Vedomosti daily investigates key Yukos bidder

Yelena Mazneva and Victoria Sunkina, Vedomosti, 8.08.2008

Last year Prana paid 100 billion roubles for Yukos assets. Its new owner is Alexander Smirnov, a 36-year-old resident of Krasnogorsk, who formerly worked for Yukos-RM, the holding’s retailing operation.

The building is the usual 12-storey prefabricated block of flats. There is no concierge in the hallway and the buttons on the lift panel are worn. Smirnov shares the five-room apartment with his wife, three children and his mother. That is how the new beneficiary of Prana, a company with at least $150-180 million in assets, lives on the outskirts of Moscow in Krasnogorsk.

Prana has left almost the same enigmatic track in the history of the Yukos bankruptcy as the Baikalfinans group. Registered in Tver and wound up in 2007, Baikalfinans became famous in 2004 for buying the key Yukos asset of Yuganskneftegaz for $9.35 billion. It was represented at the auction by two staff members of Russian oil major Surgutneftegaz. Subsequently Baikalfinans was absorbed by Rosneft. Yet who owned the Group at the time of the auction remains a mystery. Ex-president Putin, today the prime minister, then said that he knew: the owners of Baikalfinans were a group of individuals “who have been engaged in the energy sector for many years”.

Prana was registered in 2005 when 99% of its shares belonged to Parson Consulting Inc, a company based in the Seychelles. The ownership was not disclosed. In May 2007 Prana, after a three-hour battle with a Rosneft subsidiary, won the right to buy part of the assets of Yukos at auction. The lot in question included all its Moscow property and its trading entities. From a starting price of 22.1 billion roubles Prana eventually paid 100.09 billion roubles. Later the greater part of these assets were sold to Rosneft for 87.58 billion roubles.

Today Prana has a new boss. Since June this year the company is owned by Novoframe Ltd, which was registered in March 2008 in Coventry, UK (see Russia’s Unified State Register for Legal Entities). The owner of Novoframe’s solitary share, according to the British registry service (Companies House UK), is Alexander Smirnov. He confirmed the information but declined to offer Vedomosti any commentary. The Novoframe director German Molostov is a British citizen and a research associate at the nearby Warwick School of Medicine. Novoframe has not yet been fully set up, he claims: other shareholders may therefore appear later. Who exactly they might be he would not clarify. Asked what the company does, why and how it became the owner of Prana, Molostov did not offer any answer. He merely added that he became its director thanks to a “long acquaintance” with Alexander Smirnov.

Smirnov’s mother Ludmila was more forthcoming. She told Vedomosti that her son had graduated from the Bauman Technical University in Moscow and then studied at the presidential Civil Service Academy. He started earning money by driving classy automobiles back from Germany. Four times he was sent to Chechnya in the late 1990s as part of the FSB’s special Vympel unit. After which, following the pleas of his family, he left the service. Since then he “never talks about his work”.

For the last five years Smirnov’s career has been documented in the quarterly statements of one of the former Yukos subsidiaries, Voronezh nefteprodukt automatics (it belongs to Prana). He became a board member of the Voronezh company this summer. From 2003 to 2006 Smirnov worked as general director of the Vympel-MIK company: its website indicates that the firm’s speciality is “the practical assurance of economic security, provision of guards and legal back up”. Set up in 1998, the company is run by former members of the FSB’s Vympel unit. In 2006-2007 when Yukos was already in the hands of the receivers Smirnov worked as deputy head of a department at Yukos-RM: this subsidiary oversaw the retail network and oil-refining capacity of the bankrupt holding, and was subsequently bought from Prana by Rosneft. Today Smirnov is deputy general director of Topmaster Realty, a 100% subsidiary of Prana.

“I am a shareholder of Novoframe, and have been so for more than a day,” Smirnov declares. Specialists are doubtful, however. Could he himself could have bought Prana if its real estate alone is worth $150-180 million? To build up such reserves Smirnov would have to save for three years, either by earning $5 million a month or by borrowing. Yet in that case it would become public knowledge, comments Ivan Andrievsky, a partner at the 2K Audit business consultancy. If Prana was sold at market price, Andrievsky asserts, then a third party must have been involved.

It’s interesting to note that another former Yukos member of staff, 46-year-old Nikolai Morozov, also joined the board of Voronezh nefteprodukt automatics this summer. From 2007 onwards he has worked as a deputy general director of the Yukos-M trading house, sold by Prana last year to Rosneft but a spokesperson for the State corporation was yesterday evening unable to provide a commentary on this coincidence.

What Prana owns
After its deal with Rosneft the company retained shares in nine former Yukos subsidiaries, including 100% of Topmaster Realty and 61% of the Economics of the Aviation Industry research institute. Prana owns three Moscow buildings (formerly occupied by Yukos) in Ulansky Street, says a source close to the institute, with office space of 18,000 cu m. The value of the real estate is about $150 million, believes Mikhail Gets, a leading partner at the New Quality agency. Vladimir Avdeyev of S.A. Ricci / King Sturge puts the value higher, around $180 million. What property is held by the other Prana subsidiaries remains unknown.

Prana
Financial services organisation
Statutory capital: 100,000 roubles
Assets: 14.3 billion roubles (2007 figures),
including 10.5 billion in long-term financial investments
Liabilities, Short-term loans and credits: 14.3 billion roubles
(late 2007 figures)
Earnings: 87.75 billion roubles
(Prana sold part of the Yukos assets to Rosneft for this sum)
Net profit: 27 million roubles