Russian Investigators Exposing $550 Million Fraud With Swiss Company Involved
Several Russian newswires reported that on December, 24 Samara Regional Investigative Dept of the Russian Investigative Committee issued a statement on the launch of the criminal case against the group of unknown individuals among Togliattiazot management. The case was filed on the basis of major fraud within 2008-2011time frame.
According to the investigators, unknown individuals among the Togliattiazot executives developed the export scheme for their production — ammonia and urea. The plant’s production was initially sold at knock-down prices to the Swiss companies affiliated with Togliattiazot majority shareholders – Ameropa AG and Nitrochem Distribution AG led by Andreas Zivy and Beat Ruprecht. Afterwards they were selling the production at market prices. Profit taxes in this case were paid in Switzerland, where the tax rate is just 2% while in Russia it is as high as 20%. Thus, a large part of Togliattiazot’s profit never really made it to the company’s budget and stayed offshore.
Under this scheme Togliattiazot was understating its profits cutting dividends for minority shareholders and leaving the taxes to various level budgets unpaid, says Russian Forbes
. According to the Russian media, minority shareholders sustained an estimated loss of $550 million, while the amount of ToAZ unpaid taxes totaled $100 million.
Prior to filing the case Investigative Committee conducted some investigative actions. Earlier this year officers from Samara Regional Investigation Dept of the Russian Investigation Committee conducted the search and seizure of documents in the Russian office of Ameropa AG — one of the major traders on the world agrochemical market.
President and owner of Ameropa AG Felix Zivy, who passed away in 2010, happened to be a close friend and business partner of the major stockholder and the former head of Togliattiazot Vladimir Makhlay. As one may infer from the open to public official Swiss documents, Makhlai’s sons, Andrei and Sergei, were at various times members of the Ameropa AG Board of Directors. As to Ameropa AG itself, it is rumored to be a major holder of Togliattiazot stock. The investigators are currently reviewing the evidence. Perhaps it would provide some clues as to where is exactly the place of Nitrochem in the scheme. The name of that Swiss company already looks familiar to the investigators from Samara.
After Felix Zivy’s demise in March of 2010, his son Andreas became the head of Ameropa AG, and the mutually beneficial Russian-Swiss cooperation went on between the Zivy-Makhlay heirs. Ameropa AG is known for its lack of transparency bordering on secrecy. As it was mentioned in foreign media, Ameropa AG was suspected in being involved into highly dubious projects in Eastern Europe and North Africa, criticized by the United Nations, environmentalists and local residents. Andreas Zivy is an extremely no-go man, thoroughly avoiding contacts with media. So far, all the attempts to investigate his life lead to the dead end. It’s likely that Andreas Zivy launders in Russia the profits he gains from the aforementioned illicit scheme, particularly investing in the construction of the port terminal for Togliattiazot’s production in the city of Taman at the Black Sea coast.
The Makhlay family took control of ToAZ during the period of privatization in 1990s. In the early 2000s, the company had constantly been having troubles with the Law allegedly initiated by the other Russian oligarch, namely Victor Vekselberg, who bought a minority share of ToAZ. The other minority shareholder, the Irish Eurotoaz Limited, filed a lawsuit alleging damage caused by ToAZ’s management fraud schemes.
Seven years ago, a criminal case was filed against Vladimir Makhlay was prosecuted on the basis of major fraud and tax evasion, which resulted in the ToAZ owner fleeing abroad where he is currently staying. As of 2005, Vladimir Makhlay is living in Great Britain. In 2011 Sergey Makhlay became the chairman of the board of Togliattiazot. There is some evidence that is suggesting that he is a citizen of the United States and is currently living in North Carolina. The other senior Makhlay’s son, Andrey, is now living in the canton of Ticino, Switzerland. Also, in Swiss Basel is residing Valentina Semenova, Vladimir Makhlay’s common-law spouse, who is also under the IC investigation on the subject of her earnings totaling 100 million roubles from Togliattiazot in 2011.
Based on the sources close to investigators, subpoenas were already sent to Andreas Zivy and Sergey Makhlay, inviting them to the investigators’ office in connection with the investigation conducted, but so far they were ignored. Russian law-enforcement officers might soon contact their Swiss colleagues and Interpol to ask for assistance investigating the fraud. In Russia a person found guilty of major fraud is liable to imprisonment for up to ten years.
* - This article originally appeared on Tilde Finance and has been republished with permission.