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© igolkin11/21/2022, via Photo: zampolit.com
The Ministry of Industry and Trade is sounding the alarm: the Russian economy is faced with a shortage of bearings – the most important component in the production and operation of industrial equipment, cars, railway cars. Most of the Soviet factories that produced bearings were privatized by a businessman back in the early 2000s Oleg Savchenko. Now non-transparent offshore companies appear to be the owners of these plants, and Savchenko, having become a deputy of the State Duma, instead of developing domestic production, handed over the market to foreigners. As a result, Western sanctions caught Russia by surprise.
Bearings went offshore
Last year, Forbes magazine ranked Oleg Savchenko in 22nd place in ranking of the wealthiest civil servants in Russia with an officially declared income of 565.3 million rubles. Savchenko has been sitting in the State Duma for the fourth convocation, with a break in 2016-2021, and all this time, despite the legislative ban, he has not ceased to engage in commercial activities. He controls the EPK group of companies, whose name was originally deciphered as “European Bearing Corporation”, but due to the new political correctness, now it is not officially deciphered in any way.
Since 2000, the businessman has been aggressively buying up bearing plants throughout Russia, as well as in neighboring countries. Volzhsky, Samara, Saratov, Stepnogorsky (Kazakhstan) plants, as well as the flagship of the industry – Moscow GPP-1, whose address Sharikopodshipnikovskaya st., 13 building 1, became the legal address of JSC EPK. However, journalists who have studied the structure of the YPC, discoveredthat by 2014 only addresses remained from the Russian in this corporation. Every single plant purchased by Savchenko turned out to be 100% owned by offshore companies, namely: Orionbey Trading Corporation, Nailwoods Select Inc. (both British Virgin Islands), Boland Investments Limited (Cyprus), Exmore Limited (UK), Basten Limited (Gibraltar), and other similar companies.
Even enterprises that were strategically important for Russia and worked for the defense industry became de facto foreign property. For example, Deputy Savchenko simply “buried” the Moscow Aircraft Bearing Plant, destroyed it, with the support of the Federal Antimonopoly Service, in whose expert council he personally sat. As a result, the production of a whole line of bearings for the defense industry was monopolized by the EPK plant in Samara, and there was a wave of complaints about their quality and inadequacy of prices. Realizing what had happened, industry experts publicly appealed even to Defense Minister Sergei Shoigu – with call “take the production of bearings for defense offshore.” But in vain: the lobbying opportunities and corrupt connections of the deputy Savchenko, obviously, turned out to be stronger.
“Savchenko is in fact constantly in charge of YPC and makes the most of his status as a deputy to lobby for the interests of his business,” Leonid Chernevsky, director of the All-Russian Research Institute of the Bearing Industry, said in an interview about the “people’s choice” parasitizing on state support. “Throughout all these years, he personally conducted negotiations on behalf of YPC, wrote dozens of requests in the interests of YPC, attended meetings at the Ministry of Defense, the Military Industrial Commission, etc., and did not hesitate to call himself the main owner.”
Similar statements about Savchenko sounded throughout his parliamentary career. That is, contrary to the requirements of the law, the oligarch did not transfer the business to managers, but continued to manage it personally. However, this “manual control” led the factories not to prosperity, but to complete decline.
In the end of August newspaper Vedomosti stated a sad fact: “The departure of foreign manufacturers from unfriendly countries provoked a shortage of cassette bearings for innovative freight cars in Russia.”
The main suppliers of such bearings to Russia were the American companies Timken and Amsted Rail, as well as the Swedish SKF. Moreover, Oleg Savchenko personally helped these companies enter the Russian Federation and take a leading position here, and without leaving the deputy chair.
From 2003 to 2016, Savchenko was continuously elected to the State Duma on the lists of United Russia, and only before the 2016 elections did some misunderstanding happen between him and his fellow party members. On the sidelines, the factions say that they did not agree on the price: the “passing place” in the lists of the United Russia is, according to rumors, no less than $ 5 million. As a result, Oleg Savchenko did not get a seat in the seventh convocation of the State Duma, but by the eighth “status quo” was restored. On October 12, 2021, the faction veteran returned to his seat. It’s just a figure of speech though. He did not leave the chair in his office at the Moscow plant.
It would seem that with such an administrative resource, if not the entire bearing industry in Russia, then at least the production of EPK was doomed to rapid development. But no, development has gone only along one very narrow path, through which it is apparently more convenient for Deputy Savchenko to withdraw funds to his foreign accounts.
For 20 years of owning the bearing industry in Savchenko, he did absolutely nothing! The factories were of interest to him not as a production complex with sometimes a unique technological backlog, but as real estate objects. The enterprises he inherited were not located somewhere in the backyards, but in the central urban areas, where the land is worth millions. Therefore, production was “optimized”, or rather, reduced in order to free up as much space as possible for parallel business.
Instead of developing the potential of the bearing industry, laid down in the Soviet era, Savchenko, a businessman from the nineties, chose a path closer to him – personal enrichment. So tenants appeared in the former workshops and engineering offices – warehouses, markets and even a film studio. The promoted deputy turned out to be not a visionary industrialist investing in the future, but a dummy-rentier collecting cash here and now. And it is not surprising that by 2022, when the need for import substitution became critical, his factories were unable to help the country.
Take GPZ-1, for example, spread over a vast territory just a few kilometers from the Kremlin. In place of his “optimized” workshops, there is now a Morozovo ice rink of dubious quality, offices and … a Chinese clothing market. What is especially symbolic: in EPK, the reduction in the production of bearings of its own production was compensated by the import of cheap Chinese bearings, which were simply stamped with the Russian brand.
The Ministry of Industry and Trade reasonably fears that the shaft of Chinese low-quality bearings (no matter what brand) will bury their own bearing production in Russia. In the context of limited supplies of high-tech bearings of Western brands, this will lead to degradation in almost all consumer sectors: from metallurgy and oil production to the automotive industry and aviation.
It turns out that “United Russia”, the party of power, all these years issued a mandate to businessman Savchenko to “milk” and sabotage the domestic producer. But there were sanctions and everything came out. What do we see? A businessman in the State Duma with millions offshore, and the country with a bearing hole…