ukraine’s sbu security service suspects rusal of destroying ukraine’s aluminum producer zalk to benefit russia
agents from ukraine’s sbu security service have in writing notified nine members of an international criminal group, including three russian citizens, that they are suspected of destroying deliberately ukraine’s only aluminum producer, zaporizhia-based zalk plant, in the interests of competitors from russia.
“… the only primary aluminum producer in ukraine was purposely destroyed in the interests of russian metal producers starting in 2006.”
in order to commit the crime, the perpetrators created an organized criminal group using representatives of the russian rusal company, the plant’s management, ukrainian businessmen and foreign citizens,” the sbu said on its website on tuesday, august 29, 2017.
russian businessman and co-owner of rusal oleg deripaska is among the suspects, according to ukraine’s sbu state security service.
the sbu said affiliated companies of the russian businessmen acquired a controlling stake in zalk under the supervision of russian businessmen and then proceeded to destroy the plant’s production capacity. in 2009 they halted the plant’s ore-thermal furnaces and the main production sites of electrolysis production, which led to damage and subsequent complete destruction of equipment, the sbu said.
ukrainian law-enforcers added that members of the group two years later arranged for the transfer of zalk’s subsidiary, the hlukhovsky quartz quarry, to companies affiliated with rusal. before the enterprise was returned to government ownership in 2015, it was destroyed by flagrant violations of pledges made in the privatization agreement.
“they liquidated zalk’s fixed assets, which led to the destruction of the enterprises cycle of production of final products. In order to completey wreck the strategic enterprise, the suspects dismantled and removed valuable equipment. ‘liquid’ assets of the aluminum rod shop were turned over to a company controlled by russian business structures,” sbu investigators said.
experts estimated that losses incurred to the state exceeded $39 million and more than uah 100,000.
sbu investigators charged nine members of the organized criminal group with criminal acts pursuant to articles, 113, 191, 255 and 364 of ukraine’s criminal code.
“one of the suspects in the case is under arrest and the former factory director was released on his personal recognizance. three of the suspects are russian citizens. the investigation continues,” the sbu said.
a sbu source said among the suspects are former zalk head ivan lishchuk, evromash and dniproinmet founder v. sirko and two citizens of cyprus.
the agency said that during 2014 to 2015 rusal representatives acting on a decision of the zalk advisory board decommissioned, dismantled and sold at a price almost twice lower than the price of scrap metal equipment from the plant’s electrolysis plant, and the funds received were fully transferred to the accounts of foreign companies controlled by rusal.
in addition, from 2009 to 2014 when the plant was headed by olexiy arnautov, currently rusal’s director for new projects, the plant’s alumina complex at the plant was turned off and destroyed. arnautov was in charge of the plant from rusal.
sbu investigators said that rusal representatives have filed a lawsuit claiming zalk debts of $174 million to russian offshore companies judson trading limited and velbay holdings limited, which the sbu regards as shell companies.
the agency said its investigation was the basis for ukraine’s president in april 2017 to impose sanctions against rusal, judson trading limited, arnautov, cypriots chrostodoulov stelios, members of zalk’s advisory board, serhiy chernevsky and iana tikhonova (both russian citizens).
zalk was privatized in 2004 to the russian sual group. in 2007 the plant came under the control of rusal, which was created with the merger of aluminum and alumina assets of rusal, sual and the swiss trader glencore.
in long-standing litigation, the ukrainian courts passed a verdict on the termination of the purchase and sale agreements of 68.01% of zalk shares and the return of this stake to state property. the shares were transferred to the state property fund (spf) only in june 2015. the spf is presently preparing this package for re-privatization, recognizing the significant difficulties with its sale due to the large debt created by the former owner of the plant before himself.
in turn, after losing in ukrainian courts on october 25, 2016, rusal subsidiary emergofin b.v. and velbay holdings ltd. appealed to the international center for settlement of investment disputes with for initiating arbitration proceedings against ukraine, filing a claim for compensation for investments made in zalk.
according to the company at the end of 2016, spf owns 68.00949% zalk shares, and velbay holding ltd. — 29.53629%.
the russian company in ukraine also owns the mykolaiv alumina refinery.
zalk earlier produced about 100,000 thousand tons of aluminum per year and the primary aluminum producer in ukraine. some 112,000 tons were produced in 2007, 112,847 tons in 2008, about 50,000 tons in 2009 and 25,000 tons in 2010.