False Bottom of ESN Group Owner

False Bottom of ESN Group Owner

Photo: https://www.vedomosti.ru/

Since the beginning of November, the core businesses of Grigory Berezkin's ESN Group such as Rusenergosbyt, a supplier to the Russian Railways (RZD) state railway corporation, Rusenergoresurs, a supplier of electricity to the Transneft oil pipeline operator, and Energosbytholding are making economy on supplies to more than a third of the Russian energy market.

Thus, Berezkin's energy companies that charge overblown rates will make money even from the slashing of power consumption by customers under government initiatives.

In accordance with the government decree dated March 20, 2019, the operator of the united energy systems of Russia, chose aggregators of the consumer demand. They will reduce their customers’ electricity consumption for a fee. It is noted that more than 37% of the market would be served by the ESN group of companies belonging to Grigory Berezkin, the holder of a Cypriot "golden passport," despite the fact that there is no power generating company among them. However, each of them is involved in scandals over significant overcharging of rates.

For example, in 2003 and 2006, Rusenergosbyt signed agreements with RZD for electricity supplies. Mostly, they are valid through 2023 but some have legal effect until 2038. The Ministry of Economic Development calculated that under these contracts, the overpayment by the railways was more than 6.6 bln rubles ($86.9 mln) annually. It is qualified as damage on a, particularly large scale. From 2003 to 2007, the intermediary services for the purchase of electricity on the wholesale market provided by Rusenergosbyt to Gazprom, led to an overcharging of the gas monopoly's electricity bills by 60%.

Transneft, whose electricity supplies are handled by Rusenergoresurs intermediary company, also fell into the yoke of Berezkin's businesses. It has overspent more than 23 bln rubles ($302.68 mln) on electricity since 2009 because of that mediation. The activities of Rusenergoresurs also caused 3 bln rubles ($39.48 mln) damage to the federal power grids operator of Unified Energy System that had transmitted energy to Transneft. Of course, the schemes of this kind would not have been ever possible without Berezkin's personal relations with the heads of the companies. This relationship can hardly be called a business one. For example, agreements with Transneft were signed when the company was managed by Berezkin’s long-time friend Semyon Weinstock. It should be said that the latter man did not spend the state resources thriftily. According to Valery Goreglyad, formerly a deputy chairman of the Accounts Chamber, the damage of the company governed by Weinstock amounted to about 3.5 bln rubles ($46.06 mln) at the initial stage of laying the initial stage of the Eastern Oil Pipeline alone.

It is believed that Berezkin's interests in Gazprom were lobbied by Alexander Ryazanov, the corporation’s deputy CEO. After his dismissal, Gazprom stopped using the services of Rusenergosbyt. Alexey Miller, the head of Gazprom, as well as Dmitry Medvedev, the then prime minister, who was the chairman of the company's board of directors when it started cooperating with Rusenergosbyt, were among other peddlers of Berezkin’s influence.

Cooperation between ESN Group and RZD was based on Berezkin’s friendship with its then president Vladimir Yakunin. Berezkin used his trust-based relationship with Yakunin for personal purposes. Moreover, he was even on the RZD board of directors. For Yakunin himself, this friendship ended in great trouble. Berezkin simply handed him over to the Federal Security Service, informing them of Yakunin's “ticklish” request to purchase real estate in his name. As it was said, for a certain “person.”

Observers said that Berezkin’s friendship with people on the Forbes list members rarely ended without any consequences. For example, the origin of his initial capital is associated with Sibneft’s dubious schemes for oil exports. The company is owned by Roman Abramovich. Viktor Kalyuzhny, a former Minister of Energy, directly accused Berezkin of fraud. According to him, Berezkin “has been nowhere near a single oil well in his entire life, but only manipulated with cash flows.”

Roman Abramovich is believed to facilitate Berezkin's acquisition of KomiTEK company later. It formed the base for his energy assets. However, Berezkin's friendship with Abramovich came to an end over time. According to one version, precisely because of the latter's machiavellian business methods. Berezkin's relationship with Vladimir Potanin also ended in a quarrel, although at first, the cooperation seemed to promise great prospects. Berezkin's initiatives in the sphere of import substitution of software also entailed a “clean-up” in the Ministry of Communications. Last summer, it ended in the firing of Aleksey Sokolov, the deputy head of the Ministry of Telecom and Mass Communications. He was in charge of the security of information systems, and information/telecommunication networks controlled the IT industry and had the power to supervise import substitution in the IT-sphere until 2019. According to some reports, Sokolov and Berezkin made an attempt to grab the assets of Omega-Holding. It owned 49% of Atlas-kart, one of the leading developers of smart card software. Last but not least, it is probably due to Sokolov that Rostelecom was forced to become a partner with Berezkin's Votron, a firm for software import substitution.

Through Votron, he owned Jolla, the Finnish developer of Sailfish OS, which “won” the Ministry of communications' competition to create the Russian operating system. Despite the fact, that the project only presupposed the russification of the foreign OS, it was included in the priority plan of the Ministry of Communications. Nikolai Nikiforov, its head at the time, personally participated in the casting of developers. Sailfish OS itself was renamed Aurora. However, Berezkin did not manage to get a state order for the project, which initially was estimated at 160 bln rubles ($2.1 bln), as this pseudo-Russian invention remained unrequested.

By the way, the initiatives of this kind are not uncommon for Nikiforov’s team. Recently, Alexey Volin, one of its members and then Deputy Minister, has been dismissed from the Ministry of Communications.

СЕrtainly, Volin had many "achievements" to his personal record. It should be recalled that Grigory Berezkin is also a media magnate who is in charge of Komsomolskaya Pravda, a patriotic daily Russian tabloid, and the RBC liberal-democratic media holding company. The latter fact, by the way, shows in bold relief, as someone might say, Berezkin’s lack of scruples.

People who know him well say that he does not have any principles at all. For example, Berezkin cuts off a partnership when it ceases to be beneficial for him. And he understands “benefit” as the ability to make a profit from almost nothing, imposing his intermediary services and almost always acting in conjunction with officials who provide almost unlimited access to state resources and cover up corruption schemes. The area of activities does not matter. The main thing is to get super-profits.

At the same time, it is often noted that Berezkin acts in the interests of other high-ranking authorities or government officials. For example, it happened with Yakunin, or with the auction for the sale of YUKOS gas assets. Berezkin was going to participate in it, allegedly for the benefit of one of the influential officials in the presidential administration, but their relationship soured later.

Perhaps this high-profile protection makes it unnoticeable that Berezkin, an owner of the Cypriot "golden passport," runs huge strategic assets. He participates in state programs in the IT-sphere and controls more than a third of the energy market and the largest media holdings, while the ownership of these assets is built through offshore companies and can’t be controlled by the state. Grigory Berezkin invests the monies transferred abroad in foreign businesses. He owns at least 30 companies in France, Monaco, Luxembourg, Kazakhstan, etc. However, Berezkin's consumer behavior and a penchant for machinations let him down. In 2018, the relevant authorities in Germany conducted an inspection of suspicious transactions worth 17 mln euros from the Cyprus account of Bemefo Holdings Limited to his personal accounts. It is highly probable that the Cypriot law enforcement authorities and the European Commission are also interested in its results.

For Berezkin this might end up getting on sanctions lists as a minimum. Despite all his efforts to present himself as a respectable media magnate of liberal views, in the Western countries he is known as someone who has built his business on closeness to the authorities. It easily falls under the definition of corruption in Europe. Paradoxically, it is not Berezkin’s “achievements” in Russia that might become his main problem. In fact, Russia’s state property and money are still disappearing in huge amounts because of schemes involving his companies. Chances are it will be the claims against him in the Western countries, which might lead to the freezing of his foreign assets or loss of control over them. The problem will not confine to the fact that Russia’s huge strategic assets might fall under the foreign influence but to the situation where possible beneficiaries who transferred their capital to Berezkin's management are likely to lose everything at once.

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