General Director of TOAZ Evgeny Korolev was Charged with a Crime — Fraud in a Large Scale

Two weeks ago we have reported that Eugeny Korolev, General Director of Togliattiazot has been put in the wanted list by Samara’s regional prosecutors. On April, 19 Investigative Committee of Russian Federation, which monitors economic crime in the country issued a statement that Korolev was charged with a crime — fraud in a large scale. This is the first crime charge which were launched against Togliattiazot management within the series of lawsuits initiated by its minority shareholder Uralchem.

In 2008 Uralchem became minority shareholder of Togliattiazot and today holds 9,74% of its share capital. From the very beginning, Uralchem was faced with inadequate standards of business ethics corporate governance at Togliattiazot. Since 2009 Togliattiazot was fined 14 times by the Federal Service for Financial Markets for violating joint-stock companies law. Total amount of administrative fines paid out by Togliattiazot was 7,9 mln rubbles ($0,26 mln) and still counting. 

Togliatti citizen petitioned ToAZ CEO Evgheny Korolev to come back to Russia

An interesting twist has just happened in the story of Russian chemical combine Togliattiazot and its fugitive CEO Evgheny Korolev, which was covered a lot recently on our blog.

Seems like ToAZ minority shareholders not the only party concerned with the fate of runaway executive who fled to London after been charged with major fraud and put on a wanted list. 

General Director of Togliattiazot is Wanted by Russian Prosecutors, Possibly Hides in London

Samara’s regional department of Investigative Committee of Russian Federation, a state watchdog inspecting into economic crime in the country, issued a statement informing that Eugeny Korolev, General Director of ZAO “Togliattiazot” has been put in the wanted list. Investigative Committee probes into the Togliattiazot’s activity in 2008-2011 when, according to the investigators, several economical crimes of the large scale were commenced. Prosecutors were not able to identify Eugeny Korolev’s location since January 2013, while Russian media citing Togliattiazot lawyer Sergey Zamoshkin reported that Korolev is probably in London in an extended business trip.

According to the investigators, 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. 

Expert Magazine: Togliattiazot May Change Ownership, Fertilizer War in its Finale

We have been tremendously bored reporting on Togliattiazot conflict, but the new facts are coming in the Russian media every day and we simply cannot ignore them. Apparently Russian business review magazine Expert had a chance to talk in length with lawyers of Uralchem, and came to the conclusion that the conflict which flurries world fertilizer market may come to an end. Togliattiazot may change ownership, says Expert magazine in its article.

Togliattiazot is the world’s largest producer of ammonia (capacity of 3.5 million tons per annum) and a kind of unique asset to own or to cooperate with — it is one of the few producers of ammonia who didn’t expand vertically into production of fertilizers and sells ammonia on the global market instead. Ammonia is a precious component for fertilizers production which is in a high demand, according to Argus Report. The price is skyrocketing while Indian producers are desperate to get the component necessary to fill the gaps from own lack of resources. Togliattiazot has another advantage — the combine created a unique ammonia pipeline to supply its production to the port of Odessa, hence it is independent from ever changing railroad tariffs. 

Uralchem Accuses Togliattiazot Shareholders of Fraud Over a Sale of Assets at Price 100 Times Lower Than the Market Value

Not everyone knows that Russia is the world's largest producer and exporter of ammonia — it ships this indispensable fertilizer component all over the world, while international giants like Yara, CF Industries and PotashCorp rely on Russian export volumes when budget their production costs. All these enormous volumes of ammonia produced in Russia mainly by three dominant producers, including EuroChem, Togliattiazot and Uralchem. We already reported before, that the usually quite and calm world of mining and natural resources development in Russia looks like a desert storm, mainly because of the conflict around Togliattiazot, which starts to remind us by the level of action some similar cases happened before with Norilsk Nickel (conflict of Deripaska and Potanin over the asset) and TNK-BP (conflict of Abramovich and Berezovsky over Sibneft assets which brought them to the UK court). Russians do get aggressive sometimes, when huge piles of money at stake and in case of Togliattiazot the piles of ammonia are very big. 

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. 

Market Risk: Russian Ammonia Suppliers Unstable

Russia is the world's largest producer and exporter of ammonia with two dominant producers, EuroChem (19% of the market) and Togliattiazot (18% of the market). Tilde Finance experts have analyzed basic production statistics for all largest domestic producers, performed an analysis of exports and imports, carried out an analysis of factors affecting the development of the market and performed an in-depth analysis of the market situation and trends which can be classified as potential risks to worldwide supplies. The report is based on data collected from the world’s largest ammonia consumers and their assessment of the current situation.

The Russian market, which produced 13.9 million tons of ammonia in 2011, is very important globally and can have a significant affect on a variety of world trading factors. Any uncertainty in supplies may be qualified as potential risks for large consumers, as it will be hard for them to re-orientate their supply chains in order to compensate for the shortages. In addition, potential supply shortages could trigger price volatility on the global markets. 

Federal Investigators are Looking Through Vladimir Makhlai’s Wife Income Statements Searching for Money Laundry Signs

Owners of the Russian chemical combine Togliattiazot had recently fall into another unfavourable story — several Russian newswires reported that a common law wife of Vladimir Makhlai, exiled Russian oligarch and combine’s principal owner, is under investigation managed by The Investigative Committee of the Russian Federation, a leading investigative unit managed by the Procuracy of the Russian Federation. Regulator is going to review earning statements of Valentina Semenova, which attracted the attention of investigative agency by hefty annual earnings number of 100 million Russian roubles (approximately $3.3 million) which she received from Togliattiazot combine for the last year. The reward can be judged as a very significant compensation to the person, who initially established herself on the combine in the duty of junior secretary. 

Romney Girl is Calling For Tax Heaven Clearance — Russian Businesses At Stake

The race is officially on, and Obama had been recently formally awarded the nomination to a second term in a post-midnight roll call on the Democratic National Convention, happened last Wednesday. It is just two months from the Election Day in the tight race with Republican challenger Mitt Romney. A lot has happened during the pre-elections campaign, but something particular had spotted into eyes of international audience.

We are talking about small international scandal Obama’s campaign had produced, which can be interpreted in the future with not very bright prospects for some of US businesmen. In July, US magazine Vanity Fair revealed that Romney had a Swiss bank account worth $3 million (SFr2.9 million), according to his 2010 tax return. President Obama's election camp,while fighting for the ballot, attacked Mitt Romney's Swiss bank accounts with a political parody “Miss Swiss Bank Account”.  

Hubei Yihua Chemical Acquires Production Plant in Russia Following its Expansion Plan

According to a Chinese source from administration of Hubei city, a chemical combine in China is in talks to a Russian plant on the details of acquisition deal. To be exact, some source from  administration of Hubei Jingzhou Chengnan Economic Development Zone, told Demotix newssite that Hubei Yihua Chemical Industry Co Ltd. displayed interest to buy into a large Russian ammonium and urea producer Togliattiazot in the attempt to manage its worldwide expansion plans. According to the informed source, negotiations with general owner of Togliattiazot combine, the Makhlai’s family had started last year and after a small intermission has been resumed again.