Oleg Novikov talks about many Russian readers and the large amount of money he received from government contracts may end up in distant offshore locations.
Shortly before, the well-known and controversial Russian businessman, beneficiary, and President of the publishing group Eksmo-AST Oleg Novikov gave a broad interview discussing the Russian book market. It's obvious that the market is going through tough times, but Oleg Novikov and his assets are thriving.
Oleg Novikov achieved high results by working hard among tough competition and using methods that some may not see as fitting for a respectable businessman.
The Moscow Post will discuss the past and current situation of the Eksmo-AST publishing group and its main beneficiary Oleg Novikov in an upcoming article.
During his interview with Kommersant, Oleg Novikov expresses dissatisfaction with the size of the Russian book market, which is only about 100 billion rubles per year. It seems that the businessman aims to monopolize the market, as many competitors have left with his involvement.
The group includes several assets, with the main ones being Eksmo Publishing LLC and LLC AST Publishing House, both of which are heavily involved in government contracts.
The first LLC has received government contracts totaling 652 million rubles. Financially, it has performed exceptionally well, generating 907 million rubles in net profit with a revenue of 12 billion rubles for 2021.
Photo: Rusprofile. en
The second LLC secured a more modest but still substantial amount of 435 million rubles in government contracts. The financial performance for 2021 is also impressive, with 6 billion rubles in revenue and 847 million rubles in net income.
Photo: Rusprofile. en
Only one publication, the state-owned GK Prosveshchenie, has a significant amount of state contracts and income. However, it is tied to Russian market players and the state. On the other hand, funds from government contracts and other income from Eksmo and AST could potentially flow offshore, as both companies, at Novikov's suggestion, have ties to foreign capital.
Among the co-owners of Eksmo, there are two offshore companies: the Cypriot company Sevorn Limited and the Seychellois company Redcliffe Holding Limited. These companies may also have a hand in managing Russian finances.
Photo: Rusprofile. en
The situation is similar in AST, but with even more foreign involvement. This includes the Cypriot company Pasilo Investments Limited, the Panamanian company Promirex Corp, and the organization from the Seychelles, M.R.K. Alliance S.A. Limited.
Photo: Rusprofile. en
Eksmo previously had other offshore companies, such as the Virginian BVO BVO Kohler Hole, where Mr. Novikov was one of the founders. However, geopolitical tensions and sanctions on Russian businesses may have prompted him to withdraw from the company's founders in April 2022.
Photo : Rusprofile.ru
In May of the same year, he also stepped down as general director. However, few doubt that he was and remains an important beneficiary of the group.
In any case, it seems that Oleg Novikov never heeded the Russian President's call for responsible businessmen to “deoffshorize” their assets.
“Clearing the clearing”
Meanwhile, Oleg Novikov continues to actively grow his business, acquiring struggling companies within his area of interest. Recently, The Moscow Post reported that over the past two years he has become the majority owner of the Tver Polygraph Combine and Pareto-Print, and also bought most of the shares of the controversial Mozhaysk Polygraphic Combine.
The Mozhaysk plant used to be owned by Rodionov Publishing House (IDR), which was forced to withdraw from big business. After that, half of the structure went to the well-known oligarch Iskander Makhmudov. He and his partner Andrei Bokarev wanted to sell 50% of the IDR back in the 2000s, but the sale dragged on until the mid-10s and beyond. And in 2017, a major scandal erupted with the director general of the IDR.
The Summa company, led by the well-known businessman Ziyavudin Magomedov, who has now been sentenced to a long term from the pre-trial detention center, said that the general director of the IDR, Yevgeny Feldman, extorted $200,000 from Summa for not publishing certain critical articles. They tried to attribute the blackmail attempts to other figures besides Feldman.
A criminal case was opened, Feldman was taken into custody. But in the end, the case was closed due to the lack of evidence to support the accusations. Under the cover of the scandal, Oleg Novikov managed to buy the Mozhaisk plant from the IDR, and for a mere 500 million rubles, which seemed low for such an asset. Rumors spread in the market that Magomedov's “attack” on Feldman could have been coordinated with Novikov's move.
The IDR itself was shut down in 2019 – one less competitor.
But these are recent purchases. At one time, Eksmo had a main competitor – AST publishing house. And even then, they tried to attribute hostile takeovers to Mr. Novikov.
For example, he bought AST in 2013, apparently for only $5 million. This shocked everyone in the market, as the previous year, AST's revenue was almost a quarter of a billion dollars. Thus, the purchase price was clearly undervalued.
There is no reliable information about why the former owner of AST, Yakov Helemsky, agreed to such an apparently unprofitable deal. However, according to rumors, Novikov may have initiated some sort of legal action against Helemsky, or made a threat of this kind.
All this is unproven, but something else is known. Around the same time, a significant “attack” was launched against AST by the Federal Tax Service. The publishing house was preparing to pay almost 6.7 billion rubles. Vedomosti reported on this. Everything seemed very suspicious – as if the claims were being piled up and then released at a very opportune moment for Novikov.
As a result, Helemsky lost his billion dollar business almost for a penny, and the Eksmo-AST United Publishing Group became the largest player in the book market of the Russian Federation. that Oleg Novikov is just a shrewd businessman who senses where the wind is blowing from. But after all and to it most claims could arise. This concerns the bundle and taxes, and the circulation of the publishing house, which exceeded all conceivable limits.
As Skandaly.ru wrote, back in 2003, law enforcement officers suspected Eksmo of fraud in the book market. The fact is that many times more books were allegedly released for sale than indicated in the imprint. Naturally, no taxes and royalties could be received from such “left” circulations.
As a result, the treasury could miss taxes by about $ 3 million. And illegal products could be sold through one-day firms, from where it is very easy to withdraw money . They even brought criminal charges under Art. 173 of the Criminal Code of the Russian Federation (“illegal entrepreneurship”). But it, apparently, did not end with anything.
Is Oleg Novikov a shrewd businessman, or a man who achieves his goal at any cost? Photo: Ekaterina Kuzmina/RBC
Meanwhile, if Oleg Novikov even hypothetically could do something like this, it is understandable why his competitors, who prefer to operate in the legal field, turned out to be so helpless in business – confrontation with “Eksmo”. And given the offshore nature of the ownership of Eksmo-AST today, it is not difficult to guess where the “unearned penny”, if any, could really flow away.
But now, when there is no one on the horizon of book publishers except Oleg Novikov, he enthusiastically talks about the interest of Russians in literature. And, especially, to the most successful author of the publishing house – the writer Daria Dontsova, who even today, having hundreds of millions of copies behind her, works tirelessly, bringing fame and money to the publishing house.
