The owner of "Kalashnikov" will shoot from sanctions

Deputy Minister of Defense of the Russian Federation and owner of 75% of shares in Concern Kalashnikov, Alexei Krivoruchko, came under EU sanctions due to the poisoning of opposition leader Alexei Navalny.
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Now he will not be able to enter the EU, and his assets and financial transactions will be frozen there. Experts interviewed by Kompaniya magazine are confident that the sanctions will not lead to a drop in arms exports, which have already noticeably decreased recently. According to the results of the first half of the year, the export of the concern fell from 5 billion to 200 million rubles.

Concern Kalashnikov is the manufacturer of the world's most famous automatic machines. Alexey Krivoruchko owns 75% of the concern's shares through LLC TransKomplektHolding (THK), according to Kontur.Fokus. The general director of Kalashnikov is Dmitry Tarasov, who also heads the THK. 25% - from Rostec. Before Krivoruchko became Deputy Minister of Defense in July 2018, he headed the Kalashnikov Concern since 2014, and before that was the general director of Aeroexpress, co-owned by Russian Railways, billionaires Iskandar Makhmudov and Andrey Bokarev, and an Estonian company "Thor Property". Makhmudov and Bokarev were also shareholders of Kalashnikov from 2013 to 2017.

Due to the imposition of American sanctions after the annexation of Crimea to Russia in 2014, Kalashnikov lost the American market, where he planned to supply the Saiga-107, Saiga-9 and Saiga-12 carbines, as well as 90 thousand units small arms, about which Krivoruchko told "Commensant". In 2014 Mitsubishi refused to supply machine tools to the concern.

Now exports are complicated by the EU sanctions imposed on Krivoruchko from October 15, 2020.

Kalashnikov sells weapons to 21 countries. In the European Union, Kalashnikov has registered trademarks Tigr, Saiga, Unker, Dragunov, AK 47, AK 74, AKM, AK 12. Tigr and Saiga are weapons for hunting, everything else is combat rifles and machine guns.

Registration deadlines for them have not expired, but the number of customers is decreasing. The group's export share is only 6.5% of mid-2020 revenue, according to reports. At the same time, at the end of 2017, exports reached 55.6% of Kalashnikov's revenue.

The company is working to enter the markets of South America, Asia and Oceania. The main sales markets for the concern, besides Russia, are the former CIS countries, Latin America, Africa, Asia and the Arab countries. To date, the concern, in addition to the EU countries, the USA and Ukraine, has registered trademarks in China and Turkey for the Saiga and AK74 hunting rifles (Kalashnikov assault rifle developed in 1974), as well as the Kalashnikov brand itself.

When asked by Ko, whether Krivoruchko is going to sell his shares in the concern and what is the risk of refusing to buy weapons of the EU countries from the Kalashnikov Concern, the company advised to contact the Russian Ministry of Defense on the first issue, and on the second issue to Rosoboronexport and the Federal service for military-technical cooperation (FSMTC of Russia). The Ministry of Defense, Rostec, Rosoboronexport and FGSVT did not answer Ko's questions.

Military expert Viktor Litovkin believes that European countries did not buy many Russian weapons anyway, while “there are countries that, regardless of any sanctions, will buy the products of the Kalashnikov Concern” - these are India, China, Iraq, Iran, the countries of the Middle East ".

Independent military expert Prokhor Tebin is also not inclined to dramatize the situation in connection with the imposition of sanctions against Aleksey Krivoruchko: "Just another signal has appeared, but nothing has changed qualitatively."

Dmitry Shimanov, general director of the research company Mar Consult, notes that since Kalashnikov has been under US sanctions, “he has strengthened marketing in the Middle East and Latin America and thereby was able to compensate for losses from exports to NATO countries. But in the first half of the year, there was a decrease in export volumes from 5 billion to 200 million rubles. Perhaps this is due to the seasonality of shipments and the pandemic. "

Weapons and ammunition produced by Concern Kalashnikov are in demand on the domestic market, they are purchased by the Ministry of Defense, the National Guard, the Federal Penitentiary Service, the FSB, and the Ministry of Internal Affairs. Since 2012, state purchases have reached 972 million rubles. At the same time, most of the purchases are probably not reflected on the public procurement website. The real revenue of the concern is much higher, only in 2019 it amounted to 36.2 billion rubles.

The Ministry of Defense buys weapons and ammunition for budget money from an enterprise controlled by the Deputy Minister of Defense. At the same time, Krivoruchko, as deputy minister, is responsible for organizing the military-technical support of the Armed Forces (AF).

Despite stable government orders, Kalashnikov has losses for the first half of the year - in the amount of more than 4.1 billion rubles. However, by the end of 2019, the concern allocated more than 43.7 million rubles for dividends. (or 25% of net profit), of which 32.7 million rubles. received the main shareholder Alexey Krivoruchko. Krivoruchko is one of the richest in the leadership of the Ministry of Defense, his annual income in 2019 amounted to more than 12.9 million rubles. He owns a house with an area of ​​almost 1,500 sq. m, a guest house of 543 sq. m, land plot of 3464 sq. m, a luxury car Aston Martin Vanquish (price 19–26 million rubles) and a Ford F-150 Raptor 4WD. Two apartments (73.8 and 60 sq. M.) Are owned by his wife. At the same time, Krivoruchko does not disclose in his declaration data on his shares in the Kalashnikov Concern.

Businessmen who were previously subject to sanctions withdrew from the capital of their companies. This is what Gennady Timchenko did, selling 44% in the oil trader Gunvor to his partner Torbjorn Tornqvist in 2014, when sanctions were imposed on the billionaire in the United States.

Billionaire Arkady Rotenberg, who fell under the sanctions of the United States and the European Union, transferred his share in Mostotrest (26.4%) to his son Igor Rotenberg at the end of 2014. True, Mostotrest itself also later found itself under US and EU sanctions, and Igor Rotenberg - under US sanctions.

Oleg Deripaska had to reduce his shares in his companies Rusal, En + and Eurosibenergo in order to achieve the lifting of US sanctions. Deripaska reduced his stake in En + from 70 to 44.95%, transferred part of the shares to a charitable foundation and refused shares pledged by VTB.

Alisher Usmanov relinquished control over Group - his USM and Megafon, his stake in the group to management in order to avoid US sanctions. Previously, USM controlled through MF Technologies, a joint venture between Megafon, USM, Rostec and Gazprombank, where Megafon owns 45% and USM owns 9%.