Dagestan transit: how the Magomedov brothers built their business and how it ended

The court found out that Ziyavudin and Magomed Magomedov, accused of fraud for 2.5 billion rubles, have not spoken to each other for several years.
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The first battles

On March 25, 2018, five days before the detention of the Magomedov brothers, the play "Blue Blue Bird" was given at the Theater of Nations. The spectators were greeted personally by the artistic director of the theater Yevgeny Mironov. Together with the whole hall, Arkady Dvorkovich applauded the master. The production was a success, and the satisfied vice-premier, who began to celebrate his birthday (March 26), after the performance moved with the guests to a restaurant nearby. Among the invited was Ziyavudin Magomedov. Usually a long-time, old friend and classmate of Dvorkovich was in excellent spirits and recalled the student days and trips to potatoes under the sound of glasses.

It was during one of these trips to the Moscow region state farm Ziyavudin attracted the attention of fellow students. When soldiers of the local military unit burst into the students of the economical faculty of the Moscow State University in the hope of gaining something, the Avar was not taken aback. Tempered in hand-to-hand fighting on the beach native Makhachkala, Ziyavudin proposed to resolve the conflict "one on one" with any of the uninvited guests. The battle took place in a barn nearby, whence Ziyavudin soon dragged the defeated almost by the leg. After that, the soldiers retired and no longer bothered the students.

Ziyavudin graduated from the economics department of Moscow State University two years later than his older brother. They lived in the same room in the hostel, regularly visited the gym and were not spilled water. At the same time Magomed seemed classmates restrained and more thorough than his brother. Parents did not indulge in Magomedov's money, and already in the students they took up business. Classmates discussed the interests of brothers in the Cheryomushkinsky market near Moscow State University. Ziyavudin himself said that they started with the sale of household appliances and computers. By the end of their studies, the brothers were already driving around on their own white Mercedes, recalls former classmate Magomed.

In 1993, the brothers established the company "Interfinance" and began to trade in securities and vouchers. Successful transactions at that time brought a profit of thousands of per cent per annum. And in the mid-1990s classmate Aleksey Frenkel suggested that Magomed invest in banking. So the brothers became shareholders of Diamond Bank. Frenkel was doing business. Magomed, who headed the board of directors, performed representative functions, his friend tells. Ziyavudin also joined the board of directors of Diamant, but he spent most of his time on Interfinance.

The banking business of the brothers did not ask, in 2001, "Diamant" lost its license. Frenkel managed to work in a dozen other banks until November 13, 2008, the Moscow City Court sentenced him to 19 years in a strict-security colony, recognizing the murder of Andrei Kozlov, the first deputy chairman of the Central Bank, as the customer (he was shot in September 2006). And yet "Diamant" became an important milestone for the Magomedov brothers - it was there that they got to know David Kaplan, who brought them to a higher orbit.

Chess game

A marvelous beach, an exclusive Sting concert, a dinner with oysters, caviar, lobsters and a river of champagne. All this was waiting for the guests of the closed party, which in summer 2012, according to the Italian newspaper Corriere della Sera, was going to roll in Sardinia, the Russian tycoon David Kaplan. According to the publication, Sting alone could cost up to € 500,000. Due to a leak in the media, the holiday was moved to Cannes.

In Russia, Kaplan became known in 2010, when he headed the Moscow office of the International Chess Federation (FIDE), the appointment took place against the backdrop of Kirsan Ilyumzhinov's victory over the former world chess champion Anatoly Karpov in the struggle for the post of FIDE president. In addition to Kaplan Ilyumzhinov, Dvorkovich and Ziyavudin Magomedov supported. The latter, from Kaplan's request, invested about $ 7 million in online chess tournaments, but the project failed, says one of Magomedov's partners. It is unlikely that he was very upset, because Kaplan helped his brothers to come to the port business.

The personality of Kaplan is shrouded in a veil of mystery. One of the interlocutors of Forbes describes him as a "punchy businessman" whom Magomedov connected when "problems arose". He always had several mobile phones with him and moved around Moscow on armored cars with security.
Another interlocutor calls Kaplan "the main financier and strategist" of Sumy's construction business. In the media, Kaplan was called an Israeli citizen, co-owner of the Lithuanian bank Snoras and attributed to him a connection with the local OPG "Vilnius Brigade".

In an interview with Prime Traveler magazine in June 2010, Kaplan did not explain the origin of his capital, but noted that the main quality of an entrepreneur is unprincipled: "Principle people in business are dead, so you will never achieve any result." Now Kaplan is 55 years old. From an interview with Forbes, he refused, but some details of his biography were found out.

Kaplan was born in Lithuania, in 1985 he graduated from the Faculty of Applied Mathematics of Vilnius University and in the early 1990s moved to Israel. There, the mathematician first designed vacuum columns for refineries, and then opened a clearing company and began to settle accounts between the countries of the former USSR. Later bought for about $ 150,000 about 12% of the Lithuanian bank Snoras, whose counterpart was Diamant of the Magomedov brothers. It was Kaplan who brought them together with the head of Transneft, Semyon Vainshtok, two business partners of Magomedov. In the early 2000s, the Magomedovs and Kaplan began to cooperate with Transneft. At first, these were small construction projects: berths and hydraulic structures. And in 2004, partners began to build a crude oil terminal in Primorsk. It was his Weinstock who saw the largest port for transshipment of oil for export. The project cost about $ 150 million, most of the money was provided by Sberbank. Having handed over the terminal in 2005, "Sum" became the operator of the whole port. Through Primorsk exported about 20 million tons of oil, "Sum" earned $ 4-5 per ton, says partner Ziyavudin, that is, the terminal could pay off in two years. In the late 2000s Kaplan left the port business of Magomedovs. By the time Weinstock, whose interests had allegedly been represented by Kaplan, had left Transneft, and the brothers were overgrown with new ties and assets.

The right approach

In 2005, two visitors came to Ziyavudin Magomedov's Moscow office. The negotiators from Yakutia came to invite him to participate in the additional issue of the largest gas producer in the region, Yakutgazprom. For 75% of the company with reserves of $ 300 million it was required to pay only $ 25 million. But there were nuances: the additional emission diluted the share of the state "Alrosa", which was overseen by Finance Minister Alexei Kudrin. In addition, the consent to the transaction of the president of Yakutia Vyacheslav Shtyrov was required.

"We'll agree with Lesha," retorts Ziyavudin's words to one of those visitors, Kudrin allegedly was his neighbor in Rublevka. Magomedov gave the command to prepare money for the deal and immediately left for the Moscow representative office of Yakutia to Shtyrov. After the meeting, the deal took place.

Ziyavudin had an "eastern ability to build relationships," says Dvorkovich's acquaintance. In 2002, Magomed went into politics to "establish GR", and the younger brother stayed on the farm, a friend of Magomedov said.

Ziyavudin managed to get along with a colleague of Vladimir Putin, Nikolai Tokarev, who replaced Weinstock at the head of Transneft. The first deputy and longtime associate of Tokarev, Mikhail Arustamov, was helped, says Transneft employee. Continuity could provide and Arkady Dvorkovich, who until 2008 was a member of the board of directors of the state company. Ziyavudin himself said that Tokarev liked the fact that he was able to eliminate problems with the ESPO-1 oil pipeline, which he inherited from Weinstock. It was a small plot, "Sum" earned less than 1 billion rubles, says Magomedov's business partner. But after Magomedov became the major contractors of "Transneft". And in 2010, "Sum" together with the state company on an equal footing acquired 50.1% of the Novorossiysk Commercial Sea Port (NCSP), the largest in terms of cargo turnover in Russia. The relationship between Tokarev and Ziyavudin was exclusively business, the Transneft employee assured. Although from the outside they could seem tight: "It's because of Tokarev's style of communication. Regardless of the rigidity of the position, he is ready to listen to the counterparty. "

Ziyavudin found an approach to the then-president Dmitry Medvedev. At his personal request, as two familiar businessmen tell, he restored the Bolshoi Theater. The work was supervised by Kaplan. He still owns "significant shares" in the construction assets of "Sums", the representative of the group said. According to a source close to Sum, Kaplan's share is about 10%.

The partners did not earn anything at the Bolshoi Theater, one of the interlocutors states. But this experience has given them access to government buildings. The largest customers of Magomedov were the structures of the Ministry of Transport, which was supervised by Dvorkovich. The amount of such contracts for 2012-2015 exceeded 120 billion rubles.

In parallel, Ziyavudin aimed at creating a logistics holding company. The former fuel and energy minister Sergei Generalov bought the Fesco transport holding company (estimated at $ 1.4 billion) and on exclusive terms privatized the package of the United Grain Company ($ 200 million), the largest infrastructure player in the Russian grain market (control remained with the state) . The first time Ziyavudin Magomedov was on the Forbes list in 2011 with an assessment of $ 750 million.

The erudite lobbyist

On May 28, 2018, in the Tverskoi Court of Moscow, it was unusually crowded. The queue of visitors, consisting of most of the strong Caucasian men, began on the street and stretched to the hall of the third floor. In the courtroom, which was crammed full of support by the support group, it turned out that during the search Magomed found three unregistered pistols. These are gifts from "respected people", he explained. According to the investigation, Ziyavudin answered Sum for the economy, and Magomed for political and security cover.

"Magomed is known in Moscow as a tough businessman with patrons in the FSB," says his former business partner Alexei Kozlov. In 2007, Weinstock's acquaintance Senator Vladimir Slutsker asked Magomed to support him in the corporate conflict around the Moscow plant Iskozh. Slutsker defeated the opponent, and then entrusted the restructuring of Iskorzh to Kozlov. The next conflict, this time with Kozlov, cost the latter freedom. Slutsker emigrated to Israel, and Magomed received the property of Iskora. "This is a person who, if he thinks you are weak, then he will not have any business with you," Kozlov said.

Meanwhile, among friends, Magomed was known as an erudite, "walking encyclopedia" and an admirer of Napoleon, whose letters and sculptural images he collects. Magomed is not so much a businessman as a lobbyist and a "public figure," Forbes's interlocutors say. In 2002, he became a senator from the Smolensk region. This was a personal initiative of the then governor and an FSB pro-Viktor Maslov, his successor Sergei Antufiev said, who did not extend Magomedov's powers: "The region should be represented by a person who knows the region and lives in it." Maslov, according to Antufiev, did not explain why he appointed a stranger as a senator: "Usually in such cases it is considered that it is a person who has connections in Moscow and which can be of use to the region." True, Magomedov did not remember any initiatives. Do not remember them and several colleagues Magomedov for the Federation Council, surveyed by Forbes.

Senator Magomedov, along with high-ranking functionaries of United Russia Boris Gryzlov and Alexander Zhukov, spoke for the parliamentary national football team. Lyubov Magomed likened her sport to another prominent figure of United Russia, Sergei Shoigu, now the head of the Defense Ministry. In a closed sports club under the Ministry of Emergency Situations, both played hockey. The partners in the games call Magomed "the first Avar who skated", as well as gambling and "sporting evil". Training was not in vain. In 2016 Magomed headed the Night Hockey League, where Vladimir Putin and Shoigu are playing. Before that, a financial scandal broke out in the league: there was not enough money for the annual hockey festival in Sochi. With the advent of Magomed, the NCSP became a sponsor of the league and everything was fine. How much all this helped "Summa" is unclear, but in 2009, having folded the senator's powers, Magomed asked his brother to rewrite half of the group's assets to him.

Different tempers

At court hearings, the brothers say that they have not been communicating with each other for several years. Ziyavudin claims that the brother has nothing to do with Summa. And Magomed is represented by the chairman of the board of directors of a certain "Cardo Alliance".

If you believe the biography of Magomed on the official website of the Khunzakh district where he was born, he created the Cardo Alliance back in 1996. According to SPARK, he is listed as the sole owner of the company at least since 2003. Through the "Cardo Alliance" Magomed owns a network of laundries "Northern Lights", its revenue in recent years did not exceed 100 million rubles. The network has got for debts, the friend Magomed tells. Cardo Alliance also had a more serious business - it, along with the Cyprus Kardo Invest Limited, owned the Danton (formerly Nafta-Ufa) grain and oil trader with revenues of about 300 million rubles (in 2012, more than 9 billion rubles). "Danton" also owned the company "Integrated Security System", which, according to SPARK, in 2011, concluded with the Ministry of Emergency contracts for the creation of emergency notification systems in eight regions for a total of 684 million rubles. And the company Cardo Story, connected with the Cardo Alliance, became a subcontractor of the Kyzyl-Kuragino railway in Shoigu's native Tuva.

According to the acquaintance of Magomed, in 2009 Ziyavudin, although he agreed to rewrite part of the assets to his brother, but "did not burn with desire." Registration lasted for five years. And only at the end of 2013 the FAS allowed offshore Shevronne to become the owner of the construction and telecommunications business of Sumy. Shevronne belongs to the brothers in equal shares, says a source close to the "Sum". The perimeter of the deal did not include Yakutian oil and gas assets, Fesco and OZK. But offshore got half Novoport Holding, through which "Sum" and "Transneft" control NCSP.

Formally, Magomed became a partner of his brother, but he still individually controlled the assets, says a source close to Sum. Magomed did not understand how the group's revenues formed, and when he was interested in dividends, Sumy was allegedly responded: "Everything went to pay off the debt." To disclose its structure refused, the source says.

Magomed did not like the style of running a younger brother's business, both of them testify. Ziyavudin regularly clashed with partners, including representatives of the state. "Zia always pressed with his point of view," confirms a Transneft employee. This is his corporate style, notes Ziyavudin's partner for Fesco, for him, "it was not a problem to talk in high tones with anyone." Magomed, according to his friend, believed that bargaining with the state is dangerous. In addition, Magomed adhered to the principle that "business loves silence," and his younger brother liked that "he is also spoken about in the Forbes list." The brothers stopped talking, saw only at family celebrations, and all communications on business were carried out through Leila Mamedzade.

Dangerous construction

Students of the Far Eastern Federal University would hardly know their gym: the windows are tightly curtained, the room, equipped with a bluish backlight, has turned into a huge banquet hall. The legendary British band Simply Red was expected, the guests were offered seafood and cocktails. Another important number, which organized the "Sum" in the framework of the Eastern Economic Forum in early September 2015, was the performance of the Dagestan dance ensemble "Lezginka". Together with the artists, which guests showered with five thousand denominations, Ziyavudin Magomedov also danced.

A year later the situation for Ziyavudin changed. Fesco admitted several defaults on the bonds. After the conflict with the billionaire Suleiman Kerimov, relations with the head of Dagestan, Ramazan Abdulatipov, deteriorated due to the Makhachkala port. Serious problems emerged in the business associated with the implementation of the masters. "Amount" tore down the terms for six of the seven motorways of Rosavtodor. And the World Cup was under threat. Billionaire Araz Agalarov could not start the construction of the stadium in Kaliningrad, as "Summa" poorly prepared the site. The Kaliningrad airfield, which Sumy was also engaged in, was not ready for a third. First Deputy Prime Minister Igor Shuvalov was furious.

And at that moment, Ziyavudin demanded that Magomed and Kaplan capitalize on the construction business by 6 billion rubles, a source close to Summa said. According to the interlocutor, state customers delayed payments for 3-4 months and closed the cash gaps had to come from own funds. According to Ziyavudin himself, for the last 2.5-3 years he personally invested about 10 billion rubles in the engineering business. Because of the rising ruble rate and the reluctance of banks to issue guarantees, the whole industry is in crisis, the businessman explained in court: "We had to help".

"He always threw in money there," Magomed confirmed. He himself considered such a strategy erroneous: "This topic should be closed and sold or merged with someone." Ziyavudin stood his ground and in January 2017 sent partners a second letter - this time with a proposal to leave the business. Kaplan still in 2013 allegedly tried to formalize a divorce with partners and quickly agreed. With Magomed it was more difficult: the brothers needed to share their shares in NCSP. Magomed wanted to sell his package, says his acquaintance. He believed that the port is limited in development, and he wanted to engage in construction and technology business. Against this background, it was very opportunely that Transneft's offer to buy out Sum's stake in the port.

Frozen port

A few days before Magomed's arrest, a telegram from the Russian Geographical Society (RGO) arrived. From it, the senior Magomedov learned that he was expelled from the Board of Trustees of the organization. RGO Council is headed by Vladimir Putin, and Magomed was invited there by Shoigu. The surroundings of Magomedov perceived this as a signal. But the brothers were calm: their deal with Transneft was agreed upon at the very top, it was only necessary to sign the documents.

First, Transneft wanted to share a package of NCSP with the Sum, the negotiator said. The idea arose in 2013, when Tokarev accused Sum of ignoring his position. Oils to the fire allegedly poured the bankruptcy of Vneshprombank, until its collapse, NCSP kept deposits in the bank, and the bank bought bonds of the Fesco structure. "In this regard, we had a fairly tough conversation with Sum," recalls an employee of Transneft. And in 2017 the partners again began to discuss the divorce.

Ziyavudin did not want to divide the package and actually offered "Russian roulette," the negotiator says: "Either you buy us out, or we". And he took the first step. Transneft was considered that the government would not give consent to the deal, since the port is a strategic asset. Therefore, the state company made a counter offer based on the costs incurred by the "Sum" for the port - about $ 500 million. This was half the amount of Ziyavudin's expectations, and he refused.

Ziyavudin was extremely stubborn, his partner in Fesco is lamenting. "Give back the port, this is a political asset," he persuaded Magomedov. To pay off Fesco's debts, an urgent sale of assets was required. But Ziyavudin believed that they were undervalued. Because of his stubbornness, the deal with the Dubai-based DP World, which was ready to buy up to 40% of Fesco, was allegedly lost. The group should not have been bought at all, says the billionaire from the transport industry: "It was necessary to lose fifty dollars [$ 50 million of advance payment], which they paid Generalova, and not enter the deal."

"He always took a lot of risk, but he got out of the water," admits Ziyavudin's partner in Fesco. By the end of the autumn of 2017, it really seemed that the situation was improving. Fesco attracted $ 680 million to VTB to pay off its debts, and Shuvalov decided to help Transneft and Summa agree. After listening to the parties, the first deputy prime minister decided to support the position of Suma, two sources familiar with the talks say. According to Forbes sources, the Sumy package was valued at $ 1.2 billion, on the Moscow stock exchange it was worth about 38 billion rubles, or $ 660 million.

The deal was agreed upon by the prime minister and the president, Forbes sources say. In late February, the FAS approved it, and Transneft agreed on a loan with Sberbank. The deal was planned to close until April 12, according to the negotiator. But the arrest mixed all the cards - Transneft immediately froze the deal. And then "Summa" offered its stake in Rosneft, Tokarev said. Both Sum and Rosneft have refuted this, but the state-owned company has long shown interest in the port. Back in 2012, its head, Igor Sechin, asked the president to transfer to Rosneft a 20% state stake in the port. It is Rosneft that remains one of the most likely candidates for the port, the head of the Federal Antimonopoly Service, Igor Artemyev, believes. And the investment company "Region", connected with Rosneft, is trying to collect more than 3 billion rubles from Fesco. "We have no relation to this [to the assets and arrest of the Magomedovs]," Rosneft spokesman Mikhail Leontiev assured Forbes.

However, the current alignment is profitable for Transneft, said the familiar Magomedovs. The brothers are isolated from asset management, and the representatives of Suma withdrew from NCSP's board of directors in preparation for the deal. "While we are satisfied with everything", - acknowledges the employee of Transneft. The Magomedovs are not in a hurry either, their acquaintance tells. Article 210 (organization of the criminal community), which is imputed to the brothers, implies the confiscation of money and property. Therefore, the payment for a package of NCSP can be blocked immediately, as soon as it enters the accounts of the brothers.

The arrest of Magomed has also stalled another trial. In the Supreme Court of New York, he challenged billionaires Victor Vekselberg, Leonard Blavatnik and their former partner Leonid Lebedev. Businessmen allegedly fooled Magomed and his cousin Ahmed Bilalov, and they lost $ 1.3 billion.