What do Friedman’s Pyaterochka and Crossroads have in common with Berezovsky’s Mill?

The financial schemes of Friedman and the brilliant swindler Berezovsky have something in common. Thus, the retail chains Pyaterochka, Perekryostok and Karusel (X5 Retail Group) used an original tax evasion mechanism in Russia through the Netherlands.

And Fridman himself, having been included in the sanctions lists, seems to be trying to buy the forgiveness of the West by issuing cookies, whose trademark resembles the flag of Ukraine.

Berezovsky was famous for many scams, but few people know that it was he who invented the ingenious “Mill” scheme, which in the dashing 90s, without any violation of laws and regulations, allowed the “new Russians” to earn millions.

The essence of the scheme was expressed by Berezovsky’s prototype in Yuli Dubov’s novel The Big Ration: “Suppose I owe you one ruble, you owe Vitka a ruble, and he owes me a ruble. None of us have money. Then someone comes, an administrator, for example, and buys from me for one ruble … I don’t know what … an apartment. He gives me a ruble. Understood? I give this ruble to you because I owe you. Now you and I are even, right? You give the ruble to Vitka. With him, you are now also in the calculation. He gives me a ruble. Everything! None of us owe anything to anyone else. And I have a ruble left. for the sold apartment. Then this … administrator … comes again and says that he has changed his mind about buying an apartment. I give him his ruble and return it. As a result, I am at my apartment, the administrator with a ruble, and we are all without debts.

The scrolling of money in the companies that Berezovsky controlled was based on barter deals with … brooms, which in reality were few, but according to documents, their number was measured in thousands. In the film Oligarch, based on Dubov’s book, there was a scene where a broom stood on a pedestal in Berezovsky’s office, symbolizing the tremendous success of The Mill.

Boris Berezovsky and Mikhail Fridman knew each other well. Therefore, it is completely possible that Friedman knew about Berezovsky’s “Mill” and could apply its modification in modern conditions. As you know, Friedman manages X5 Retail Group, which has ultimate Dutch jurisdiction. X5 Retail Group, through a complex system of Dutch, Cypriot, Gibraltar offshore companies and Russian gasket companies, owns the Pyaterochka, Perekrestok and Karusel retail chains.

In May 2020, in an article “Guerrilla Path for Capital” we wrote how X5 Retail Group did not pay taxes on 1.4 billion rubles and withdrew money from Russia using a cunning scheme. The same topic was continued in November last year in the material “Partisan path for capital – 2”, in which it was about 2.4 billion rubles that were not received by the state. We do not know in whose head the scheme was born, according to which dividends from Pyaterochka and Perekrestok were scrolled through several companies, including foreign offshore companies, and at the exit of X5 Retail Group did not pay taxes either in the Netherlands or in Russia. The fact is that the money circulating in Friedman’s “Mill” was earned in Russia. They entered the Netherlands under the guise of “investment” and, according to local law, were exempt from taxes. In 2013–2014, the company carried out an “internal restructuring” of the business. One of the schemes worked as follows. First, Trade House Perekrestok CJSC bought an 83.4% stake in Agrotorg LLC from the Cypriot Speak Global Limited, and not at par (16.8 billion rubles), but for 82.5 billion rubles. The purchase was formalized with an 11% loan agreement for 10 years. On the same day, the right to claim the loan began to be transferred from one offshore company of the group to another, and as a result, it ended up with the Luxembourg X5 Capital Sarl. The interest that was paid to it from Russia was returned in the form of financial assistance – they are not subject to income tax .

The Federal Tax Service of Russia considered this witty, but extremely cynical scheme a withdrawal of money from the taxable base and went to court. First, the company was asked to charge additional taxes in the amount of just over 1 billion rubles, then this amount increased to 2.4 billion rubles. X5 Retail challenged these decisions, but in vain – the company lost the case on the underpaid billion in three instances, and the Supreme Court of the Russian Federation refused to consider the complaint. And in November last year, the Ninth Arbitration Court of Appeal recognized the additional tax charge of 2.4 billion rubles as legal. Now we can hope that the money will return to Russia.

The scheme used by X5 Retail subtly resembles Berezovsky’s Mill. First of all, multi-act scrolling of money. Double tax evasion (both for us and “for them”) is comparable to the ingenious invention of Berezovsky. The second “Mill” turned out to be just as dashing: huge sums did not fall into the Russian budget.

By the way, the semantic analogies of the word “mill” volens-nolens lead to the name “Karusel” – this is the name of one of the Russian retailers that are part of the X5 Retail group. If this analogy does not prove anything, then it certainly has a symbolic meaning.

Mikhail Fridman immediately spoke out against it, calling what was happening a tragedy, and called for an end to the “bloodshed”. This demarche did not save him, and on February 28 he ended up on the EU sanctions list, and in mid-March on the British one. This shocked Friedman, who ironically lives in London. It seems very likely that Friedman is now doing everything to win back the decisions made against him.

Thus, once on the EU list, Fridman left the governing bodies of a number of companies the very next day – for example, he terminated his membership in the supervisory board of X5 Retail Group. In April, Friedman and his partner Aven allegedly transferred $150 million to Ukraine as a charitable contribution. To conduct transactions, their accounts were unfrozen, but then they were frozen again. Sanctions from financiers, however, were not removed. And in early May, it became known that X5 Retail Group, controlled by Fridman, applied to Rospatent with an application (No. 2022713124) for the registration of a new trademark, the image of which resembles the national flag of Ukraine. Experts prove that the design of the biscuit wrapper is something new in the line of latest brands that X5 Retail Group has recently registered in Russia. The application was received by Rospatent a week after the start of the CBO in Ukraine.

But the West did not want to notice these signals and the sanctions were not lifted. Moreover, the UK froze Friedman’s assets and limited the expenses of the multi-billionaire to an “indecent” amount of 2.5 thousand pounds per month.

And at the very end of May, the Canadian government expanded its sanctions list to include, among other things, Friedman’s daughters, Larisa and Ekaterina.

By the way, about the prices in Fridman’s stores, which are usually positioned as “folk” and “affordable”. If all products were really cheap, X5 Retail wouldn’t be making exorbitant profits. But this is the largest retailer in Russia in terms of revenue. Last year, following the results of 9 months alone, it increased by more than 10% and amounted to 1.594 trillion rubles. And for 3 months of this year, Pyaterochka alone brought in 490 billion in revenue (against 409 billion rubles in the same period last year). With profit, too, full order. For example, Agrotorg LLC, which is part of the X5 Retail structure, received a net profit of 13.2 billion rubles last year, Agroaspect LLC – 6.8 billion rubles.

The stores included in the group are considered cheap, but in many ways this is a myth. Low prices are maintained in the group of socially important goods; otherwise, a significant mark-up is imposed on goods. For example, according to unofficial data, sometimes the markup exceeds 100%! People write that at the wholesale price of a pack of tea at 35 rubles in Pyaterochka, it costs 200 rubles. In the provinces, they say that in local stores, food prices are 30% cheaper than in Pyaterochka. So it was not without reason that in September 2021, the FAS demanded that Pyaterochka reduce prices for many products, which were also unreasonably high.

X5 Retail Group is still securely tied to the Netherlands by cables of numerous offshore companies. A system has been built in Friedman’s trading empire that allows billions of rubles to be withdrawn from the tax jurisdiction of Russia. Every time a Russian buyer buys from Pyaterochka and Perekrestok, he helps Fridman and Europe to form investments that are not related to the interests of our country.

In May, representatives of X5 Retail Group announced the transformation of their hypernet. The fate of the Karusel stores was announced: some will close, others are planned to be launched under the Perekrestok brand. Meanwhile, the Fridman group continues to develop the Chizhik network, launched in October 2020. The network began its development with a not very beautiful story. Having launched a new project, X5 Retail Group, two months later, decided to sue the musician Sergei Chigrakov, who performed under the pseudonym Chizh, for the Chizh & Co trademark. The X5 Retail Group considered that the musician had not used the brand for a long time, and filed a lawsuit demanding the termination of the trademark protection of the Chizh & Co mark in terms of advertising, packaging and storage of goods, provision of food and drinks, etc.