No More Crimes at ToAZ

No More Crimes at ToAZ


Togliattiazot (ToAZ,) one of the largest chemical fertilizer producers in Russia, is finally not in the spotlight of the criminal chronicle. An extraordinary general meeting of shareholders was held at the request of the company's shareholder Uralkhim on November 27.

During the meeting it was decided to terminate the powers of the managing company Togliattiazot and the members of the Board of Directors by an absolute majority of votes of more than 80%.The new members of the Board were elected: Andrey Ermizin, Sergey Momtsemlidze, Mikhail Lopatin, Dmitry Tatyanin (Picture 1) and Artur Karamashev. Dmitry Tatyanin, Uralkhim's Director for Legal Affairs, was elected as Chairman of the Board of Directors. Anatoly Shablinsky (Picture 2), formerly head of Uralchem's Kirovo-Chepetsk branch, was appointed as CEO.

Dmitry Tatyanin, new Chairman of the Board of Directors of Togliattiazot

Anatoly Shablinsky, newly elected CEO of Togliattiazot

The vote by Oleg Egerev, a financial manager appointed by the arbitration court to Sergei Makhlai, the main owner of ToAZ and declared bankrupt, became the decisive factor to change the management of the plant. According to the federal law “On Insolvency (Bankruptcy),” Egerev received the right to manage the property of Makhlai, including his shares in ToAZ, which he managed through foreign offshore companies Trafalgar Trafhold Ltd, Instantania Holdings Ltd, Bairiki Inc. and Kamara Ltd.

This is a real milestone in the long story of liberating ToAZ from criminality. The gang of Makhlais and their foreign associates, who seized the huge plant by corrupt methods during the era of privatization, illegally transferred billions of dollars, owned by the plant and its non-controlling shareholders, to an offshore account. In 2019, Vladimir and Sergey Makhlai, who are hiding abroad, their Swiss partner Andrew Zivi and several other accomplices were found guilty of fraud on an especially large scale by stealing the plant's exports and sentenced to 8.5 to 9 years in prison. The Makhlais' crimes were revealed by the results of tax audits, showing the understatement of the taxable base. Subsequently, the tax authorities’ claims were recognized as legitimate and justified by all courts. The court rulings formed the basis for proving the affiliation between the main owners of ToAZ brothers Makhlais and the Swiss offshore company Nitrochem Distribution AG, through which decades of theft of exports of products took place.

As part of the civil suit, the convicted swindlers were obligated to pay damages of 77 billion rubles ($1.03 bln) to ToAZ and another 10 billion rubles ($134.4 mln) to Uralchem, recognized as a victim in the case. Although the verdict came into force on November 26, 2019, the swindlers refused to acknowledge the Russian court rulings and defiantly avoided payments. As a result, the international gang leader Sergei Makhlai was declared bankrupt on August 9, and his property, as well as the assets of his accomplices, was foreclosed on. The court appointed a financial manager Oleg Egerev to Makhlai who was no longer allowed to dispose of his property which was seized on August 11.

The criminals tried to continue robbing ToAZ even after they were caught red-handed in the theft of exported products. The budgets and profits of ToAZ continued to leak away to offshore through fictitious contracts, forced unprofitable deals that brought losses, and finally the direct theft of unaccounted-for products, equipment, and spare parts by exporting them through the plant’s gatehouses, controlled by the private security company Almaz which was in collusion with the criminals.

They took everything they could from the plant for sale: reaction pipes, shut-off valves, rails, and so on. The swindlers cancelled scheduled equipment repairs to strip the plant of more. It is a hazardous industrial facility, where accidents and group fatalities are already a sad everyday reality.

After being convicted of fraud, Sergei Makhlai decided that he would hide abroad and continue committing crimes in Russia through his accomplices whom services he generously paid. Makhlai, until recently a billionaire, was declared bankrupt and accused in new criminal cases on the establishment of an organized criminal group and participation in it (Part 3, Article 210 of the Criminal Code), attempted bribery on a large scale (Part 3, Article 30 and Part 5, Article 291 of the Criminal Code), failure to pay taxes on a large scale (Part 2, Article 199), as well as a new criminal case of fraud in 2012-2013 (Part 4, Article 159 of the Criminal Code). (Part 4, Article 159 of the Criminal Code). Some of Makhlai's closest associates, who were prosecuted together with him in these criminal cases, have already been arrested. Some have even managed to receive a guilty verdict. Alexander Popov, former chairman of Togliattikhimbank, owned by Makhlay, was sentenced to 7.5 years in a strict regime colony on June 9. He was fined 500 million rubles ($6.72 mln) for trying to give a $2 million bribe to the Russian Supreme Court to overturn the decision to impose additional taxes on ToAZ. Ksenia Balashova, another accomplice of Makhlai, who is accused of fraudulent conspiracy to sell ToAZ shares and tax evasion of more than 90 million rubles ($1.21 mln), was also put on trial.

The professionalism of law enforcement agencies, tax authorities and courts that increased over the years, their accumulated experience in the fight against corruption and organized crimes, as well as the enormous amount of work done did not leave the criminals a chance. They went down swinging, and even tried desperately to disrupt the extraordinary meeting of general shareholders at which they were to resign.

“On August 18, Uralkhim sent a request to ToAZ for the convocation and holding of an extraordinary meeting of general shareholders with the agenda of the premature termination of the powers of the company's management bodies and the election of a new Board of Directors. According to the law on joint-stock companies, the meeting of shareholders to elect the board of directors must be held no later than 75 days after the request is made, in this case no later than November 3.

However, the board of directors of ToAZ, which consists entirely of Mahlai's stooges, refused to comply with the requirement of Russian law to call an extraordinary meeting on the pretext of worsening the epidemiological situation in the Samara region and the introduction of non-working days from October 25 to November 7. This was a far-fetched pretext, since the resolution did not apply to systemic companies with a continuous production cycle, or to ToAZ, which continued to work under no timeline. Uralkhim appealed to the court. Its statement of claim noted the necessity and possibility of compliance with all requirements and preventive measures for COVID-19. During the meeting, Uralkhim acted strictly in accordance with applicable law and the decision of the Arbitration Court of the Samara region of November 22, 2021, which came into force.

The decisions taken by the shareholders at the meeting are aimed at normalization of the production and financial activities, improvement of its efficiency, increase of the employees' wages, increase of allocations to the budgets of all levels, considerable expansion of the investment program and equipment modernization, restoration of law and order at the plant. Besides, there is now a real possibility to exact from the majority shareholders of the plant the multibillion losses they had caused.

There was a historical moment for the plant on November 26. It was taken under the protection of the Federal National Guard Troops Service (Rosgvardiya), as required by law, and the company has provided round the clock counter-terrorism regime. The private security company Almaz, hired by the ToAZ management, was expelled. This put an end to the rampant theft of factory products and equipment. This was one of the decisive steps to restore legality at the enterprise.

It gives confidence that all funds stolen by the Makhlai’s mafia will be recovered, and the culprits will be punished.

Original material:

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