How Money is Withdrawn from Togliattiazot. Part 2. Hundreds of Millions of Dollars in Fictitious Construction Contracts

How Money is Withdrawn from Togliattiazot. Part 2. Hundreds of Millions of Dollars in Fictitious Construction Contracts

Photo: http://kanoner.com

We continue publishing a series of investigations about the channels for withdrawing profits from PJSC Togliattiazot, one of the largest industrial enterprises in the Samara Region.

Last time we told how the scheme developed by former employees of the consulting company Ernst & Young made it possible to withdraw at least USD 300 million from the plant in five years under the guise of payments for logistics and chartering.

Nevertheless, the owners of the plant, Vladimir Makhlai’s family members hiding abroad for many years and their foreign accomplices, did not stop there. Today we will talk about another scheme that allowed the Makhlais to withdraw millions of dollars abroad – these are fictitious construction contracts.

According to informed sources, in 2014-2015, top managers of Togliattiazot Dmitry Mezheedov and Viktor Kazachkov developed a scheme for the implementation of the Tarsu project jointly with Turkish partners. It was initiated by the Turkish citizen Bulent Ezdemir, who, together with his fellow citizen Seza Mehmet Kornosor, owned the Russian company MSA Stroy.

We should dwell in more detail on the activities of the MSA Stroy. The Togliatti Company MSA Stroy was registered in 2003, and since 2016, it has been listed in the register of small and medium enterprises. The real founder and owner of the company was initially the Turkish citizen mentioned above, Seza Mehmet Kornosor. When Sergey Makhlai took the position of the chairman of the board of directors of Togliattiazot in 2011, Bulent Ozdemir served as the first head of the company. Two other Turkish citizens, brothers Nuri and Koksal Uslu, also worked in the company's management. Ozdemir was personally responsible for the communications with Makhlai, and Kornosor was engaged in relationships with local authorities in Togliatti, including the Ministry of Internal Affairs and the tax service. Koksal Uslu acted as chief accountant and financial director, i.e., he was directly involved in the withdrawal of Togliattiazot funds through the banks, including Turkish ones. Nuri Uslu controlled the work on construction sites and was responsible for contacts with subcontract organizations.

The annual value of company contracts at Togliattiazot facilities exceeded 1 billion rubles. The largest of them were construction and installation works in the port of Taman since 2001 (totaling over 2 billion rubles), since 2012 – overhaul of two prilling towers at the urea plant in workshops No. 8 and No. 9 (over 0.5 billion rubles), construction of a methanol loading rack, construction and installation work on auxiliary facilities for methanol storage tanks, methanol pipelines, overpass equipment, gas breathing units, drain trays, etc. (over 0.4 billion rubles), construction of a new ammonia pipeline in the inter-workshop communications facility No. 16 (over 0.5 billion rubles), repair of a pumping station system in the urea production shop (over 0.4 billion rubles), insulation work on pipelines, tanks, assemblies of all ammonia, urea, urea-formaldehyde concentrate units, inter-workshop communications facility (over 1.5 billion rubles), and а residential house on Novopromyshlennaya Street (over 1.5 billion rubles). All work was carried out according to a well-established scheme – at least 75-80% advance payment for all calculated amounts, in most cases there were no completed certificates of work performed, deadlines were constantly postponed, works were fulfilled without design and as-built documentation, without examination of industrial safety for projects and finished work, technical and field supervision.

Since 2016, concurrently with MSA Stroy, Intercon Company has been working with the same management and executive teams, i.e., the works were essentially duplicated. The main subcontractor of MSA Stroy and Intercon was RS Service managed by Renat Zalyalov and Shagit Sharafutdinov.

The details of the Tarsu Project were discussed during the visit of Tolyattiazot Corporation delegation to Istanbul in October 2014. The official goal of the project was “engineering surveys for the reconstruction of water treatment and water supply systems for the production of urea (a hazardous production facility) and water treatment systems in workshop No. 15 (treatment facilities)”, as well as the upgrade of these facilities.

Ozdemir also engaged his relatives and partners Kerem and Emre Sapci in the implementation of the Tarsu Project. The Tarsu Company itself, registered in 1977 in Istanbul, was an ordinary construction company that was not connected in any way with technological innovations and had neither experience in this area, nor its own developments, nor licenses. Tarsu has traditionally been working with residential buildings and has never carried out renovations of hazardous production facilities.

Nevertheless, Sergey Makhlai approved this company as the contractor for the reconstruction project for the water treatment and water supply systems. Sources at Togliattiazot say that the Turkish side has positioned Tarsu as an intermediary company for the transfer of exclusive technology owned by the American corporation General Electric in the field of water treatment, water purification, and water supply systems. However, having considered Tarsu’s commercial offer, the former chief heating engineer of Togliattiazot A.V. Poddubsky openly doubted the exclusivity of the technology, excluded GE from the potential licensors and negatively described the prospects for the project. For this, Poddubsky was dismissed in 2017.

A new chief heating engineer A.V. Simonov, who previously worked at the Sintezkauchuk enterprise, was hired to fulfill the contract concluded with the Turks. Simonov was also subsequently removed from this position but he was nevertheless forced to supervise the project. To carry out design work, undergo examinations, hire employees in Russia, Turkish Tarsu registered its subsidiary Tarsu Rus in Moscow – OOO Tarsu Stroitelstvo i Proektirovanie (Tarsu Construction and Design LLC). The average number of employees of this organization in 2018 was one person – apparently, that was the general director Ali Askerovich Besleneev.

The contract with Tarsu had a secret appendix, according to which the cost of the contract exceeded 1 billion rubles. The contract included surveys, development of design documentation, examination of industrial safety of the project, and construction and installation works. The implementation of the project overlapped the works performed by MSA Stroy and Intercon companies affiliated with Bulent Ozdemir and Magomed Shishkhanov.

Sources at Togliattiazot report that the former chief heating engineer A.V. Simonov signed certificates of work fulfilled under heavy pressure from Dmitry Mezheedov, who threatened him with dismissal and other problems. In addition, a provocation was organized by the employees of the economic security service of the Tolyattiazot Corporation against the deputy chief heat engineer, A.S. Korushev, which resulted in his detention by the officers of the Department for Fighting against Economic Crimes of the Department of Internal Affairs for Togliatti and the Investigative Committee of the Russian Federation and placement in a pre-trial detention center. Korushev suffered because he had refused to sign and approve certificates of work performed on urea production water treatment systems, i.e., preparatory work for a parallel project, for the representatives of MSA Stroy affiliated subcontracting companies.

Employees of the production, technical and construction services of Togliattiazot noted that the amounts of work were fictitious, they were not completed on time and were of very low quality. No advanced technologies, access to which had been declared as the official goal of the project, were applied. A.V. Poddubsky said that outdated Turkish technologies were used, that were good to treat domestic (rather than chemical) wastewater and were incompatible with sewage treatment plants in the urea industry. However, out of the 8,437,200 euros that the Togliatti Company was supposed to pay for the “design and equipment by General Electric”, 2,488,974 euros had already been paid. Togliattiazot also concluded a ruble contract for the supply of a Honeywell automated process control system for the 3rd ammonia unit for 264,042,878 rubles, of which 258,392,246 rubles had been actually paid, and a foreign currency contract for Honeywell automated process control systems for the 1st ammonia unit for 4,997,123 dollars, of which the plant has already paid 1,448,866 dollars in advance. However, in both cases, not only the work was not completed, but even the deadlines were not set for them.

According to Togliattiazot employees, at the end of 2019 Bulent Ozdemir and Emre Sapci twice travelled to London to meet with Sergei Makhlai. He invited the Turkish partners to conclude an additional agreement with Togliattiazot to continue reconstruction of the water supply, water treatment, and water purification systems from 2020 to 2025. They also discussed the participation of Turkish partners during these five years in work fulfillment in the ports of Taman and Odessa under the charter contracts and continuation of work at the second stage of the Tarsu Project.

Sources in the Togliatti construction industry say that Mezheedov’s meetings with the leaders of subcontracting organizations affiliated with MSA Stroy have recently become more frequent. At the meetings, prospects for the implementation of construction and installation works in the urea production site are discussed.

According to the assumption of sources at Togliattiazot, subcontracors will carry out work that Tarsu and the Chinese Samso companies had not performed under the contracts at the urea site. In addition, sources note an increase in the flow of financial resources allocated for settlements with subcontracting construction organizations, which are carried out by the new financial director S.V. Shishov. In the scheme of funds withdrawing from Togliattiazot, the channel with the participation of Bulent Ozdemir is still one of the main ones. The money goes through Turkish banks, and there from it is transferred to the Swiss offshores of Togliattiazot main owners.

The described scheme for cash withdrawal from Togliattiazot through MSA Stroy is not the only one. Many other contracts “operate” through which multimillion-dollar amounts are issued in the form of unsecured advances. There is a sufficient amount of information for law enforcement agencies to pay attention to the construction contracts made by Togliattiazot. In all likelihood, criminal cases may be instituted in the near future against customers and actors of illegal schemes.

What is most disturbing, it is not just about the theft of money from Togliattiazot but about poor quality of construction work performed by unprofessional organizations at hazardous production facilities. Therefore, the above scheme for profits withdrawing from Togliattiazot not only inflicts enormous economic damage onto one of the largest enterprises in the region, but also poses real threat to the life and health of people, the population of the whole Togliatti and suburban villages.

The description of criminal fraud does not end there. A Turkish citizen Bulent Ozdemir is the organizer of a scheme for the export of laundered cash to other countries through the international ports of Tatarstan, which is carried out using corrupt ties with the customs authorities of the republic. Almost every month, a suitcase with one million US dollars goes to Turkey, and from there it is transported to Sergey Makhlai.

We will describe this and other schemes and channels for the illegal withdrawal of funds from Togliattiazot in the following parts of the journalistic investigation.

Russian Academic Says Governmental Greed Main Problem in Russia During Pandemic Governors’ Residences and Enrichment Methods