Why does not runaway Kurchenko "drown"?

The business of runaway Kharkiv "young oligarch" Serhiy Kurchenko and "formers" behind him replenished with new acquisitions in Russia in September.

This is Reviakino Metallurgical Plant (RMP, Tula oblast) and Stavstal Electrometallurgical Plant (Nevinnomyssk, Stavropol Krai).

By decision of the Basmanny District Court of Moscow, these enterprises were transferred to the management of OOO Gaz-Alliance (Nizhny Novgorod), the ultimate owner of which is S.Kurchenko.

RMP is capable of producing 500 thousand tons of rebar and long products within a year, Stavstal – 350 thousand tons of rebar.

However, the quality of these assets makes it possible to classify them as "junk", and the future prospects under the management of Gaz-Alliance are quite dubious.

Metal failed to be useful

Both enterprises have huge debts to the state-owned Sberbank of Russia – for example, Stavstal's debt is about $150 million excluding interest payments and payments arrears.

Due to the inability of previous owners to pay off the loans taken, Sberbank initiated a bankruptcy of RMP and Stavstal, receiving a controlling interest in them - 51% of the shares.

But this did not solve the problem of the refund and Sberbank began searching for buyers for its share. It is telling that the largest local players refused the offer. In particular, head of the board of directors of the Novolipetsk Metallurgical Combine Vladimir Lisin stated in a commentary to media in March 2016 that "it is pointless to buy a company with debts". According to him, the banks "should write off the debts which they themselves have driven up" – and then the NLMC is ready to consider the option of buying RMP. The similar situation was with Stavstal.

The fact is that there are already too many producers of long products and rebar in the central region of the Russian Federation. The same NLMC has metalworks in Kaluga with a capacity of 1.5 million tons per year.

Not far away, in the city of Balakovo, the plant of the Severstal group is located with 1 million tons per year.

In total, 17 enterprises produce rebar in the Russian Federation, the total volume of production in 2016 was 7.52 million tons. Whereas local consumers bought only 6.3 million tons. That is, the Russian market in this segment is already oversaturated.

That is why the RMP stopped in 2015, and Stavstal did not manage to reach its full capacity at all: in 2015, it produced 21 thousand tons of rebar, in 2016 – 50 thousand tons. Then it also stopped.

And this is in the period when Russia was actively preparing to receive the 2018 World Cup and construction industry was on the rise – that is, there was an increased demand for rebar and long products.

Now the situation with the sale of these products has deteriorated further. Russian media, citing sources in the Russian metallurgy, report on S.Kurchenko's "Napoleon's" plans to start producing rebar at the RMP from steel feed that will be supplied by the Yenakiieve and Alchevsk Iron and Steel Works.

As it is known, in the spring of 2017, both these enterprises were transferred to the management of Vneshtorgservis, also associated with S.Kurchenko.

However, the consequences of accident in the converter plant of Yenakiieve Iron and Steel Works, where there was a strong fire in April of this year – are not eliminated so far. Therefore, it is possible to smelt cast iron in a best-case scenario, and steelmaking still does not work.

By the way, there was another powerful fire at the Yenakiieve Iron and Steel Works in July – the suspended casting crane caught fire. The fire destroyed the crane control panel, electrical wiring and electrical equipment, including the engine.

The work of the plant was stopped again. And this confirms once again: the current "administration" has no skilled personnel capable of providing steelmaking.

The job advert of Vneshtorgservis at the Yenakiieve Iron and Steel Works, dated August, allows us to conclude that the main workshops are not operating at full capacity. Since the recruitment is only in the specialties in the repair and railway shops. The "managers" of S.Kurchenko do not even staff the works with people of metallurgical professions.

As for the Alchevsk Iron and Steel Works, according to separatist media, it was allegedly possible even to resume the production of rolled products in early June – by adding an additional power supply line.

However, electricity continues to be regularly disconnected in the city itself – every 2-3 days. Therefore, there are reasonable doubts about the resumption of its continuous supply to the works.

Moreover, as OstroV noted earlier, the problem of stable operation of the Alchevsk Iron and Steel Works is not even about how to ensure constant supplies of electricity, but about where to get it.

According to the calculations, it turns out that in January-February, the works worked more or less fully for only 4 days – based on the received volumes of steel smelting.

It follows that statements for Russian media about the intention to "set up the work of RMP and Stavstal at the expense of raw materials from the "DNR" and "LNR" plants is another cheap PR of the "formers".

But it is not quite clear who it is intended for: after all, their owners in the Russian Federation should know how things really are at the industrial enterprises of captured territories of the Ukrainian Donbass.

For example, that despite the statements made at the beginning of July about the launch of the Khartsyzsk Pipe Plant, it did not start its operation.

Therefore, the only raw materials that can be transported from the CDDLO structure of S.Kurchenko to electrometallurgical plants in the Russian Federation is crashed armor to be melted down. Well, and another metal that can be cut from idle mines and factories. But such a "business" will not be able to exist for a long time.

Fuel suction

Few people believe that unknown Serhiy Kurchenko, who embarked upon a career of courier in the commercial firms of Kharkiv, was able to break into the top of ranking of the wealthiest Ukrainians at the time of V.Yanukovych thanks to extraordinary business talents.

It is not enough just to come to the office at 7 a.m. – while the others are still sleeping, as the then Naftogaz deputy head Oleksandr Katsuba – who, by the way, is now accused of embezzling $16 million from this state-owned company, explained the success of his fellow countryman

It is believed that in fact, S.Kurchenko serves as a facade sign for son of the runaway ex-president Oleksandr Yanukovych and his business partners, including son of the runaway ex-head of the Prosecutor General's Office of Ukraine Artem Pshonka and son of the runaway ex-prime minister Oleksiy Azarov.

Before the overthrow of V.Yanukovych, they made investments abroad mainly in the purchase of real estate. Almost all of their business was located in Ukraine.

It consisted mainly in the smuggling of gasoline and diesel fuel, running protection of small illegal coalmines in the Donbass and embezzlement from the state budget by selling consumables and equipment to state mines at inflated prices.

S.Kurchenko was required as an official cover – so that representatives of the ruling clan could not be accused of corruption.

Moreover, they had legal assets as well: ZAO Ukrainian Media Holding, Odessa Refinery Plant and Kharkiv Metalist Football Club. All this was "assigned" to the "young oligarch".

After fleeing to Russia, the need for him has not gone away – after all, getting out from behind the back of official owner of the VETEK (Eastern-European Fuel and Energy Company – ed.) group means for the "formers" to concede involvement in the former corruption schemes in Ukrainian economy. And they continue denying it.

S.Kurchenko was needed by the Russian authorities. Of course, the Kremlin understands all his inconsistency as a business manager perfectly well. But, as J.Stalin wrote in a telegram to head of the main political department of the Workers' and Peasants' Red Army L.Mehlis in 1942, "we do not have the Hindenburgs on reserve".

To entrust the management of the few remaining enterprises in CDDLO to some Russian business group would mean official recognizing of occupation of the Ukrainian Donbass. Whereas Moscow still assures the international community that there is a "civil war" going on there.

That is why in the spring of 2017, Vneshtorgservis was given control of plants and mines seized by the "DNR"-"LNR" militants.

Whereas, in 2015, the then leaders of the "DNR-LNR" A.Zakharchenko and I.Plotnitsky declared S.Kurchenko "persona non-grata" in the area, accusing of disrupting the supply of oil products for which money had already been paid.

Of course, with such a level of relations with local "leaders", S.Kurchenko could get CDDLO plants and mines only due to a call from the Kremlin.

In addition, it is worth recalling Kurchenko's acquisitions, made after his flight from Ukraine.

Almost immediately after the annexation of the Crimea, in April 2014, companies associated with the "young oligarch" bought Sovremennik, the third largest network of petrol stations in the Crimea, which at that time had 34 gas stations.

A little later, in May 2014, the Kharkiv fugitive bought the Lukoil network in the Crimea - 13 gas stations. Sovremennik had debts for the supplied gas to the Gas Ukraine 2020 company from Kurchenko's orbit - and this money, according to sources, were used for paying for this asset.

But in June 2017, it became known about a much more serious acquisition. Geolog Oil & GasTrading, registered in Vienna, bought a network of 126 gas stations in Germany.

The company is part of the Austrian holding Garda Handels & Beteiligungs GmbH, the final beneficiary of which for a long time was A.Azarov. A few days before the introduction of EU sanctions against him in February 2014, Konstantin Pivovarov became the new nominal owner.

The Pivovarov family is closely associated with the Azarovs: Konstantin Pivovarov was the Deputy Minister of Construction, Housing and Public Utilities, his uncle headed the office of the Prime Minister and First Deputy Prime Minister for many years when these positions were held by M.Azarov.

Another representative of the Pivovarov family headed the personal guards of M.Azarov during his vice premiership. At the same time, K.Pivovarov was the first vice-president of FC Metalist, after Kurchenko became its president.

Speaking about his connections to the family of the fugitive ex-prime minister, it is also worth recalling about a curious transaction that took place on November 27 and December 5, 2013.

At that time, €500 thousand and €3 million from LPG Trading GmbH (Kurchenko's company) were transferred to the accounts of the art gallery of A.Azarov's wife in Vienna. Yet another deal in Germany deserves a mention – the purchase of the Sparschwein Gas station network by the VETEK group at the end of 2012. Law enforcement agencies of Germany became interested in the deal, suspecting "laundering" of illegal income.

As a result, the tax police could not prove their criminal origin, therefore the criminal case was closed. Although the new owner did not show the legal sources of money paid for Sparschwein Gas.

But in the course of the investigation, it was found out who was behind this deal.

It turned out that 50% of the Dutch company, which owns a network of gas stations through offshore companies, belong to A.Azarov, 25% - to S.Kurchenko himself and another 25% - to A.Koshel, one of the top managers of VETEK, together with his boss who became the defendant in a number of criminal cases after the change of power. This once again confirms that the “young oligarch” merely serves as a cover for the former leadership of Ukraine.

The 2012 purchase, when they were in power, raises no questions. But in 2017, they spend money in emigration, but the previous income no longer exists. However, in October 2017, Premier Oil LLC from the Kurchenko’s orbit bought a network of petrol stations from the Russian group AFK Sistema.

These are 60 gas stations in 20 regions of Russia and 11 bases of storage of liquefied gas with a total capacity of 5.3 thousand tons. However, the quality of this asset is also doubtful, as well as the above-mentioned metallurgical acquisitions in the Russian Federation.

It turns out that the company has an average of 3 gas stations per area or region. This makes logistics for the delivery of liquefied gas to gas stations very expensive.

And the management of such an extensive, but dotted network is also problematic. Well, the "young oligarch" does not have much choice: you have to take what you are given.

Thus, after the flight to the Russian Federation, the main business of the "former authorities", united under the guise of S.Kurchenko, is the sale of petroleum products.

The second most important is the trade of coal in CDDLO. According to Russian media reports, back in 2016, Gaz-Alliance received a contract for the supply of thermal coal for OGK-2, which is a part of Gazprom Energoholding.

More specifically, these are 5 agreements for the supply of 16.57 million tons of coal from September 2016 to June 30, 2019 for $5.8 million.

In addition, the Krasnodonvugillya association, formerly part of the Metinvest group of Rinat Akhmetov and "nationalized" by the militants in the spring of 2017, continues to work.

Along with other assets, Krasnodonvugillya then came under the control of Vneshtorgservis. The merger does not go very well when compared with the pre-war period.

If in 2012, 5.1 million tons of coking coal were mined there, when in 2017 - a little more than 1 million tons. On the other hand, taking into account world prices of about $200/ton, it turns out that the annual income should be $200 million.

It is quite enough for keeping the "former authorities" in good shape. But who needs it and why?

Off the radar № 2

Let us try to figure out who takes care of the runaway "young-oligarch" and his senior partners in Russia.

Obviously, this is Igor Sechin, head of the Rosneft state-owned company. The former First Deputy Prime Minister of the Russian Federation is one of the few people who knew V. Putin even before he ascended to the top of power.

In the Russian unofficial "table of ranks" Sechin is considered second after the current leader of the Kremlin.

The appointment in 2017 of Vneshtorgservis' CEO Vladimir Pashkov, who is considered to be the representative of the interests of the head of Rosneft, indicates the association of Kurchenko with Sechin.

The fact is that after his dismissal from the post of the Irkutsk Vice-Governor, V. Pashkov established a company that in 2015-2016 started to win the Rosneft tenders over and over again.

If so, the patronage of the head of Rosneft explains all the successes of the "former leadership" in expanding business in Germany and Russia, as well as preferences for their companies in the Ukrainian oil products market.

After all, most of the diesel fuel is still imported to Ukraine from the Russian Federation.

As mentioned above, the transfer of CDDLO assets under Kurchenko's management is dictated by the need for the Kremlin leadership to avoid direct control of the occupied territories.

But why allow the "former authorities" to gambol in the Crimea and Germany?

Or, for example, to make Perspective Trade Group LLC, which is associated with a runaway "young oligarch", the exclusive recipient of Russian diesel fuel in Ukraine in the autumn of 2017?

To answer this question, we should remember once again that the "former leadership" must live in conditions corresponding to the status of "the king in exile".

Yes, the Kremlin perfectly understands not only Kurchenko's price as a business manager, but also the political failure of his senior partners.

At the same time, the desire for revenge in Ukraine has not vanished, and therefore there should be at least someone who, if something happens, can be presented to the international community as "the legitimate representative of the interests of the Ukrainian people".

As soon as Moscow strategists fathom the utopianism of such ideas, the sphere of Kurchenko's business interests will narrow to the CDDLO. This will obviously happen soon after the next presidential and parliamentary elections in Ukraine.

Vitaliy Krymov, OstroV