Following the arrest of Ziavudin Magomedov and his brother Magomed, the owners of Summa Group and major players in the Russian transport sector, on 31 March 2018, the Tverskoy court in Moscow seized their assets, which included 4 vehicles, 2 apartments as well as shareholding and bank accounts of many companies owned by Summa. Among those affected were major Russian ports of Novorossiysk and Vladivostok.
Summa Group controls a number of port and logistics assets in Russia, including Novorossiysk Commercial Sea Port (25%) and FESCO Transportation Group (32.5%), which owns Vladivostok Sea Commercial Port. Novorossiysk Commercial Sea Port (NCSP) is Russia’s largest port operator with terminals not only in Novorossiysk but also in Primorsk (oil) and Baltiysk (containers) ports. In 2017, the volume of NCSP Group reached 144 mln tonnes, accounting for 18% of the total throughput of the Russian ports.
Within the criminal proceedings against Ziavudin Magomedov, the bank accounts and property of NCSP and its subsidiaries were arrested but subsequently released on 28 June, which led to an 8% jump in NCSP’s shares, according to RBC. On Friday, NCSP published its Q1 2018 Consolidated Financials, which mentioned: “On the date of reporting the arrest was removed.”
The NCSP Group reports a 5% increase in its revenue in January-March 2018: USD 238 mln as compared to the same period of 2017 (USD 226.5 mln).
The bank accounts of Vladivostok Sea Commercial Port (VSCP) were also seized but unlike those of NCSP, still remain blocked, as the Moscow city court confirmed on 20 June the Tverskoy court’s initial ruling on the accounts’ seizure. VSCP informs that although the port keeps operating as usual, handling vessels and trains according to schedules, the situation negatively affects the company’s business reputation and may have an adverse effect on the competition within the stevedoring market of the Russian Far East. Besides, VSCP is one of the largest tax payers and employers in Primorye region, with average salaries of blue-collar staff being 2-2.5 times higher than the average one in Vladivostok. Therefore, the situation bears risks of growing social destabilization in the region, warns the company. VSCP does not see any grounds for the seizure of its bank accounts and will continue contesting the court’s decision.
The Magomedov brothers are charged with setting up an organized crime group and with embezzlement of RUR 2.5 bln (USD 43.6 mln) of the federal and regional budgets and withdrawing the funds to offshore companies. They reject all the charges. Initially, the brothers were arrested until 30 May, however later the court extended the arrest until 5 August.