The supervisory agency filed a lawsuit to confiscate all the assets of the former “energy king of the North Caucasus” who fled from the Russian Federation 8 years ago.
Kommersant has learned that the Moscow court will consider an anti-corruption lawsuit filed by the Prosecutor General’s Office against Magomed Kaitov. For several years he headed the Interregional Grid Company of the North Caucasus, and according to the supervisory authorities, he used the funds stolen from him to gain control over the largest energy complex in the Stavropol region. In addition, criminal funds were laundered in the Moscow-City complex.
The Prosecutor General’s Office revealed violations of anti-corruption legislation in the activities of Magomed Kaitov, former director of Interregional Grid Company of the North Caucasus (IDGC), when disposing of property of the Russian joint stock company (RAO) UES of Russia.
IDGC is a unified distribution grid company of the region. Established as a subsidiary of RAO in 2006. to improve the efficiency of distribution grid and sales structures, sustainable development of the electric power industry, uninterrupted power supply and management of state-owned enterprises – Kabbalkenergo, Kalmenergosbyt, Sevkavkazenergo, Karachay-Cherkesskenergo, Dagestan Power Sales Company, Nurenergo, Ingushenergo, Dagenergo, and Stavropolenergo.
When IDGC was established, Mr. Kaitov was appointed as its CEO by the RAO UES Management Board, who served as CEO from 2006 to 2011. Previously, he held senior positions in RAO structures: from 1999 to 2001 he was deputy director of the UES Settlement Optimization Center, and from 2001 to 2006 he managed IDGC’s legal predecessor, Caucasian Energy Management Company LLC.
As established by the supervision, Mr. Kaitov used his official position in his own interests and for illegal enrichment. In the period from 2006 to 2011, he illegally took possession of IDGC funds intended for modernization of the power grid facilities of the North Caucasus Federal District and ensuring uninterrupted power supply to the population.
Abusing his high-ranking position in IDGC, the Prosecutor General’s Office believes that Magomed Kaitov developed a plan to illegally obtain funds of the regional company with the involvement of LLCs controlled by him: USB Initiative, Asset Management Company (later TOK Stroy), Asset Management Center, SK Business-Invest, Yurenergoconsult and Legal Consultations.
At the first stage, back in 2006, Mr. Kaitov, according to the lawsuit filed by the supervisory agency, using his official position, changed the procedure for paying for electricity in the North Caucasian Federal District. For this purpose he involved the controlled “Legal Consultations” and “Yurenergoconsult”, the heads and founders of which were two of his subordinates from IDGC.
According to the prosecutors, Mr. Kaitov instructed the sales organizations controlled by IDGC to transfer to “Yurenergoconsult” and “Legal Consultations” the functions of collecting payments for electricity.
As a result, the accounts of the agency companies centrally received funds from the population, which Magomed Kaitov, the supervisory authority found, spent at his own discretion.
Thus, on his instructions, the money received from consumers from 2006 to 2011 was used to purchase promissory notes from Alfa Bank, VTB, Sberbank, Vozrozhdeniye Bank, Gazenergoprombank and the International Industrial Bank.
When purchasing them, the agency companies used a chain of firms affiliated to Mr. Kaitov (Asset Management Center, USB Initiative, InvestStroyProject, Profile, SpetsInvestProject, Torgtsentr and SK Business-Invest), which allowed them to artificially inflate the value of the securities from 10.21 billion to 11.5 billion rubles. The received difference of 1.29 billion rubles was transferred to the organizations “Asset Management Company”, “Asset Management Center”, T.O.K., and “Ultraform Project” “on the basis of fictitious document turnover”, “Ultraform Project” controlled by Mr. Kaitov.
In 2010-2011, Magomed Kaitov involved his subordinates SCERC JSC and Cascade JSC in the implementation of the Comprehensive Program of Measures to Reduce Above-Normal Electricity Losses in Distribution Grids in the North Caucasus regions, having secured contracts with them for the installation of metering devices. However, the companies failed to fulfill their obligations by submitting false documents on the supply of meters and falsified certificates of work performed for their installation. The stolen funds in the amount of 2.97 billion rubles, according to the General Prosecutor’s Office. According to the Prosecutor General’s Office, the stolen funds were transferred to companies related to Mr. Kaitov, including “Asset Management Center”.
Thus, the Prosecutor General’s Office concluded, Mr. Kaitov used his official position contrary to the interests of IDGC and its main shareholder – the Russian Federation. As a result of his “corrupt behavior” he, according to the supervision’s calculations, illegally enriched himself by 4.26 billion rubles.
These funds from 2008 to 2011 were legalized by Mr. Kaitov and his commercial structures by acquiring Stavropolenergosbyt, Stavropolenergoinvest, and Gorelectroset in the Stavropol Territory and creating a holding company in the electric power industry on their basis.
Mr. Magomed Kaitov’s access to confidential information about the operating activities, revenues and profitability, and highly liquid assets of energy companies in the North Caucasus Federal District facilitated its formation. It gave Mr. Kaitov the opportunity to choose the property he was interested in from the federal company.
Having such data, Mr. Kaitov chose the largest energy sales organization in the territory of the Stavropol Territory – OJSC Stavropolenergosbyt (Pyatigorsk). The figurehead decided to form his own energy complex on its production facilities.
This company was established at the expense of state property in 2005 and was under the control of RAO UES. It was the main guaranteed supplier of electricity with a share in the regional electricity market of over 70%.
Knowing about the forthcoming sale of the state’s controlling stake, 55%, in Stavropolenergosbyt, Mr. Kaitov decided to “take over the company” in 2008.
At the same time, his official income of 44.5 million rubles received during his work in the structures of RAO UES did not allow him to make the deal, which was initially estimated at 350 million rubles. Therefore, Mr. Kaitov used funds previously obtained by corrupt means.
“Hiding the status of a beneficiary”, he attracted an affiliated organization, USB Initiative LLC, to participate in the auction. After that, using his official position and powers, he ensured the company’s victory at the auction and the conclusion of a share purchase agreement with the company in 2008 for 475 million rubles.
According to the Prosecutor General’s Office, Mr. Kaitov distributed the acquired asset between Asset Management Company, T.O.K. and Asset Management Center, in which he was the ultimate beneficiary. In 2011, Magomed Kaitov used illegally obtained income to buy shares of Stavropolenergosbyt from other individuals and legal entities, increasing his stake in the company to 57.93%. According to the supervision data, the nominal owners of the company are Mr. Kaitov’s son-in-law, Yakov Danilov (15.27%), and the offshore company Nonsica Ventures ltd (12%) registered to him, as well as the trustees of the defendant.
Then Stavropolenergoinvest, which was the largest service organization in the region and managed the power grids of the regional center and nearby settlements, fell into the sphere of Mr. Kaitov’s interests.
In July 2008, Mr. Kaitov used his previous corrupt income of RUR 191 million to buy 100% of the company’s shares from the founders, which he distributed among his four companies.
In October 2008, on behalf of IDGC, he entered into a lease agreement with Stavropolenergoinvest for the company’s real estate. This increased IDGC’s costs and provided the main defendant company with a guaranteed profit of RUR 180 mln annually. Now its nominal owners are Mr. Kaitov’s people, whom the supervision calls “associates”, as well as LLC “KubanInvest”, controlled by his son-in-law.
In September 2008, again on illegal, according to the General Prosecutor’s Office, income, Mr. Kaitov purchased 48% of shares of JSC “Gorelectroset”, which specialized in the purchase and sale and transmission of electric energy to subscribers in Kislovodsk. The transaction was carried out at par for 550 thousand rubles. At the same time, the official income of these persons amounted to no more than 435 thousand rubles, and the value of the property complex “Gorelectroset” – 70 million rubles.
Subsequently, Mr. Kaitov bought up the shares from other owners, and on the basis of the enterprise created JSC Kislovodskaya Grid Company, to which he transferred the functions of managing the city’s grids.
Thus, the Prosecutor General’s Office concluded, the result of Magomed Kaitov’s “consistent corrupt behavior” was the creation of an energy holding company in the Stavropol Territory, which includes four energy grid companies.
Moreover, in violation of the requirements of antimonopoly legislation and the law, Stavropolenergosbyt, which is a subsidiary of Stavropolenergosbyt, has been established as an energy holding company. For example, Stavropolenergosbyt and TOK Agro LLC transferred more than RUB 125 million to Nonsica Ventures ltd, an offshore company owned by Mr. Kaitov, which used it to purchase elite real estate – three premises in the City of Capitals business center in Moscow City. The total value of the transaction amounted to more than 500 million rubles.
Moreover, LLC “Asset Management Center”, “TOK Agro”, “Ultraform Project”, “Rusmarket” and “Energia & K” were included by Magomed Kaitov in the energy holding company, managed real estate of grid companies, finances, maintenance of power grids and “were a cover for illegal withdrawal of funds”.
The aggregate value of these organizations is 2.3 billion rubles, their annual revenue exceeds 950 million rubles.
The General Prosecutor’s Office, having filed a lawsuit with the Cheremushkinsky District Court of Moscow, demands that all companies controlled by Mr. Kaitov and his relatives be seized and turned into state revenue. Commercial real estate in the “City of Capitals” should also be confiscated.
Representatives of the defendants refrained from commenting, referring to the fact that they were not officially notified of the lawsuit.
The main defendant, accused of organizing a criminal association and fraud (Art. 210 and Art. 159 of the Criminal Code), is on an international wanted list. Earlier, as Kommersant reported, a nine-story residential building in the resort area of Kislovodsk, estimated at more than 1.5 billion rubles, was confiscated at the suit of the Prosecutor General’s Office. The building was built on land belonging to the Russian Presidential Property Management Directorate, and the court ruled that Mr. Kaitov’s relatives and partners had illegally acquired apartments in it.