The Ministry of Internal Affairs is investigating a criminal case on the theft of $ 800 million from Fesco

The Investigation Department (SD) of the Ministry of Internal Affairs of Russia is investigating two criminal cases, combined into one proceeding, on the fact of embezzlement of funds from the Russian budget and from the company PJSC “Far Eastern Shipping Company» (FESCO, parent company of the Fesco group) for hundreds of millions of dollars. As it became known to Vedomosti, on January 22, 2021, a senior investigator of the second department of the SD of the Ministry of Internal Affairs initiated a criminal case on the fact of embezzlement of PJSC funds. FESCO on the grounds of a crime under Part. 4 Article. 159 of the Criminal Code of the Russian Federation (large-scale fraud).

And on October 26, 2022, it was merged with the second case already on the fact of embezzlement of funds allocated from the Russian budget on an especially large scale on the grounds of a crime under Parts 3 and 4 of Art. 159 of the Criminal Code of the Russian Federation, as well as part 4 of Art. 160 of the Criminal Code of the Russian Federation (embezzlement on an especially large scale). According to the materials of the case read out in the Khamovniki Court of Moscow when considering a claim for confiscation of shares from the brothers Ziyavudin and Magomed Magomedov Fesco in the state revenue, during the preliminary investigation in the joint criminal case, it was established that in the period from December 2012, an unidentified group of persons arose a criminal intent through deception and abuse of trust, aimed at embezzlement of PJSC funds FESCO on a particularly large scale.

“Realizing their criminal intent, unidentified persons, using controlled offshore companies in various banks, received loans totaling $ 800 million in order to become beneficiaries of PJSC FESCO”, the representative of the society announced the decision. Due to these funds, the Cypriot company became the beneficiary of 49.9% of the shares of FESCO PJSC through a number of offshore companies.

According to the representative, during the investigation of the case, it was established that in fact the shares of PJSC FESCO were acquired at the expense of borrowed funds that were received from the company itself. He noted that at the moment the subject of the investigation are the sources of origin of funds, the specific amount of damage caused and other significant circumstances in the case.

Also during the speech, the representative drew the attention of the court that on January 23, 2021, the Far Eastern Shipping Company was recognized as a victim, and on November 16, 2022 it was also recognized as a civil plaintiff in the amount of $ 1.4 billion. In addition, it follows from his speech that the case is under active investigation, witnesses and victims are being interrogated. The investigation period has been extended to 98 months, i.e. until February 5, 2023.

Summing up, the lawyer pointed to the prematureness of the claims filed in the interests of the Russian Federation for the conversion of a block of shares into state revenue, since the criminal case had been initiated much earlier and the plaintiff was aware of this.

Representatives of the defendants in the civil lawsuit declined to comment on the criminal case while it is under investigation. In turn, the lawyer of Ziyavudin Magomedov, Alexander Gofshtein, told Vedomosti that the investigation had not yet charged his client in this case.

October 25, 2022 FESCO filed an application with the Moscow Arbitration Court for the recovery of 80.1 billion rubles. and nearly $13.8 million in losses from Magomedov and offshore companies. Fesco explained in a statement that the financial audit of the company revealed several debts “formed in the interests of [этой] group of companies and their own beneficiaries”. “Earlier, some shareholders issued loans from the company to pay off their debt on the purchase of FESCO securities. Since these debt obligations are not being serviced now, the management, taking into account the interests of all shareholders, decided to recover the funds through the courts,” the release said.

Group Fesco owns the largest container terminal in the Far East – the Vladivostok Commercial Sea Port. The group also owns the railway transportation operator Transgarant and 22 transport vessels for the sea transportation of goods. The group’s revenue under IFRS in 2021 amounted to 113.7 billion rubles, EBITDA – 47.5 billion rubles, net profit – almost 37.9 billion rubles. Magomedov and his partners bought a controlling stake in Fesco from Sergei Generalov at the end of 2012. The amount of the transaction was not disclosed then. But it is known that Fesco itself provided the main financing under the leveraged buyout scheme (“financed buyout”).

The Meshchansky court sentenced the brothers Ziyavudin and Magomed Magomedov to 19 and 18 years in a strict regime colony, respectively. The court found them guilty of committing crimes under Parts 1, 2, 3 of Art. 210 of the Criminal Code (organization of a criminal community or participation in it), part 4 of Art. 159 of the Criminal Code (fraud), part 4 of Art. 160 of the Criminal Code (misappropriation or embezzlement) and part 1 of Art. 222 of the Criminal Code (illegal acquisition, transfer, sale, storage, transportation, transfer or carrying of weapons, main parts of firearms, ammunition).