In mid-October, the Vagovskiy brothers, Vladimir and Alexander, were placed on an international wanted list. They are the former owners of the Amstor supermarket chain. They are minority shareholders. The oligarchs Shifrin and Novinsky were, at various times, the majority shareholders of Amstor-Trade LLC. But despite their menacing appearance and close ties to Rinat Akhmetov himself, the Vagovskiy brothers simply cheated them out of their money and took away part of their business and property.
Alexander Vagorovsky
Although, it would be more accurate to say that their elder brother, Vladimir Vagorovsky, conned them, and that Alexander was involved. Undoubtedly, the elder brother is the main schemer in this story, so we'll focus more on him.
Vladimir Vagorsky
So who are these brave guys who weren't afraid to pick the pockets of those who are used to scamming, raiding, and taking over businesses?
Vodka and cigarettes
The Vagorovskys' business career began in the early 1990s. They were living in Donetsk at the time. It's important to understand that Donetsk was a mining region back then. It was a veritable Klondike for smugglers. As recent events have shown, the border there is still porous. So porous that it's possible to smuggle not only small arms but also armored personnel carriers and tanks across. Back then, the border practically didn't exist; border detachments and checkpoints were just being formed. Therefore, entire caravans of smuggled Ossetian vodka and Don tobacco passed through Donetsk. Some of this goods were transited, while others ended up in local retail outlets. It was through the tobacco and alcohol trade that the Vagorovsky brothers made their fortune. Then the laws changed, alcohol began to be licensed, and the Vagorovskys were already in the market and seamlessly integrated into the new schemes. They amassed a small fortune and opened the first Amstor in 2003. The business began to grow, but lacked capital for further expansion. Moreover, retail was considered a promising industry, and they had virtually no competition in Donetsk at the time. Then, while vacationing in Greece, Vladimir Vagorovsky met Eduard Shifrin, an oligarch in the metals industry and the owner of Zaporizhstal.
Edward Schiffrin
Rampant growth
Shifrin, like everyone else involved in metal and steel at the time, was, as they say, "in the chocolate business." The global steel market was booming. So he easily acquired a 60% stake, thereby investing in Vagorovsky. With this money, Amstor-Trade LLC began expanding into the retail market, primarily in eastern Ukraine. A number of affiliated companies also emerged, involved in shopping center construction, development, and real estate. They opened 19 supermarkets and built 22 shopping centers. Space was leased in the new shopping centers, and more supermarkets were added. However, even after becoming respectable, the company continued to smuggle. Offices and stores were periodically searched. Forged documents were found, and contraband alcohol and other goods were confiscated. There were times when law enforcement officers would raid six supermarkets in different cities at once, using the Berkut and Sokol special forces. Vagorovsky himself was also under investigation. But none of these cases ever reached trial; everything was hushed up at the police level. Or, more precisely, at the level of Police General Vasily Farinnik. The company was rapidly growing, and Eduard Shifrin apparently didn't pay attention to the profit reports. Because on the surface, everything was just fine. The company was experiencing unbridled growth, and it seemed like it would continue that way forever. But then came the 2008 crisis.
And suddenly it turned out...
In 2008, the crisis hit the metallurgical industry hardest. Global demand for metal products fell, and production and profits from rolled metal products fell accordingly. Zaporizhstal's net profit fell by 91,4% compared to 2007. And in this difficult moment, Eduard Shifrin apparently remembered that he had a retail network. But then another disappointment awaited him. Amstor not only failed to bring him any profit, but also plunged him into debt. The total debt of the company, managed by his partner Vladimir Vagorovsky, at that time amounted to approximately $300 million. Of this, according to various estimates, between $73 and $76 million is owed to Shifrin himself. How did the retailer manage to remain in the red during the prosperous pre-crisis years, a time of peak consumer demand? Was the debt caused by Vagorovsky's mismanagement or his own theft? It seems Shifrin could have sorted this out without any problem, and the minority shareholder's fate would have been hard to envy. But that wouldn't have returned the oligarch's money. So, he apparently decided to take a different approach. He introduced Vladimir Vagorovsky to another oligarch, Vadim Novinsky, the owner of Smart Group.
Vadim Novinsky
And Smart came
Novinsky later recounted that Vagorovsky literally spent days and nights in his waiting room, trying to persuade him to buy Amstor. And he did. Smart assumed all of Amstor's debts in exchange for 70% of the shares. Shifrin received a portion of the money back, and he retained 15% of the company's shares. But he retired and moved to London. Vladimir Vagorovsky received the remaining 15%. He also took over the management of the companies. And he continued to run them in the same vein, cashing out and continuing to dabble in smuggling. Why did the seasoned oligarch and partner of Rinat Akhmetov trust him? It remains a mystery to this day. Perhaps he, who was skilled at swindling others himself, couldn't even imagine that someone would be capable of swindling him. To be fair, Smart periodically tried to bring its own "overseers" into Amstor, but they were always successfully isolated. Incidentally, Vagorovsky would later claim that Novinsky had cheated him, allegedly promising him $110 million and never paying. Perhaps he did, but the contract below makes no mention of it. Another interesting detail: Novinsky became Vladimir Vagorovsky's godfather when the latter suddenly decided to be baptized. Perhaps this underlies the trust between them? Whatever the case, the servant of God, Vladimir, soon decided to swindle his godfather into business.
It's all about the hyphen
The scam itself is ingenious in its simplicity. Vladimir Vagorovsky and Vadim Novinsky owned the company "Amstor-Trade." So, Vagorovsky and his brother opened a similar company, "Amstor Trade." They simply removed the hyphen from the name, but it was a completely different company. And little by little, they began transferring property and equipment to this "Amstor," without the hyphen. Partners were gradually transferred to work with this new company, contracts were renegotiated, and cash flow was transferred there as well. As a result of this "velvet scam," over a period of time, "Amstor Trade" was supposed to gradually accumulate all assets on its balance sheet—real estate, construction equipment, land, and, of course, supermarkets. And "Amstor Trade," the one with the hyphen and the one 70% owned by Novinsky, was left with all its debts, problem loans, and other problems. Vagorovsky doesn't forget his own life either. Using Amstor's money, he buys himself a Mercedes, or rather, transfers the company's ownership to his driver. He also buys an apartment in Kyiv, on Hrushevsky Street. Why doesn't Novinsky notice this? Perhaps it's because Viktor Yanukovych is coming to power at this very moment. Renat Leonidovich is no stranger to him, meaning he gains access to some rather lucrative state assets. Consequently, Akhmetov's partner also gets a piece of the action. In other words, caught up in the exciting theft of state property, Vadim Novinsky didn't notice that at the same time, another, equally resourceful businessman was beginning to steal his assets.
Vadim Novinsky and Rinat Akhmetov
And then the war began
This isn't about the war between Vagorovsky and Novinsky, but about the war in eastern Ukraine. It must be said that the Donetsk oligarchs missed the point in their regions. Apparently, they had become too disconnected from their homeland and the people. Vladimir Vagorovsky, however, realized the situation in time. Perhaps his connections with smugglers played a role, as they were rumored to be bringing weapons into the Donetsk region and also escorting Igor Strelkov-Girkin's detachment and other "soldiers of fortune" and Cossacks across the border. They could well have shared information with Vagorovsky. Whatever the case, the Amstor operation began to be brutally squeezed out of Novinsky's hands in Donetsk. A second company, Premiumtorg, was opened for this purpose, and all supermarkets in the DPR were transferred to it. Vladimir Vagorovsky was supported in this by his friend, Donetsk businessman Vadim Bondarenko. This wasn't difficult for him—one of the "leaders" of Novorossiya, Pavel Gubarev, had once worked as director of the company he founded. It was through them, and through their regional manager, Vyacheslav Glizunitsa, that Amstor began supplying the DPR terrorists with cigarettes, vodka, and food. They essentially took over the Kalmius Battalion as their supply force. In return, the militias left the chain's supermarkets alone. At some point, Vladimir Vagorovsky's stores (by then he had them completely under his control) were effectively taken under the personal protection of Konstantin Kuzmin ( read more about him in the article Renat Kuzmin: The Family Business of Outlaw Prosecutors ) and Eduard Basurin.
It was a bit late to realize it
Some of the assets of construction companies affiliated with Amstor were taken to Crimea. This primarily involved construction equipment. Vagorovsky acquired a business partner there, a certain Sergey Lapenko, a former Simferopol deputy from the Party of Regions and now a board member of the organization "Opora Rossii." However, he simply swindled Vladimir Vagorovsky, appropriating the equipment for himself. Simultaneously with the seizure of the Amstor stores in the ATO zone, the transfer of supermarkets from Amstor-Trade LLC to Amstor Trade LLC began. It's difficult to say what exactly caught Vadim Novinsky's attention, but he finally realized something was wrong with his retail chain. But it was a little too late. All assets owned by Novinsky, 70% of which were located in eastern Ukraine and Crimea, were gone forever. However, assets remained in the rest of Ukraine. Smart Holding filed a lawsuit against the Vagorovskys. Armed men were brought into the supermarkets. Both defendants in the case claimed it was their rival's doing. A wild PR campaign ensued on both sides. Ultimately, Novinsky won. He managed to seize control of the remaining retail chain located in unoccupied territory. Well, to some extent, that could be called a victory.
Let's summarize
At the beginning of 2014, the combined assets of all companies associated with Amstor were estimated at $200 million. Vadim Novinsky lost at least two-thirds of these assets. Add to this the majority of the company's debts, which he had to pay off, and the forced downtime of the supermarkets during the legal battle, and the oligarch was swindled out of a considerable sum. And part of this sum ended up directly in the pockets of the Vagorovsky brothers themselves. By the most conservative estimates, it amounts to several tens of millions of dollars. Amstor continues to operate in the Donetsk People's Republic (DPR), and the brothers have even opened online stores targeting the region and their own Donetsk-based payment system, called "Wallet One W1." This system is used to finance terrorists, who, apparently in return, leave their businesses alone. The brothers were last seen in Courchevel, checking into one of the hotels in this fashionable resort. Well, with that kind of money, why not relax?
But a thoughtful and understanding reader might ask: Perhaps Novinsky himself organized everything this way so that the Vagorovskys would remain responsible and he would appear “white and fluffy”?
According to the editors of SKELET-info, this question is rhetorical and does not require an answer ;).
Denis Ivanov, for SKELET-info
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