SERGEI PUGACHEV

54 years old | Embezzlement and scam 

Born in 1963 in Kostrama, Russia, Sergei Pugachev was once one of the most powerful oligarchs and politicians in Russia – to the extent that the Muscovite daily newspaper Nezavissimaïa Gazeta[1]  awarded him the title of the country’s Most Influential Businessman in 2007. 

***

A fortune with shady roots

Starting as an entrepreneur in the late 1980s, Sergei Pugachev quickly seized opportunities arising from the fall of the USSR and the complex liberalization of the Russian economy to set up a financial and industrial empire. In 1991, he founded the Northern Commercial Bank in St-Petersburg[2], before cofounding the Meiprombank in 1992[3]. Investigative journalists and Russian tax authorities soon started to point their finger at the latter, because of the obscure origins of its capital and its dubious financial practices[4].

Money and power games

With a thriving business, Meiprombank became in very few years one of Russia’s main financial institutions[5] and Sergei Pugachev started getting involved in politics. In 1995, he was a candidate to the Duma, but didn’t get elected. In 1996, he rallied President Eltsine’s campaign team, and contributed to his re-election.[6]. In 1999, he assisted Vladimir Putin, whom he foresaw as Boris Yeltsin’s successor, in his presidential bid. [7]

Putin’s election represented a milestone in Pugachev’s life. Thanks to his political capital, Pugachev started diversifying his business activities. In 1999, he bought the Yenisei Industrial Company[8], before becoming one of the majority shareholders of the Baltic Sea shipyards, the Severnaia  Verf shipyards and dozens of other machine-building firms. 

In 2000, the oligarch gathered his various industrial activities within a unique holding company, the OPK[9], and managed to obtain the licenses and necessary funds to develop his commercial empire. In 2000, the Yenisei Industrial Company was granted a license[10] to extract coal from the Elegest coal deposit, close to the Mongolian border. In 2007, the firm received 1,5 billion dollars from the Governmental Commission in charge of investments in the Russian Federation.[11]

A slippery slope

Sergei Pugachev continued to be a key figure in his country’s political arena, becoming a member of the board of the Russian Union of Industrialists and Entrepreneurs (RSPP) in 2000, and Senator of the Russian Federation in 2001. This implied that he benefitted from legal immunity.[12]  

Since his national business was thriving and his political connections were strong, Sergei Pugachev aimed to develop his holding company internationally. He acquired Star Limousines in Monaco in 1999[13] (which closed down in 2003), and the fancy French grocery chain Hédiard in 2007[14], declared bankrupt in 2013 and sold in 2014. He was also involved in the creation of a TV channel in Luxembourg, Luxe TV, set up in 2006[15] and made bankrupt in 2012. In general, he invested in various projects across France, Luxemburg and the United States. In 2009, he was granted French citizenship.[16]

Embezzlement scandal exposed

In 2010, the extension of Pugachev’s empire was halted by embezzlement accusations. On 5 October 2010, his bank Meiprombank’s license was revoked after the unveiling of suspicious transactions. The authorities suspected that the bank had been used to transfer capital out of the country.[17] On 30 November 2010[18] an audit led to the announcement of the bank’s bankruptcy, which was drowning in debts estimated at 4 billion dollars[19]. A trial for major fraud schemes was launched against Pugachev in 2013.[20]

In 2014, the British justice seized 2 billion dollars[21]  from Sergei Pugachev’s shares in the United Kingdom as a preventive measure – where he was residing at the time. Despite an official prohibition from leaving British soil, he fled to France.[22] Sergei Pugachev never showed up at the High Court of Justice in London to answer accusations made against him.

After many years of legal proceedings, the businessman was declared guilty of embezzlement by Russian courts in 2016.           

Sergei Pugachev now resides in a villa on the French Riveria, close to Nice. Only a small portion of his assets was seized by justice. Despite numerous cases against him, the former banker is still trying to get a hold of the assets that were transferred to his creditors as compensation.[23]

In March 2017, the Russian government issued an extradition request – so as to hold him accountable for the crimes he has been charged with.[24] It is now up to France to determine what status it wishes to grant such a fugitive living within its borders.

[1] http://www.lsa-conso.fr/carnet-des-decideurs/pougatchev-serguei,150683
[2] https://www.lesechos.fr/10/12/2007/LesEchos/20064-041-ECH_serguei-pougatchev--le-tsar-de-l-epicerie-fine.htm
[3] http://www.leparisien.fr/flash-actualite-monde/l-oligarque-pougatchev-ancien-argentier-du-kremlin-reclame-12-milliards-de-dollars-a-la-russie-22-09-2015-5116687.php
[4] http://www.lemonde.fr/europe/article/2003/11/19/serguei-pougatchev-le-banquier-qui-tutoie-vladimir-poutine_342480_3214.html
[5] http://www.leparisien.fr/faits-divers/moscou-demande-a-paris-d-extrader-l-oligarque-serguei-pougatchev-02-03-2017-6726861.php
[6] https://www.pugachevsergei.com/biographie?lang=fr
[7] https://www.pugachevsergei.com/biographie?lang=fr
[8] http://www.parismatch.com/Actu/International/Refugie-l-ancien-ami-de-Poutine-se-bat-Serguei-Pougatchev-859823
[9] https://lenta.ru/economy/2004/05/31/mpb/
[10] http://www.rfgf.ru/license/itemview.php?iid=2655331
[11] https://www.kommersant.ru/doc/752798
[12] http://www.lemonde.fr/europe/article/2003/11/19/serguei-pougatchev-le-banquier-qui-tutoie-vladimir-poutine_342480_3214.html
[13]https://books.google.fr/books?id=6DW9BAAAQBAJ&pg=PT200&lpg=PT200&dq=pougatchev+star+limousines&source=bl&ots=0_xU3epPJw&sig=QrPlz9Hk4T9RDw1ZEU5SntbEOBM&hl=fr&sa=X&ved=0ahUKEwi80NrDqobUAhVBlhQKHblRCRoQ6AEIOjAD#v=onepage&q=pougatchev%20star%20limousines&f=false
[14] https://www.lesechos.fr/10/12/2007/LesEchos/20064-041-ECH_serguei-pougatchev--le-tsar-de-l-epicerie-fine.htm
[15] http://www.parismatch.com/Actu/International/Refugie-l-ancien-ami-de-Poutine-se-bat-Serguei-Pougatchev-859823
[16] http://www.lemonde.fr/europe/article/2015/07/10/serguei-pougatchev-quitte-la-grande-bretagne-pour-la-france_4678151_3214.html
[17] http://www.lemonde.fr/europe/article/2013/12/26/un-tribunal-russe-ordonne-l-arrestation-de-serguei-pougatchev_4340317_3214.html
[18] https://www.lesechos.fr/01/12/2010/LesEchos/20816-152-ECH_la-mejprombank-de-pougatchev-declaree-en-faillite-par-la-justice-russe.htm
[19] http://www.lsa-conso.fr/carnet-des-decideurs/pougatchev-serguei,150683
[20] http://www.lemonde.fr/europe/article/2013/12/26/un-tribunal-russe-ordonne-l-arrestation-de-serguei-pougatchev_4340317_3214.html
[21] https://www.hoganlovells.com/en/news/hogan-lovells-wins-court-battle-with-maximum-prison-sentence-for-pugachev
[22] http://www.lemonde.fr/europe/article/2015/07/10/serguei-pougatchev-quitte-la-grande-bretagne-pour-la-france_4678151_3214.html
[23] https://www.pugachevsergei.com/litiges-2?lang=fr
[24] http://www.ouest-france.fr/europe/russie/moscou-demande-paris-d-extrader-l-oligarque-pougatchev-4830969

CHRONOLOGICAL PROCEEDINGS OF THE POUGATCHEV CASE

International RussiaUnited-KingdomFrance

 

 Russia

Europe

2009

 
  • 2009: Pugachev receives the French citizenship.

2010

  • 2010: Beginning of the expropriation of Pugachev’s assets in Russia. The Central Bank in Russia revokes Meiprombank’s license.
 

2011

  • 2011: The Comitee of Criminal Investigation in Moscow opens a criminal file for premediated bankruptcy (Meiprombank).
  • 2011: A trial is opened in France at the request of Pugachev for extortion and threats from high-ranking collaborators of the Deposit Insurance Agency of Russia.

2012

   

2013

  • 4 December 2013 : Beginning of trial for embezzlement in Moscow for the Meiprombank case. Pugachev does not show up in court.
  • 26 December 2013 : Pugachev’s arrest warrant is filed following the findings of the Russian government.
 

2014

 
  • June 2014: Russia introduces provisional measures before the High Court of London (Meiprombank case).
  • 11 July 2014: the High Court of London orders the freezing of 2 billion dollars of Pugachev’s assets (Meiprombank case). Pugachev is absent from court.
  • 26 November 2014: A « red » wanted notice is filed by Interpol.

2015

 

  • 2 March 2015: Pugachev is forbidden from leaving the UK and asked to hand over his passeport to international law firm Hogan Lovells (representing Russian interests).
  • May 2015: Scotland Yard places Pugachev under protection following the discovery of explosive devices in his car.
  • 23 June 2015: Pugachev flees to France.
  • 21 September 2015: Pugachev files a lawsuit against the Russian State before the Court of Arbitration in The Hague to get reparations for the « expropriation of his Russian industrial empire » and asks for 12 billion dollars.
  • 15 October 2015: Interpol recognizes the illegitimacy of the demands made by the Russian Federation deemed politically motivated. Pugachev is taken off the Interpol database.
  • 22 December 2015: the High Court of London files an arrest warrant against Pugachev for contempt of Court (after he failed to show up in court).

2016

  • January 2016: Pugachev loses his final appeal before Russian courts.
  • April 2016: Pugachev files a complaint with the European Human Rights Court for wrongdoing committed during the examination of the civil claim of subsidiary responsibility in Russia.
  • July 2016: The Russian Federation informs the President of the International Court of Justice in The Hague and lawyers of Pugachev, that it recognizes the Court’s jurisdiction and will participate in the trial.

2017

 

  • 13 February 2017: Beginning of the trial before the Court of Abritration, between Pugachev and the Russian Federation.