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. Last Updated: 07/27/2016

Borovoi Plans to 'Gut' Scams

Swindlers beware. High-profile entrepreneur Konstantin Borovoi is aiming to recoup money lost by small investors in a myriad of unscrupulous schemes that have plagued post-Soviet Russia.


But while the former head of the Russian Commodity and Raw Materials Exchange has colorfully threatened to "gut" those responsible for issuing worthless documents to the citizenry, most commentators say they have little faith in the new venture.


Even Borovoi has not divulged how he plans to force money from the debtors, and critics have labelled his efforts a public relations ploy.


Nevertheless, Borovoi says he has already convinced several small firms to pay back 2 billion rubles ($440,000) to investors.


In an interview, the flamboyant businessman said his Borovoi-Trust company would wage his battle by pooling into special depository banks the shares, receipts, contracts and liabilities of 124 companies which have balked at repaying their debts. When the sum is sufficient, the trust will force debtors to return the money.


In return, the depository banks will receive 15 percent of the reclaimed winnings.


Leonid Rosenblum, chairman of Investstroibank, said Borovoi-Trust has collected documents worth 11 billion to 12 billion rubles since he began working with the firm June 26.


"The main purpose for our work is to acquire the liability status for shares, certificates, agreements and other papers, which will create a secondary market of liabilities," Rosenblum said.


But analysts expressed skepticism about the project.


"This is just another of Borovoi's shady enterprises," said Alexei Sitnin, head of the Central Bank's press service. "He wants to attract the attention of the press."


Even the targets of Borovoi's threats have reacted with disbelief.


"So far the activities of the trust and the consequences for us are obscure," said an MMM employee, who asked not to be named. "I don't think they're going to do anything serious."


Moscow's Committee on Shareholders' Rights is reviewing the potential consequences of the scheme, according to spokesman Alexei Kondratiev.


As for the organizations that refuse to pay up, Borovoi had tough words.


"Defaulters will have the unpleasant sensation of being gutted," he said. "We will discipline the market."