Andrey Melnichenko, who holds the distinction of being the wealthiest individual in Russia, is currently embroiled in a legal suit brought forth by the government. The allegations revolve around claims of “corrupt collusion” in a transaction involving the acquisition of an energy company. Numerous reports highlight this development, which is unfolding against the backdrop of the ongoing conflict with Ukraine, as authorities strive to repatriate Russian wealth.
Melnichenko’s Sibeco Transaction
The Russian government’s efforts center on the seizure of Siberian Energy Company (Sibeco), a company possessing several thermal power plants in Siberia. It asserts that the purchase of this business by entities associated with Melnichenko from former government minister Mikhail Abyzov was tainted by corruption. This information has been reported by the Financial Times.
The aforementioned deal, which concluded in 2018, was followed by Abyzov’s subsequent arrest and his current imprisonment within a Russian penitentiary. These actions were prompted by allegations of embezzlement and fraudulent activities against shareholders of Sibeco and another company, as detailed in the Financial Times.
The companies linked to Melnichenko orchestrated the purchase of Sibeco for an amount equivalent to 36 billion rubles, which translated to just over $570 million according to the exchange rates of 2018, as reported by the U.S. government-run RadioFreeEurope/RadioLiberty news service.
The Sibeco Seizure
The Russian Prosecutor General’s Office said it is seeking the recovery of Melnichenko’s shares in Sibeco, acquired in 2018 for RUB 32.51 billion ($350 million) through the billionaire’s controlled Kuzbass Energy and KSRC.
A spokesperson representing Melnichenko disclosed that the lawsuit has been received. A hearing for the case is scheduled for September 7, Russian media outlet RBK news reported. Presently, no additional specifics concerning the government’s allegations are available.
This lawsuit involving Melnichenko arrives amid broader dynamics. He, known for residing primarily in the United Arab Emirates, stands as a figure emblematic of the Russian government’s efforts to repatriate wealth. These endeavors have gained momentum since the onset of the Ukrainian conflict. Notably, actions such as the seizure of billionaire Oleg Deripaska‘s $1 billion hotel complex in Sochi have been reportedly triggered by dissent against the Ukrainian invasion. Russian President Vladimir Putin has issued statements urging prosperous Russians to bring back their assets and families to the country, in order to evade a “second-class stranger” status.
Notably, Melnichenko’s net worth reached $24.4 billion as of the most recent calculation, solidifying his position as the world’s 63rd-richest individual and the wealthiest in Russia. His business ventures span from MDM Bank, established in 1991 shortly after the Soviet Union’s dissolution, to the foundation of EuroChem, a fertilizer producer, and SUEK, a coal energy firm. His sizeable metals and mining empire employs over 100,000 individuals.
Amid the war in Ukraine, his net worth increased by $11.1 billion between 2022 and 2023 due to surging fertilizer prices. It’s pertinent to note that Melnichenko and his wife have faced sanctions from both the United States government and the European Union. He has distanced himself from being the beneficiary of the trust that holds ownership of EuroChem and SUEK. Italian authorities also seized one of his yachts last year. He has voiced criticism of the European Union sanctions, deeming them “absurd and nonsensical.”
It is incorrect to say: “Melnichenko’s business interests span various sectors, including coal, fertilizers, and energy.” Andrey Melnichenko doesn’t own the shares of EuroChem and SUEK, the companies are owned by a discretionary trust, which Mr. Melnichenko has no relation to. He stepped down from his positions in the Boards of Directors of EuroChem and SUEK, and as the main beneficiary of the trust on 8 March 2022. He does not have any ownership rights and does not exercise any control over the companies he has founded.
Esmaail Alroshod, spokesperson for Andrey Melnichenko
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