SCHOOL FOR SCOUNDRELS – ALEXANDER MASHKEVICH ASKS NEW YORK JURY TO FIND ANDREI MELNICHENKO GUILTY OF BAD REPUTE, HACKING AND MEDIA MANIPULATION15:00 12.08.2015
Proof that oligarchs have more money than sense isn’t hard to come by. For a man with no business reputation left to lose in London to ask a jury in New York to judge his business rival to be a scoundrel is a proof that Alexander Mashkevich (lead image, with glasses), control shareholder of International Mineral Resources, is determined to test against Andrei Melnichenko (lead image, without glasses), owner of the Eurochem fertilizer group.
International Mineral Resources (IMR), a Dutch company owned by Mashkevich and his two partners, Patokh Chodiev and Alijan Ibragimov, has been an offshoot of Eurasian Natural Resources Corporation (ENRC). When ENRC was at the peak of its London Stock Exchange value, Mashkevich was worth over $3 billion. He’s down to less than $2 billion now, according to Forbes which doesn’t count liabilities. Melnichenko, whose debts are also not counted by Forbes, is reported to be worth over $8 billion. By the arithmetical rule, having four times more money than Mashkevich, Melnichenko should have one-quarter the common sense. Or is it the other way round?
ENRC became defunct as a public shareholding company in 2014. That followed a UK Government investigation of allegations of bribery to obtain mining concessions in Africa, corruption in Kazakhstan, and coverup within the board of directors and management. No charges have been filed to date. The company is now a private concern, Eurasian Resources Group (ERG), registered in Luxembourg and doing business in Kazakhstan and west Africa, with financing from Russia’s state banks. It is sensitive to financial press reports about what has been happening to its management and business fortune, especially in London where Mashkevich resides at Number 15, St. James’s Square.
On November 12 Mashkevich authorized the New York lawyers, Jonathan Cogan (below, left), Steven Perlstein (centre), and Rebecca Mangold (right), to file a 22-page complaint against Melnichenko’s New York lawyer, Patrick Salisbury; his Eurochem potash mine subsidiary in Volgograd region, and Rinat Akhmetshin, a Russian by origin and a Washington agent of Salisbury’s and Melnichenko’s. Akhmetshin is described in the court filing as “a former Soviet military counterintelligence officer”. Read the full file here.
Mashkevich (spelled Machkevitch) is identified by his lawyers in the claim as one of “three East European industrialists”; the word Kazakhstan doesn’t appear. Their “business holdings” have been targeted by a negative media and litigation campaign of Melnichenko; he is described as the “primary ultimate beneficiary and owner of EuroChem”, the diversified international fertilizer holding.
The Mashkevich charge against Melnichenko is one of organizing an “unlawful scheme to hack highly confidential and/or commercially sensitive communications and other private information from IMR’s computer systems.” The alleged plan was to “st[eal] IMR’s sensitive and confidential materials. Defendants then sought to inflict maximum damage on IMR, including by using the fruits of this hacking to assist ECVK [Eurochem Volga-Kaliy] in the Dutch litigation. In addition, Defendants disseminated the stolen materials and other negative information to journalists and other third parties as part of a smear campaign against IMR designed to harm IMR’s business reputation.”
Hacking is usually a criminal offence. This is a civil claim, based on “common law trespass to chattels and civil conspiracy.” Mashkevich’s lawyers have applied for a jury trial. If successful, they are asking for an injunction to prevent “using or distributing IMR’s stolen confidential information in any way”; and damages calculated to compensate IMR’s costs for litigating; plus “punitive damages”.
The materials alleged to have been hacked and stolen have already been used in a proceeding Melnickenko brought in a Dutch court, charging IMR and its related company Shaft Sinkers with paying bribes and falsifying mine records to defraud Melnichenko’s subsidiary, Eurochem Volga-Kaily (ECVK), at the new Gremyachinskoye potash mine. That story can be followed here. The Dutch court records confirm that Mashkevich was directly involved with Melnichenko in the failed negotiations preceding this court case.
IMR won the case, but on a technicality. The Dutch judges didn’t dismiss Eurochem’s charges of bribery and fraud. They ruled that Eurochem had failed to present evidence that IMR had been directly involved, leaving undecided who was responsible for the corruption, and what liability Shaft Sinkers, the company responsible for the abortive Volga mine drilling project, might have.
“The District Court is of the opinion that it cannot result from what has been advanced by ECVK that IMR was actively involved in the policy and business of ShS [Shaft Sinkers] and had a decisive influence on these in the period in which the alleged wrongful actions of ShS were committed. It has been established that IMR indirectly held 54% of the shares in ShS. That is insufficient in itself to assume that IMR was indeed actively involved in and influenced the business operations of ShS. Nor has ECVK advanced any concrete facts or circumstances against IMR`s contestation which show this direct involvement of IMR.”
So Eurochem has moved again, restating its case to a higher Dutch court. According to Eurochem’s latest annual report, “on 18 September 2014, the Group filed a writ supported by newly discovered additional evidence with the Dutch appeal court. The management of the Group believes that it has very strong evidence to support its case against IMR.”
IMR told the New York court the Dutch case is “still pending”. If IMR wins the injunction it is after in New York, it may be hoping to oblige the Dutch court to disregard the evidence Melnichenko has presented.
In August of this year, Shaft Sinkers abandoned its London Stock Exchange listing. At that point, its share price was 0.65 of a penny, with a market capitalization of £30 million. It had initially listed on the London Stock Exchange in 2010, and reached a peak share price in February 2011 of 192p (cap of £91 million). The company’s financial report for 2014 has not been published; in the earlier reports the bottom-line at Shaft Sinkers had been dwindling steadily. By the start of 2014 it was selling off assets to pay the legal costs of Melnichenko’s litigation; it was unable to find fresh creditors to accept £9 million in new debt cover.
The evidence against Shaft Sinkers — IMR is now charging in the New York state court — was stolen from communications between IMR and Shaft Sinkers. These data files were then passed to Melnichenko’s lawyers in 2012 and 2013 to help them run their case against IMR and Shaft Sinkers in The Netherlands. In parallel, Akhmetshin was allegedly paid to distribute the information he had hacked to journalists to encourage them to report negatively on Mashkevich and his businesses. The reporters aren’t identified except for their publications – Harper’s, The Nation, Wall Street Journal, the Huffington Post, and Main Justice, a Washington lawyers’ blog.
Akhmetshin is reported to have been paid $145,000 over 2012 and 2013. There is no report of how much Salisbury was paid then, or how much since. Salisbury has also been engaged on proceedings in federal New York court and in a state court in New Jersey for Melnichenko’s claims for a sculpture that was too small for his wife’s garden, and for a paint job on their motor yacht.
The modus operandi for Salisbury and Akhmetshin went like this, according to the latest court claim. “On January 30, 2014, Akhmetshin met with a client at the Café Royal Coffee Shop on Regent Street in central London and gave him a copy of the stolen IMR materials.”
“At approximately 11:25 a.m., Akhmetshin met his client at the coffee shop and handed him an external hard drive, explaining that the drive contained numerous folders of documents that included memoranda, emails, and financial information. Akhmetshin described his process for obtaining the documents, stating that he had a team that hacked materials from IMR senior executives and from individuals in key administrative positions whose computers were likely to contain important internal documents. Akhmetshin said that his team had collected approximately 50 gigabytes worth of material. The businessman commented on the volume of material, and Akhmetshin responded, “there is a lot of the stuff, so — but that’s why you are paying money.”
“Akhmetshin added that he was hired because there were certain things that the law firm could not do. Upon information and belief, Akhmetshin’s reference to ‘certain things that the law firm could not do’ was a reference to the unlawful hacking of IMR’s computer systems.”
Six months later, on June 25, 2014, Melnichenko lost his Dutch court case against IMR. “But for the hacked information provided by Akhmetshin,” IMR is now saying in New York, “ECVK [Eurochem] would not have initiated the meritless Dutch litigation against IMR.” That isn’t exactly what the Dutch court ruled – and the Dutch appellate court is now reconsidering the evidence and the law in the case. But because its cash is frozen while the case continues, IMR continue to suffer financially, just as Shaft Sinkers has done. The cash out of Mashkevich’s reach amounts to €886 million ($1.2 billion). This is the real money at stake in the new US court case.
The core of the argument between Melnichenko and Mashkevich, and of the Dutch litigation between Eurochem and IMR, is Melnichenko’s charge that Mashkevich plotted to cheat him by taking $270 million in mineshaft construction contracts for a technology he knew wouldn’t work. In order to keep the money, and prevent Melnichenko from taking it back and cancelling the deal, Mashkevich, IMR and Shaft Sinkers arranged to corrupt and bribe employees of Eurochem’s Gremyachinskoye mine, and deceive the management. That’s what Melnichenko is saying.
Mashkevich isn’t saying. The alleged corruption, bribery, fraud and deceit aren’t mentioned in his New York claim. Instead, Melnichenko’s agents allegedly stole their way into the IMR computers and turned the data into “disparaging allegations about IMR, certain entities associated with IMR, and their ultimate beneficial shareholders — certain of which are based on negative press articles about IMR written by individuals and entities with whom Akhmetshin has ties.”
By focusing on the authenticity of the internal communications, in order to prove they were stolen from IMR, the IMR lawyers don’t mean to buttress the case that IMR was in fact behind the corruption being argued in front of the Dutch judges. But that’s the implication of the argument in the New York court papers. In the corridors of the New York courthouse, this is known as shooting yourself in the foot.
The lawyers for Mashkevich – Cogan, Perlstein and Mangold – were asked to clarify their evidence. What newspaper articles were they pointing to which contain the “disparaging allegations” to influence the Dutch court? They refuse to say.
How, they were also asked, did they obtain the emails quoted in their court papers between Melnichenko’s henchmen, Salisbury and Akhmetshin? How do they know now exactly what was said at the Café Royal coffee table when Akhmetshin handed over IMR’s confidential files, almost two years ago? Could it be that Mashkevich’s agents have hacked and eavesdropped to get their evidence that Melnichenko’s agents were doing, er, exactly the same thing?
What does Akhmetshin have to say? He is incommunicado, listed at an address on Vermont Avenue, in northwest Washington. His listed telephone number doesn’t answer. His front company called the International Eurasian Institute for Economic and Political Research, popped up in US Government records in 2011. But US Government radio has called it a “one-man think tank” which has disappeared, taking Akhmetshin with it. At the time Akhmetshin was working for political opponents of the President of Kazakhstan, Nursultan Nazarbayev. He was also making himself a name as an expert on bribery in Kazakhstan.
Nazarbayev presents the Order of Kurmet (“Honour”) to Mashkevich “for achievements in the development of the economy”
Although Akhmetshin is called a Washington lobbyist in the new court papers, he has never registered with the US Justice Department for his foreign clients, as the Foreign Agents Registration Act requires. Here’s an associate of his who did in 1999. If IMR’s court claim is correct, Akhmetshin was lobbying the US media for the benefit of the Russians, Melnichenko and Eurochem, between 2012 and 2014.
Akhmetshin is too young to have been a ranking military intelligence (GRU) agent before he moved to the US, says a source who knows him. “Maybe he was a rookie, and when he didn’t make the grade, he decided to try his luck in Washington.” IMR’s lawyers were asked to substantiate their claim. They could not.
Salisbury’s secretary declined to connect him by telephone, but provided his email address for questions. He was asked to clarify whether Akhmetshin was a former GRU officer, and to explain how he believes IMR got hold of his email exchanges with Akhmetshin, as well as voice-tapes of Akhmetshin. Was the information IMR is citing in court obtained lawfully, and how does Salisbury respond to the charges that he had acted unlawfully? He refuses to answer.