March 1, 2024 (hetq.am) Vahe Sarukhanyan
In the first part of this story, we touched on some details of the deal to divest the telecommunications operator, MTS Armenia. In the article, we described a Chinese man, Zhe Zhang, who claims to be the beneficial owner of the Cypriot company Fedilco Group Limited, which acquired the Armenian company from Russia’s MTS. Konstantin Sokolov is the other alleged owner.
We recall MTS Armenia CJSC’s statement that the new owners are “professional investors with extensive experience in telecommunications, finance, energy, and asset management.” However, based on the information we received and the results of our research, we concluded that in this case, as in many other transactions, Zhang and Sokolov are merely managers, while the real owners or investors behind them remain in the shadows and, for one reason or another, maintain confidentiality.
According to marketscreener.com, 49-year-old Konstantin Anatolyevich Sokolov graduated from St. Petersburg State University (he is apparently a native of St. Petersburg), after which he received a master’s degree in management from the University of Chicago. According to the same source, Sokolov’s name is associated with American and British companies, where he primarily holds (or held) director positions. At two of these companies, Sokolov and Zhe Zhang serve (or served) on the board of directors.
Sokolov’s company is involved in a dispute with an investor and a lawsuit
Konstantin Sokolov figures in the story of a Canadian investor who, according to the Cypriot press, became the victim of a fraud amounting to over $2.5 million.
In 2018, the Cypriot publication 24h.com.cy reported on a lawsuit pending in a Cypriot court by a Canadian investor seeking the liquidation of a local company, Posparon Investments Limited, so that the amount of money embezzled from him through fraud could be clarified. According to the publication, Posparon directors Olga Igorevna Katorajchik and Ilya Vyacheslavovich Sokolov (both Russian citizens) persuaded the Canadian investor to invest $2.5 million through a Liechtenstein-based fund in the Russian joint-stock company Kompressor Kompleks (KK), which specialized in the production of pumps and compressors. This was a leading mechanical engineering company in St. Petersburg.
According to 24h.com.cy, an agreement was signed as part of the investment deal stating that Posparon Investments Limited owned 80% of KK. However, the lawsuit emphasized that Posparon was a shareholder not of the Russian company, but of the Cypriot Wellinom Holdings Limited , where the directors were none other than Olga Katorajchik and Ilya Sokolov. In reality, according to Cypriot and Russian registries, Posparon had no direct connection to either KK or Wellinom Holdings. Nevertheless, Posparon was at the top of the pyramid (the other companies were presented as its subsidiaries). The Canadian became a shareholder in this particular company and subsequently sued Posparon.
Officially, since 2012, about 80% of KK has belonged to another Russian company, Argo LLC , which in turn belonged to Wellinom Holdings Limited until 2016.
According to the documents, Wellinom’s owners are Cypriot companies providing investment services, both owned by the same person. This is a very convenient and common way to conceal the true beneficial owner. The same can be said of Posparon, about 70% of which, as can be seen in the diagram below, was owned by two Cypriot companies providing consulting and business management services, which again reveals nothing about the true owners.
The ownership structure of the Compressor Complex as of 2016, when the company was acquired by SBK Premier. The following countries are color-coded:
Russia – green, blue;
Cyprus – purple;
Malta – brown.
According to this diagram, Ilya Sokolov was a member of the board of directors of KK (according to his LinkedIn page , he also served as chairman of the board from 2011 to 2017), as was Konstantin Sokolov (from 2011 to 2014). Furthermore, K. Sokolov was a participant in KK with a 0.0042% stake.
Let’s return to the lawsuit against Posparon. It states that directors O. Katorajczyk and I. Sokolov later informed a Canadian investor of $2.5 million that an $8 million adjustment to the reasonable value of the investment had been made, but they failed to provide the financial statements of the aforementioned Posparon subsidiaries to justify the increased investment. Instead, the Canadian was presented with a report from a Cypriot audit firm stating that the adjustment to the investment amount was due to an alleged increase in the net asset value of a Posparon subsidiary (presumably “KK”).
In any case, in 2014, I. Sokolov sent documents to the Canadian investor and his lawyers, but the arguments for increasing the investment amount did not satisfy the Canadian. The directors, however, reported that the Russian company had taken out a $35 million loan from a local bank, which had increased the value of the underlying Cypriot company. Ultimately, the investor demanded a meeting not only with Olga Katorajchik and Ilya Sokolov, but also with Konstantin Sokolov, the ostensible owner and ultimate beneficiary of Posparon (and, of course, its subordinate “KK”). Sokolov assured the Canadian that he would henceforth receive the most up-to-date information about the investment from him personally.
However, according to 24h.com.cy, the Canadian investor had not received any important information by 2017, and although his lawyers periodically tried to clarify the situation, Posparon directors Katoraychuk and Sokolov convened a general meeting of the company to re-approve the audited financial statements for 2013-2014, without explaining why this was necessary.
In January 2018, a lawsuit seeking the liquidation of Posparon Investments Limited was filed by a company owned by Canadian investor Wastendo, which held 6.3% of its shares. According to the Cyprus state registry, Wastendo’s sole owner is Glenn Smith, a resident of Calgary, Canada. Smith is, in fact, the investor mentioned by 24h.com.cy or his representative.
In addition to demanding Posparon’s liquidation, Wastendo requested the court to compel other shareholders (Norfin Management Limited, Norfin Holdings Limited, and Yarton Investments BV) to purchase its 6.3% stake for $2.5 million. Essentially, the Canadian investor wants his money back from the remaining Posparon shareholders, who were essentially operating under K. Sokolov’s control. The lawsuit stated that, according to the Canadian investor, the company exhibited serious signs of poor management and malfeasance by the board of directors, and that the company’s operations were carried out fraudulently, facilitated by a Cypriot audit firm. However, the opposing party filed a counterclaim requesting the dismissal of Wastendo’s claims, which the Nicosia court upheld in December 2018.
It turns out that the Canadian investor failed not only in concluding a deal with Posparon, but also in defending his interests in court.
However, Posparon, a company founded in 2008, was struck off from the Cyprus state register in July 2022.
Regarding the Compressor Complex, which is at the center of the investment dispute, in 2016, SBK Premier, a company belonging to the Sberbank Group, became the new owner of Argo, which held 80% of the enterprise (presumably, the bank acquired a controlling stake in the engineering company in exchange for a loan). This meant that KK was no longer controlled by the Cypriot Posparon. In 2017, Argo was transferred to another Russian company, Grossmann Rus, part of the engineering company Grossmann Group. The latter works with major oil and gas companies. However, in 2020, KK was declared bankrupt, and in 2022, Grossmann Rus will suffer the same fate.
As noted above, Posparon directors O. Katorajczyk and I. Sokolov convinced a Canadian investor to invest $2.5 million in Kompressorny Kompleks through a fund operating in Liechtenstein. It is difficult to determine the precise connection between this fund and Posparon and its subsidiaries. It is noteworthy, however, that from 2011 to 2020, Ilya Sokolov, according to his LinkedIn page, served as an external advisor to the Liechtenstein-registered Gotthard Umbrella Fund, which invested primarily in the Russian real estate market. Furthermore, the Russian newspaper Kommersant reported that the Gotthard Umbrella Fund’s 2018 report included Kompressorny Kompleks in the fund’s portfolio. The fund ceased to exist at the end of 2019 .
The failure of an investment project to restore a landmark building in St. Petersburg.
K. Sokolov and his partners were involved in another project, which, however, failed. In May 2010, the St. Petersburg government, at a closed meeting, decided to alienate three buildings designated as federal landmarks to private investors, who were to convert them into luxury or five-star hotels. However, no auction was announced for the acquisition of these buildings; they were sold directly as part of a single package.
According to Russian media reports , the two buildings were purchased by two companies affiliated with the billionaire twin brothers Boris and Mikhail Zingarevich . The buyers paid 30 and 20 million rubles, respectively. However, in addition to these amounts, they committed to investing specific amounts.
A third building, the home of Mikhail Vavelberg, a banker well known in the Russian Empire, was sold in a similar manner. It was purchased for 111 million rubles by the St. Petersburg company IFG-Bazis-Proekt . Its general director told Russian media that they have no connection to the Zingarevichs.
The Zingarevich brothers are known primarily for their timber business (they are sometimes called the “forest brothers”). In the 1990s, their partner was Dmitry Medvedev, a native of St. Petersburg who later became President of the Russian Federation. Today, the brothers’ partner is another billionaire and also a native of St. Petersburg, Zakhar Smushkin, about whom we have previously written .
In 2010, the Russian press reported that IFG-Basis-Proekt belonged to the Cypriot company Applerson Holdings Limited , whose beneficial owners were unknown. Danat Bulavko, then CEO of IFG-Basis-Proekt, said that it was an international investment fund. Applerson’s intention to invest in a St. Petersburg hotel complex was reported back in 2009. At the time, it was also noted that this company was a division of the Cypriot investment fund IFG-Basis. According to Russian media reports, the fund was created to invest in real estate in Eastern Europe, Russia, China, and the Persian Gulf. As of 2009, the fund included approximately 100 properties, and its financial partners included Austria’s Erste Bank, Italy’s Generali Group, and Switzerland’s Bank Julius Baer & Co.
It should be noted, however, that according to the Cyprus state registry, an investment fund named IFG-Basis is not registered in the country. Conversely, according to the Cyprus registry, the owners of Applerson Holdings Limited, which existed from 2009 to 2014, never had such an entity. Applerson’s last owner was Crest Wave Investments Limited, a company registered in the British Virgin Islands, and Konstantin Sokolov was a member of Applerson’s board of directors.
Thus, in 2010, when the Russian company IFG-Bazis-Proekt purchased the Vavelberg house with the intention of converting it into a hotel, the company’s owner was Applerson Holdings Limited, with which K. Sokolov was directly associated. It is also known that from 2013 to 2016, the Russian company belonged to the Moscow-registered LLC “Innovative Development Company,” which was 50-50 owned by the Cypriot company Wellinom Investments Limited and the VBO-registered Wellinom Properties Limited. Our research revealed that K. Sokolov was again behind various companies bearing the Wellinom name. Another question is whether he was the actual owner or merely assumed that he was.
The ownership structure of IFG-Basis-Project as of 2016, when the company had not yet been transferred to SBK Premier, looked like this:
Russia – green, blue
Cyprus – purple
Offshore zones (BVI, Anguilla) – brown.
From 2010 to 2017, Ilya Sokolov, a partner of K. Sokolov, served as the CEO of IFG-Basis-Proekt. In 2013, Sokolov signed an agreement with the Arab company Jumeirah Group, which was to assume management of the hotel being built on the site of the Vavelberg House. However, this project never came to fruition.
In 2019, the Russian newspaper Kommersant, citing its sources, reported that Konstantin Sokolov, businessman Yevgeny Tonkachev (who denied his involvement), and the Liechtenstein-registered Gotthard Umbrella Fund were involved in the IFG-Bazis-Proekt hotel project. According to the newspaper, in 2018, the Vavelberg House, along with the Kompressorny Kompleks enterprise, was included in the fund’s list of assets. However, in 2019, the fund completed the alienation of the historic building. As noted above, Gotthard Umbrella Fund was liquidated at the end of 2019.
In fact, just as the machine-building enterprise “Kompressor Komplex” was controlled until 2016 by the Cypriot company Posparon Investments Limited, whose beneficial owner was Konstantin Sokolov, so the company “IFG-Basis-Proekt” was under the control of companies affiliated with Sokolov until 2016.
Sokolov and his partners never managed to implement the project of converting M. Vavelberg’s house into a hotel, although it was planned to open in 2015, that is, five years after the sale of the historic building.
In 2016, Sberbank subsidiary SBK Premier became the sole owner of IFG-Basis-Project. In 2017, this company was replaced by the Russian company Project 5-7, which was in turn jointly owned by Sberbank and billionaire entrepreneur Nikolai Buinov .
In 2019, Sberbank left, after which Project 5-7 and its subsidiary, IFG-Bazis-Proekt, were completely transferred to Buinov’s control. It was under his leadership that the transformation of the Wawelberg House, which had been underway for over 10 years, was completed in 2021. The 5-star Wawelberg Hotel opened there in April 2021.
K. Sokolov’s mother founded a similar company in Cyprus.
In December 2023, a company called IFG Basis Capital (CY) Limited was founded in Cyprus, with Bronislava Gorelik as its sole shareholder and director . According to a Hetq.am source, B. Gorelik is Konstantin Sokolov’s mother. She is also involved as a shareholder in other Cypriot companies . According to the Cyprus State Registry, Bronislava Gorelik is registered in Malta but holds Israeli citizenship. It can be assumed that K. Sokolov is actually behind the companies registered in her mother’s name.
Hetq.am continues to identify the real beneficial owners of MTS Armenia. We received identical information about the real buyers of this telecom operator from two different sources. More on that in the next article.
The original English text of the article on Hetq.am has been removed. Today, only the Russian-language editorial version remains available.