The oligarch will peck out the eye of the oligarch
In the context of the reduction of the “food base” the long-standing contradictions between Viktor Vekselberg and Oleg Deripaska have intensified. Sual Partners (“Sual”) of oligarch Viktor Vekselberg is trying to get access to information about the major transactions of Oleg Deripaska’s Rusal, where Sual has a 25.72% stake. We are talking about several potentially unprofitable projects of dubious value, which could cost the company too much, and, as a result, Viktor Vekselberg.
Since Oleg Deripaska is in no hurry to provide the necessary information to his partners, it seems that we are facing a new conflict between influential businessmen. And in the past there were quite a few of them – and in the conditions of economic turbulence and sanctions, this one could turn into a real war.
The interest of Vekselberg’s structure was aroused by several Rusal deals. The first is a joint project with the American company Braidy Industries to build an aluminum plant in the United States.
The agreement on it was signed in 2019, already during the period of sanctions pressure on Rusal. But the project was not implemented at all due to the outbreak of a corporate scandal within Braidy Industries, and now that both oligarchs are under cross-sanctions, this is out of the question.
The second deal that interested Vekselberg was the purchase of a 4.35% stake in the RusHydro state corporation from VSMPO-Avisma. Then the acquired share increased to 9%, but the purchase structure was not transparent – through many transactions over two years. Apparently, this was not agreed with Sual, how much money was spent on this is also a question.
If it turns out that the deals were problematic, or, even worse, the minority shareholder represented by Sual could get leverage to put pressure on Rusal and Oleg Deripaska personally. This is probably why the latter is in no hurry to disclose information.
apples of discord
In the past, both oligarchs have repeatedly clashed, continuing to enrich themselves in the Russian subsoil. Back in 2011, a similar dispute arose around Rusal’s contract with the Glencore trader, which at that time had an 8.75% stake in the company. It was about Glencore gaining control of half of Rusal’s aluminum sales abroad. This was written by the publication Ura.ru.
It is believed that powerful Russian businessman Gennady Timchenko may have had influence on Glencore. Perhaps he agreed with Deripaska, but Viktor Vekselberg’s “Sual” didn’t like it. Then, however, they had fewer shares at their disposal than today – 15.8%.
And the reason was that Rusal offered Glencore a contract without any competition or procedures, there were no tenders among other traders, therefore, the deal could have a corruption flavor with a plus for Deripaska’s top managers.
As a result, Sual, in agreement with a number of other shareholders, vetoed Rusal’s decision. He was supported even by Mikhail Prokhorov from the ONEXIM Group, who initially advocated a deal with Glencore. But Oleg Deripaska simply ignored the veto. Which, apparently, aroused serious hostility and suspicion on the part of the Vekselberg team.
But that’s not all. Conflicts flared up on other occasions as well. According to FLB, Deripaska was generally inclined to ignore Rusal’s minority shareholders and their opinion in many respects. For example, minority shareholders advocated the sale of Rusal’s stake in Norilsk Nickel, which Deripaska categorically opposed.
And another reason for the conflict was the fate of the Ural factories of Rusal, which in the past belonged to Viktor Vekselberg’s Sual. Rusal wanted to curtail the production of aluminum on them, because it is unprofitable due to high electricity prices. A significant part of this energy was supplied by IES holding, which is part of the Renova group of companies Viktor Vekselberg.
Thus, Rusal accused Renova of not giving discounts to the plant, clearly hinting at the need to lower prices. Renova, on the other hand, believed that it was Rusal that did not modernize enterprises in order to increase their energy efficiency.
All these conflicts took place, in many ways, under the rug. But at one point, the contradictions spilled over into the public domain when Viktor Vekselberg wrote an open letter, the tone of which was clearly not complementary to Oleg Deripaska.
“I have to state with regret that at present Rusal is in a deep crisis caused by the actions of management, as a result of which Rusal has turned from the world leader in the aluminum industry into a company overloaded with debts, involved in a large number of legal battles and social conflicts” , – Vekselberg wrote in 2012. His words are quoted by Forbes.
Oleg Deripaska.
It should be noted that at that time Rusal had $11 billion in debt. But Rusal still has debts today – and considerable ones. As of mid-2022, they were estimated at $5.8 billion, and grew by 23.6% over the year.
While Deripaska is busy with Potanin
Debt and losses mean fewer dividends to minority shareholders. Apparently, Viktor Vekselberg decided that now is a good time to attack Deripaska. And he himself just recently got bogged down in another conflict – over Norilsk Nickel with the no less controversial oligarch Vladimir Potanin. The moment is perfect.
In October 2022, Rusal, which owns 26% of Norilsk Nickel, filed a lawsuit in the High Court of London against Vladimir Potanin. The plaintiff argued that under Potanin, who became CEO of Norilsk Nickel in 2012 and then its president, the company “lost a number of business assets that played a key role in the activities of the group,” which led to “substantial losses,” according to UC Rusal statement.
The lost assets included NordStar airline (sold to management in March 2022), Industrial Construction and Installation Company (PSMK), and Logistic Center, a transport and logistics services operator, whose key customers are Norilsk Nickel enterprises.
In the case of NordStar, the deal may even be fictitious, while control over the company could in reality remain with Potanin. After all, almost the entire management of the airline was agreed by his team – they can only “keep” the asset. But Deripaska can’t get to him now.
The most “sworn partner” of Oleg Deripaska still remains Vladimir Potanin.
The most interesting thing is that the possibility of filing such a lawsuit was signed in a special agreement between the shareholders of Norilsk Nickel, primarily Deripaska and Potanin, who in 2012 ended a major corporate conflict over the company’s shares.
At the end of 2022, the agreement expired, so Deripaska arrived just about, at the very end. Among other things, it provided for a financial monitoring service through which shareholders could monitor whether someone from their influence groups was pulling the blanket over themselves – read, taking on too much.
Just at this time, Vladimir Potanin set his sights on the Kolomozerskoye lithium deposit in the Murmansk region, which accounts for almost 19% of Russia’s lithium reserves. And as a partner he did not take Deripaska at all, but the Russian state corporation Rosatom. It is obvious that the contradictions between the Russian oligarchs are aggravated in the face of a reduction in the food supply.
Here we can also recall that the same Potanin, according to rumors, could try to buy out a stake in En + from Polina Yumasheva, the former wife of Oleg Deripaska. The Moscow Post spoke about that situation. Then the deal did not take place, but there was no more trust between Deripaska and Potanin.
In general, the struggle between Potanin and Deripaska for the shares of Norilsk Nickel was sharp, with many phases. At one of them, Rusal announced its intention to ask its shareholders for a mandate for “Russian roulette” to buy or sell Norilsk Nickel shares. It was about the fact that Rusal is ready to buy out Potanin’s stake in Norilsk Nickel (30.3%) in the range of $25-32 per ADR ($10.8-13.9 billion) or sell its stake (27.8%) in a company from a valuation above $32 per ADR (more than $14.1 billion). Forbes wrote about it.
This is Deripaska’s attitude to strategic assets. Will the same thing happen in the case of Rusal against the backdrop of aggravated contradictions with Vekselberg?
Who does not pay the “Promissory note”
At the same time, Viktor Vekselberg himself is also under a series of Western sanctions. And at the same time, he is a conflict person – he has enough ill-wishers. In 2016, the oligarch experienced a real “attack” on himself, when the acting head of the Komi Republic, Sergei Gaplikov, complained to the President about the Vekselberg Vorkuta CHPP. This was written by “Version”.
The reason was that supposedly the owners do not seek to modernize the equipment, the boilers are old, they require major repairs, and the accident rate is very high. As the same Versiya wrote, the situation could be beneficial to the owner of OAO Severstal, Alexei Mordashov. But in the end, Vekselberg was able to respond to the claims – it turned out that Komi utilities owed power engineers 5 billion rubles, and also nodded at high coal prices.
When everything is shut down in the West, is Viktor Vekselberg only left to milk his Russian partners?
And now Vekselberg has many other headaches, in addition to falling apart industries, which have not been modernized for a long time. For example, Western institutions do not return debts to him – back in 2019, an English bank refused to return the loan taken and froze the calculation of interest.
Therefore, it is already difficult for Vekselberg to seek happiness in the West – he has to deal with what is in Russia. And in Russia there are partners who are not averse to snatching their piece in defiance of minority shareholders. Thus, in the context of a reduction in the “food base” such conflicts and mutual claims will only grow.