Tomorrow, Luzhniki will host the general meeting of shareholders of VTB Bank OJSC.
The “effective managers” will be telling shareholders, me included, that we just need to wait a little longer and the money will start coming in. That they have “optimized,” “introduced strategic planning,” “opened up new horizons,” and “reviewed and improved their approaches.” There will be a mountain of charts and slides. One of them will almost certainly feature a smiling mother hugging a chubby baby, with the slogan: “With VTB, I feel secure about the future.” The shareholders will sit there glaring hatefully at the presidium. They do not need presentations; they remember that during the “People’s IPO” (a state-promoted public share offering), the shares were placed at 13.6 kopecks, and now, four years later, the share price is 8.5 kopecks. There is only one explanation: VTB, a bank that is 85% state-owned, is being looted. Of course, people steal everywhere here, but at VTB they do it with passion and enthusiasm. These are true professionals. They are virtuosos of fraud and embezzlement. And once again, I return to my drilling rigs. The bank’s management is reporting to shareholders on its performance, so I will report as well. Especially since VTB president Andrei Kostin gave me a perfect opening in his interview with MK yesterday:
Well then. Let us have a little exposé of this big, very rich liar. For those who have not been following the investigation from the beginning, here is a very brief reminder of what this is about: The bank’s subsidiary, VTB Leasing, bought 30 Chinese-made drilling rigs. In China, each rig costs $10 million. But the crooks at VTB bought them not directly, but through a shell company in Cyprus at $15 million apiece. Here is the crude diagram I drew for a post two years ago:
As we can see, this simple and obvious scheme brought the crooks a net profit of $156 million. Here is a video you can watch as well to understand what is what. For the past two years, we have been investigating this case and trying to force VTB itself, along with our valiant police, to bring the thieves to justice. We collected and published all the documents exposing the fraudsters long ago. There was, however, one very important document missing: the contract between the Cypriot intermediary and the Chinese manufacturer, which would state the price of the rigs. Of course, we established the price from other sources, but it was still a weak spot, and it allowed the little thieves from VTB to shout that they bought the rigs for $15 million, not $10 million, because transportation costs, installation supervision, and so on had to be added to the price. For a year and a half, we searched unsuccessfully for the missing contract, mostly trying to pry it out of customs. As it turned out, we were just being stupid until a kind person pointed out that the rigs would have had to go through certification, and that we should look in that direction. So here it is: VTB — intermediary
Intermediary — Chinese manufacturer (the very contract that had been missing)
Which is exactly what had to be proved: the delivery terms are the same — DDU, settlement of Purpe. Now let us take a calculator and do the math. $456***,990,000 minus $297,000,000 equals $159,990,000 stolen. *** Fact: VTB’s management carried out a half-billion-dollar deal with some obscure company whose owners are unknown. That obscure company pocketed $159 million. Now let us move on directly to Kostin’s lie about how “they are being leased out and the investment will be recovered.” This part is much simpler. The rigs are too large to hide. It is four thousand railcars’ worth of equipment. Anyone can simply go to the settlement of Purpe and see how, for the fourth year now, they are supposedly “being leased out.” In winter, half a billion dollars of VTB shareholders’ money lies under the snow; in summer, it lies in the swamp. Here are some very recent photos sent to me from Purpe:
A fair question arises: why have the crooks and thieves at VTB still not leased out these rigs? The first and obvious reason is that the rigs cost 50% more than market price, so any normal lease arrangement would also be very expensive. And if they lease them below cost? Then what? We started looking into what else might be wrong. And we found it.
This is Gazprom’s assessment of the rigs they are trying to palm off on it. In short: one of the most important indicators for a drilling rig is the “allowable hook load.” The higher it is, the deeper you can drill. Since the task of these “effective managers” was to steal money, not to lease out the rigs, they took whatever the Chinese could slap together for them quickly. The possible uses for rigs like these in Russia are very limited. And there are as many as 30 of them — that is a lot. As we can see, Gazprom is interested in these rigs for five wells, but they can actually be used on only one. So that is the situation. And while the VTB people are trying to bury the case of the stolen $159 million, they are also burying all the other circumstances, which is already leading to losses of $500 million. You might ask me: why are you digging your heels in over these rigs like a ram? The amount does not seem all that large. Let us see whether it is a large amount: Here is the notice of the general shareholders’ meeting. And here is the draft resolution on profit distribution:
In other words, a total of 6 billion rubles — about $200 million — will go toward all dividends combined (to the state, to foreigners, to individual investors, to everyone). And in the drilling-rig deals alone, $159 million was stolen net. So if that money had not been stolen — or if the case were investigated now and the money recovered — annual dividends could be doubled. The entire drilling-rig deal cost the bank about $600 million. The rigs have been sitting in a swamp for four years. Obviously, it is no longer possible to recover all of that in full. So in order to steal $159 million, they squandered $600 million. Or 18 billion rubles, which is comparable to the annual net profit of the entire VTB Group. Not to mention that $600 million, even at 4% annual interest, could have been earning shareholders $24 million a year. But it was not. Is that enough reason to dig in stubbornly like a ram? I think it is. On June 6, the Moscow Arbitration Court will hold a preliminary hearing on my lawsuit against VTB seeking to have the deal declared invalid. I believe it was void from the very beginning; by now it is obvious that VTB’s management had no intention other than to skim off a quick $159 million. No one ever intended any real leasing, and no one intends it now. These people want one thing only: to steal. Given how eagerly the police and investigators served the interests of the VTB thieves during the criminal inquiry stage, we have no rosy expectations that everything will go easily and smoothly in arbitration. But we will fight. I would appreciate it if you helped spread the information from this post. VTB shareholders will find it interesting ahead of the meeting.