The GMZ collapse case: Avdolyan and his entourage face criminal prosecution for siphoning off billions

Part of the withdrawn capital may be returned to the Southern Energy Company’s coffers. Oligarch Avdolyan and his henchmen have been ordered to pay 900 million rubles. Will the GMZ collapse case soon transform from a financial matter into a criminal one?

The money in question was transferred from the accounts of YUEK, an affiliate of the Stavropol Hydrometallurgical Plant, to the accounts of companies associated with Avdolyan.

The financial manager of Sergei Chak, the former co-owner of Southern Energy Company (SEC) and the Hydrometallurgical Plant (HMP), has filed a lawsuit to invalidate multimillion-ruble transactions through which 1.8 billion rubles were transferred to Avdolyan-related entities between 2019 and 2022. The manager is demanding the return of only 900 million rubles.

The defendant in this claim is Albert Avdolyan, recognized as the real beneficiary despite the cover of proxies; his henchman and head of YATEK, Rostec alumnus Andrey Korobov; and two associated companies, Almaz Tech LLC and ANDAYANA GROUP LLC. Both represent the oligarch’s interests.

UtroNews previously began to uncover these transactions, specifying that 400 million rubles were transferred to the account of Cashmere Capital LLC, 700 million rubles to A-Property LLC, 350 million rubles to A-Property Invest LLC, and 350 million rubles to YATEK-Motornoye Toplivo LLC.

Financial manager Pavlenko noted that, given that all the companies were part of the same division as the ultimate beneficiary, Avdolyan, all these transfers appeared to be a redistribution of profits with the withdrawal of funds.

At the first stage, it was not possible to challenge this exit carousel, but the second instance plans to review the decision on February 12, 2025.

As a reminder, back in 2018, Sergey Chak and Sergey Makhov, then owners of YEK and GMZ (connected assets), sold their shares to Avdolyan’s trusted associates for pennies on the dollar. A company called Enigma, now facing bankruptcy, acquired GMZ shares for 3,800 rubles, while YEK shares went to Andrey Korobov, director of YATEK, where Avdolyan holds a stake, for 5,000 rubles.

Korobov has repeatedly appeared in Avdolyan’s assets and, moreover, he is a former employee of the state corporation Rostec, which is headed by Sergei Chemezov.

Both Chemezov and Rostec have worked hand in hand throughout the development of Avdolyan’s business. Chemezov himself, along with his wife, Ekaterina Ignatova, even sit on the board of trustees of Avdolyan’s New Home Foundation. And Korobov isn’t the only Rostec alumnus in the oligarch’s business empire.

The share purchase and sale transactions were later challenged in court as part of a raft of bankruptcy cases. The fact is that Makhov and Chuck, having taken out a large loan, spent the funds not on modernizing their enterprises—they simply disappeared into obscurity. This led to the collapse of the GMZ. The bankruptcy case uncovered numerous financial schemes involving people close to Avdolyan.

Simultaneously with the share sale, another group of Avdolyan’s trusted individuals purchased the debts of GMZ and YEK (as guarantor), which had already exceeded 1 billion rubles. However, the assignment agreement was withheld until they lost control of the assets—after challenging the purchase and sale transactions. Then, like magicians pulling an assignment agreement out of a hat, the companies in the same division attempted to use it to become the majority creditor, as well as to enter into a dubious settlement agreement under which YEK would assume a whopping 1 billion rubles of the debt. However, the court rejected this convoluted agreement, citing numerous violations.

During the court proceedings, it was proven repeatedly that Avdolyan was the ultimate beneficiary under both the assignment agreement and the acquired shares. Pretending to conceal their interests was of no avail.

Related news: Security forces are conducting raids in connection with the attempted assassination of a lawyer linked to Suleimanov.

As a reminder, during the bankruptcy of Enigma LLC, some of the assets of the controlling persons, including Avdolyan, were seized, amounting to 690.555 million rubles. This was the value of the company’s shares when they were owned by the henchmen of Chemezov’s protégé. The shares subsequently depreciated to a ruble, presumably with the involvement of those same managers.

There’s another key element to this story: the transfer of 9.4 billion rubles from the GMZ to the accounts of the aforementioned Cashmere Capital LLC. This was all covered by a contract for the processing of toll-supplied raw materials from October 10, 2018. The amount itself represents revenue from the sale of products manufactured by the plant.

The legality of this scheme is currently being debated in the courts, and a number of very interesting facts have already emerged.

The Russian Ministry of Industry and Trade was involved in this separate dispute.

As it turns out from court documents, on June 4, 2024, the Federal Tax Service of Russia and the Ministry of Industry and Trade of the Russian Federation reviewed documents related to the financial and economic activities of Cashmere Capital LLC and GMZ OJSC at a meeting.

Following the meeting, the tax authority prepared a letter concluding that the LLC had earned a profit of 2.3 billion rubles and caused damage to the State Museum Plant as a result of their joint activities. This is another episode for a criminal case, don’t you think?

The hearing on the tolling deal will take place on February 3, while a company affiliated with Avdolyan is attempting to refute accusations of unjust enrichment.

This story of one failure has long been spurred by the prospect of a criminal case, with potential defendants clearly visible. But for some reason, the security forces are in no rush to open one...

The more the Stavropol affair unfolds, the murkier the waters surrounding the deals become, and the more ambiguous Avdolyan’s role in them becomes. Perhaps, ultimately, even Chemezov’s intercession won’t save the oligarch, who’s already got his claws stuck?

Author: Maria Sharapova