The Prosecutor General’s Office continues to attempt to seize stakes in various strategic production assets in favor of the state on the grounds that their privatization was carried out with violations. Following the stake in TGK-2 confiscated from ex-senator Leonid Lebedev, the Prosecutor General’s Office is demanding the return of shares from the owner of the Volzhsky Orgsintez chemical plant, privatized in 1993-1996, Alexander Sobolevsky. The market believes that other chemical enterprises with the possibility of producing defense products may be next in line.
The Prosecutor General’s Office filed a lawsuit with the Arbitration Court of the Volgograd Region for the recovery in favor of the Russian Federation of 100% of the shares of the chemical enterprise Volzhsky Orgsintez JSC. The defendant in the lawsuit is Alexander Sobolevsky (according to the report, the beneficiary of the enterprise), the third parties are the tax service, the Federal Property Management Agency and the plant itself. According to the case file, 2,344,925 ordinary shares with a nominal value of 0.2 rubles should be claimed. each. At the request of the Prosecutor General’s Office, the court arrested the papers and property of the enterprise. The next hearing in the case is scheduled for August 17.
According to the Prosecutor General’s Office, Mr. Sobolevsky “illegally took possession of Volzhsky Orgsynthese, which is of strategic importance for ensuring the defense of the country and the security of the state.”
The case notes that the Russian Federation, as the owner of the enterprise, did not privatize it and did not transfer the authority to own, use and dispose of its property in the Volgograd Region. Despite this, from September 1993 to 1996, the regional State Property Fund “illegally distributed state-owned property in the form of securities, transferring them to third parties, including residents of foreign states.” It was not possible to get a comment from Volzhsky Orgsintez.
Volzhsky Orgsintez is one of Europe’s largest producers of organic synthesis products, producing aniline, methionine, flotation reagents, carbon disulfide, and gasoline additives. According to the company’s financial statements, its revenue under RAS in 2022 grew by 23.5%, to RUB 15.5 billion, and its net profit grew by 1.6 times, to RUB 2.9 billion. Kommersant’s sources on the market see the logic of the potential deprivatization of Volzhsky Orgsintez in the fact that it produces, among other things, products that are important for the defense industry. The plant remains promising both for increasing the production of existing products and for the production of new ones, for example, vulcanization accelerators.
Kommersant’s sources do not rule out that the trend towards “the return of assets to the state” may also affect other chemical production with a defense profile.
In mid-July, following a similar lawsuit, the Prosecutor General’s Office already confiscated more than 80% of the shares of TGC-2 PJSC (which controls energy assets in five regions of Russia). According to the supervision, the beneficiary of the company, ex-senator Leonid Lebedev, acquired the business with corruption proceeds and illegally engaged in it, being a member of the Federation Council from 2002 to 2015. The defendants plan to appeal the judgment.
Dmitry Semyagin from Rupec notes that the most commercially interesting products of Volzhsky Orgsynthese are reagents for the enrichment of non-ferrous metal ores. “Moreover, in recent years, the company has been conducting a rather large-scale investment program that concerns them specifically,” the expert recalls. In particular, xanthate production upgrades were carried out in 2011 and 2016, and a new project for them was announced for 2022. But after the introduction of Western restrictions on access to technology, there was no information about him. In 2019, the enterprise modernized, and in fact built a new plant for the production of MN carbamate (used for flotation of nickel ores). The main consumer of this reagent was Norilsk Nickel, and, according to Mr. Semyagin, according to representatives of Volzhsky Orgsintez, it was precisely for his needs that the capacities for the production of MN carbamate were increased.
