As sanctions on Russia were started in 2014 and have been gradually escalating some of the Russian oligarchs embraced re-profiling their companies to the Western ones. It seemed a good way to go for those of businessmen who are heavy reliant on export volumes and US and European investments. Such is metal production and chemistry, for example. Both are in the very focus of interest of Andrey Melnichenko – an oligarch with strong ties with Kremlin strongmen and criminal gangs turned ‘financial groups’ – a very Post-Soviet type of businessmen originating in 90s.
Andrey Melnichenko has registered his head company «Evrokhim» aka «EuroChem» in Swiss Zug thus evading a possible impact of the sector-based sanctions. However, the escape to the Europe has gone not as planed. After US has sanctioned Russian criminals, UK has imposed it’s own version of the money-laundering measures, European Union, Luxembourg and Switzerland are on the row to implement their own legislations targeting corrupt Russian regime. It was tested on well known Ruslan Kerimov and the next obvious target is Andrey Melnichenko, according to some business community rumours. There are a plenty of reasons to believe them, though.
Andrey Melnichenko: rich and exposed
Melnichenko got it all. He owns $13.2B (€10.9B), being #89 wealthiest person worldwide and #9 in Russia. His assets are both exposed to Europe&USA and Russia. He is in close ties with Kremlin and has stormy criminal background. His companies have unresolved tax issues and court cases. It makes him dependent from the benevolence of the Europe and more important – of good relationship with the Russian state in all its complexity.
Melnichenko is heavy user of off-shore companies which helps him to evade Russian taxes. His major companies are officially based in Switzerland and Cyprus, but the volume of the sales of their products to the state of which he hides the taxes reaches billions. Of course he need some protection from the unwanted questions. And he finds it in close ties with the FSB and Kremlin itself.
In fact, his career was started at KGB. He was young and aspiring schoolboy from the deeply provincial Gomel town in Belarus when he was introduced to the Internship for Able Children – a well known hatchery for the intellectual workforce of the Committee.
His career was intended to be a scientific but USSR collapsed and the reborn KGB – FSB demanded talents far from the math and physics. Criminal gangs needs to launder their money and strongmen needs to establish their presence in ‘new Russia’ demanded extraordinary talents and Melnichenko has got one. He was introduced to the controversial reality of those days: criminal gang «Izmailovo» and state strongmen in charge of controlling the chaos of the 90’s.
Long story short he was truly talented boy and managed to establish control on the infamous MDM-Bank, chemical and power plants while maintaining close ties with whom he started his career: «Izmailovo» gang from one side and FSB from the other side. And don’t be confused: these sides are not against each other. Oleg Deripaska, a troubled aluminum oligarch is also a prominent figure of this exact society.
Deripaska and his aluminum corporation «Rusal» is under pressure now. He got sanctioned by US as one of the Russian tycoons with criminal background. His «Rusal» is in closest possible ties with Andrey Melnichenko company, «SUEC». SUEC stands for Sibirian United Energetics Company and it delivers energy to the power-hungry «Rusal». At the current state of affairs Melnichenko is both interested in some parts of «Rusal» and worried of not to get sanctioned by himself.
Melnichenko Siding with «Rostech» and Sergei Chemezov
«Rusal», however, is well worth the worries. Owning the aluminum giant can be very profitable. But to participate in this game Melnichenko need support both from the Izmailovo gang and – more important – from nearest Putin allies. In this case it is Chemezov, director of the «Rostech» state corporation. He gently offered to the Chemezov, according to the insider info, to push «Rusal» to the brink of bankruptcy by raising the rates on the SUEC-supplied electric power. After «Rusal» will get into trouble it will be «saved» by the «Rostech» and Melnichenko himself thus creating mega-corporation which is in control of both power and aluminum plants. This will require the highest approval possible – by Putin himself.
Of course it will make him vulnerable to the imposed international sanctions, but who cares about it owning a good quarter of the wealthy – but suppressed by the oligarchs – country?
To be continued…