Kremlin nationalises FESCO

News 17 Jan 2023 by WCN Editorial

Moscow’s Khamovniki District Court has complied with a lawsuit brought by Russia’s Deputy Prosecutor General Igor Tkachev against the shareholders of the Far-Eastern Shipping Company (FESCO), the parent company of FESCO Transportation Group

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The court ruled in favour of nationalising the 92.4% stake in FESCO held by Ziyavudin Magomedov (32.5%), Mikhail Rabinovich (26.5%), Andrey Severilov (23.8%, the group’s current board chairman) and Sergey Bazylev (9.6%).

Ziyavudin Magomedov’s elder brother Magomed is the principal defendant under the suit. According to Tkachev, Magomed Magomedov was unlawfully involved in politics and business during his tenure (from 2002 to 2009) as a Russian senator.

After four years in pre-trial detention, the Magomedov brothers were sentenced inNovember last year to 18 years and 19 years in maximum security prison for embezzling state funds in connection with acquisitions by Summa, their then holding company, and the construction of a football stadium in the Kaliningrad exclave. The court confiscated Ziyavudin’s interest in FESCO, but the other stockholders were not affected, so the Prosecutor General’s Office filed the second claim.

All shareholders will appeal the decision, including FESCO as a third party. FESCO’s lawyers are examining the judgement’s likely detrimental consequences for the group’s international activities.

However, Russia’s Federal Agency for State Property Management will probably sell the shares through an auction. The most likely highest bidders are state-run RosAtom or Delo Group, which is already partly owned by RosAtom.

Thus, the Russian state continues to turn the clock back to the days of the USSR. It has already assumed full or partial control over a number of Russia’s transport assets, including Novorossiysk Commercial Sea Port and St Petersburg’s outer harbour of Bronka.