The Khamovnichesky Court of Moscow turned the shares of the Far Eastern Shipping Company (FESCO) – one of the largest private transport and logistics companies in Russia (international name – the FESCO group) – owned by a billionaire, into state income Ziyavudin Magomedov. According to a correspondent of Business FM, thus, the court satisfied the claim of the Prosecutor General’s Office of Russia.
Kommersant.Ru, 01/11/2023, “The judge took FESCO”: On Wednesday night, the judge of the Khamovniki District Court Tatyana Perepelkova fully satisfied the claim of Deputy Prosecutor General Igor Tkachev. According to its decision, 737,808,127 FESCO shares, owned by Smartilicious consulting ltd, were turned into the income of the Russian Federation, the same number of shares were taken from Enviartia consulting ltd., 236,111,111 shares from Vovosa co limited, 196,552,053 were confiscated from Rikima holdings limited, 134 352 903 lost Mirihia holdings limited and the same – Calamita trading limited, 283 577 497 shares held by Noubelius ltd. went to the state, and the court took 135,000,000 and 134,417,800 shares of the shipping company, respectively, from Nautilius LLC and NovatorInvest LLC. […]
It should be noted that according to the verdict of the court in the criminal case, the FESCO shares owned by Ziyavudin Magomedov were already subject to confiscation. However, in the criminal process, it could not spread to other owners, therefore, obviously, a prosecutor’s claim was filed immediately against all the main owners of the shipping company. The defendants tried to get the proceedings postponed. […] At the same time, the prosecutors made it clear that the shares would in any case be at the disposal of the state. […]
The defendants told Kommersant that they would appeal the court decision. However, some of them believe that the appeal will become a mere formality. According to them, after turning into state revenue, the shares will be at the disposal of the Federal Property Management Agency, which will then hold an auction for their sale. The confiscation itself, both defendants and prosecutors believe, will not affect FESCO’s activities, but will only lead to a change in its owners. — Inset K.ru
The defendants in the case were the elder brother of the businessman, ex-senator Magomed Magomedovand 12 more individuals and legal entities that owned 92.4% of the shares of FESCO.
These are Smattilicious Consulting LTd, Enviartia Consulting Limited, Vovosa Co Limited (8% of shares), Rikima Holdings Limited (6%), Mirihia Holdings Limited, Calamita Trading Limited, Noubelius Ltd (9.6%), LLC ” Nautilius” and LLC “Novatorinvest”, as well as a businessman Mikhail Rabinovichhis partner Andrei Severilov (owning 26.5% and 23.8% of FESCO shares, respectively) and ex-member of the board of directors of FESCO Sergey Bazylev.
The Prosecutor General’s Office based its claim on anti-corruption legislation, which allows the forced seizure of property of officials and members of their families, the legal origin of which is not confirmed, to the state’s income.
The supervisory authority claimed that corruption proceeds were used to acquire the shares of the Far Eastern Shipping Company, which Magomed Magomedov, Ziyavudin Magomedov’s brother, received when he was a member of the Federation Council from the Smolensk region in 2002-2009. By law, he had no right to engage in commercial activities. “Part of the income illegally received during his time in power was legalized by Magomedov by acquiring a controlling stake in PJSC Far Eastern Shipping Company (PJSC FESCO, international name FESCO) in 2012,” the lawsuit said.
Magomed Magomedov himself denied ownership of the shares. Neither he nor his brother personally participated in the process, entrusting the case to lawyers. They claimed that the Prosecutor General’s Office wants to seize the shares for the second time. The fact is that on December 1, 2022, the Meshchansky Court of Moscow, having convicted the brothers for multi-billion dollar embezzlement during the construction of large facilities on 19 and 18 years in prison, confiscated from the owner of Summa Ziyavudin Magomedov a share in the FESCO transport group in the amount of 32.5% of the shares. This verdict did not enter into force, as it was appealed by the defendants in the Moscow City Court.
IA “Interfax”, 01/11/2023, “The court turned the shares of the FESCO group into state revenue in a new lawsuit against the Magomedov brothers”: In addition, according to the verdict, the court confiscated the shares of the transport assets of the FESCO group owned by Ziyavudin Magomedov, namely the shares of FESCO Transport Group LLC (part of the group) and shares in Russian Troika JSC, Port Fleet JSC, JSC ” Portactive”, PJSC “VMTP”, “Port Petrovsk”, “Fesco Bunker”, etc. – Insert K.ru
At a preliminary hearing in the case on December 28, the Magomedovs’ lawyers asked to suspend the proceedings in the Khamovnichesky Court until the verdict enters into force, but the court refused. This petition was re-submitted at the hearing on January 10 by the representative of Magomed Magomedov, lawyer Yulia Badylo, with a certified copy of the judicial act attached.
A representative of the FESCO also petitioned for the suspension of the proceedings. He said that at present the Investigative Department of the Ministry of Internal Affairs is investigating the case of embezzlement of funds from FESCO in the amount of 800 million US dollars. According to him, this investigation found that in fact 92.4% of the company’s shares were acquired in 2012 at the expense of borrowed funds that were stolen from the company itself. On January 23, 2021, she was recognized as a victim in a criminal case, and on November 16, 2022, as part of a criminal case, she filed a civil claim for $1.4 billion. The shares were seized.
According to the defendant’s representative, the investigation period in the case, which is “in the stage of active seating”, has now been extended until February 5, 2023. “The case was initiated much earlier than the appeal to the court of the Deputy Prosecutor General with a claim for seizure [акций]. Turning them into state revenue is premature,” said FESCO representative Daniil Sidorov. He stressed that the court’s decision to confiscate the securities would grossly affect the outcome of the criminal case and the interests of the victim, as well as “entail legal uncertainty” and create “competition between civil and criminal proceedings.”
Vedomosti.Ru, 01/11/2023, “Ministry of Internal Affairs is investigating a criminal case on embezzlement of $ 800 million from Fesco”: The Investigative Department (SD) of the Ministry of Internal Affairs of Russia is investigating two criminal cases, combined into one proceeding, on the fact of embezzlement of funds from the Russian budget and from PJSC Far Eastern Shipping Company (FESCO, the parent company of the Fesco group) for hundreds of millions of dollars. […]
“Realizing their criminal intent, unidentified persons, using controlled offshore companies in various banks, received credit funds totaling $800 million in order to become beneficiaries of PJSC FESCO,” the company’s representative announced the decision. Due to these funds, the Cypriot company became the beneficiary of 49.9% of the shares of FESCO PJSC through a number of offshore companies.
According to the representative, during the investigation of the case, it was established that, in fact, the shares of PJSC FESCO were purchased at the expense of borrowed funds that were received from the company itself. He noted that at the moment the subject of the investigation are the sources of origin of funds, the specific amount of damage caused and other significant circumstances in the case. […] Summing up, the lawyer pointed to the prematureness of the claims filed in the interests of the Russian Federation for the conversion of a block of shares into state revenue, since the criminal case had been initiated much earlier and the plaintiff was aware of this. Representatives of the defendants in the civil lawsuit declined to comment on the criminal case while it is under investigation. In turn, the lawyer of Ziyavudin Magomedov, Alexander Gofshtein, told Vedomosti that the investigation had not yet charged his client in this case. — Inset K.ru
However, the prosecutors (there are three of them in the case) again asked to reject the petition “due to the lack of grounds provided for by law”. As a result, judge Tatyana Perepelkova rejected the request.
She also did not satisfy the petitions filed by the defendants to postpone the process. Thus, the representative of the FESCO asked to postpone the proceedings in order to “notify all interested parties”, and also referred to the fact that the company did not receive all the documents necessary for the process, while the court violated the deadlines for posting information for civil proceedings. The lawyers also asked to postpone the process for four months in order to agree on positions with their clients, Ziyavudin Magomedov and Sergei Bazylev. However, the representative of the prosecutor’s office regarded these actions as an attempt to drag out the process, which as a result was not postponed.
However, the defense did not give up. Consideration of the petition of the defendants, who, in particular, asked to be given time to familiarize themselves with the materials of the prosecutor’s office in order to prepare a response to the claim, dragged on until the night. However, they were all rejected. The judge did not agree to postpone the trial even so that the lawyers could eat and drink: the indignant lawyer of the shipping company Daniil Sidorov was offered to order food at Yandex-Lavka, but then she took pity and ordered the secretary to hand him a glass of water. However, later she removed the lawyer from the process because he interrupted her and did not respond to comments. The challenge to the judge was not satisfied.
The court made its decision at around 2:00 am. Shortly before that, at midnight, the defendants’ lawyers left the court in protest, and two called an ambulance due to poor health. In this regard, they did not express their position on the case, and the court limited itself to hearing the position of the prosecutor’s office.
Earlier, on May 27, 2022, the same judge of the Khamovnichesky Court granted another claim of the Prosecutor General’s Office for the seizure of $750 millionproceeded, according to the supervisory authority, by the Magomedov brothers from the sale of shares in the Novorossiysk Commercial Sea Port (NCSP).
Far Eastern Shipping Company (PJSC FESCO, international name FESCO) is the parent company of the FESCO group, which unites dozens of legal entities. It occupies a leading position in the Far East in the field of logistics of various types of cargo. The company performs sea, rail, road domestic and international transportation. The assets of PJSC FESCO, in particular, include four terminals in Vladivostok, Novosibirsk, Tomsk and Khabarovsk.
