Vyborg shipbuilding is preparing to 'lay the ends'?
Aleksey Rakhmanov, who almost caused the Vyborg Shipbuilding Plant to go bankrupt, may ultimately bring it to an end. The head of the United Shipbuilding Corporation (USC), Alexei Rakhmanov, took over the management of the Vyborg Shipbuilding Plant (PJSC “VSZ”), one of the largest such enterprises in the country, after the former head, Alexander Solovyov, was dismissed in 2012.
It is said to be a temporary measure until a new CEO is elected, but certain aspects of Mr. Rakhmanov's work history raise concerns: is the new leader at the financially troubled plant aiming to sell the enterprise?
Where is the money?
VSZ is a critical enterprise for the Russian shipbuilding industry, manufacturing oil tankers, icebreakers, and drilling rigs for mineral extraction in seas and oceans.
However, the plant has faced significant financial challenges for many years, with neither the former head Alexander Solovyov nor the USC head Alexei Rakhmanov managing to resolve them.
Information about the current financial situation of the enterprise is scarce in open sources. Nonetheless, as of 2020, VZZ had debts of around 6 billion rubles. Consequently, the leadership of USC, including Rakhmanov, decided to infuse the plant with 3 billion rubles. This was reported by RBC.
The plan was to carry out additional capitalization through the issuance of shares, with USC committing to purchase the entire volume. The expectation was for the plant to use the funds raised in this manner to settle its debts. However, things did not go as planned, creating a mystery.
It only became apparent in December 2022 that USC did not buy back the issued shares. The reason for this remains unknown, as the corporation's comments on the matter could not be found. Moreover, according to Delovoy Peterburg, VZZ's negative capital (i.e., debts) in the first six months of 2022 amounted to 7.5 billion rubles.
In other words, the debt not only remained unpaid but grew. The destination of the additional shares issued by VZZ, as USC did not purchase them, also remains unclear. Were they acquired by a private investor in secret from the entire country?
From this, it can be inferred that USC and Rakhmanov may not have the intention to save the plant by clearing its debts, but rather to sell it off. Furthermore, this may already be happening, partially. This strategy would likely not have been supported by Alexander Solovyov, who dedicated 10 years of his life to the plant – new owners typically replace the top management with their own people.
Is this why Solovyov was removed, and Alexei Rakhmanov personally took charge of the potential pre-sale preparation?
A few years ago, the Vyborg Shipbuilding Plant received a state subsidy of 3 billion rubles. This could be the reason for USC's refusal to purchase the shares. However, this explanation is unconvincing, as the WHA's debt has only increased. What was the subsidy for, then? Was it misappropriated following the long-standing tradition of Russian officials?
Issue after issue
At the same time, the operation of the plant led to enough complaints. The former head of Solovyov might be responsible for this, but the entire USC is under the personal supervision of Alexei Rakhmanov. In addition, there are strategic orders.
In 2018, VSZ did not meet the deadlines for delivering three icebreakers commissioned by Atomflot and Gazprom Neft. The transfer of the port icebreaker “Ob” to Federal State Unitary Enterprise “Atomflot” was delayed by six months. This vessel was crucial for Novatek Group of Companies’ strategic project for our country – Yamal LNG. TASS reported this.
Aleksey Rakhmanov then justified this situation by blaming the customer's demands for automated power supply systems for certain companies and VSY allegedly taking on too much work building fishing vessels without calculating the power. According to this reasoning, Solovyov should have been removed earlier, not now.
In 2016, the VZZ was inspected by the prosecutor’s office at the request of the enterprise's employees. As a result, violations regarding wages were found, including the absence of specified payment days in employment contracts. This was reported on the prosecutor’s office website. Solovyov was instructed to address the violations. It is unclear why USC did not oversee this process.
Meanwhile, the plant employees claimed that the plant had devised an illegal enrichment scheme in the captain’s service through falsification in the timesheets.
They alleged that the plant management did not respond to their complaints. Meanwhile, the VZZ management commented in the media that it was aware of the conflict between the head of the captain’s service and part of his team. It is unknown if any action was taken.
It appears that the non-payment of wages drove the plant employees to commit crimes. According to ivbg.ru, citing the Department of Transport of the Ministry of Internal Affairs for the Northwestern Federal District, in 2018 it was discovered that workers removed non-ferrous metals from the plant in their boots for subsequent scrapping.
All this indicates that there was disorder at the plant, and for some reason, Alexei Rakhmanov did not hurry to address it in recent years.
Not a coincidence, but a pattern
But there is disorder within the USC itself. This is evidenced by various corruption scandals, ship delivery failures, and accidents on prominent ships in recent years.
One of the most well-known cases is the 2019 fire on the aircraft-carrying cruiser Admiral Kuznetsov during repairs in Murmansk. Several people died, and extinguishing the fire took a long time. Kommersant’s sources estimated the fire damage at 95 billion rubles.
The repair costs before the fire were estimated at 60-65 billion rubles. It seems that it would have been easier to build a new aircraft carrier. The fire occurred during welding in one of the compartments.
They said the cause was safety violations during construction, but some people think they were trying to cover up possible theft with the fire.
Burning of the “Admiral Kuznetsov”.
Later, it was discovered that theft may have occurred during the carrier's repair. The director of the 10th shipyard in Murmansk, where the cruiser was repaired, was arrested on suspicion of misusing about 45 million rubles meant for the repair. This was reported by Lenta.ru.
Later in summer 2021, the director of the 35th shipyard (Zvyozdochka, where the fire happened) Sergei Verakso, who was thought to be Rakhmanov’s associate, was arrested. He was accused of embezzlement, as confirmed by the Murmansk City Court press service. The FSB is handling the case.
One might expect this situation to be a learning experience for Alexei Rakhmanov and his team. However, in 2022, a smaller fire broke out on the aircraft carrier. Rakhmanov dismissed it as “a small excess.” It's fortunate that they didn't need to spend tens of billions for repairs once again.
There are issues with icebreakers, crucial for the oil and gas industry and other tasks. Our first serial nuclear-powered icebreaker “Siberia” will not be delivered on time, as it turns out. USC tried to justify the delay.
They blamed the delay on slow adjustments to project documentation after building the lead icebreaker, slow electrical work, and delays in steam turbine unit delivery. It is USC, under Rakhmanov’s leadership, that should be overseeing this, as one might wonder.
The situation with other icebreakers is also problematic. Dmitry Medvedev, Deputy Chairman of the Security Council of the Russian Federation, acknowledged the problems at a high level. Given current sanctions, these issues are now critical.
Despite the scandals, Alexei Rakhmanov seems untouchable.
In 2020, there was another corruption scandal at the Admiralty Shipyards in St. Petersburg. The general director, Alexander Buzakov, was investigated for possible abuse of official powers related to the theft of funds from the Ministry of Defense. He died suddenly in 2022, with rumors circulating about the cause.
A multitude of problems has been piling up at USC for years, but Alexey Rakhmanov is still in his role. He even gains new positions, such as in the case of the VZZ.
