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Rostelecom executives suspected of embezzling 200 million dollars

November 21, 2012, 12:26 UTC+3
In the view of experts, the scandal could have been caused by the desire of high-ranking officials to replace the Rostelecom company leadership
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On Tuesday, the homes of President of Russia's largest telecommunication company Rostelecom Alexander Provotorov and the company's major minority stakeholder Konstantin Malofeyev were searched. They are suspected of embezzling 200 million US dollars from the VTB Bank. In the view of experts, the scandal around the Rostelecom leadership could have been caused by the desire of high-ranking officials to replace the company leadership.

Before coming to Rostelecom Provotorov had worked in the Marshall Capital fund that was founded by Konstantin Malofeyev, the Komsomolskaya Pravda daily writes. This fund owned a certain Nutritek group. In 2007, it sold nine dairy plants to Russagroprom. The money for the purchase – 230 million US dollars was borrowed by Russagroprom from the British subsidiary of Russia’s VTB Bank – VTB Capital Plc. The state-run bank said later that Russagroprom never returned the loan. Moreover, the cost of the enterprises was overstated, and Russagroprom and Nutritek owners allegedly were legally connected and intentionally provided to the bank untrustworthy information about the pledges.

The Vedomosti newspaper reports that formally all these actions are linked with the case of default on a VTB loan worth 255 million US dollars. However, Malofeyev claims that the case is only a pretext, and in fact, this is “a thoroughly planned attack” on Rostelecom.

According to Malofeyev’s wife and lawyer Irina Vilter, the search of his home was started at 06:00 and ended at 14:30, after which the businessman was handed a writ to come to the Investigation Department of the RF Interior Ministry (MVD) for an interrogation. Malofeyev went there on his own. During the search the police confiscated paintings from the house. The investigators did not explain why.

The case within which the searches and interrogations were conducted was opened upon the application of VTB one year ago. However, the newspaper writes, an acquaintance of the businessman says that the actions of the law enforcers were provoked by Malofeyev’s “too confident behaviour” and his “sudden” desire to become a member of the Federation Council, as a result of which he could get immunity.

The newspaper recalls that in November, the Smolensk Region governor Alexei Ostrovsky presented Malofeyev to residents of the Znamenskoye settlement as a possible FC member from the region, and on Sunday Malofeyev won elections to the settlement’s Council of Deputies.

Malofeyev told the Vedomosti daily that on Wednesday he had an appointment with VTB President Andrei Kostin in order to discuss the settlement of the financial dispute. “I don’t understand why the searches were made just before the meeting,” the businessman said.

Experts believe that the corruption scandal around the Rostelecom leadership is caused by the attempts of some senior officials to change the company’s leadership, the Novye Izvestia newspaper writes. So, this September, RF Minister of Communications Nikolai Nikiforov at a meeting with President Vladimir Putin raised the issue of replacing the Rostelecom leadership. Nikiforov expressed dissatisfaction with the company’s efficiency, as the shares of the operator fell by more than 50 percent on the financial market. Then the minister’s request for the change of the company management was considered and rejected. However, news appeared later that the government proposed several candidates for the post of the Rostelecom head instead of Alexander Provotorov.

Senior officials, including from the Ministry of Communications, this summer suggested that Alexander Provotorov should resign voluntarily, “otherwise promising him legal problems,” a source close to the president of Rostelecom told the Kommersant daily. Alexander Provotorov declined to comment on the question of whether he will step down.

However, another variant of the resignation of senior leaders – the dismissal in order to “preserve the objectivity of investigation” linked with the operation of their structures, has been twice tested over the past month, the newspaper said. That was the official reason for the resignation of the former Minister of Defence, Anatoly Serdyukov, the same explanation was given concerning the forthcoming dismissal of head of Russian Space Systems Yuri Urlichich. However, Rostelecom and Nutritek are non-related stories, there is no conflict of interest between them, senior partner of Top Contact Artur Shamilov believes. “So, here we cannot draw parallels with other high-profile resignations of the recent period,” he added.


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