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By John Helmer, Moscow

If it’s true, as folk say, that you can’t keep a good man down, are crooked men equally irrepressible? The case of Ziyavudin Magomedov (lead image, right) —  plaintiff in New York State Supreme Court;  in prison on remand and a defendant in Moscow city court — is an example of either one or the other. At the very least, Magomedov is proving that muslims can have chutzpah.

The lineup of Magomedov’s friends and enemies is more thoroughly reported than the evidence of  criminal liability for which he and his brother Magomed were arrested on March 30; charged the day after in a Moscow city court; and imprisoned without bail.  

The friends start with former deputy prime minister Arkady Dvorkovich, a friend since university days. Indirectly, the friends through Olga Shipilova, Ziyavudin’s wife,  include Natalia Dubovitskaya,  wife of the Assistant to the President Vladislav Surkov, and Natalia Timakova, Press Secretary to Prime Minister Dmitry Medvedev. Other business friends reported in the Russian and western media include Semyon Vainshtok, the head of the Russian oil pipeline company Transneft until September 2007;   and David Kaplan, a Russian-Israeli businessman who is reported to have been chief of staff to Ziyavudin, and to have operated a variety of business schemes and financings on his behalf.

Left to right: Natalia Timakova, Semyon Vainshtok, and David Kaplan. For a recent Forbes Russia story linking all three to Magomedov’s business, read this. Rospress has reported that Forbes has come under pressure to censor this report.

The list of enemies – in the sense that they have been commercial rivals, business antagonists and public critics – include Igor Sechin, Rosneft’s chief executive (lead image, left); Nikolai Tokarev, chief executive of Transneft since Vainshtok’s ouster; and Suleiman Kerimov, the Dagestan senator recently released from detention in France on money-laundering charges.  

Left to right:  Nikolai Tokarev and Gennady Timchenko, a rival of Magomedov’s in crude oil transportation, port shipments, and export trading; Suleiman Kerimov.  

Ziyavudin’s multi-billion dollar asset holding Summa Group, based in Moscow, has operated principally in oil transportation, port terminals,  shipping,  and the grain trade. The story of these businesses can be followed in this archive of thirty stories. The common factor in each story of Magomedov’s success and failure has been his attempt to pit his political friends, almost all of them  in the circle of Prime Minister Dmitry Medvedev, against his business enemies. The latter have usually proved the stronger.

The story of Sechin’s and Tokarev’s fights with Magomedov began with the contest for control of Novorossiysk port; more recently Sechin  defeated  Magomedov’s Rotterdam oil trading plan by withholding the crude oil Magomedov needed, and by buying off Vitol, Magomedov’s trading partner and co-financier.

Kerimov and Magomedov are both Dagestanis, but with different, rival alliances in the Caucasus. A Russian shipping source in a position to know says Magomedov’s predicament is a “spider’s knot. Zia[vudin]  gave a statement in France against Kerimov, Kerimov has managed to escape the French tackles and he is now playing against Zia and Mago[med]. Summa and Kerimov had some minor issues over Makhachkala port [Dagestan] to control a comparatively small budget flow. But [for Ziyavudin] to testify abroad against a ‘brother’, risking his freedom – this is considered as betrayal,  and may lead to blood revenge. Also, the Rotenbergs [Arkady and Boris] and Sechin are competing for shares of Nakhodka port [Vostochny in the Russian fareast] which has belonged to Summa.”

The Magomedov brothers were first detained on March 30, before Ziyavudin was about to fly to Florida for what he said was a medical procedure. He denies he was fleeing for US asylum. Russian media report the medical problem was an old one which Ziyavudin had ignored for years.

The criminal indictment was presented in a Moscow city court on March 31. The charge sheet combined seven cases, some of which have been under investigation since 2014. The total sum allegedly embezzled by the brothers from state budget funds was declared to be Rb2.5 billion ($42 million).  For details of the opening of the case, read this

The indictment alleges over-charging for construction of football stadiums in Kaliningrad (Rb500 million) and St. Petersburg (Rb668 million); a St. Petersburg subway station; power plants and electricity lines in the fareastern region of Yakutia (Rb650 million); and works at the United Grain Company (Rb613 million).  For more particulars, click to open

Ziyavudin has denied the charges laid against companies in his Summa Group are offences for which he is liable himself. Wiretaps linking him to his subordinates have been identified in the indictment.   Through his lawyer Magomedov has charged the indictment is a frame-up. “Everywhere in the case files, we see claims that [Ziyavudin Magomedov] managed and coordinated criminal acts as the head of a commercial organization. But heading a legal entity isn’t in itself a crime.”

Magomed, who says he separated his companies from Summa and his brother’s business years ago,  has declared his innocence of the charges: “I’m not a shareholder at any of these companies where I’m listed as a beneficiary. […] I’ve studied the case files closely and I didn’t find a single crime committed by the companies to which I have any connection. I’ve never met with the people named in the charges.”


For an enlarged,  almost readable version of the company map substantiating Magomed’s claim that his interests are separate from Ziyavudin’s, click on the Forbes report. 

In the four months since their detention, the Summa group has been trying to sell port and real estate assets as quickly as it can for fear of seizure orders by the courts or confiscation by judicial penalty. Summa and Magomedov’s spokesman stopped responding to this correspondent’s questions years ago. To a Russian newspaper inquiry last week, Summa denied that a deal for the sale of Nakhodka port has been done. “We have had several proposals, but they did not suit us, and we plan to develop the project ourselves.”   Other asset sales by Summa have been confirmed.

The intensification of Ziyavudin’s legal troubles in Moscow have so far not drawn public protests of his innocence from his known friends, or from any significant figure in Russian business. The silence is deafening by comparison with the support demonstrated in the past for Vladimir Yevtushenkov, arrested on Sechin’s initiative in September 2014  and released three months later;  Alexei Ulyukaev, arrested,  also on Sechin’s complaint,  in November 2016,  then convicted and imprisoned in December 2017; and Kerimov, who was first arrested in Nice on November 20, 2017, and released seven months later after a ruling by a French appeal court.

Until Magomedov’s Moscow arrest, his year-old lawsuit claiming almost $2 billion in New York had not been noticed.  The docket of the case, initiated by Ziyavudin and his cousin, Akhmed Bilalov – also on the run from earlier embezzlement charges – can be opened here.  

Source: https://iapps.courts.state.ny.us/

Magomedov is suing for the value of a 5.37% stake he claims to have owned the Nizhnevartovsk oilfield in western Siberia. The asset claim dates back more than twenty years to 1996, but Magomedov and Bilalov say they had an agreement with Leonid Lebedev to combine his stake with theirs. They then waited on Lebedev. Their patience, they now say, lasted until 2015, when Lebedev allegedly betrayed them. He had sold their stake and his own to Victor Vekselberg and Len Blavatnik, who had gone on to multiply their value of the asset in Tyumen Neftegaz (TNK), the TNK merger with BP, and finally the sale of TNK-BP to Rosneft.

According to the court papers filed in February 2017, Magomedov and Bilalov didn’t wake up until the Rosneft deal generated $55 billion in proceeds in 2013.  “After Mr. Blavatnik and Mr.Vekselberg refused to pay Mr. Lebedev  his share from the Rosneft sale, Mr. Lebedev filed suit in New York in February 2014, seeking more than $2 billion in damages.” It was Lebedev’s  (right)New York court case which triggered Magomedov and Bilalov. For the file on Lebedev’s court case, read the archive here. Lebedev’s New York Supreme Court case can be followed here. In the latest court filing, submitted on July 30, Vekselberg and Blavatnik have provided fresh bank evidence to substantiate lying by Lebedev to support his case. “Plain and simple, Lebedev has committed perjury to sustain his claims against Defendants, and his claims should be dismissed for that reason.”

Lebedev fled Russia for homes in Cyprus and California in 2015. The same New York judge, Saliann Scarpulla, is presiding in both cases.

According to Magomedov and Bilalov, they and Lebedev decided between themselves to share the proceeds of Lebedev’s attack on Vekselberg and Blavatkin.  “When [Magomedov] learned of Mr. Lebedev’s breaches in 2014, Mr. Magomedov (on behalf of Plaintiffs) confronted Mr. Lebedev. In that discussion and discussions that followed, Mr. Lebedev admitted to breaching his obligations to Plaintiffs under their joint venture, reaffirmed his obligations to act jointly with respect to all matters concerning the NNG shares, including to share in the proceeds associated with the NNG shares, and entered into a new agreement pursuant to which Mr. Lebedev agreed to share equally the proceeds of his dispute with Mr. Vekselberg and Mr. Blavatnik. Plaintiffs agreed to assist in those efforts.”

“Thus, having entered into a new agreement with Mr. Lebedev, Plaintiffs did not bring a lawsuit against him for his earlier conduct and in reliance on Mr. Lebedev’s promises, Mr. Magomedov (on behalf of Plaintiffs) took substantial steps to assist with Mr. Lebedev’s recovery efforts.”

Magomedov had now added Vekselberg to the list of his powerful enemies, but he misjudged how reliable Lebedev would prove to be as a friend. In 2015, the court claim declares, “Mr. Lebedev began to insist that he wanted to renegotiate the terms of the deal. Specifically, while he initially agreed that he would share equally in the allocation of proceeds from the recovery efforts with Plaintiffs, Mr. Lebedev changed his mind and told Mr. Magomedov that he no longer wished to do so. When Mr. Magomedov refused—as he (on behalf of Plaintiffs) had been performing under that agreement for over one year—Mr. Lebedev subsequently broke off all contact with Mr. Magomedov in January 2016.”

Magomedov waited another year before deciding to attack Lebedev, Vekselberg  and Blavatnik (right) altogether. His aim is payment for the original oilfield shares of $1.305 billion plus “a declaratory judgment, (i) for a declaration that Plaintiffs are entitled to one-half of the $611 million in proceeds that Mr. Lebedev received [from Vekselberg and Blavatnik] in 2001 through 2003; and (ii) for a declaration that Plaintiffs are entitled to one-half of the proceeds that Mr. Lebedev obtains from Mr. Blavatnik and Mr. Vekselberg”, plus punitive damages.” In round numbers, not less than $2 billion.

On March 30, Judge Scarpulla held a hearing on applications from Veklselberg, Blavatnik and Lebedev to dismiss Magomedov’s claim.  She said she wasn’t impressed by Lebedev’s argument that Magomedov’s lawsuit  could have no jurisdiction over him in New York. “[That] is a tough thing because

Lebedev is the Plaintiff before me in another lawsuit, and so your argument is, yes, I should be able to come into New York and sue, but I shouldn’t come into New York and be sued. That is something that I have some thought about.”

The judge also expressed sympathy for the argument presented on Vekselberg’s and Blavatnik’s behalf that if there had been a claim by Magomedov against them for the oilfield shares, the time for them to make their claim ran out in 2002. The new claim, they told the judge, is nothing but “an agreement to profit from a lawsuit against them.”

US lawyers believe that the breakthrough in new evidence revealed this week in New York will give Scarpulla the chance to dismiss Lebedev’s case against Vekselberg and Blavatnik. If she decides that, the sources expect she will accept their application to have Magomedov and Blilalov dismissed also.


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