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. Last Updated: 07/27/2016

Abramov, Vekselberg Named in U.S. Suit

Minority investors in Ukraine's Nikopol ferroalloy plant were to file a lawsuit in U.S. federal court on Thursday accusing metals billionaires Alexander Abramov and Viktor Vekselberg, among others, of large-scale bribery and looting, a lawyer for the plaintiffs said.

The case casts the Russian businessmen as party to actions taken by Viktor Pinchuk, a Ukrainian billionaire and son-in-law of former President Leonid Kuchma, and a number of his associates, according to the complaint to be filed in U.S. District Court for the District of Massachusetts, a copy of which was obtained by The Moscow Times. Due to the nine-hour time difference, it was not possible to determine late Thursday whether the complaint had been filed.

Nikopol, majority-owned by Pinchuk, is the world's second-largest ferroalloy producer, holding 10 percent of the world market for the material used in steel manufacturing. Abramov is board chairman and a major shareholder in Evraz Group, Russia's second-largest steelmaker. Vekselberg controls a number of metal assets, including SUAL, the world's sixth-largest aluminum producer, through his Renova holding.

A spokesman for Abramov said he could not comment on the case, as he had not received any notification of the suit. Representatives of Renova declined to comment, saying Vekselberg's official spokesman was ill.

Vedomosti reported in September that Abramov and Vekselberg had agreed to pay Pinchuk $380 million for his majority stake in Nikopol but backed out after a Ukrainian court ruled in September that a 50 percent plus one share stake in the company had to be returned to the government.

The renationalization, initiated by then-Ukrainian Prime Minister Yulia Tymoshenko and her government, was annulled after her government was ousted in September.

While Vekselberg and Abramov will not answer charges surrounding the privatizations of Nikopol, "the case alleges that they joined in the conspiracy going on at the Nikopol plant," Sergei Sokolov, a partner in Marks&Sokolov, which represents the plaintiffs, said Thursday.

The case claims U.S. jurisdiction because two of Pinchuk's associates and co-defendants, Jerry Margulis and Alexander Novack, hold U.S. green cards, while Vekselberg is an American citizen and Renova is U.S.-registered, Sokolov said.

The plaintiffs are three Cyprus-registered companies -- Athina Investments, Varkedge and Wisewood Holdings -- whose beneficiaries are named as several U.S. citizens and a Ukrainian-born Israeli citizen, Igor Kolomoisky. The U.S. citizens are not named, and Sokolov would not identify them.

The companies allege that Abramov and Vekselberg paid bribes of $25 million and Pinchuk another $25 million to Ukrainian government officials to block Tymoshenko's efforts to renationalize Nikopol.

Citing transcripts of telephone conversations published in the Ukrainian press, the complaint alleges that "Abramov and Vekselberg were attempting to exercise control over Nikopol, and the $25 million payment was made as part of that effort."

During this period, the two Russian businessmen also supported and were party to the looting of the company by "diverting hundreds of millions of dollars in profits to American and other entities," which were controlled directly or indirectly by Pinchuk, Margulis and Novack, and later also by Vekselberg and Abramov, the complaint says.

The plaintiffs are seeking to recover, on behalf of Nikopol, the misappropriated profits plus triple the damages under the Racketeer Influenced and Corrupt Organizations Act, or RICO, the complaint says.

Sokolov said he rated the chances of the case succeeding as "high," even though a similar case against Evraz and another metals billionaire, Oleg Deripaska, was dismissed by a U.S. federal court on Wednesday. The court said it saw little reason for the case to be heard in the United States.

Albert Yeganyan, head of Vegal-Lex, a Moscow-based law firm that specializes in conflict cases, said all major Russian raw materials suppliers had faced some legal action in the United States at one time or another.

"Not a single RICO case against Russian raw materials companies has been won, although there have been some out-of-court settlements," he said.

"To file a case is simple. But no one has been able to prove the two vital points in such cases: the existence of a pact between those accused and it causing damages to the plaintiff," he said.