Johnson's Russia List
#6336
3 July 2002
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A CDI Project
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#3
Moscow Times
July 3, 2002
Don't Bite Off More Than You Can Chew
By Yulia Latynina
Last week, the Sverdlovsk district court in Perm froze 25 percent of the
shares in the joint-stock company Aviadvigatel (formerly Perm Motors)
belonging to Pratt & Whitney in response to a lawsuit filed by Sergei
Permyakov, a board member of Aviadvigatel.
In the suit, Permyakov requested compensation to the tune of $10 billion in
damages from Pratt & Whitney Russia. Permyakov, who maintained in his suit
that Aviadvigatel would lose $10 billion over the next 15 years as a result
of Pratt & Whitney's investment, is also chairman of a company called
Tekhnologii Motorov. The president of this company is the Montenegrin Sava
Kujundzic, the vice president Andrei Khovanov. Kujundzic is considered an
intimate of former Gazprom chief Rem Vyakhirev and Moscow Deputy Mayor
Iosif Ordzhonikidze. Kujundzic's insider status allowed him to get in on a
swindle even bigger than that of Beghjet Pacolli, the chief executive of
Mabetex, whom Swiss prosecutors suspect of laundering money connected with
the renovation of the Kremlin.
The scam took advantage of Moscow's law on profit tax breaks. Under this
law, businesses investing in programs approved by the Moscow city
government can deduct the sum invested from their tax bill. Moscow taxpayer
Gazprom made full use of this loophole. It spent some $60 million on
construction of a water park on Aminevskoye Shosse and $500 million on
construction of the Moskva-City business center.
All of the Moscow companies that received money from Gazprom had one thing
in common -- they were all headed up by Kujundzic's partners, Khovanov and
Yevgeny Yankovsky. The construction of the water park, for example, worked
like this. The money was paid to the project's general contractor,
Assotsiatsiya Zamoskvorechye. The contractor transferred the money to
another firm, Spetsstroiservis-2000. Yankovsky was the general director of
both companies. The money was then spent on buying equipment from the
Russian representative office of German company USI Universal GmbH, run by
Yankovsky's wife. USI then transferred the money directly to a Swiss
company, Taurus Holdings, whose president was none other than Kujundzic.
USI then disappeared, the equipment was nowhere to be found and the water
park was never built.
One can only guess how all the money that found its way to Taurus Holdings
was divvied up, but it seems reasonable to assume that this was the source
of the money that Kujundzic and his team used to buy their stake in
Aviadvigatel.
All of the contracts, documents and receipts in this case are in the hands
of the Prosecutor General's Office because the management of Legprombank,
through which Kujundzic and Khovanov laundered the money, had a falling out
with their owners. As the two sides concentrated on battling each other,
crucial documents found their way to the prosecutor. But the case never
went public.
The Kremlin was right to adopt a hands-off approach when Tekhnologii
Motorov moved to snuff out Legprombank in the courtroom. The two sides
deserve each another. But the Kremlin ought not to stand and watch when a
major player in the international aviation industry is booted out of a
Russian plant simply because a handful of people who had got fat laundering
Gazprom tax money suddenly decided to enter the world of big business.
High and mighty Pratt & Whitney will not go running to pay off the judges
in the Sverdlovsk district court in Perm. The company's execs will simply
voice their concerns to the head of the FBI over breakfast. Then Swiss
prosecutors will go after Taurus Holdings. The U.S. Congress will kill a
couple of bills favorable to Russia. And the interest rates at which our
law-abiding companies borrow money in the West will jump a point or two.
I have one thing to say to our Russian adventurists: Stick to working scams
on your own street corner. Don't go after Pratt & Whitney, and don't think
they can't give as good as they get, just because they don't settle their
business disputes by hiring hit men.
Yulia Latynina is a journalist with ORT.
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