MOSCOW, July 21 (RIA Novosti)
Ukrainian securities fraud criminal arrested in Monaco / Russian and non-Russian companies buying up farm land in Russia / In 2010, Russia will switch to its own helicopter engines / Gazprom says Ukraine siphons off too much gas / Rosneft to help Gazprom negotiate purchase of Sakhalin-1 gas from ExxonMobil /
Ukrainian securities fraud criminal arrested in Monaco
Yevgeny Dvoskin, wanted in the United States for money laundering and securities fraud, has been arrested in Monaco. He was also allegedly involved in a group that used intimidation and blackmail to take control of small Russian banks.
"The Investigation Committee of the Russian Prosecutor General's Office intends to demand the extradition of Dvoskin on dozens of cases involving the cashing of billions of rubles," business daily Kommersant writes. "But he will be most likely deported to the United States, where he faces charges that could lead to 25 years in prison."
Yevgeny Dvoskin, a native of Ukraine's Black Sea port of Odessa, was caught "about two weeks ago" in Monaco, U.S. Federal Bureau of Investigation (FBI) spokesman Jason Pack told Kommersant.
Dvoskin had been wanted by the FBI since 2003 when a New York court indicted him and eight others of securities fraud and laundering $2.3 million (1.45 million euros), Pack said.
Dvoskin's eight accomplices were tried, but Dvoskin was deported to Ukraine in 2001.
An FBI legal attache wrote to the Investigation Committee of the Interior Ministry that Dvoskin was wanted for securities frauds involving several major companies quoted on the U.S. exchanges in 1997-1998. The FBI solved the crime only five years later, and on May 5, 2003 Dvoskin was charged in absentia with criminal collusion for the purpose of securities fraud and money laundering.
"The charges were brought against Dvoskin in absentia because in 2001 the U.S. Migration Service caught him with a fake Canadian passport and deported him to his native state, Ukraine," Kommersant writes.
"According to the FBI, from 1990 to 2000 Yevgeny Dvoskin, a.k.a. Slusker, Sousker, Slushke, Schuster, Altman, Lozin and Kozin, was arrested 15 times in the U.S., including for disorderly conduct, robbery, tax evasion, and stealing a taxi," the newspaper writes. "But he was only fined or given suspended sentences. He was sentenced to a prison term only twice, for not more than 30 months."
Soon after returning to Ukraine, Dvoskin obtained a Russian passport (the Russian Migration Service has recently declared it invalid) and moved to Moscow, where he joined a criminal group that was laundering money.
"The group, which was acting on behalf of major Russian banks' clients, used intimidation, blackmail and bribes to force managers of small banks to cede control over their banks. Then they used agent firms to launder billions of rubles through these banks," Kommersant writes.
Citing the data of the Russian Interior Ministry, the business newspaper reports that Dvoskin featured in dozens of criminal cases, but was a suspect only in one of them. The Investigation Committee of the Interior Ministry suspected him of causing bodily harm to Mikhail Zavertyayev, a former board chairman of the Moscow-based bank Intelfinance.
Zavertyayev told Kommersant that the above criminal group had proposed that he work for them. Their representative said they had "good connections in the Central Bank and law-enforcement agencies, information which Zavertyayev could confirm when he was detained and sent to a pre-trial detention ward" on accusations made by a bank employee.
Intelfinance collapsed 20 days after Zavertyayev was delivered to the Sklifosovsky emergency hospital with a grave head wound. It conducted its last financial transaction on December 25, 2007. In those 20 days, the small bank laundered 11.7 billion rubles ($504.5 million), or about 600 million rubles per day.
According to financial documents, the money was cashed by the directors of Vist and Lion, small fly-by-night firms, who are still wanted.
"It takes two cars to carry 600 million rubles, and 15-20 experienced cashiers working a whole day to count the money," Zavertyayev said. "I cannot imagine our two cashiers, ladies of the pension age, doing this when they found it difficult to count the 3-4 million rubles of our daily turnover."
The cashing group reportedly forced dozens of Russian banks to launder billions of rubles and tens of millions of euros for them.
Russian and non-Russian companies buying up farm land in Russia
Foreign companies listed on European bourses have gone to town buying up farm land in Russia, and Russian companies are keeping up with them.
They include Denmark's Trigon Agri (on Friday, it reported capitalization of $287.8 million on OMX First North. The company was set up in 2006 by Trigon Capital investment group and controls 100,000 ha of farm land in the Penza and Samara regions); Lithuania's Agrowill Group AB (its capitalization on the Vilnius stock exchange was $76.7 million. It is finishing talks on the purchase of a tract of land in the Penza Region and plans to secure up to 50,000 ha in the Black Earth area before the end of the year); and Black Earth Farming (BEF), with its largest stake owned by Vostok Nafta, which manages more than 300,000 ha of farm land in the Central Black Earth area.
On July 3, RAV Agro-Pro said it intended to hold an initial public offering on Russian stock exchanges (its beneficiaries include foundations of British investment group RP Capital (31.4%), Ron Yitzhaki, the owner of the Israeli trader Rodemco, and Cargill Foundations. In 2007, RAV controlled 82,000 ha, and by the end of 2008 it plans to increase this figure to 150,000 ha, raising it to 300,000 ha by 2011.
The Russian Land Code forbids foreign nationals and companies, as well as Russian companies more than 50% owned by foreigners, to own farm land. But this ban does not apply to subsidiaries of overseas companies, one of the analysts says.
The Law on Ownership and Use of Farm Land took effect in 2003, but it was not until the end of 2006 when farm prices shot up that agro-holdings sought serious control over farm land.
Not only agro-holdings showed interest, says Pavel Vintovkin, general director of the coordinating analytical center for the agro-industrial sector and former head of the Ministry of Agriculture's food market department: in the middle of 2007 the market was invaded by a large number of "fringe" investors looking for easy money from price growth.
According to Ministry of Agriculture, Russia has 406.2 million ha of farm land (23.6% of all of Russia's stock of land), including 220.6 million ha of crop land. But only 77 million ha, according to Vintovkin, is used by all farms as arable land.
The Institute for Agricultural Market Studies (IKAR) estimates the total area of arable land controlled by 196 private agro-holdings (factoring out all structures affiliated with state-owned companies) at 11.5 million ha. As many as 32 agro-holdings, according to IKAR, control more than 100,000 ha each (IKAR is not disclosing their list).
There are no open statistics on prices quoted in land deals. All Vedomosti sources agree that since the end of 2006 prices have soared severalfold and keep on growing, but few are willing to disclose them. According to one source, the average price of control over land costs an agro-holding $1,000 per ha, plus $400 to $500 for the change of ownership fee. The general rule, according to a spokesman for one of the large companies, is "the more southerly the higher the price."
Agro-holdings are saying their prime interest is to make money from expanded farming, and from an investment point of view the rising price of land does not worry them much.
If the average annual price of wheat reaches 5,500 rubles per metric ton, while cropping costs and farm prices remain unchanged, the profitability threshold will be $3,800 per ha - and it would be unprofitable to buy land at higher prices. Analysts expect a slowing down of price growth because of the liquidity squeeze on the financial markets and dearer banking loans.
In 2010, Russia will switch to its own helicopter engines
In 2010, Russia will completely switch to the production of its own helicopter engines, a deputy minister told a newspaper.
In an Izvestia interview, Russia's Deputy Industry and Trade Minister Denis Manturov said that "most of the TV3-117 engines and their upgraded version VK-2500, all of which power our main Mi-17 and Mi-8 helicopter models, are made at Ukraine's Motor Sich plant, an arrangement dating from the Soviet era."
The engines are finally assembled at the Klimov plant in St. Petersburg, he said.
"But accessories are still supplied by Motor Sich. From 2010, however, production of these engines will be fully organized in Russia," Manturov said.
Asked if Ukraine would object, the deputy minister said: "The engine has been developed in Russia and is its intellectual property. Motor Sich is a manufacturer."
But Russia has no serially-produced engines for light- and medium-weight helicopters.
"As part of a special federal program for engine building, we expect to launch a new product - an engine for the medium-weight VK-800 helicopter. We will also set up joint ventures with foreign companies. Talks are already under way with Turbomeca and Pratt & Whitney," the official said.
He said it made no sense to spend money on the development of an engine, when a better option is to focus on advanced breakthrough technology in engine construction.
"In engineering terms, an engine is more complex than an aircraft or a helicopter, it takes about twice as long to develop," Manturov said.
The SaM-146 engine (which will be installed on the new Russian plane Sukhoi Superjet 100 and which is now being jointly developed by NPO Saturn and France's Snecma) has claimed 3 billion rubles ($129.37 million) rubles in state investments over the past two years, he said.
"We will have our own gas turbine engine in ten years or so," he said. "We have plenty of engineering recommendations, but we need to upgrade our experimental facilities, test rigs and production base. The kind of engine we will have will be of a different level, one that will help us overtake our rivals," the deputy minister said.
On July 28, the ministry will put before the inner cabinet a new program for the manufacture of strategic materials. "It also provides for the development of materials indispensable for the modern engine," the official said.
Russia's lag in engine building has become catastrophic in the past ten years, and the sphere needs an urgent overhaul.
"Our goal is to move to third place in seven to ten years and corner 10% to 12% of the world market in gas turbine aero engines, gas pumping turbines, engines for shipping and transport, and power machinery," Manturov said.
Gazprom says Ukraine siphons off too much gas
Russian energy giant Gazprom has informed Ukrainian oil and gas company Naftogaz that it should stop withdrawing Russian natural gas in excess of contracts.
According to sources of business daily Kommersant, Ukraine has been trying to accumulate additional amounts of gas ahead of the promised increase in Gazprom's prices for Ukraine to $400 for 1,000 cubic meters from $179.5. This would increase Ukraine's gas expenses to $22 billion next year.
On July 14, Gazprom sent a fax message to Naftogaz insisting that it stop siphoning off gas in excess of the contract with RosUkrEnergo, a gas trader 50% owned by Gazprom.
A source told Kommersant that in the first week of July, Ukraine had withdrawn over 1 billion cubic meters of natural gas above the contracted volume. Naftogaz does not fully coordinate RosUkrEnergo's requests for gas transit to Western Europe, he said.
Gazprom has notified Naftogaz that it must formalize the gas receipt acts for June and sign a technical agreement for 2008.
Naftogaz is channeling the surplus gas into underground storage tanks.
"Naftogaz is sending more gas to the depot than Ukraine will use this year to create a cushion for a possible dramatic increase in gas prices to $400 per 1,000 cubic meters and pay for the gas this year," the source said.
Maxim Shein, an analyst at BrokerCreditService, said if prices were raised to $400 per 1,000 cu m, Ukraine would have to pay $22 billion, instead of $9.9 billion, for 55 billion cubic meters of Russian natural gas. This will spike "inflation and dramatically increase the cost of life in the country," he said.
According to the analyst, Ukraine is doing its best to minimize fuel expenses.
By the evening of July 18, Ukraine reduced gas withdrawal to the contractual amount. However, Naftogaz still owes $2 billion to RosUkrEnergo.
Andrei Knutov, press secretary of the Swiss-registered gas trader, said the overall debt included debts for previous years, payment for Russian natural gas received in the first quarter of 2008, and debts for Central Asian gas imports in the second quarter.
As a result, RosUkrEnergo did not attend the extraordinary shareholder meeting of Ukrgazenergo, a parity venture between RosUkrEnergo and Naftogaz, which was responsible for domestic gas supplies in Ukraine until April 1, 2008.
RosUkrEnergo's executive director, Dmitry Glebko, said: "It would be absurd to discuss dividends of Naftogaz before it repays its debt to RosUkrEnergo."
In reply, Naftogaz said: "Failure to hold the meeting prevents the calculation of RosUkrEnergo profits for 2006-2007 and approval of the action plan for 2008, which is doing substantial damage to the company and its shareholders."
Valery Nesterov, an analyst with the Troika Dialog brokerage, said Gazprom was unlikely to solve the debt problem this year.
"Ukraine is a disorderly taxpayer, who is exploiting the pseudo-monopoly status of a transit country for Russian natural gas," he said.
In this situation, Gazprom may cut gas supplies to Ukraine, Nesterov said, adding that the sides would likely find some other method of avoiding a new gas war.
Rosneft to help Gazprom negotiate purchase of Sakhalin-1 gas from ExxonMobil
Rosneft will help Gazprom to negotiate the purchase of Sakhalin-1 gas from ExxonMobil. The previous two-year-long talks have been fruitless. The Sakhalin-1 project operator ExxonMobil holds a 30% stake, and Rosneft a 20% stake.
Gazprom has to negotiate buying gas supplied by Exxon to the Khabarovsk Territory via the Daltransgaz pipeline (between 1.5 and 2 billion cubic meters per year). Besides, Rosneft will sell a blocking stake in Daltransgaz to Gazprom, a result of over 18-month talks (another 27.4% of Daltransgaz shares are state-owned and 47.5% are owned by organizations close to Gazfond). In exchange, Gazprom will grant Rosneft access to the "free capacities" of the Sakhalin-Khabarovsk-Vladivostok gas pipeline system, which is to incorporate the Daltransgaz pipeline.
The agreement was signed by Gazprom CEO Alexei Miller and Rosneft President Sergei Bogdanchikov, Gazprom said on Saturday. Rosneft refused to comment.
The agreement was signed on Thursday, said a Gazprom official. It was made public only after Russian President Dmitry Medvedev met Deputy Prime Minister Igor Sechin on Friday. The focal point of the meeting was supplying gas to the Far East, a source in the Presidential Executive Office said.
Last winter Medvedev, then a presidential candidate, gave the order to determine why Gazprom and Rosneft had failed to agree on splitting the gas pipelines in the Far East. "I will speed up both Gazprom and Rosneft", he promised. "Ordinary citizens are affected, as the pipeline is not being modernized, and a fuel shortage risk is emerging," Medvedev said. On Friday he asked Sechin whether his order had been carried out.
The problem appears to have been solved. Between 1.5 and 2 billion cubic meters of Sakhalin-1 gas will be supplied to the region, Sechin said after meeting with the president. He didn't elaborate on who will be the distributor. Currently, it's Exxon. In 2007, the company produced around 8 billion cubic meters of Sakhalin-1 gas, though the lion's share is being pumped back underground, as distribution issues are still unresolved. Gazprom wished to buy gas from Exxon for domestic distribution. Exxon hoped to export gas, having signed a memorandum of understanding with China's CNPC.
Talks are still on, and every option is being considered, says Exxon's representative in Russia, Dilyara Sydykova. Most likely, the issue is as good as settled, and Gazprom will get the gas, as now it is supported by Rosneft, says Solid brokerage analyst Denis Borisov.
It is a matter of price whether the Americans will find this solution favorable. It's not clear, whether Rosneft is an affected party. A year ago, Bogdanchikov said he was ready to exchange his share in Daltransgaz only for Gazprom's Yuzhno-Priobskoe oilfield, which was considered a bad joke by Gazprom management.
Gazprom earmarked over seven billion rubles within this year's budget to buy Daltransgaz shares, a source in Gazprom says, adding that the exact amount of shares to be bought is not specified in the budget. It would be a fair price for the Rosneft-owned shares, as a quarter of Daltransgaz's value varies between $300 and $350 million, Borisov says.
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