Exactly a year ago, in his interview to the Economist, Mikhail Fridman, #79 in the Forbes list of billionaires, quoted a widely used Russian proverb – you can never be sure you won’t go to prison or be a beggar. He never had an objective reason to fear jail, he said then. The year has shown how the tides may turn.
Today, Spanish prosecutors accuse him of raider attacks, market manipulation, fraudulent insolvency, business corruption and misuse of company assets in regard to two Spanish businesses – Zed and DIA.
Earlier this year, a Spanish court has put Russian billionaire Mikhail Fridman under official investigation for corruption, accusing him of having helped orchestrate the bankruptcy of Spanish technology company Zed.
The National Court, which deals with major financial cases, summoned Fridman for questioning in September placing him under probe for corruption in business, market abuse, fraudulent insolvency and misuse of company assets.
As told by AFP, Fridman is accused of having led “a series of actions that led to the insolvency of the Spanish company Zed Worldwide SA… in order to buy it at a ridiculously low price, much lower than that of the market,” the court document said.
According to the National Court, the Russian magnate was a shareholder and creditor for Zed, a Spanish technology company declared bankrupt in November 2016. As a result, he had “a privileged position for any type of decision in the group,” it said.
Spain’s anti-corruption prosecutors say mobile phone operator Vimpelcom, which has since been re-named as VEON, controlled by Fridman, suddenly terminated or modified contracts with a Russian subsidiary of the Spanish group from 2014, depriving it of significant revenue.
Those contracts had boosted Zed’s revenues to such an extent that it planned to list on Nasdaq and secured a 140-million-euro ($157-million) loan in 2013, increasing its debt. Some of that was loaned by a bank controlled by Fridman, prosecutors say. In difficulty, Zed applied for bankruptcy in June 2016.
Four months later, people close to the Russian businessman came forward to buy Zed for 20 million euros, “much less than its value when blockage manoeuvers controlled by Mr. Fridman started,” prosecutors say.
The very same manoeuvers have been spotted by the press in the case of DIA, the embattled Spanish supermarket chain Mikhail Fridman bought in May via a hostile takeover. The Reuters writes that Spain’s High Court is investigating allegations that Russian tycoon Mikhail Fridman acted to depress the share price of DIA when trying to take control of the supermarket chain, a court document seen by Reuters showed.
Spain’s Supreme Court gave the High Court a mandate to investigate anonymous accusations which it said indicated Fridman may have acted to manipulate prices, engaged in insider trading and damaged the interests of minority shareholders.
The court document cites a police report alleging that Fridman acted in a coordinated and concerted way through a network of corporations to create short-term illiquidity in the company and lower the share price before launching his takeover: “LetterOne Investment Holdings (directed by Fridman), shareholder in DIA, maintained a heightened financial tension to lower the share price before buying the company.”
In October, Fridman appeared in court in Madrid as part of the ZED case, and denied all charges. The Court however, ruled to maintain the ‘accused’ status in his regard.
Not all smooth back at home either. Fridman’s name is being mentioned in the context of another hostile takeover, that of Korund-M, an R&D and production enterprise that develops secure computers for Russian state-owned structures (including those responsible for aviation and space programmes), and holds a license for developing weaponry.
As told by Business First, Fridman’s A1 investment company bought 50% of Korund-M’s shares earlier this year via an affiliated company and is now being accused of an attempted raider attack by its founder and director of 35 years Russian Academic Betelin.
Betelin claims that Fridman’s involvement in a strategically important enterprise related to national security can be qualified as “foreign involvement” because A1 is registered in Luxemburg. Sources in Russia say that since the ‘Kremlin dossier’ was published, Fridman’s local structures have been avoiding any contact with the national military forces not to anger the US, whether or not Fridman’s involvement in a Russian national defense enterprise will affect the way he is profiled in the US sanctions lists remains to be seen.