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Published in Stream:
Russia Update: March 25, 2015
Press by
The Interpreter
@Interpreter_Mag
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Interpreter_Mag
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Businessman and Russian Orthodox philanthropist Konstantin Malofeyev, an avid supporter of the Russian-backed separatists in southeast Ukraine, is reported to have paid back a debt owed to VTB Bank for $100 million, a fraction of the original amount and minus any penalties or interest, Kommersant reports.

One of the persistent templates for trying to understand events in Moscow, notable particularly from ultranationalist and separatist bloggers, is the concept that "liberals" in the Kremlin will "dump Novorossiya" -- that is President Vladimir Putin will be overcome by the "party of peace" in reaching a ceasefire with Ukraine and get rid of anyone related to the "party of war" supporting the separatists in the Donbass.

That was how the dismissal of Aleksandr Dugin from Moscow State University and the retirement of Col. Igor Strelkov were interpreted last year. Periodically, rumors of impending assassinations or attempted assassinations against Russian-backed warlords in Ukraine such as Givi (Mikhail Tolstykh), Motorola (Arseny Pavlov) or Aleksandr Mozgovoy are disseminated in this vein.

Since Malofeyev was reported to bankroll first the Crimean takeover then the "Donetsk People's Republic" adventure, when he was reported to have his home and office searched rumors of the "Novorossiya dump" occurred again. Then, when Malofeyev was reported to have reached a settlement finally with Rostelekom after a long court case, that was seen if not as a "dump" at least as a closing of the "Novorossiya" chapter with a discounted fine instead of prosecution.

Now Kommersant has further researched the matter and today March 25 reports further details on how Marshall Capital Partners, Malofeyev's company paid back an original loan of $225 million, which had earned interest and penalties and reached the amount of $596 million, settling it for just $100 million.

Kommersant cites sources that claim the terms for the settlement were already reached back on January 21 and the documents signed February 18. VTB Kapital and Rusagropom agreed to settle the loan given in 2007 for purchase of dairy plants to Alverdine Investments, Ltd in the Virgin Islands for $100 million, and agreed to refrain from further legal action. This also involved ceasing a lawsuit in the UK that had frozen the shares of Marshall Capital Partners. Malofeyev in turn dropped a lawsuit for $600 million against VTB for damages resulting from the freeze on the shares. In exchange for this deal, a criminal case against Malofeyev on charges of embezzlement of a VTB loan was dropped in March.

According to Kommersant's source close to VTB (translation by The Interpreter):

"We reached a peaceful agreement with Konstantin Malofeyev, the claims regarding the debt are settled, the bank has received all the money. We are not commenting on the details."

Malofeyev's press service also confirmed that a settlement was reached but said they didn't know the sum of the deal reached by VTB and Alverdine and claimed that Malofeyev had no connection to Alverdine. Another source close to Malofeyev said he had settled the debt for $100 million and obtained this "discount" due to his "civic position." This was believed to be code words for his support for the Russian-backed separatist war in the Donbass, and his humanitarian aid sent to residents.

Kommersant consulted various excerpts who said that an 85% or greater write-off of a bad loan or purchase for pennies on the dollar by collectors' agencies is common if a period of time has lapsed, or there is no means of payment or collateral.

In February, Novaya Gazeta leaked a document drafted by a group close to the Kremlin in which Malofeyev was said to be involved, which indicated that the Kremlin had reviewed and endorsed a scenario for taking over the Crimea and the Donbass even before former president Viktor Yanukovych was toppled. Malofeyev denied involvement in the study.

One theory about the leak of the document was that it was to put pressure on Malofeyev to reach some agreement with the Kremlin, and yet if Kommersant's sources are telling the truth, the terms for the debt discount and payment were already reached before the leak.

To definitively determine whether Malofeyev has been "dumped" or just "got off with a fine," his further activities will have to be watched to see if he continues to donate to ultrarightist causes. Last year he was spotted meeting with Col. Strelkov at the church in Valaam, and then attended a conference titled "Moscow the Third Rome" where he was on the same platform with Dugin, former intelligence officer Leonid Reshetnikov of the Russian Institute for Strategic Studies and other hardliners. But he didn't attend the conference of European and US far-right and Nazi fringe parties with Russian ultranationalists in St. Petersburg this past weekend.

VTB Bank formally denied the claims regarding the settlement of the debt, Novaya Gazeta reported.

-- Catherine A. Fitzpatrick