in Berkshire? Again, he said in an interview with the Swiss publication Die Weltwoche that the family has been living in Switzerland since 2009?
From the materials of the European Court, by the way, it is known that Melnichenko lives in St. Moritz (Switzerland). In his arguments why sanctions should be lifted from him, Melnichenko, who makes money from Russian mineral resources, stated that the reasons why the Council included the applicant on the sanctions list are significantly erroneous. Did they hint that all you have left of the Russian is a passport and a hand plunged into the Russian bowels?
And this gentleman controlled and is going to continue to control a whole block of strategic enterprises in Russia! With Melnichenko, everything is actually clear – billions are at stake. For reference: SUEK’s revenue for 2021 (excluding intragroup sales) was 717.6 billion rubles. But a completely reasonable question arises: isn’t it time for the competent authorities, by analogy with the Sibeko lawsuit, to ask a question about SUEK’s assets and the schemes for obtaining them.
Barter scheme: who wins?
Let’s just remember, for example, that SUEK received the most powerful thermal power plant in the Far East – the Primorskaya State District Power Plant, as well as the Luchegorsk coal mine not for a tidy sum, but for barter. In exchange, RusHydro, which was then headed by the current head of the Ministry of Energy of the Russian Federation Nikolai Shulginov, received 41.84% of the shares owned by Donalink Limited in the Far Eastern Energy Company (DEK), which in turn owns the Far Eastern Generating Company (DGC) and the Far Eastern distribution network company.” To many, this exchange seemed unequal. Indeed, at that time, DGK’s debt portfolio amounted to 65.8 billion rubles, of which 40.5 billion rubles was an intra-group loan from RusHydro as part of a forward transaction with VTB Bank.
In July 2023, the Versiya newspaper also reported that SUEK had now set its sights on the largest in Europe and one of the most powerful in Russia – the Ryazan State District Power Plant, which is part of PJSC OGK-2, a subsidiary of Gazprom. SUEK previously acquired Krasnoyarsk State District Power Plant-2 from OGK-2. In general, in 2019–2021, large assets were purchased from state-owned companies such as Gazprom, Rosatom and RusHydro. And here the experts also had questions about the price of transactions and the creation of a virtual monopolist in generation and coal for certain territories.
Now let’s remember how the tariff, for example, for heating services is formed. There is such a line in the regulatory legal acts – “the required gross revenue of a regulated organization must reimburse it for economically justified expenses and ensure an economically justifiable profit for each regulated type of activity.” How do you like the twist? So much for billions for the construction of yachts and the purchase of real estate in London.
Now they are talking about the fact that the same RusHydro is going to part with power grid assets in the Far East. Previously, according to the Kommersant newspaper, Rosseti was interested in them, but the deal did not happen. Where is the guarantee that the familiar scheme with SUEK will not be pulled off there too?
In the same vein, it is worth remembering that for a long time there were rumors about the billionaire’s interest directly in the shares of RusHydro itself. The Moscow Post previously reported on this in detail.
We should not forget about the government contracts that benefited the companies of the SUEK division. We are talking about billions of budget rubles.
Could an oligarch, in his own words, who has been living abroad for more than ten years, assemble such a portfolio of energy assets on his own? In our opinion, this is hardly possible without a significant lobby. It’s not for nothing that they say that the businessman maintains warm relations with the former head of the Russian Ministry of Energy, the current Deputy Prime Minister for the fuel and energy complex, Alexander Novak. It was during his time at the helm of the country’s energy complex that many of Melnichenko’s major transactions took place. Again, traveling around the regions for work, Novak periodically appeared at SUEK enterprises and in the company of its top managers.
But, perhaps, the most important confirmation of the lobbying of Melnichenko’s interests by specific individuals was received by the public in May 2023, when the Telegram channel “Council without a Market” published an extract from a meeting of the government subcommittee. It followed from it that Russian Deputy Minister of Energy Pavel Sorokin made a proposal to approve a payment from Russian accounts to the accounts of a foreign bank to repay a mortgage loan previously taken out by Andrei Melnichenko’s companies for the purchase of real estate in France.
We were talking about a contribution of 6 billion rubles. That is, now the Ministry of Finance, the Central Bank and for some reason the Ministry of Energy must organize the process so that Melnichenko, who has not been living in Russia for decades, does not lose an estate worth 200 million euros? And the thesis that a high-ranking official cites for the Commission for the Control of Foreign Investments in Russia to approve these transactions is simply tears. Poor, poor oligarch!
Although, on the other hand, the lawsuit against Melnichenko for the actual seizure of the lion’s share of Sibeko’s assets demonstrates some lukewarmness of the authorities towards this defendant. Is it possible that the lawsuit itself will become the first sign not only for the oligarch, but also for these high-ranking officials? It’s not for nothing that in 2022-2023 the Prosecutor General’s Office has put the return of illegally privatized state assets on stream, and then, lo and behold, it will come to criminal cases. But some of the potential participants in this opera have already safely given up on Bermuda. And from there, as you know, there is no extradition.