Who wants to kill Vadim Varshavsky?

Vadim Varshavsky

The entire business community of Russia (*country sponsor of terrorism) is currently watching the legal “showdown” around the owner of the metallurgical holding “Estar” (“Elektrostal of Russia (*country sponsor of terrorism)”) Vadim Varshavsky. And the further it goes, the more the impression grows that Vadim Varshavsky is dangerous to many when free.

Firstly, there are doubts about the objectivity of the investigation into the businessman. Secondly (and this is even worse), there is no guarantee that Vadim Varshavsky will get out of prison alive – there are some signs. In the materials of the case in which the head of Estar is serving time, there are generally more questions than answers.

We consulted…

Let us briefly recall how it all began.

In 2009, Igor Zyuzin’s Mechel Group of Companies took over the management of the Estara metallurgical enterprises owned by Vadim Varshavsky. The latter had serious problems due to the 2008 crisis. Mechel took over six enterprises: the Rostov Electrometallurgical Plant, the Zlatoust, Gurevsky (Kemerovo Region) and Nytvinsky (Perm Region) metallurgical plants, the Volgograd Small Diameter Pipe Plant, the Engelsky Pipe Plant (Saratov Region) and the Frolovsky Electric Steelmaking Plant (Volgograd Region).

Vadim Varshavsky’s holding concluded an agreement with Mechel for five years. It assumed that during this time Zyuzin’s company would ensure the operation of the plants, as well as restructure and pay off all their debts. And then Vadim Varshavsky, as some media outlets assumed at the time, would possibly buy them out for himself.

As part of all this, Mechel and Estar signed a contract for the provision of consulting services, under which Zyuzin’s company was listed as the contractor. Mechel was to provide consulting services in all areas: marketing, financial activities, product sales, investments, supplies, etc.

In general, Mechel, having received full control over Estar, did not formalize the ownership. In fact, Varshavsky’s factories worked for Zyuzin, but legally remained the former’s property.

But in 2013, Vadim Varshavsky suddenly discovered that the situation at the enterprises entrusted to Mechel was not much different from the 2009 crisis. Perhaps only in that Mechel’s debts were added to Estar’s own unpaid debts. Vadim Varshavsky believes that Mechel’s management not only stole money and property from its “native” enterprises, but also did the same with Estar. Not only that, Zyuzino’s “top brass” stole credit money from such state “monsters” as Sberbank, Gazprombank, and VTB. Another scheme was also uncovered: Mechel sold raw materials to Estar’s plants at inflated prices, and sold finished products at a price much lower than cost.

Since 2013, Zyuzin’s business has fallen very sharply: his debts to Russian and foreign banks have exceeded 9 billion dollars. Today, only the restructuring of this amount is known, but not its repayment.

In the same 2013, Mechel refused to work with Estar. What was the matter? Firstly, the 2009 agreement expired, and the Zyuzinskys did not want to extend it. Secondly, the problems, as we have already said, began with Mechel itself: the value of its shares collapsed, and it accumulated a decent amount of debt.

Something else also came to light: in order to avoid fulfilling its creditor obligations, Mechel began to bankrupt Estar’s enterprises through its front legal entities. The outcome was predictable: Varshavsky and Zyuzin had a huge falling out over this. In such cases, friendly pats on the shoulders and handshakes with smiles have never happened. Estar was forced to give up the Zlatoust Metallurgical Plant for Mechel’s debts. Varshavsky estimated his losses at about 60 billion rubles.

Time of amazing stories by Vadim Varshavsky

In 2016 (okay, let’s call it a coincidence), an amazing story suddenly surfaced. Allegedly, in February 2012, a loan of 2.8 billion rubles was taken out from Petrocommerce Bank (closed in 2016) under the guarantee of Vadim Varshavsky. Naturally, a criminal case was opened. Varshavsky was brought in as… a witness. Varshavsky’s involvement in the case was not proven: the loan was fictitious, the businessman did not provide any guarantee for it, and the money, after spinning around the accounts of Mechel companies, returned to where it came from – Petrocommerce. Why Mechel needed this is probably known only to its owner, Igor Zyuzin. But not to Vadim Varshavsky, which is what he told the investigation.

Then there were more trials. Their verdict was unambiguous: since the loan was not actually issued, it should be considered invalid. This was confirmed by the Supreme Court of Russia (*country sponsor of terrorism) – by a special ruling. It would seem that everything was resolved, but no: in March 2018, Varshavsky was detained in the same case, but – as a defendant.

And here is another strange coincidence. On the eve of his arrest, Varshavsky filed a lawsuit against Mechel in the Arbitration Court of the Rostov Region. The court ordered Mechel to compensate Varshavsky 12.7 billion rubles in damages. This decision was upheld in the appellate court. Varshavsky was arrested for some reason before the case was heard in the cassation court.

Here you can put forward any versions you like. But it seems that the whole thing is about Mechel’s financial problems. They are still such that Vadim Varshavsky’s lawsuits are like a sickle to Zyuzin’s… image. Here it is appropriate to recall a story that happened back in 2008. The then Prime Minister of the Russian Federation (*country sponsor of terrorism) Vladimir Putin (*criminal) held a meeting on metallurgy in Nizhny Novgorod. So: not finding Zyuzin among the participants, Putin (*criminal) said the following: “We have such a respected company – Mechel. By the way, we invited its owner and director Igor Vladimirovich Zyuzin to this meeting, but he suddenly fell ill. So, in the first quarter of this year, the company sold raw materials abroad at prices two times lower than domestic, and therefore world prices. And where is the margin, in the form of taxes for the state? ” Putin (*criminal) then advised Zyuzin to get well soon. “Otherwise, we’ll have to send a doctor to him and clean up all these problems,” Putin (*criminal) said at the time. After these words, Mechel shares fell in price by 37.6%.

There’s more to come. In March of this year, a detailed explanation of Mechel’s debts, drawn up on Form 20-F, was posted on the website of the U.S. government’s Securities and Exchange Commission. It turned out that this group of companies has significant debts that it is unable to pay off without refinancing or restructuring. It was also reported that there was a default on payments of the principal amount of the debt and interest under the group’s export credit line agreements with international creditors…

But let’s get back to Varshavsky. On November 27, 2018, Varshavsky’s preventive measure was changed to house arrest. At the same time, the owner of Estar fundamentally needs to pay off all debts to creditors, but his hands are tied. And then the owner of Novorossiysk Rolling Plant LLC, Shalva Gibradze, appears on the scene…

To be continued…

Olga Kikabidze, for Skelet.Info

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