Russian infrastructure investment magnate, Ziyavudin Magomedov, along with his brother Magomed Magomedov, and associate, Artur Maksidov, have been arrested and detained until May 30 on the order of Moscow’s Tverskoi Court, on suspicion of a $44 million embezzlement related to construction of Kaliningrad’s Baltika stadium.
The Magomedov brothers are co-owners of Summa group, a major investor across logistics, construction, engineering telecoms and energy, with Ziyavudin Magomedov believed to be amongst Russia’s 50 wealthiest people. The detention is part of an investigation into organised crime and fraud launched by Russia’s Interior Ministry, with Tass quoting spokesperson Irina Volk saying the case was about “embezzlement of budgetary funds on a grand scale, including those allocated for the construction of infrastructure and power supply facilities.”
Radio Free Europe added that in a statement to the court the Interior Ministry said that the detentions related to construction of Kaliningrad’s Baltika stadium for this year’s Football World Cup. Artur Maksidov is the head of the Summa Group subsidiary constructing the venue. Claims raised in mid 2017 suggested that construction work at the venue had been significantly overstated. Kommersant is reporting that the charges revolve around more than just the stadium construction and include Novorossiysk Commercial Seaport.
The Tverskoi Court rejected a $44 million bail application by the brothers as well as a proposal that the claims be seen as a civil and not criminal issue, with Vedomosti reporting that investigators claimed Magomedov had booked a flight to Miami the day prior to his detention and that “The stolen money is held in foreign accounts of offshore companies controlled by Magomedov”. Reuters is reporting that Judge Maria Sizintseva said they had acted as part of an organized crime group and had tried to put pressure on witnesses. Vedomosti adds that the case was first initiated as early as 2014, involves 7 separate issues of embezzlement with two further suspects having fled Russia for the United Arab Emirates. Magomedov denies all claims.
FT.com notes that Magomedov ‘is embroiled in a number of disputes involving state-owned companies and powerful figures, notably around his port business.’
Notably, Summa Group has been attempting to reach agreement with its partner, State-controlled Transneft, on the sale of its stake in Novorossiysk Commercial Seaport, Russia’s largest Black Sea Port and Russia’s largest grain handling port, with negotiations reaching an impasse on price. The operations of the port are currently in focus with Russia’s grain exports hitting an all-time high and the capacity of the Port of Novorossiysk a key factor in Russia being able to handle the volumes.
Magomedov and Summa group are also believed to be in dispute with Russian Railways and Roman Abramovich over port operations at Vladivostok, where Summa group purchased port operator, Fesco, in 2012. FT.com reports that this dispute centres on the operations of state controlled rail container shipper, TransContainer, in which Fesco has a 21% stake. Bloomberg is noting that a high profile embezzlement accusation could signal jockeying for influence in the new Putin administration.