The BKIT companies or “BKITs” are the rightful majority shareholders in ToAZ.  They hold those shares as trust managers. The BKITs allege that they are victims of a relentless raider attack by the defendants, led by Mr. Dmitry Mazepin. A Russian raider attack – also known as reiderstvo – is a phenomenon recognized internationally as an illegal hostile takeover of a company. Reiderstvo involves the use of corrupt and unlawful tactics to illegally take over a target company, with the help of corrupt state authorities.

Initiating criminal and civil complaints for the sole purpose of unlawfully obtaining increased shareholding in ToAZ by knowingly manipulating and abusing the Russian court system to relitigate matters on which it has been unsuccessful.

Dmitry Mazepin repeatedly issued explicit threats as to the steps he would, and ultimately did, take in order to try to defraud the BKIT shareholders. Despite holding only a minority stake, Mazepin allegedly employed a combination of legal maneuvers, criminal charges, and political influence to undermine ToAZ’s majority shareholders.

Mazepin made direct threats to ToAZ’s leadership. Sergey Makhlai, then-chairman of ToAZ, claimed that Mazepin warned him in 2013 that if he did not agree to sell a majority stake in ToAZ, the company would face a hostile takeover, and its relationship with Swiss-based shareholder Ameropa would be misrepresented to facilitate this. These threats reportedly occurred during meetings in Budapest and Zurich.

Following these threats, Mazepin and Uralchem initiated a series of legal actions in Russia, accusing ToAZ executives of fraud and underselling products. These charges led to convictions in absentia for several executives, including members of the Makhlai family and Ameropa directors. However, the proceedings were criticized for due process violations, such as the use of anonymous witnesses and disregarding exonerating evidence.

Russia ‘raider attack’ case makes it to the High Court – The Irish Times

Co-conspirator Yevgeny Sedykin procured the unlawful suspension of the ToAZ Chairman and tried to replace the legitimate ToAZ Board of Directors with nominees of the raiders. Fortunately a Russian Appeals Court stopped the plan. Mr Sedykin was later convicted of trying to take over the board of ToAZ in separate criminal proceedings. However, despite his conviction, he joined a Mazepin-led damages claim in related proceedings in Russia.

The raiders initiated civil and criminal proceedings against ToAZ on the false premise that ToAZ had failed to make available a list of ToAZ shareholders to UCCU. The basis for UCCU’s claim turned out to be a false Shareholder Price Agreement (SPA) UCCU had drawn up with BVI shell company Belport, which allowed UCCU to claim that it was liable to Belport for failing to provide said list. Aside from the fact that the SPA was false, a Russian judge confirmed in 2011 that ToAZ had made the shareholder list available to UCCU.

Despite the rejection of its claim, UCCU doubled down on the Shareholder List and filed a criminal complaint. The complaint explained that the failure to provide the list was an attempt by ToAZ to conceal illegal profits made from the alleged conspiracy of underselling ammonia in concert with its main trading partner at the time, Nitrochem.

A few days after UCCU filed its claim, the Russian authorities opened a new criminal investigation pursuant to Article 159(4) of the Russian Criminal Code and recognized UCCU as a ‘victim’ of this crime, thereby enabling UCCU to bring a separate civil claim in the context of the criminal proceedings which it quickly launched. The criminal and civil proceedings led to oppressive pre-trial detention orders, freezing orders and even frivolous Interpol Red Notices which were subsequently lifted.

The conflict extended beyond Russia, with ToAZ’s majority shareholders—represented by offshore entities known as the BKITs—filing a lawsuit in Ireland in 2016. They accused Mazepin and his associates of orchestrating a conspiracy to defraud them of their shares through fabricated legal proceedings and improper influence over Russian courts. Despite a 2019 undertaking by Uralchem not to enforce a Russian judgment against the BKITs pending the Irish case, Mazepin’s entities allegedly proceeded with actions that led to the seizure and auction of BKIT-held shares to Mazepin-controlled companies.

A fifteen year campaign of intimidation, fraud and corruption finally bore fruit on November 27th of 2021, when Uralchem convened an extraordinary shareholders’ meeting, reportedly surrounded by armed guards, where they replaced ToAZ’s board with their own representatives.

This move effectively placed ToAZ under Mazepin’s control, despite Uralchem’s minority shareholding. Subsequently, through a series of auctions, Mazepin’s affiliates acquired over 90% of ToAZ’s shares. This led to Mazepin and his associates effectively seizing full control over the company from its rightful owners, and putting the shares up for auction. The BKIT Companies will pursue every means of challenging this unjust and illegal takeover.

This series of events has been characterized as a classic example of “reiderstvo,” or corporate raiding, involving the use of legal and political mechanisms to forcibly take over a company. The situation underscores the challenges faced by foreign investors in Russia and has drawn international scrutiny.

For a detailed account of these events, refer to the article “Fertilizer oligarch flouts Cyprus law” published by Cyprus Business News.