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. Last Updated: 07/27/2016

Shvartsman Fund Deals Canceled

Five regions have canceled the results of venture capital tenders won by a company formerly headed by controversial businessman Oleg Shvartsman for not meeting the terms of the agreement, a source said.

The Volgograd, Voronezh and Samara regions and the republics of Chuvashia and Bashkortostan annulled the results of tenders won by Finans-Trust and announced new tenders to create venture capital funds, RIA-Novosti cited a source in a government agency as saying.

Shvartsman, however, said the decision was political and that Finans-Trust would create the venture funds in the regions anyway, with the help of the Joint Arab Investment Corporation, Kommersant reported Tuesday.

In November, the newspaper published an interview with Shvartsman in which he said his firm, FinansGroup, benefited from links with the presidential administration, as well as internal and external intelligence services, in owning and managing $3.2 billion worth of assets. In particular, he said the company would lead a "velvet reprivatization" that would benefit state companies such as arms trader Rosoboronexport.

Rosoboronexport filed a lawsuit against Kommersant and Shvartsman for damaging its reputation, and the Moscow Arbitration Court on Tuesday set a hearing in the case for April 1.

The tenders, held in June 2007, were to create regional investment funds, in which the federal government would contribute 25 percent, the local regional government would contribute 25 percent, and Finans-Trust was to provide the rest.

Shvartsman told Kommersant that he and Joint Arab Investment would create the funds faster than the Economic Development and Trade Ministry will.

The Joint Arab Investment Corporation was founded by Egypt in 1977 and is 76 percent owned by the Abu Dhabi Investment Company, Kommersant said.