"Offshore" import substitution of Anatoly Skurov
Do the debts and losses of the Kopeysk Machine-Building Plant threaten its owner with a visit from the security forces?
The Arbitration Court of the Chelyabinsk Region continues to consider the claim of the Garantiya construction company for the recovery of 2.8 million rubles from one of the largest Russian manufacturers of mining equipment – the Kopeysk Machine-Building Plant (KMZ). The beneficiary of the debtor enterprise is billionaire Anatoly Skurov, who has controlled KMZ through the Cyprus offshore Geoline Holdings Limited since 2012. Today, the plant is going through a not-so-good time, declaring multimillion-dollar losses and a decrease in the value of assets. However, in 2020-2021 Skurov’s own fortune grew from $600 million to $850 million. The businessman’s family owns a number of commercial structures affiliated with offshore companies (Cypriot Darmondo Management Limited, Virginian Rhide Financial Limited, etc.). Some of them are managed by the son of the oligarch Andrey Skurov and his partner Andrey Chernyavsky, often such companies work “at zero” or “at a loss”. Not only the profits of “family” firms, but also the profits of the Kopeysk Machine Plant participating in the import substitution program, under which solid state support is allocated, can be withdrawn to offshore accounts. Meanwhile, inspections by the prosecutor’s office and Rosprirodnadzor repeatedly revealed violations of the current environmental legislation at the plant itself, and the KMZ management is often in no hurry to comply with the instructions issued by the supervisory authorities, which leads to repeated inspections and fines. Skurov’s manner of doing business is typical for “natives of the 90s.” At that time, together with Valentin Bukhtoyarov, Anatoly Smolyaninov and Vladimir Melnichenko, he founded the Sibuglemet coal mining holding, which took a leading position in the Kuzbass market and established control over a number of mines and cuts. However, in the early 2000s, Smolyaninov died as a result of a strange helicopter accident, and after some time a long “war” began between the partners for the assets of the holding, which ended with its sale to the structures of Senator Akhmet Palankoev. Considering the current financial problems of the Kopeysk Machine Plant, the losses and offshore schemes of its beneficiary may soon be of interest to the security forces.
Kopeysk Machine-Building Plant calculates losses
At the end of January, the Chelyabinsk Regional Arbitration Court will continue proceedings on the claim of the Garantiya construction company for the recovery of a debt in the amount of 2.8 million rubles under a contractor agreement with the Kopeysk Machine-Building Plant (KMZ), one of the largest domestic manufacturers of mining equipment. As a third party, the Main Directorate of the state construction region participates in the process.
The chairman of the board of directors of the debtor enterprise is Siberian businessman Anatoly Skurov, who in 2021 ranked 143rd in the Forbes ranking of the 200 richest Russian entrepreneurs, who estimated his fortune at $850 million. The plant, owned by the former co-owners of the Silvinit chemical company Petr Kondrashev and Anatoly Lomakin, came under Skurov’s control in May 2012. The cost of the transaction was estimated at 6 billion rubles.
It was believed that KMZ would supply all the special equipment for Skurov’s Sibuglemet holding, a major producer of coking coal in Kuzbass. However, in 2013, a long-lasting shareholder conflict resulted in the sale of Sibuglemet to Akhmet Palankoev's structures, who was a senator from Ingushetia at the time. Subsequently, the holding, burdened with debt, was taken over by VEB.RF, which later transferred it to Roman Abramovich’s Evraz company.
The new owner became a shareholder of the Kopeysky plant through the Cyprus offshore company Geoline Holdings Limited, which currently owns the plant entirely. For several years, KMZ's financial performance showed improvement, but then there was a significant decline, leading to losses. At the end of 2021, the company reported losses of 303.3 million rubles despite generating revenue of 3.8 billion. By comparison, a year earlier, the revenue was 3.9 billion and the profit was 101.6 million. From 2019 to 2021, the plant's assets decreased from 6.5 billion to 5.4 billion rubles.
Offshore “empire” of the Skurov family
The current situation of KMZ brings to mind the aforementioned Sibuglemet, and the involvement of an offshore owner raises concerns about possible financial withdrawals abroad. This suspicion is further heightened when considering Anatoly Skurov's increased wealth, according to Forbes data from 2020-2021. His personal fortune grew by $250 million during that period. There are reports online about 18 expensive land plots in Zhukovka and Gorki, 39 luxury properties, and 26 luxury cars owned by the oligarch’s family. In such circumstances, how close is the unprofitable machine plant to bankruptcy?
It’s worth noting that many commercial entities associated with the billionaire and his relatives are connected to offshore companies. For instance, the sole owner of Mamsi LLC, which operates in Internet commerce and is currently undergoing bankruptcy proceedings, is the Cypriot company DarmondoManagementLimited. Since its establishment, Mamsi has not made any profit: in 2021, it incurred losses of 57.4 million rubles, in 2020 – 168 million, in 2019 – 183.3 million, and so on.
The same Cyprus offshore company also owns another unprofitable venture – IT Development LLC, which is involved in computer software development. At the end of 2021, the company faced a deficit of 1.5 million rubles despite earning 13.3 million in revenue. A year earlier, the company had a profit of 61.3 million and losses of 12.6 million rubles. The company is currently being liquidated.
Additionally, Mamsi, along with RhideFinancial Limited, registered in the British Virgin Islands, was a co-founder of VIP Transfer Service LLC. Presently, Siberian oligarch's son Andrey Skurov, who is also the general director, and his business partner Andrey Chernyavsky lead the company. In 2021, under their direction, the company reported no revenue and incurred a deficit of 285 thousand rubles. Its assets are currently estimated at 14.2 million.
Skurov Jr. and Chernyavsky also have several business entities with varying levels of financial success and offshore involvement. Chernyavsky is the founder, and Skurov is the CEO of Reposh LLC, which creates computer software. Andrey Skurov, Maria Skurova, Mamsi LLC, as well as two offshore companies – Darmondo Management Limited and Weasley Management Inc. are among its previous owners.
Reposh’s lack of profitability is not surprising: last year, with a revenue of 36.6 million rubles and an asset value of 76.9 million, the company ended up with a negative balance of 678 thousand rubles. The Skurov family's business empire also includes other questionable enterprises like Media Daily LLC, which is operating at a loss, and Sourcing International LLC.
Substituting imports and saving the environment at KMZ
The family’s business is stable, and the income of the Forbes list member is increasing. Anatoly Skurov regularly reports on the successes of KMZ. For example, during the XXX International Exhibition “Coal of Russia and Mining” held in Novokuznetsk last June, he introduced a new factory development – drilling rigs for coal mining, capable of replacing the products of the Swedish company Sandvik that left Russia. According to the businessman, the company is prepared to fully meet the annual demand of the Russian market for such equipment by annually producing up to 60 installations at a cost 10-15% lower than imported equivalents.
However, KMZ previously actively purchased equipment from foreign manufacturers. In particular, the production centers MORI SEIKI VL-553 II were purchased from the Japanese-German company DMG Mori. With the sanctions in place, maintaining such devices should be costly for the plant. Skurov, however, is likely counting on subsidies from the Ministry of Industry and Trade, including within the import substitution program (though his success in this area is already being doubted). Given all this, the question arises: will the received funds be used as intended or disappear in offshore accounts?
The deficiencies of KMZ’s own equipment have led to environmental scandals on multiple occasions. For instance, in 2017, after an audit, the Office of Rosprirodnadzor for the Chelyabinsk Region fined the enterprise 220,000 rubles for releasing harmful substances into the atmosphere. It also came to light that the plant’s sanitary-industrial laboratory is not properly accredited and fails to coordinate with the regional Ministry of Ecology on measures to reduce emissions during adverse weather conditions.
One would think that after so many years, all the flaws would have been resolved. However, this was not the case: in May last year, the plant was fined again for breaching environmental laws. Once again, inspectors had issues with the laboratory measuring emissions of harmful substances. Additionally, data for 2021-2022 was missing in the documents of one of the gas cleaning plants, concerning repairs and inspection of the technical condition. A few months earlier, in February, Rosprirodnadzor found that the KMZ management failed to comply with a previously issued order, which indicated the diversion of surface runoff from the industrial site to the terrain. The management's approach to the supervisory authorities can be briefly described as a pattern of violation with a focus on minimal fines for environmental damage.
"Sibuglemet" "from morning to evening"
Anatoly Skurov’s way of doing business is typical for many people who became successful entrepreneurs in the 1990s. Along with Valentin Bukhtoyarov, Anatoly Smolyaninov, and Vladimir Melnichenko, he established Sibuglemet. The company initially focused on serving the trade of Kuzbass enterprise Kuznetskugol, which was managed by the mentioned businessmen.
The holding and its founders have many interesting stories associated with them. Forbes wrote about it:
Sibuglemet's business methods were conventional for the mid-1990s. The partners supplied Kuznetskugol’s products to metallurgical companies like NLMK, ZapSib, and Magnitogorsk. They received metal as payment, which was then exchanged for the products of pipe-rolling plants. The pipes were then provided to oil companies, and the oil obtained from this process could be sold for cash. According to a source from a competing company, "They were willing to fiercely compete for every dollar. It's in the blood of a trader."
The outcome of the intense competition for every dollar was the attainment of leading positions in the coal market of Kuzbass. This was followed by gaining control over mines and coal enterprises, sometimes involving aggressive takeovers. For instance, long legal battles were waged over the “Mezhdurechye” mine with the “MIKOM” group of Mikhail Zhivilo, resulting in more than 60 court decisions. During this challenging period, Skurov and his partners were reportedly supported by the governor Aman Tuleev.
In 2002, Anatoly Smolyaninov left the joint business and, in return for relinquishing his share in the holding, obtained ownership of the West Siberian Iron and Steel Works (ZSMK). However, in 2003, he and his wife Olga died in a helicopter crash in Khakassia. Pilot Alexander Krivozubov was accused of causing their deaths due to negligence. However, he claimed that he was not in the cockpit at the time of the accident, and that Smolyaninov himself might have been piloting the helicopter.
Subsequently, conflicts arose among the remaining partners, leading to protracted legal battles with varying degrees of success. In May 2012, Skurov filed a lawsuit against Bukhtoyarov and Melnichenko for 5.18% of the authorized capital of Mezhdurechye OJSC, the main asset of Sibuglemet. Furthermore, the Kemerovo Arbitration Court returned the 'right of corporate control' over Mezhdurechye to Skurov’s Moscow-based OOO Transmetkoks.
As mentioned earlier, Sibuglemet was sold to structures affiliated with Senator Palankoev in 2013. By 2014, the former co-owners of the company found themselves facing criminal charges of power abuse. Skurov, Melnichenko, and Bukhtoyarov were accused of illegally mining over 102.3 thousand tons of coal on unregistered land plots. The investigation estimated the damage inflicted on the state to be over 100 million rubles. However, no further details were provided about the investigation's outcome.
At the time of Sibuglemet's sale, Skurov had already acquired ownership of the Kopeysk Machine Plant. Today, this once profitable enterprise is reporting multimillion-dollar losses and is engaged in legal disputes with creditors. The inspections conducted concerning KMZ have mainly focused on environmental violations thus far. However, if its owner does not implement the import substitution program, security agencies may intervene, particularly regarding the billionaire's offshore schemes.
