Timber Company’s Days in Russia Numbered

The company takes its assets abroad

The export of Russian timber was the business of the head office of the Russian timber company Ilim Pulp (a division of a Swiss enterprise) in St. Petersburg. Now, its activities are centralized in the hands of two foreign traders. This is not surprising, despite the temporary pause in the fight between Ilim Pulp and Base Element. Yet, the situation with the Russian timber company Ilim Pulp is becoming more and more intense.

The Ilim Pulp Enterprise is currently completing a transaction that is connected with the purchase of an Irish company, also a timber trader. This was stated by Ilim’s Managing Director Mikhail Moshiashvily. The sum of the transaction was not exposed, but it was said that Ilim Pulp would soon have another foreign trader.

Acquiring a foreign trader is connected with the fundamental reorganization of the company’s entire foreign sales, as Mikhail Moshiashvily put it. Ilim’s head office in St. Petersburg currently deals with the export sales of the enterprise. However, it is now planned that there will be a separate company organized within the Ilim Pulp Enterprise for working on the foreign market. This will be the place for the Irish company, which is now being purchased by Ilim Pulp. Mr. Moshiashvily also said that there would be a second foreign trader organized in the future as well. Thus, one company will sell Ilim Pulp’s production on the European market, and the other company will work in China and in the Middle East. The Russian division of the enterprise will deal with wood-working only.

In addition, such schemes of export activities have recently become rather popular in Russia, especially against the background of the current propriety crisis. When an owner is unable to keep the companies that he owns, he moves most liquid assets to offshore companies and pays major attention to the control of the sales. If a company’s owner changes, the new owners find out that they can manufacture production, but they can’t sell it abroad. This happens on account of the fact that sales rights are usually assigned to foreign companies. The rights are basically assigned for many years for the companies, which are beyond the Russian jurisdiction.

In this case, the Office of the Prosecutor General of Russia or other special services can not exert any decisive influence on anything. Legal procedures are not good either, because they presumably take too much time and money.

The fight between the Base Element and Ilim Pulp for Russian leading timber enterprises has faded away to a certain extent. For the time being, Swiss businessmen stay in the wood-working industry of Russia. Yet, they have few chances for their business to survive.

The Arbitration Court of the Adygeya republic ruled that Ilim Pulp’s administration at Bratsky Woodworking Factory is legitimate. A district court of the Kemerovo region ruled to withdraw the control stock of Kotlassky Pulp and Paper Mill from Ilim Pulp. The propriety issues of those enterprises have not been settled yet. Ilim Pulp’s adversaries claim that they are still the owners of those enterprises, since they legally purchased their shares. Ilim Pulp still remains a minor shareholder.

To crown it all, Russia media outlets keep publishing interesting articles about Ilim Pulp’s protectors from all kinds of governing bodies imaginable. Newspapers write that Ilim Pulp is sponsored by the people from the State Duma, from ministerial departments, by vice premiers of the Russian government, ect. The Compromat.Ru website recently published an extensive piece devoted to the incredible scale of Ilim’s transgressions and infringements of investment programs, accounting reports, bribery, criminal negligence, and so on. The Russian mass media reported that the deputies of the Russian State Duma sent numerous inquiries to the Office of the Prosecutor General of Russia and to other law-enforcement and governing bodies. Those incidents are being currently investigated.

However, it is not the worst thing to happen to the company. At the present moment, Ilim Pulp’s administration faces a real opportunity to be implicated in serious criminal proceedings. The proceedings were instituted on the fact of assassination. Leonid Davidenko, the director of the Industrial and Construction Bank, has been recently killed. Senior bankers from St. Petersburg claimed that the crime was directly connected with the long-term conflict around the Kotlassky Pulp and Paper Mill. A source amid St. Petersburg senior bankers told ABCNEWS.Ru that one of the theory’s of the crime considers the implication of Ilim Pulp competitors.

Therefore, there will be nothing surprising if the management of this company concentrates its activity on exports and then runs away from Russia.

Dmitry Slobodanuk PRAVDA.Ru

Translated by Dmitry Sudakov