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Russian authorities have filed a lawsuit against Andrey Melnichenko as they seek to seize and nationalise one of the companies in the billionaire oligarch’s metals and mining empire, claiming its purchase five years ago was a corrupt deal.
The state’s accusations come amid a campaign by the Kremlin to entice wealthy Russians to bring their wealth and businesses back home, stepping up pressure on magnates such as Melnichenko, who is now based mainly in the UAE, where he has moored a $300mn superyacht.
Since Russia’s full-scale invasion of Ukraine 18 months ago, the Kremlin has used both carrot and stick to try to compel oligarchs to prove their loyalty to their homeland.
Some businessmen who have voiced mild criticism of the invasion have found their assets subject to legal disputes, while loyalists have been rewarded. Some, for example, have been given the opportunity to purchase assets seized by the state from foreign companies.
According to the lawsuit against Melnichenko, who has described the invasion of Ukraine as “tragic”, state prosecutors aim to seize Sibeco, which runs several thermal power plants in western Siberia, generating electricity for the region. The suit was filed in the city of Krasnoyarsk this month.
Melnichenko bought the company in 2018 from Mikhail Abyzov, who was then a government minister. A few months later, in the spring of 2019, Abyzov was arrested, accused of embezzlement and of defrauding the shareholders of Sibeco and another company prior to the deal. The state took over his assets and Abyzov remains in jail in Russia.
In the current suit, state prosecutors claim to have uncovered “corrupt collusion” between Melnichenko and Abyzov in the 2018 Sibeco sale while continuing to investigate Abyzov himself.
A representative of Melnichenko acknowledged to the Financial Times that the lawsuit had been received, and said a team of lawyers was working on the case. However, he refused to comment on the allegations against his client until the litigation begins. A hearing has been scheduled for early September, according to a listing on the Krasnoyarsk court website.
Melnichenko was this year listed by Forbes as Russia’s wealthiest man, his net worth soaring to more than $25bn, thanks to rising prices for coal and fertilisers, the commodities sold by the two main companies he founded, EuroChem and Suek.
The oligarch removed himself as a beneficiary of the trust which owns the two companies after Russian president Vladimir Putin launched his full-scale invasion of Ukraine, when he along with many other top Russian industrialists was hit by US and EU sanctions. The primary beneficiary became his wife, who then also came under the sanctions. Forbes’ estimate of Melnichenko’s wealth is based on the corporate structure in place before the start of Russia’s invasion in February 2022.
Abyzov, a close ally of former president Dmitry Medvedev, faces four criminal charges, including of defrauding Siberian energy companies of Rbs4bn ($42.5mn) and moving the proceeds offshore. He is being held in the Lefortovo prison in Moscow. The state has already seized Rbs32.5bn from the former official and has sold some of his assets at auction, including apartments in the capital.
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