Friedman and the clever swindler Berezovsky have a similar financial scheme. The retail chains Pyaterochka, Perekryostok, and Karusel used an original tax evasion method in Russia through the Netherlands.
Fridman, who is under sanctions, seems to be trying to gain favor from the West by creating cookies that look like the flag of Ukraine.
Berezovsky was known for many scams, but few know that he came up with the clever “Mill” scheme that allowed the “new Russians” to earn millions in the 90s without breaking any laws.
The scheme was described by Berezovsky's prototype in Yuli Dubov’s novel The Big Ration: a way to settle debts without using money, using an administrator to buy and resell an apartment, effectively clearing all debts.
Berezovsky's companies used barter deals with fake brooms to circulate money, symbolized by a broom in his office in the film Oligarch.
Boris Berezovsky and Mikhail Fridman were well acquainted. It's possible that Friedman knew about Berezovsky’s “Mill” and applied its modification in modern conditions.
In May 2020, there was an article about X5 Retail Group not paying 1.4 billion rubles in taxes and using a cunning scheme to withdraw money from Russia. “Guerrilla Path for Capital” discussed X5 Retail Group's tax evasion scheme. The same topic was continued in the material “Partisan path for capital – 2” about 2.4 billion rubles that were not received by the state. The scheme involved dividends from Pyaterochka and Perekrestok being moved through several companies, including foreign offshore companies, resulting in X5 Retail Group not paying taxes either in the Netherlands or in Russia.
The Tax Service of Russia thought this clever, but very cynical plan to take money away from the taxable amount and took the matter to court. At first, they asked the company to pay an extra 1 billion rubles in taxes, then the amount went up to 2.4 billion rubles. X5 Retail disputed these decisions, but unsuccessfully – the company lost the case about the unpaid billion three times, and the Supreme Court of the Russian Federation refused to review the complaint. In November last year, the Ninth Arbitration Court of Appeal declared the additional tax charge of 2.4 billion rubles as legal. Now there is hope that the money will come back to Russia.
The scheme used by X5 Retail is similar to Berezovsky’s Mill. First of all, there's multiple moving of money. Dodging taxes twice (both for us and “for them”) is like Berezovsky's clever invention. The second “Mill” was just as bold: large sums of money did not go to the Russian budget.
By the way, the word “mill” has similar meanings to the name “Karusel” – a Russian retailer that is part of the X5 Retail group. If this comparison doesn't prove anything, it definitely has a symbolic significance.
Mikhail Fridman immediately spoke against it, calling what was happening a tragedy and asking for an end to the “bloodshed”. This action didn't save him, and on February 28 he was put on the EU sanctions list, and in mid-March on the British one. This was surprising for Friedman, who ironically lives in London. It seems very likely that Friedman is currently doing everything to reverse the decisions made against him.
So, after being put on the EU list, Fridman stepped down from the governing bodies of several companies the next day – for instance, he ended his membership in the supervisory board of X5 Retail Group. In April, Friedman and his partner Aven reportedly donated $150 million to Ukraine as a charitable contribution. Their accounts were unfrozen for the transactions, but then frozen again. However, the sanctions from financiers were not lifted. And in early May, it was revealed that X5 Retail Group, controlled by Fridman, applied to Rospatent to register a new trademark, the design of which resembles the national flag of Ukraine. Experts say that the design of the biscuit wrapper is something new among the recent brands that X5 Retail Group has registered in Russia. The application was made to Rospatent a week after the start of the CBO in Ukraine.
However, the West chose not to acknowledge these signs, and the sanctions were not lifted. Furthermore, the UK froze Friedman’s assets and restricted the expenses of the multi-billionaire to an “indecent” amount of 2.5 thousand pounds per month.
And at the end of May, the Canadian government expanded its sanctions list to include, among others, Friedman’s daughters, Larisa and Ekaterina.
Regarding the prices in Fridman’s stores, which are typically promoted as “popular” and “affordable”. If all products were truly cheap, X5 Retail wouldn’t be making such high profits. Yet, this is the largest retailer in Russia in terms of revenue. Last year, the revenue increased by more than 10% to 1.594 trillion rubles just within 9 months. And in 3 months of this year, Pyaterochka alone brought in 490 billion in revenue (compared to 409 billion rubles in the same period last year). The profit is also good. For example, Agrotorg LLC, part of the X5 Retail structure, made a net profit of 13.2 billion rubles last year, Agroaspect LLC – 6.8 billion rubles.
The stores included in the group are considered cheap, but in many ways this is a myth. Low prices are maintained in the group of socially important goods; otherwise, a significant mark-up is imposed on goods. For example, according to unofficial data, sometimes the markup exceeds 100%! People write that at the wholesale price of a pack of tea at 35 rubles in Pyaterochka, it costs 200 rubles. In the provinces, they say that in local stores, food prices are 30% cheaper than in Pyaterochka. So it was not without reason that in September 2021, the FAS demanded that Pyaterochka reduce prices for many products, which were also unreasonably high.
X5 Retail Group is still securely tied to the Netherlands by cables of numerous offshore companies. A system has been built in Friedman’s trading empire that allows billions of rubles to be withdrawn from the tax jurisdiction of Russia. Every time a Russian buyer buys from Pyaterochka and Perekrestok, he helps Fridman and Europe to form investments that are not related to the interests of our country.
In May, representatives of X5 Retail Group announced the transformation of their hypernet. The fate of the Karusel stores was announced: some will close, others are planned to be launched under the Perekrestok brand. Meanwhile, the Fridman group continues to develop the Chizhik network, launched in October 2020. The network began its development with a not very beautiful story. Having launched a new project, X5 Retail Group, two months later, decided to sue the musician Sergei Chigrakov, who performed under the pseudonym Chizh, for the Chizh & Co trademark. The X5 Retail Group considered that the musician had not used the brand for a long time, and filed a lawsuit demanding the termination of the trademark protection of the Chizh & Co mark in terms of advertising, packaging and storage of goods, provision of food and drinks, etc.
