these events were part of a corporate raiding scheme, with the involvement of senior managers at Marta, to damage my businesses and embezzle its assets.
Bankruptcy of Marta group
In 2008, the Marta group of companies consisted of more than 50 companies operating in various business areas. This included the following:
- Grossmart supermarket chain of 215 stores, employing about 8000 people , controlling 241,500 square meters of space, the value of assets of more than $600million.
- 25% share in the joint venture Billa Russia, operating 33 stores, controlling more than 70,000 square meters of space and employing 2500. The value of the share of Marta worth more than $50million.
- Online stores, including one of the leading at the time in Russia - 003.ru, the estimated value of about $80million.
- Network of Pur Pur stores, containing more than 100 stores valued at about $50million.
- Development company RTM estimated in June 2008 to be worth $983million, controlling premises with a total area of 78,000 square meters.
This whole group of companies was merged into an Austrian holding, the main owner of a 75% stake was me. The total value of the group's assets was about $1,760million.
I had the best team in Russia. Guys, I'm glad that we worked together in Marta. I hope that everything went well with you!
Yes, everything was fine then - projects being developed, money being earned. My wife told me - let's sell something and save the money for a "rainy day". But I said that now is not the time, that there is still an opportunity to keep developing. Well, I made my choice.
How to become a millionaire? You must first become a billionaire ...
As my wife said, one day we fell asleep millionaires, and woke up as ordinary people.
Since 2008 our life has changed dramatically. I lost all my business assets, including all supermarkets, hypermarkets and the commercial real estate.
All of this was done with the help of my employees, the Russian government and the FSB – Russia’s security agency.
The problems started in April 2008 when REWE Group issued a press release in which they declared that their joint venture with Marta did not exist anymore. This news came as a major shock to me.
Around the same time, I realized that I had lost control over some of the most valuable assets of the Marta group. This seems to have taken place through a sequence of arrangements made by some of my former employees and colleagues behind my back.
In July 2008, I submitted a statement to the police in which I explained that a corporate raid was taking place in relation to my businesses. Although the Department of Investigation commenced the preliminary investigation pursuant to this report, it was not taken much further.
Instead, with the help of the FSB, a criminal case was initiated against me, accusing me of the appropriation of bank loans. I was first charged first on 1 August 2008 with the offense of unlawfully obtaining credit (Article 176 of Criminal Code of RF) and then on 23 September 2010 with fraud (Article 159 of Criminal Code of RF). These allegations say that I appropriated 1.5 billion roubles from the funds loaned to my companies by a number of Russian banks during 2006-2008. I was also accused of giving false information about assets presented as security and the financial health of the borrowing companies.
Despite the fact that my companies were repaying all loans and interest as they fell due prior to 2008 and that I did not borrow any of this money for my own account, nor have I signed any of the loan documents, the investigators have not even tried to make sense of how this money was distributed. They simply alleged that I created a criminal group designed to embezzle the credit funds. Despite the allegation that a “criminal group” was involved, no one else was charged. Moreover, the combined value of my businesses at peak time in 2007 considerably exceeded the amount of loans in question. Had I wanted this money, I could have easily sold my companies for the amount many times the sum of loans involved.
These allegations against me were so chaotic and arbitrary that they included instances where loans were already repaid or the banks were already compensated for their losses by enforcing the security and selling assets of my companies.
The investigators refused to commission an expert accounting report, requested by my lawyer, which could determine how the borrowed funds, received from creditor banks, were actually spent by the Marta group. Had such an independent report been considered, it would have shown conclusively that all borrowed funds were utilized for legitimate business needs of Marta rather than having been withdrawn by me personally.
However, there is no point in looking for logic in the charges of the Investigative Committee. I now have very good reasons to believe that these charges amount to a prosecution made “on order” by persons interested in the embezzlement of assets of the Marta group.
A threat to physical existence hanged over my family. We were intimidated by the police, the FSB officers and the members of organized criminal groups. Everything was done to force me to leave the country. This would have been very convenient for those who wanted to take over my business.
There was a period in 2009, when I was without a penny of money. When my wife unexpectedly went into premature labour we had no money to pay the medical bills, as our daughter was born very prematurely and needed resuscitation. I had the deposit placed with the private clinic, but this was not enough. I borrowed $20,000 to pay for the ward and treatment. I’m sincerely thankful to the friends who helped us in these difficult moments.
I sent my family from Russia to London, but my wife and I stayed until the last opportunity in Moscow. I attended the appointments with the investigators regularly, as I was still hopeful that the truth could be established.
However, in September 2010, they came to arrest me at the address in Moscow where I lived. They were FSB officers. I then realised that if I was to be placed in the preliminary detention centre, it would have been unlikely that I would ever leave prison alive. From that moment on, I had no choice but to leave Russia.
On the eve of my departure I had a talk with the FSB officer who was involved in my case. He bluntly said that my case was a prosecution made “on order” and that no matter what I did, I would never return my business to myself, but I could earn freedom if I paid $10million. I did not have anywhere near that amount of money.
Although the investigation of the criminal case was suspended following my departure from Russia, there is no statute of limitations for the offenses I was accused of and the case can lie on the shelves for as long as the prosecutors wish. Therefore, I was put on the international wanted list. More specifically, I was placed on the Interpol “red notice” list, which made me liable to arrest and deportation into Russia in virtually any country. I have since learned that Interpol is a very convenient mechanism for the Russian authorities to deal with inconvenient clients.
We came to England almost without money. My wife, mother and daughter had to sell their Russian apartments, jewellery, watches and other things to be able to teach our children in a private school, pay legal fees and simply survive. Throughout this time we lived in rented accommodation. I do not want to say that we did not have the money to exist, but at times it has been very difficult and we have had to rely on financial help from friends of the family.
After moving to England I was involved in several lawsuits. First of all, Russia applied for my extradition to face trial in relation to the above charges. It was a very expensive and long process. Ultimately, this application for my extradition was rejected by Westminster Magistrates’ Court in London on 16th November 2012. I shattered the accusations of Russia, receiving in my defence the excellent statements of Judge Evans, which were then used as precedents in other processes.
One item of evidence involved video and audio recordings, in which senior prosecutor Gvozdev attempted to extort from me the sum of $1million, to be shared between a number of Russian prosecution officials, purportedly to help close the case.
These revelations have shocked the English court. As a result, Russia received a devastating defeat in court. District Judge Nicholas Evans in his decision stated: “The level of corruption revealed by transcripts (of recorded conversations between GT’s contact in Russia and a senior investigator Mr Gvozdev) is just appalling.” Moreover, Judge Evans mentioned that there was a real possibility of corporate raiding perpetrated against my business in Russia.
Consequently, I became the enemy of the Russian Prosecutor's Office, because I did not "wash the dirty linen at home."
Following this decision, I submitted an application to the Investigative Committee of Russia with a request to initiate proceedings against a number of officials of the Investigative Department of Russia’s Ministry of Internal Affairs and the Prosecutor General’s Office of Russia. Eventually Mr Gvozdev was arrested. This was followed by questioning of a senior investigator of Ministry of Internal Affairs – Irina Konovalova, who was primarily responsible for handling my criminal case. Ms Konovalova subsequently testified that although she did not herself see any basis for the criminal charges against me, she was required to bring these charges by direct orders from her superiors.
Mr Gvozdev was found guilty of extortion and was given a suspended prison sentence and Ms Konovalova was forced into honorary retirement. Nevertheless, the criminal case against me remains open until the present day and no superior officers in Russian law enforcement agencies were investigated for their involvement in my prosecution despite having been identified by Gvozdev and Konovalova.