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. Last Updated: 07/27/2016

Domodedovo Workers Cry Foul

Hundreds of Domodedovo employees feel they have been duped by the airline's general director, the Property Ministry and MDM-Bank in a disputed privatization scheme that promised mountains of gold but yielded a few thousand rubles.

About 1,800 of the 2,053 employees who participated in the scheme for a 49.6 percent stake in Domodedovo ended up with a mere seven shares each, said a source in the Property Ministry.

Domodedovo general director Alexander Akimov and 13 other employees got 276,500 shares each, while another 207 employees got between 8 and 460 shares, the source said.

In other words, a majority of the employees wound up with a total of 0.34 percent in the airline, while 14 people got just about the entire stake.

Furthermore, the ministry source said, those 14 employees have already sold their shares to three offshore companies that the local press has linked to oil tycoon turned Chukotka Governor Roman Abramovich.

"The employees were duped," said Domodedovo pilot Viktor Cheban, who denounced the sell-off from the start and refused to participate. "Even though it has a controlling stake in the airline, the Property Ministry has washed its hands of the matter. But it still has the power to reverse the situation."

The Property Ministry itself, which oversees privatizations, has protested the sell-off as illegal, saying the closed subscription pricing each of the more than 3.8 million shares at 17 rubles was grossly undervalued. The pricing suggested that Russia's No. 5 airline was worth $4.6 million.

Domodedovo, the main airline for flights from Moscow to destinations in the Far East, Chukotka and Kamchatka, had revenues of 4.1 billion rubles ($140 million) last year, according to Akimov. It operates 24 planes, including three Il-96-300 jets valued at $30 million each.

The Property Ministry -- which is challenging the subscription in court and has already lost 14 suits -- delayed the transfer of shares to the employees until this year.

Once the shares were released, offshore company Layton Investment Ltd. said in Rossiiskaya Gazeta that it had accumulated more than 10 percent of the shares and was calling an extraordinary shareholders meeting for April 13.

Alexander Borodin, head of the Property Ministry's transportation department, said Layton and offshore companies Exmor Ltd. and Angalia Ltd. have already accumulated most of the other privatized shares.

In the meantime, the Russkiye Finansoviye Traditsii investment company distributed a letter within the airline saying it would buy shares starting at 1,000 rubles each. RFT has refused to identify its client, but Cheban, the pilot, said he was told when he called RFT that Layton is behind the purchase and Akimov was the first to sell his shares. Layton's lawyer, Dmitry Pafnutyev, denied RFT was representing Layton's interest but confirmed it was actively buying shares.

While 1,000 rubles per share is a competitive price that values the whole airline at $260 million, the average employee would earn less than his monthly salary by selling his seven shares.

The average salary at Domodedovo is 10,000 rubles, according to Akimov.

Cheban said that Akimov told employees already in 1999 that if they signed up for shares, an investor would buy them for 1,000 rubles each.

The total number of shares that the employees applied for was not immediately clear Monday.

On Friday, Akimov said he had subscribed for 100 percent of the shares. Thirteen other employees also bid for 100 percent. As bids were weighted in favor of those wanting more shares, those 14 bids wiped out any chance that the employees who made more modest bids would get a significant amount, the Property Ministry source said.

A bid for 100 percent of the subscription at 17 cents per share amounts to $2.3 million.

Any employee who bid for more than 90 shares had to prove he had the needed financial backing, Akimov said.

He said MDM-Bank provided loans to cover his and the other 13 employees' bids. He would not specify the amount.

Andrei Parshintsev, deputy head of the Property Ministry's transport department, said the ministry has determined that MDM-Bank is the nominal shareholder for the three offshore companies.

MDM-Bank refused to comment. Spokesman Gennady Parskov said the bank does not discuss its clients' deals.

Meanwhile, at least two MDM officials, Alexei Garkusha and Maxim Lyubimov, are on a list of 22 candidates for the nine-seat board of Domodedovo airlines. Former MDM employee Dmitry Kashlakov is also on the list.

Parskov said the candidates would not represent the interests of the bank if elected to the board and should be considered as individuals.

Contacted by phone, both Garkusha and Lyubimov refused to comment.

Kashlakov quit the bank two or three weeks ago, Parskov said.

The list of candidates also has nine representatives from the Transport and Property ministries and Akimov, who in addition to a board seat hopes to keep his post as general director.

Layton's lawyer Pafnutyev, who is also on the list of board candidates, said Layton supports Akimov for both positions.